RAMIREZ STRIKES AGAIN!

From IBD Cartoon Editorials...

Christmas Day, 1776: 'Victory or Death'

by George F. Smith

On Christmas Day, 1776, a few Americans gave us the first installment of a gift we have all but lost.

After the makeshift American army under George Washington's command ousted the redcoats from Boston in early 1776, the British moved to New York City, where they launched an invasion in August. Washington met them head-on and suffered devastating defeats, and survived only by fleeing from the enemy.

During the sleepless nights and hungry days of their retreat across New Jersey, Washington had hoped to pick up support from the locals. But the opposite turned out to be true: In Newark, for instance, only 30 turned out to join the Americans, while on the same day 300 New Jerseyans fell in for the British.

By the time he escaped across the Delaware River into Bucks County, Pennsylvania, Washington had only 3,000 of his original 20,000 troops. Seeing American forces arriving in retreat only twelve miles from where they sat in Philadelphia, Congress exposed their backbone: They panicked, made excuses and fled. They gave Washington dictatorial powers and went into hiding in Baltimore, 110 miles to the south.

"The game is pretty near up," Washington wrote in a letter to his cousin in Virginia. Even the Bucks County militia let him down. Desperate for troops, he had ordered them called out, but they turned Loyalist, and he had to dismiss them.

As winter set in, Washington made headquarters in William McKonkey's three-story stone house on the west side of the Delaware. British commander William Howe had written to his superior in England, Lord Germaine, telling of the severity of the December weather. For that reason he would go into winter quarters until spring, leaving his men spread over numerous New Jersey outposts, ready to march at a moment's notice. He admitted, though, that the chain of outposts was too extensive.

Lord Charles Cornwallis, Howe's field commander, decided to garrison the outposts with Hessian mercenaries and send the British troops back to New York. He himself was anxious to return to his wife in England, while Howe continued his affair in New York with the wife of one of his officers. Cornwallis left command of New Jersey in the hands of the cocky and thoroughly mediocre General James Grant.

In the 100-house village of Trenton, the outpost closest to Washington, the 1,600 Hessians were under command of Colonel Johann Gottlieb Rall, a hard-drinking gambler whose troops had a reputation for plunder and rape. Once encamped. they proceeded to demonstrate their reputation. Hessian brutality swung many New Jersey neutrals to the American cause. Instead of tacking red ribbons to their doors indicating their loyalty to the Crown, they formed militia bands to ambush Hessian patrols. In his diary, one Hessian officer complained "we have not slept one night in peace since we came to this place." [1] He wrote this passage in Trenton, on Christmas Eve.

History tells us of the desperate condition of Washington's men - their ragged clothes, their lack of shoes, their chronic hunger. While this was true, it was also carefully exaggerated. Making excellent use of spies, Washington led the British to believe his condition was completely hopeless. Thus, when Rall complained to General Grant that his position was too much exposed, Grant dismissed it as ludicrous, since Washington was all but decimated. Besides, after December 31 Washington would not even have an army, since the term of service would expire for most of his men.

Perhaps at the suggestion of Benedict Arnold, Washington decided to attack Trenton while the Hessians slept off the effects of their Christmas celebration. It was do or die time; if he didn't take Trenton, the American cause was dead.

Benjamin Rush, one of the few members of Congress who remained in Philadelphia, paid Washington a visit on the morning of December 24, 1776. Seeing the general depressed, Rush tried to boost his spirits with talk about Congress being behind him, even as they ran like cowards. As they talked, Rush noticed Washington scribbling on scraps of paper, one of which fell to the floor. Rush picked it up and read, "Victory or Death." It was the watchword for the attack on Trenton.

The following afternoon, Christmas Day, Washington gave his officers their marching orders. They included a special oratory they would read to their men, in an attempt to boost their morale. Earlier that month, Tom Paine had written a new essay on a drumhead in General Nathanael Greene's tent as the American army retreated across New Jersey. Called The American Crisis, Paine had it printed in Philadelphia on December 19. As the troops prepared to climb aboard the boats and cross the Delaware, with a winter storm kicking up, they heard Paine's opening words: "These are the times that try men's souls." They would not forget them.

Under the direction of Marblehead ship captain John Glover, the first boats pushed off from McKonkey's Ferry at two in the afternoon. It took fourteen hours to transport men, horses, and artillery across the river. Ice floes crunched against the sides of the 60-foot Durham iron-ore barges as the boatmen, sleet slashing their eyes, poled the crafts over and back.

Meanwhile, in Trenton, Rall had eaten a hearty meal and retired for a game of cards with a few of his aides and his host, a man named Abraham Hunt. Shortly after midnight a shivering Loyalist from Bucks County showed up at the door with a written message, handing it to a servant. Rall refused to be disturbed and tucked the note into his waistcoat pocket without reading it.

At 4:00 a.m. the American troops began their ten-mile march to Trenton along River Road. Washington, from his tall chestnut horse, urged his men to keep moving and stay with their officers. Two men stopped to rest - and froze to death. At Birmingham, the force split into two divisions. One, led by Nathanael Greene, swung off to the east to skirt the town, while the other, under John Sullivan's command, headed straight for the main Hessian barracks on King Street.

At 8:00 a.m. Sullivan's advance guard rushed the ten Hessian pickets outside the barracks. Three minutes later Washington ordered the rest of the men to storm the town. As they fell upon the enemy, many of them shouted, "This is the time to try men's souls!" [2] With their gunpowder soaked and useless, Sullivan's men relied on the bayonet to roust the Hessians out of the houses. Earlier in New York, Rall's men had mercilessly slaughtered Americans as they tried to surrender. It was a gratifying sight to see the Hessians turning and running.

Sodden from the previous night's celebrations, some Hessian units threw on their coats and tried to form ranks in the streets. As they did, they were cut down by Henry Knox's six-pounders firing from the ends of Trenton's two main streets.

Rall finally broke from the Hunt house, jumped on his horse and galloped toward his regiment, who were marching down King Street to the sounds of fifes, bugles, and drums while being showered with grapeshot. "Lord, Lord, what is it, what is it?" he kept shouting in German. As he tried unsuccessfully to organize a bayonet charge, he was hit twice and assisted into the Queen Street Methodist Church. While he lay dying, someone noticed the unread note in his pocket: the American army was marching on Trenton.

