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The Tally Ho

Friday, February 25, 2005

A Little Economics

Those who watch the blog know that it has been some time since the likes of Nico has made a post. However, my blog-writing diappearance is over--at least temporarily. Today I come something a bit less "follow the news" and a bit less "current events" than ordinary posts--although I guess it is "follow the news" and "current events." Oh well. It seems to me that I distinctly remember economics playing a sizeable part in domestic and foreign policy of every "empire" throughout history--afterall, it was prevalent with the Egyptians, Greeks, Romans, Mongols, Chinese, Japanese, French, British, Germans and on, and on, and on... So, I propose this--A 4-part series that outlines economic performance over the last year/two years, leading economic indicators, forecasts from analysts and from myself, and some overall opinion and interpretation/discussion from both myself and anyone who chooses to read any of this. As a warning, the data overviews in the first couple of sections are a bit slow/uninteresting, but the forecasts and conclusions have no validity (if they have any) without them. As a disclaimer, I do not claim to be an award-winning economist or a Chartered Financial Analyst, but this is my own small gathering of information in order to make assessments of the current economy and what the world can expect from America in the coming year. As for the discussion, I hope to gain some good comments and feedback--whether you think i'm full of horse pooh or you agree. With all of this being said, I will conclude this post and begin section 1. --Nico

Economic Data and Forecast 2005

Gross Domestic Product[1]


Gross Domestic Product (GDP), value of all goods and services produced in the United States, rose in 2004 by 4.4% from its 2003 level. This is heralded by many as a substantial achievement as GDP grew by only .08% between 2000 and 2001, following the “bursting of the tech bubble” and 9/11, but has grown by 1.9% in 2002, 3.0% in 2003, and now 4.4% in 2004.

The key drivers of GDP growth in 2004 were personal consumption expenditures (CPE), the largest sector of GDP (70% of GDP in 2004), which increased 3.8%, equipment and software purchases, which increased 13.4%, exports, which despite being offset by imports, increased 8.1%, residential fixed investment, which increased 9.5%, and Federal Government spending, which increased 4.7%.

Interesting to note in the state of the economy is the continued importance of CPE as a component of GDP although it decreased in importance from 70.6% in 2003 to 70.2% in 2004. Also important to note are the changes in exports and government spending. While export values increased in 2004 by a rate of 8.1%, imports also continue to grow by 9.8%, thus continuing to be a GDP deflator by 1.7%. Additionally, government spending has increased in total value each year but has been increasing at a decreasing rate as it increased by 4.4% in 2002, 2.8% in 2003, and 2.0% in 2004. It has also been decreasing its impact on GDP growth during this period.

GDP by Sector

As mentioned previously, CPE continued to increase at significant rates in 2004. Among the components of CPE, durable goods produced the largest gains at 6.8% from 2003 levels, while produced at significant 4.5% increase, and services produced a more average 2.8% increase.

Gross private domestic investment showed the largest gains of any sector in 2004 as it grew 12.9% from 2003 levels. This was provided by the substantial increases in equipment and software expenditures as well as increases in residential housing. Non-residential structures grew by only 1% in 2004.

Net exports and imports proved to be interesting in its production of GDP in 2004. While exports grew by their highest rate in four years at 8.1%, powered by increased exports of both goods and services, imports also grew by their highest rate in four years at 9.8%, fueled by increased goods imports. Thus, net exports continue to have a negative impact on GDP despite recent growth in exports.

Government spending continued to increase in 2004. However, government spending increased by just 2.0% in 2004—the smallest increase since 1998. Of particular importance in this figure are the only marginal increases in state spending at .4%--its lowest in more than 20 years—while federal spending continues to increase with continued emphasis on growth in defense spending while domestic non-defense spending decreased by 0.5%--the first non-defense spending decrease since 1996.

GDP by Industry (2003)

In 2003, services-producing industries grew by 3.2% while goods-producing industries grew by 2.8%. While both of these levels are below average GDP growth rates from between 1995 to 2000, a further breakdown reveals which industries are performing better in the post 9/11 economy.

The largest industry growth rate in 2003 was in durable goods manufacturing, with this industry growing at 6.1%. Creating this significant growth in 2003 was computers and electronics, which posted 28.8% growth in 2003. Also leading durable goods growth was automobiles, with a much more modest, but significant, 8.9% growth. Behind durable goods, utilities grew by 5.9% in 2003. Also among the industry growth leaders in 2003 were information at 5.7%, retail trade at 5.6%, and agriculture, forestry, fishing, and hunting at 5.5%.

Industries continuing to experience significant struggles in 2003 were mining, which experienced at 7% decrease, and wholesale trade, which experienced a 1.9% decrease during the year. While other industries are underperforming their previous levels of growth, it is essential to note the generally positive direction of GDP growth by industry.

Stock Markets[2]

Dow Jones Industrial Average

The chart below tracks the DJIA movements over the last five years.

(Blogger cannot handle charts or Excel tables...for chart go to http://finance.yahoo.com then click on DJIA, 5y)

Here it is important to note significant changes in the market’s levels. The market peaked in December of 1999 at 11497 composite. Subsequently, the