Minutes later the remaining Hessian officers put their hats on their swords, the corporals lowered their flags, and the infantry men grounded their arms. The Battle of Trenton was over. The Americans had suffered four casualties to the two hundred Hessians killed and wounded. Some of the Hessians had escaped and would alert the Hessian unit at Princeton. After a brief council with his officers, Washington decided his men were in no shape to take on more Hessians that day, so they headed back to McKonkey's Ferry with captured weapons, supplies, and 948 prisoners.

It took them twelve hours to recross the Delaware. The weather had gotten so cold Americans and Hessians had to stamp their feet in time in the boats to break up the new ice that was slowing their passage. When the Continental troops finally collapsed into their tents, they had gone forty-eight hours without food, almost as long without sleep, and had marched 25 miles in freezing weather.

They also won a critical victory for independence and liberty. While no war is good, defensive wars are sometimes necessary. Our forefathers knew this. That's why some of them went marching, 226 years ago.


References

1. Randall, William Sterne, George Washington: A Life, Owl Books, Henry Holt & Company, New York, 1998, p. 321.

2. Rothbard, Murray N., Conceived in Liberty, Vol. IV, Mises Institute, Auburn, Alabama, 1999, pp. 198-199.

TAKING THE AIR OUT

Food inflation may fall to no more than 4.5 percent in 2009 as lower dairy costs give consumers relief from this year’s price gains, the highest in almost three decades, the U.S. Department of Agriculture said.
(Bloomberg News)

Combined with the crash in crude oil and gasoline prices, this deflation should function as a huge tax cut to consumers and many businesses as far as lower input costs. With that said, we need to recognize that runaway deflation can be catastrophic if not under control--and is far worse than inflation--. Also, this commodity tax cut cannot be said to offset the rising unemployment or rising foreclosures in quite the way the bulls want it to.

BOTTOM LINE: A food and energy tax cut is just what the doctor ordered for the American consumer and the struggling American business, but the medicine may indeed kill the patient if we cannot control deflation over the coming quarters. Sooner or later--if it hasn't already--crashing commodity prices will freak people out instead of offering a breather.

Head and Shoulders Bottom (Reversal)

Here's a bullish scenario from stockcharts.com. See if the information below relays to our current S&P 500 chart over the past three months...

The Head and Shoulders bottom is referred to sometimes as an Inverse Head and Shoulders. The pattern shares many common characteristics with its comparable partner, but relies more heavily on volume patterns for confirmation.

As a major reversal pattern, the Head and Shoulders Bottom forms after a downtrend, and its completion marks a change in trend. The pattern contains three successive troughs with the middle trough (head) being the deepest and the two outside troughs (shoulders) being shallower. Ideally, the two shoulders would be equal in height and width. The reaction highs in the middle of the pattern can be connected to form resistance, or a neckline.

The price action forming both Head and Shoulders Top and Head and Shoulders Bottom patterns remains roughly the same, but reversed. The role of volume marks the biggest difference between the two. Generally speaking, volume plays a larger role in bottom formations than top formations. While an increase in volume on the neckline breakout for a Head and Shoulders Top is welcomed, it is absolutely required for a bottom. We will look at each part of the pattern individually, keeping volume in mind, and then put the parts together with some examples.

1. Prior Trend: It is important to establish the existence of a prior downtrend for this to be a reversal pattern. Without a prior downtrend to reverse, there cannot be a Head and Shoulders Bottom formation.
2. Left Shoulder: While in a downtrend, the left shoulder forms a trough that marks a new reaction low in the current trend. After forming this trough, an advance ensues to complete the formation of the left shoulder (1). The high of the decline usually remains below any longer trend line, thus keeping the downtrend intact.
3. Head: From the high of the left shoulder, a decline begins that exceeds the previous low and forms the low point of the head. After making a bottom, the high of the subsequent advance forms the second point of the neckline (2). The high of the advance sometimes breaks a downtrend line, which calls into question the robustness of the downtrend.
4. Right Shoulder: The decline from the high of the head (neckline) begins to form the right shoulder. This low is always higher than the head, and it is usually in line with the low of the left shoulder. While symmetry is preferred, sometimes the shoulders can be out of whack, and the right shoulder will be higher, lower, wider, or narrower. When the advance from the low of the right shoulder breaks the neckline, the Head and Shoulders Bottom reversal is complete.
5. Neckline: The neckline forms by connecting reaction highs 1 and 2. Reaction High 1 marks the end of the left shoulder and the beginning of the head. Reaction High 2 marks the end of the head and the beginning of the right shoulder. Depending on the relationship between the two reaction highs, the neckline can slope up, slope down, or be horizontal. The slope of the neckline will affect the pattern's degree of bullishness: an upward slope is more bullish than downward slope.
6. Volume: While volume plays an important role in the Head and Shoulders Top, it plays a crucial role in the Head and Shoulders Bottom. Without the proper expansion of volume, the validity of any breakout becomes suspect. Volume can be measured as an indicator (OBV, Chaikin Money Flow) or simply by analyzing the absolute levels associated with each peak and trough.
   • Volume levels during the first half of the pattern are less important than in the second half. Volume on the decline of the left shoulder is usually pretty heavy and selling pressure quite intense. The intensity of selling can even continue during the decline that forms the low of the head. After this low, subsequent volume patterns should be watched carefully to look for expansion during the advances.
   • The advance from the low of the head should show an increase in volume and/or better indicator readings, e.g., CMF > 0 or rise in OBV. After the reaction high forms the second neckline point, the right shoulder's decline should be accompanied with light volume. It is normal to experience profit-taking after an advance. Volume analysis helps distinguish between normal profit-taking and heavy selling pressure. With light volume on the pullback, indicators like CMF and OBV should remain strong. The most important moment for volume occurs on the advance from the low of the right shoulder. For a breakout to be considered valid, there needs to be an expansion of volume on the advance and during the breakout.
7. Neckline Break: The Head and Shoulders Bottom pattern is not complete, and the downtrend is not reversed until neckline resistance is broken. For a Head and Shoulders Botom, this must occur in a convincing manner, with an expansion of volume.
8. Resistance Turned Support: Once resistance is broken, it is common for this same resistance level to turn into support. Often, the price will return to the resistance break, and offer a second chance to buy.
9. Price Target: After breaking neckline resistance, the projected advance is found by measuring the distance from the neckline to the bottom of the head. This distance is then added to the neckline to reach a price target. Any price target should serve as a rough guide, and other factors should be considered, as well. These factors might include previous resistance levels, Fibonacci retracements or long-term moving averages.

Alaska Air Group, Inc. (ALK) formed a head and shoulders bottom with a downward sloping neckline.Key points include:

1. The stock began a downtrend in early July, and declined from 60 to 26.
2. The low of the left shoulder formed with a large spike in volume on a sharp down day (red arrows).
3. The reaction rally at around 42 1/2 formed the first point of the neckline (1). Volume on the advance was respectable with many gray bars exceeding the 60-day SMA. (Note: gray bars denote advancing days, black bars declining days and the thin red horizontal is the 60-day SMA).
4. The decline from 42 1/2 to 26 (head) was quite dramatic, but volume did not get out of hand. Chaikin Money Flow was mostly positive when the lows around 26 were forming.
5. The advance off of the low saw a large expansion of volume (green oval) and gap up. The strength behind the move indicated that a significant low formed.
6. After the reaction high around 39, the second point of the neckline could be drawn (2).
7. The decline from 39 to 33 occurred on light volume until the final two days, when volume reached its highest point in a month. Even though there are two long black (down) volume bars, these are surrounded by above-average gray (up) volume bars. Also notice how trend line resistance near 35 became support around 33 on the price chart.
8. The advance off of the low of the right shoulder occurred with above average volume. Chaikin Money Flow was at its highest levels, and surpassed +20% shortly after neckline resistance was broken.
9. After breaking neckline resistance, the stock returned to this newfound support with a successful test around 35 (green arrow).

AT&T (T) formed a head and shoulders bottom with a flat neckline. The shoulders are a bit shallow, but the neckline and head are well pronounced. Key points include:

1. The stock established a 6-month downtrend with the trend line extending down from Mar-98.
2. After a head fake above the trend line in late June, the stock fell from 66 to 50 with a sharp increase in volume to form the left shoulder.
3. The rally to 61 met resistance from the trend line, and the reaction high became the first point of the neckline.
4. The decline from 61 to 48 finished with a piercing pattern to form the low of the head. Even though volume was heavy when the long black candlestick formed, the subsequent reversal occurred on even higher volume. This reversal was followed with a number of strong advances and up gaps. Also notice that Chaikin Money Flow was above +10% when the low of the head formed.
5. The advance from the low of the head broke above the trend line, extending down from Mar-98, and met resistance around 61. This reaction high formed the second point of the neckline.
6. The right shoulder was quite short and shallow. The low was recorded at 57 and Chaikin Money Flow remained above +10% the whole time. Support was found from the trend line that offered resistance a few weeks earlier.
7. The stock advanced sharply off of lows that formed the right shoulder, and volume increased three straight days (blue arrow). This is a bit early, but volume remained just above average for the neckline breakout a few days later. Also Chaikin Money Flow remained above +10% the whole time.
8. After the break of neckline resistance, the stock tested this newfound support twice while consolidating recent gains. The power arrived a few weeks later with a strong move off support and a huge increase in volume. The stock subsequently advanced from the low sixties to the low eighties.

Head and Shoulder Bottoms are one of the most common and reliable reversal formations. It is important to remember that they occur after a downtrend and usually mark a major trend reversal when complete. While it is preferable that the left and right shoulders be symmetrical, it is not an absolute requirement. Shoulders can be different widths as well as different heights. Keep in mind that technical analysis is more an art than a science. If you are looking for the perfect pattern, it may be a long time coming.

Analysis of the Head and Shoulders Bottom should focus on correct identification of neckline resistance and volume patterns. These are two of the most important aspects to a successful read, and by extension a successful trade. The neckline resistance breakout combined with an increase in volume indicates an increase in demand at higher prices. Buyers are exerting greater force, and the price is being affected.

As seen from the examples, traders do not always have to chase a stock after the neckline breakout. Often, but certainly not always, the price will return to this new support level offer a second chance to buy. Measuring the expected length of the advance after the breakout can be helpful, but don't count on it for your ultimate target. As the pattern unfolds over time, other aspects of the technical picture are likely to take precedent. Technical analysis is dynamic, andand your analysis should incorporate aspects of the long-, medium- and short-term picture.

OLD HICKORY ON BAILOUTS

President Andrew Jackson to a group of bankers in 1832 before he annulled the Second U.S. Bank due to corruption:

“Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves.”

WHAT A LONG STRANGE MARKET IT'S BEEN

For the past year, I have basically traded around this stock market with great success. At one point I was well ahead of the major averages. Much of that changed in early August, when I saw commodity prices crashing and equities in general as well. My favorite company in the entire market has been Foster Wheeler for quite some time. At $48, coming down from $85, it looked like a steal to me. I therefore began to buy on the way down. Little did I know that, like several other high quality stocks during the past few months, Foster Wheeler would not be spared the nasty deleveraging and overall panic out of stocks that has taken place since September.

At one point, FWLT reached $13.85, and the only way to keep my sanity was to laugh at the absurdity of the way the market was valuing the stock seeing as the company has very little debt and $9/share in cash! I could have easily panic sold, and still can, as the stock closed this week at $25.38. But the fact is that FWLT has done everything correct. They are valued at around a $3 Billion market cap even though their backlog is $8 billion. Their balance sheet is pristine and the management has been applying the share buyback program of $750,000,000 which is a sizeable portion of the company's value. The company also says it is in the process of signing off on eight mega-deals over the next several months.

In short, Foster Wheeler offers both amazing growth and value. To bet against Foster Wheeler now is to bet that the world will cease to grow--especially in cash rich regions like Asia and the Middle East--where many of the big energy infra projects are now.

It's been a painful ride, but I'm more confident than ever that I'll emerge in the next 1-3 years with a huge profit from FWLT.

SPENDING OUR WAY INTO A CURRENCY COLLAPSE

THE BIG 3's PROBLEM SUMMED UP COGENTLY....

...by cartoonist extraordinaire Michael Ramirez of IBD.  (click to enlarge)

WE STILL HAVE THIS HOLIDAY!

THE BIG STEEL SOLUTION REDUX FOR CARS

great article in the Herald Tribune...

CHANGING MY VIEW

After much toiling,  I've changed my view on free trade.  I've always believed in U.S. isolationism (George Washington,'s concept of No Foreign Entanglement,  Hamilton's famous quote "Trade with everyone--alliances with no one") but I was also a globalization free trade guy.  However,  I read through the history of the Tariff Act of 1816 today and it occurred to me that all four presidents on Mount Rushmore were actually protectionist.  

Further,  until the roaring twenties,  America was largely a self-sufficient farming and industrial nation with virtually no federal income taxes--instead we derived our federal revenue from tariffs on imports.  The roaring twenties saw free trade and had weakened America after the 1929 crash to the point where other countries could afford to retaliate when Hoover raised tariffs on imports by signing the dreaded Smoot-Hawley Tariff Act.  (Keep in mind Hoover also raised taxes) 

WWII pulled us out of the depression, but since the war, America has seen many of its industrial sectors demolished by foreign countries such as Japan, who actually sold televisions at a price that would yield a negative profit for their companies in order to wipe out our American companies in that sector.  The tactic succeeded.  Since then, in 1994 China revalued its currency, debasing it to the point where they became the export king home to countless American (and other non-Chinese corporations).

In short, we are getting hustled by other countries.  Does that make me a pro-Union liberal? Absolutely not.  I am as anti-union as they come and I think unions, indeed, have contributed greatly to the demise of the big 3 automakers.    

Thus, my new view is that I support cutting federal income taxes earned in America from companies operating on American soil to 0%, as well as slashing payroll taxes for the same category and capital gains taxes to low single digits.  In place of this federal revenue, I would be in favor of heavy tariffs on imports.  Note that this plan only works if regulations and union boondoggles are lifted on American companies to let them operate more efficiently.  

 

ANOTHER RISING GOP STAR

Tim Pawlenty, conservative Republican governor of Minnesota (!).  

I've been very impressed with his political views as well as his speaking ability.  I think Pawlenty, Jindal and Palin, along with Congressmen Paul Ryan and Eric Cantor will be the leaders of the GOP for several decades to come.   

SECULAR BEAR?

While we appear to be making a standard reverse head-and-shoulders bottom in the major averages at the moment, the idea that we are off the races is a bit premature.  To be sure, if you believe in long term trends, we have been in a bear since 2000, and the 2002-2007 move was a feeble bull leg and ultimate bear trap.   According to history, the current secular bear could easily last from 2000 until 2017--and it makes sense.  After we get out of this deflationary scare, inflation will be the next enemy what with ultra low interest rates and a never-ending U.S. printing press.  Thus,  if correct policy action is taken (if we're lucky) then we may be able to fight our way out of inflation by 2017 creating an August of 1982 Reagan bull market scenario.  

Remember though, we were very lucky in 1980 to have Reagan cutting taxes, deregulating AND Paul Volcker having the guts to raise interest rates above 20% to break inflation's back.   We should only hope to so lucky this time around...

THE AFTERMATH

Well, if you're reading this then you know last Tuesday was an awful night to be a Republican, let alone a conservative Republican.  Obama has already shown glimpses of governing as a centrist--he's smart enough to know the mistakes Clinton and the Congress made in 1992 as far as overreaching is concerned.  

Still,  Obama was funded heavily by left wing George Soros and many other radicals, so he'll feel the squeeze.  It should be entertaining at the least.  

The GOP is again learning the hard way that moderate Republicans don't win. McCain, hero as he is, joins Ford on this list.   As of now, Bobby Jindal (pictured) is one of the rising stars of the party.  I'm also happy to see Mike Pence become the #2 Republican in the House.  I'll have more on this later...

ELECTION DAY POST

Just voted.

I have to say that I'm really relieved that the never ending election season is over. The past several months, from a political and economic/investing perspective, have been about as much fun as waking up at 5 a.m. to a sheet of ice on your car after sleeping two hours.

This election will be remembered for many things. First and foremost was the complete demise of any semblance of an objective, fair mainstream media--meaning CBS, NBC, ABC, CNN, MSNBC, New York Times, LA Times, Washington Post, Newsweek et all. I'll also remember this season for seeing the real conservatives with conviction and guts like Sean Hannity, Laura Ingraham, Thomas Sowell, Jonah Goldberg among others, as opposed to the sellouts who never really were conservative to begin with: Goerge Will, Peggy Noonan, David Brooks, Kathleen Parker. The latter group of sellouts basically lurched to the left as a sign of protest against the Palin pick. While I can respect a conservative who would rather have seen Mitt Romney or Tim Pawlenty picked, abandoning conservative values and backing Obama--by far the most liberal candidate ever to come this close to being elected POTUS--is unbecoming anyone who calls him/herself a conservative. As of now, I'm referring to Will, Noonan and Brooks as liberal pundits on this blog and in person in public.

Apart from that rant, the numbers look bad for McCain. The general feeling is that everyone is drinking the kool-aid, almost willing to punish themselves by electing Obama just so they can further punish Republicans for the past eight years. In my view, this is a HUGE mistake, but the fact is that America is voting with raw emotion as they did in the October stock market panic. And frankly, you just can't fight against that kind of strong emotion lacking rationale.

As of this writing, I'm hopeful McCain can run the table and pull out Ohio and Florida at the very least, and then pull the upset in Pennsylvania. If he doesn't, I won't be shocked, and I do not think that conservative principles are dead. But I do think if Obama wins and the Dems do well in the Senate races, we are in for a long 2-4 years at least. It could actually get much worse if Obama turns out to be more like Chavez than Jimmy Carter or FDR, but I truly hope it never comes to that.

The reckoning, indeed, will come the morning after the Obama drunken euphoria wears off, and the hangover will feel a lot like a Nanny welfare state.

NEWT'S CLOSING ARGUMENT FOR MCCAIN

in his usual cogent and focused style...

SCARY SPOOKY POLITICS

Or maybe not.  If Obama is being controlled by wall street sellouts, maybe I shouldn't be worried. That is, if Wall Street can, indeed, control him.  I seem to remember throughout history powerful groups supporting a radical candidate they though they could control after election.  Names such as Pol Pot, Hitler, Stalin....oops. 

THE OBAMA TEMPTATION

From NRO:

The Obama Temptation [Mark R. Levin]

I've been thinking this for a while so I might as well air it here. I honestly never thought we'd see such a thing in our country - not yet anyway - but I sense what's occurring in this election is a recklessness and abandonment of rationality that has preceded the voluntary surrender of liberty and security in other places. I can't help but observe that even some conservatives are caught in the moment as their attempts at explaining their support for Barack Obama are unpersuasive and even illogical. And the pull appears to be rather strong. Ken Adelman, Doug Kmiec, and others, reach for the usual platitudes in explaining themselves but are utterly incoherent. Even non-conservatives with significant public policy and real world experiences, such as Colin Powell and Charles Fried, find Obama alluring but can't explain themselves in an intelligent way.

There is a cult-like atmosphere around Barack Obama, which his campaign has carefully and successfully fabricated, which concerns me. The messiah complex. Fainting audience members at rallies. Special Obama flags and an Obama presidential seal. A graphic with the portrayal of the globe and Obama's name on it, which adorns everything from Obama's plane to his street literature. Young school children singing songs praising Obama. Teenagers wearing camouflage outfits and marching in military order chanting Obama's name and the professions he is going to open to them. An Obama world tour, culminating in a speech in Berlin where Obama proclaims we are all citizens of the world. I dare say, this is ominous stuff.

Even the media are drawn to the allure that is Obama. Yes, the media are liberal. Even so, it is obvious that this election is different. The media are open and brazen in their attempts to influence the outcome of this election. I've never seen anything like it. Virtually all evidence of Obama's past influences and radicalism — from Jeremiah Wright to William Ayers — have been raised by non-traditional news sources. The media's role has been to ignore it as long as possible, then mention it if they must, and finally dismiss it and those who raise it in the first place. It's as if the media use the Obama campaign's talking points — its preposterous assertions that Obama didn't hear Wright from the pulpit railing about black liberation, whites, Jews, etc., that Obama had no idea Ayers was a domestic terrorist despite their close political, social, and working relationship, etc. — to protect Obama from legitimate and routine scrutiny. And because journalists have also become commentators, it is hard to miss their almost uniform admiration for Obama and excitement about an Obama presidency. So in the tank are the media for Obama that for months we've read news stories and opinion pieces insisting that if Obama is not elected president it will be due to white racism. And, of course, while experience is crucial in assessing Sarah Palin's qualifications for vice president, no such standard is applied to Obama's qualifications for president. (No longer is it acceptable to minimize the work of a community organizer.) Charles Gibson and Katie Couric sought to humiliate Palin. They would never and have never tried such an approach with Obama.

But beyond the elites and the media, my greatest concern is whether this election will show a majority of the voters susceptible to the appeal of a charismatic demagogue. This may seem a harsh term to some, and no doubt will to Obama supporters, but it is a perfectly appropriate characterization. Obama's entire campaign is built on class warfare and human envy. The "change" he peddles is not new. We've seen it before. It is change that diminishes individual liberty for the soft authoritarianism of socialism. It is a populist appeal that disguises government mandated wealth redistribution as tax cuts for the middle class, falsely blames capitalism for the social policies and government corruption (Fannie Mae and Freddie Mac) that led to the current turmoil in our financial markets, fuels contempt for commerce and trade by stigmatizing those who run successful small and large businesses, and exploits human imperfection as a justification for a massive expansion of centralized government. Obama's appeal to the middle class is an appeal to the "the proletariat," as an infamous philosopher once described it, about which a mythology has been created. Rather than pursue the American Dream, he insists that the American Dream has arbitrary limits, limits Obama would set for the rest of us — today it's $250,000 for businesses and even less for individuals. If the individual dares to succeed beyond the limits set by Obama, he is punished for he's now officially "rich." The value of his physical and intellectual labor must be confiscated in greater amounts for the good of the proletariat (the middle class). And so it is that the middle class, the birth-child of capitalism, is both celebrated and enslaved — for its own good and the greater good. The "hope" Obama represents, therefore, is not hope at all. It is the misery of his utopianism imposed on the individual.

Unlike past Democrat presidential candidates, Obama is a hardened ideologue. He's not interested in playing around the edges. He seeks "fundamental change," i.e., to remake society. And if the Democrats control Congress with super-majorities led by Nancy Pelosi and Harry Reid, he will get much of what he demands.

The question is whether enough Americans understand what's at stake in this election and, if they do, whether they care. Is the allure of a charismatic demagogue so strong that the usually sober American people are willing to risk an Obama presidency? After all, it ensnared Adelman, Kmiec, Powell, Fried, and numerous others. And while America will certainly survive, it will do so, in many respects, as a different place.

GREAT DEPRESSION II? THINK AGAIN, CASSANDRAS

AND THIS FACTOID TOO...

THE FACTOID NO LIBERAL WANTS TO SEE

The Top 1% already piggyback the bottom 95% in this country, and penalizing them more will result in the top 1% cutting back on spending and investing and most likely see them move their capital to more rich-friendly countries.  

BARACK THE MAGIC MARXIST

Great tidbit from Jimmy P's blog here

MORE LATENT LIBERALISM

Any doubt about the political leanings of Google's corporate hierarchy was erased on Monday, October 13, 2008, otherwise known in America as Columbus Day. As per the liberal agenda, white males are to be castigated and not celebrated in the least, unless they're open liberals suffering from extreme white guilt. The 50th anniversary of the creation of this fictional character, the Paddington Bear, was instead the logo of the day. Props to Noel Sheppard's blog.

KARL ROVE ENVY

Matt Taibbi, the too-cool-for-school Rolling Stone political hack, demonstrates in his latest article just how much envy and perverse attraction that liberals have for Karl Rove. Taibbi spends the whole piece hurling shit at Rove paragraph after paragraph after giving this disclaimer about his thesis that Rove is back on the scene working for McCain:

"The actual evidence of Rove's newfound influence on the McCain campaign is — like so much of the history surrounding this uniquely maddening personage — scant at best, part vapor and part legend, a thing mostly deduced and inferred from various factoids and ripples in the informational pool."


Yea, Matt, I mean it's only evidence right? Who needs that? It's much easier to engage in some liberal creative writing assignment as though you're in a MFA program where the Marxist instructor tells you to write stream of consciousness on any Anti-GOP subject for five minutes.

MY PICK FOR THE FUTURE

Congressman Mike Pence has all the makings of a future president and leader of the conservative movement.

Check out his speech when he voted No to the bailout bill.

REQUIRED READING

Thomas Sowell, in my view the best living economic writer, succinctly lays out what caused this whole financial mess and how Obama is getting off scott-free.

AMERICA ON THE BRINK

Facing a significant and probable chance of the most socialist president ever being elected to office on November 4th, 2008, combined with a complex financial crisis that is (misguidedly) leading many people to question the effectiveness of free market capitalism,  it is clear that we are at an historic crossroads in American history. 

In my view, we are quickly moving towards a Marxist state.  If Obama wins, we will have very liberal Democrats controlling the White House and both Houses of Congress.   

McCain and Palin, though far from perfect, will offer the best chance at decreasing federal spending since Reagan.  

I genuinely do not believe I am exaggerating when I say that the free market Democracy as we know it in America may be riding on the shoulders of Sarah Palin tonight in her debate that could easily swing the polls back in her favor...

HERE COMES GWEN IFILL WAVING HER OBAMA POM-POMS

Unbelievable

KILL BILL!

Nancy Pelosi's pre-vote partisan anti-Bush, anti-GOP, anti-free market tirade not only killed any chance of the bailout bill passing the House's vote today by humiliating House Republicans, but also gave our country a glimpse of how socialism and--eventually--communism and possibly fascism is seeping its way into our country.   

WHO IS BARACK OBAMA?

WHY ARE THERE NO RECORDS FROM THE FOLLOWING?

1. Occidental College records — Not released
2. Columbia College records — Not released
3. Columbia Thesis paper — “not available”
4. Harvard College records — Not released
5. Selective Service Registration — Not released
6. Medical records — Not released
7. Illinois State Senate schedule — “not available”
8. Law practice client list — Not released
9. Certified Copy of original Birth certificate - - Not released
10. Embossed, signed paper Certification of Live Birth — Not released
11. Harvard Law Review articles published — None
12. University of Chicago scholarly articles — None
13. Your Record of baptism– Not released or “not available"
14. Your Illinois State Senate records–”not available”

HOW DID THIS MESS HAPPEN?

This 1999 New York Times (!) article serves as clear evidence of lax lending standards towards minorities and low-income people by Fannie Mae.

"Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

Raines has advised the Obama campaign along with Jim Johnson who is a current economic adviser.

BOTTOM LINE: "Fiscally Conservative. Socially Liberal" yields weird results like this. Also, Liberal Democrats have just as much, if not more, to do with the current economic mess as Republicans.

MY FEELINGS ON THE FEDERAL BAILOUTS OF 2008

"Any society that would give up a little liberty to gain a little security will deserve neither and lose both." -Benjamin Franklin

FOUNDING FATHERS ON THE RIGHT TO BEAR ARMS

QUOTES OF THE DAY:
"The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government." -Thomas Jefferson (1743-1826)

"No Free man shall ever be debarred the use of arms." (Thomas Jefferson, Proposal Virginia Constitution, 1 T. Jefferson Papers, 334,[C.J.Boyd, Ed., 1950])

"...to disarm the people - that was the best and most effectual way to enslave them." (George Mason, 3 Elliot, Debates at 380)

"The Constitution shall never be construed....to prevent the people of the United States who are peaceable citizens from keeping their own arms" (Samuel Adams, Debates and Proceedings in the Convention of the Commonwealth of Massachusetts, 86-87)

"The best we can hope for concerning the people at large is that they be properly armed." (Alexander Hamilton, The Federalist Papers at 184-8)

"Firearms stand next in importance to the Constitution itself. They are the American people's liberty teeth and keystone under independence ... From the hour the Pilgrims landed, to the present day, events, occurrences, and tendencies prove that to insure peace, security and happiness, the rifle and pistol are equally indispensable . . . The very atmosphere of firearms everywhere restrains evil interference - they deserve a place of honor with all that is good" (George Washington)

EMPTY SUIT ALERT!!!

Jackie Cafferty is back at it again--this time claiming the brilliant notion that only because of racism can this presidential election race be tied.  Thanks to column castigator, Roy St. Pittsburgh, for the link.  

NOTE: I'm well aware that Cafferty recently lost his wife, so I have no interest in attacking him personally, but professionally he has been beyond biased and has underminded any notion of objective journalism.  Similarly, when viewed as a partisan commentator he still fails because he offers very little, if no, evidence to substantiate his ambitious theses.  

REGULATION NOT THE ANSWER TO LEHMAN FAILING

QUOTE OF THE DAY:
"If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand." -Milton Friedman (1912-2006)

POLITICS & MARKET COMMENTARY:
This is a scary time in America, and NOT Because Lehman went belly up and a few other firms are drowning, such as AIG and WaMu, but because liberals are taking the opportunity to push for more and more regulation and less and less capitalism in the name of "fairness."

Folks, capitalism entails risk--and lots of it. We guarantee in this country the PURSUIT of prosperity along with life and LIBERTY, but in no way do guarantee you a house or a car. If you want handouts and Big Brother looking out for you at all times then go find a communist country to move to and see how that works out for you.

Why let Lehman fail? Why let any other firm fail? Don't people lose jobs and doesn't this cause panic and fear? It's the same logic why you let 50 guilty men walk free rather than imprison 1 innocent man. Free Market Capitalism is the best system in the world because it offers incentives to succeed beyond your wildest dreams by limiting government intervention. Period.

This has always been the premise behind the USA--we, the people, can do it better than the government.

Ok, rant over.

CAMPAIGN SEASON HITS ITS STRIDE

FOSTER WHEELER FIGHTS BACK!!!

After getting dominated by hedge fund selling over the past several months and falling from $78 to $33/share, POD fav Foster Wheeler (NASDAQ:FWLT) has announced a massive stock buyback program.  Not only does this filter the forced selling (due to panicky client redemptions) into the company's hands, but also squeezes the shorts who overshot on the downside. 

If you're wondering whether you missed the move in this stock, I think we're just getting started here, and POD's year-end price target on the stock is $65/share.  Remember, this is an ultra long term play on the global buildout not just in China but also the Middle East and many other non BRIC emerging markets.  

COMMUNITY ORGANIZER DEFINED

QUOTE OF THE DAY:
"A society deadened by a smothering network of laws while finding release in moral chaos is not likely to be either happy or stable." -Robert Bork (born 1927)

POLITICS:

• Great article from the UK Spectator about the Marxist implications of Obama's early role as a community organizer on the South Side of Chicago. No doubt it was strategically correct for Giuliani and Palin to mock this part of Obama's resume, but this article offers a much more horrific view of the position.

• Another concise and spot-on analytical piece from Karl Rove in today's WSJ.

***FEARLESS FORECAST: Against the odds, McCain pulls out a victory in New Mexico on Nov. 4. Note that if McCain wins NM and OH, a CO loss isn't as lethal.

AL GORE vs. FARMER'S ALMANAC

Despite being castigated and mocked, I continue to maintain my "bullshit" call on global warming. In fact, an even scarier notion than global warming is found in the latest edition of The Farmer's Almanac, which suggests that we're actually in a period of global cooling (extremely harmful to crops more so than warming) and the only thing keeping us from getting really cold is our man-made gas generating behaviors. Now that is a truly fucking convenient truth, and I'll take that publication's impressive track record since 1792 over Albert Gore's loser agenda any day of the environmentally unfriendly week.

IKE'S TAKE ON BAILOUTS

QUOTE OF THE DAY:
"If you want total security, go to prison. There you're fed, clothed, given medical care and so on. The only thing lacking... is freedom." -Dwight D. Eisenhower (1890-1969)

STOCK MARKET:
At the risk of sounding like a broken record, I'm reiterating my strong buy for energy/commodity based stocks that are dramatically oversold. The only way I'm wrong is if the world goes into a deep global recession. I don't see that happening, period. BUY BUY BUY.

POLITICS:
In yet another example of American self-loathing by the leftist media, the liberals over at Reuters couldn't resist running a story showing that foreigners overwhelmingly want Hussein Obama as president. Hmm, you think his socialist policies have anything to do with that? OBVIOUSLY, if McCain moves ahead in the polls then OF COURSE we Americans must be such dunces that we need input from the rest of the world.

Anyone who wants to know how 1820's America dealt with liberals should look at this map
showing James Monroe kicking the living crap out of high-taxing, aloof, out-of-touch John Quincy Adams in his reelection bid.

BAILOUT NATION

QUOTE OF THE DAY:
"Pennies do not come from heaven -- they have to be earned here on earth." -Margaret Thatcher (born 1925)

POEM OF THE DAY:

ON FEDERAL BAILOUTS

When everyone is free,
some people fail.
When no one is free,
everyone fails,
But when we say we are free,
but do not let certain people fail,
it is no longer the dog,
that wags its own tail.

-by Eric Berkowitz, in response to this news. Something tells me that if you're walking around downtown Manhattan today, near Trinity Church's graveyard in particular, and you feel the ground shaking, it's probably because Alexander Hamilton is turning over in his grave.

As column castigator "Roy St. Pittsburgh" notes, "Just look at this video to see Obama's reaction to increased use of public taxpayer dollars in private enterprise."

MSNBC ADMITS ITS LIBERALS WERE DISGUISED AS OBJECTIVE NEWS ANCHORS

From Brian Stetler of the NY Times on Sunday evening:

After months of accusations of political bias and simmering animosity between MSNBC and its parent network NBC, the channel decided over the weekend that the NBC News correspondent and MSNBC host David Gregory would anchor news coverage of the coming debates and election night. Mr. Olbermann and Mr. Matthews will remain as analysts during the coverage.

CLIFFS' NOTES OF OBAMA'S FISCAL POLICY

BABE-RAHAM LINCOLN'S COMING OUT PARTY

QUOTE OF THE DAY:

"Don't expect to pull up the weak by pulling down the strong." -Calvin Coolidge (1872-1933)

STOCK MARKET:

Another volatile and scary week for equities presents more great intermediate to long term opportunities. With the Dow Jones now down 3,000 points since October 2007 and the U.S. technically avoiding a full-blown recession, I believe there is no point in panic selling or short-selling here. Every sector has gotten slammed at one point or another over the past year, with commodities being the last to fall, and to me that signals that we are either at the bottom or very close to it. The broad market is a STRONG BUY.

POLITICS:

Despite being left for dead not unlike John McCain at the Hanoi Hilton some 35+ years ago, the Republican Party delivered an "A" caliber convention in St. Paul last week. Wednesday night clearly stole the show as I detailed in an earlier post, capped off by Sarah Palin (affectionately referred to as "Babe-raham Lincoln" in some conservative circles)'s bases-loaded Grand-Slam speech. While McCain's Thursday night speech was not as eloquently delivered as Obama's a week earlier, it was more genuine and insightful. The ending of McCain's speech was also original, as he implored Americans to "fight with" him while speaking over the delegates' loud standing ovation.

The next two months of this election will determine whether we revert back to Jimmy Carter-style socialism if Obama wins, or to, well, I'm not quite sure if McCain/Palin will give us the Reagan days, but I think they'll come awfully close--especially if McCain continues to move to the right on fiscal issues (No cap and trade, please).

Liberals seem to be on their heels now, as the Obama campaign has taken it's first nasty left hook since their campaign started, dating back to the Democratic primaries. I believe Obama and his campaign have a glass jaw. They're great at trashing Bush and McCain, but any shot back at them and they get punch drunk. Let us remember that Obama barely squeaked out the Democratic nomination, and he lost many big, general election battleground states along the way. Look for Steve Schmidt & friends at McCain campaign HQ to continue to out maneuver the complacent Obama brain trust. A great piece in the WSJ today defines Michigan as a key state this year that McCain has an excellent chance of capturing because of several factors working against Obama.

BASED LOADED GRAND SLAM

QUOTE OF THE DAY:
"Don't hit at all if it is honorably possible to avoid hitting; but never hit soft." -Theodore Roosevelt (1858-1919)

STOCK MARKET:
I'm looking to be a BUYER of this market as we are seeing a continued overdone sell off in the broad indices. With that said, there is no need to buy all at once or to be a hero, so I'm trying to buy little by little into each of these down days. Looks like Dougie Kass is still the go to guy as far as market analysis, as this time the famed short-seller is turning bullish on this market.

POLITICS:

GOP Convention Night #2--Grade: A+

In a sharp contrast to the forced praise by the Clintons of BHO at last week "Dem"-ver Convention, last night saw Romney, Huckabee and Giuliani give genuine praise to the victor of their party's nomination.

Romney's speech was like music to the core conservative ear, with the telegenic and astute Mormon talking about limited government, family values and free market capitalism with low taxes and regulation from Washington.

Huckabee appealed to working class, social conservative voters with his aw-shucks/preacher combination delivery. He was effective in describing how he became Republican not because he was born into wealth (he wasn't), but because he wanted a chance at prosperity, and only the free markets that Republicans champion can provide that as opposed to the socialist aspects of the Dems.

Of the three, however, Rudy Giuliani proved he has no equal as far as charisma in public speaking. He played a similar role in the 2004 GOP Convention, where his speech blended sardonic wit, red meat attacks, and cogent analysis. Here, we saw an even better speech than 2004, and I suspect that this speech will be remembered for quite some time in the same way Zell Miller's legendary 2004 speech is still referenced.

Finally, Sarah Palin, under unspeakable pressure, came out after the aforementioned three gentlemen had reached base and delivered a grand slam. She delivered VP attack dog commentary on the Dems with a smile and some apple pie appeal. In particular, it's hard to imagine how single mothers (probably the key to the election on top of white working class voters in general) were not mesmerized by her shockingly smooth combination of femininity and grit. It's the kind of combination Hillary has been unsuccessfully trying to pull off for years.

Even though the daily tracking polls that would have reflected a post-Palin speech opinion have not been released, a key tell has been the knee-jerk reaction of liberals who right away went on the air and blogs accusing Palin of being mean and nasty in an attempt to marginalize her. Again, this argument fails because Palin differs so greatly from Hillary, and is also yet another attempt at sexism by claiming a woman can't be tough without coming off like Rosie O'Donnell. But across the aboard, even the most communist of publications have conceded the powerful impact of Palin's speech. Anyone who thought this race would be anything other than a barn-burner has better be prepared to stay up very late on November 4, 2008.

MY THOUGHTS ON THE SARAH PALIN SPEECH

THE GIPPER'S PROPHETIC WARNING

If you haven't seen it, or you've let too much time pass since you last saw it, do yourself a favor and watch Reagan's farewell speech from the Oval Office in January, 1989.  Especially note about halfway through when he talks about the danger in eroding national pride.  Seems like a stark contrast to Obama going to Berlin and apologizing for America.   It also seems in direct affront to all of the patriotism-mocking undertones from the left.  

COMMON SENSE AND EMPTY SUITS

QUOTE OF THE DAY:
"Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one." -Thomas Paine (1737-1809)

STOCK OF THE DAY:
Aha! Foster Wheeler (FWLT) has been the only stock I've talked about since the inception of POD, and it has been absolutely getting its rear end kicked over the past few months. As stated in previous posts, the infrastructure firm has a huge energy bent, so it is no wonder that the stock has sold off in sympathy with the sharp decline in the price of crude since mid-July. With that said, famed trader Doug Kass had a great tidbit in thestreet.com today about a huge commodity-based hedge fund going under and thus liquidating its assets. I suspect stuff like this is much more the reason for FWLT's decline than fundamentals, since the company has a healthy worldwide backlog of projects and executes better than its peers. I reiterate my strong buy recommendation and I will buy more shares myself.

POLITICS:

GOP Convention Night #1, Grade: A-

Last night saw a solid triple-play in primetime featuring President George W., Fred Thompson, and Joe Lieberman capping the night. Thompson's speech had by far the most red meat attacking libs, and he delivered it well. He also went in-depth about McCain's experience as a POW which was EXTREMELY important given McCain's modesty about bringing up the heroic but painful memory. While the speeches weren't delivered perfectly--Bush is never going to wow you in a prepared speech, and Lieberman looked tired--the night was still effective and set the stage for tonight's huge attraction. Rudy Guiliani will be the keynote, and he has been looking as sharp as ever defending McCain/Palin, and the true headliner will be Sarah Palin, who I think will deliver a grand-slam propelling the GOP to a huge convention bounce.

Back to last night, not only did all three speakers predictably endorse McCain, but they gave specific, substantive details about McCain's past and his accomplishments, which is in stark contrast to the lofty, insufficiently focused rhetoric about Barack Hussein Obama at the Dem Convention last week.

In fact, all you'd ever really know about Obama from watching last week's convention is that he passed a high-paying wall street law firm job to run for president. Besides that, we really have not found out much about his professional accomplishments, i.e., being born to a father from Kenya is NOT a professional accomplishment, being half-black is not a professional accomplishment, being a good father is great but not a professional accomplishment.

Of course I'd be remiss to forget to say that even though Obama's professional accomplishments are severely lacking, his policies are also off the mark when it comes to appealing to Americans. Understand that for all intents and purposes, Obama should be up by double digits in every major poll given the unpopularity of Bush, the Iraq War, and the economy. Yet, this great piece in the Wall Street Journal today illustrates why Obama is still too close for comfort with McCain even after BHO's post-Denver bounce.

EMPTY SUIT ALERT!
Jack Cafferty, now of CNN, never misses an opportunity to inject left-wing cheap shots into his "file." One of his most recent blogs had the following gem about the GOP,

"It is entirely fitting that the headliner for this masquerade is a feeble looking 72-year-old white guy who doesn’t know how many homes he owns."

Oh, really Jack? That feeble looking old white guy is feeble because he let his ass get slaughtered on the verge of death for five years in Vietnam so that you can freely be the washed out hack you are with a job. And he doesn't know exactly how many homes he has because his wife owns them as per her own wealth and prenuptial agreement.

As column castigator "Roy St. Pittsburgh" notes, "It looks like Cafferty is trying to audition to host his own show at MSNBC once Joe Scarborough goes completely off the deep end having to deal with Marxists every single day at the office."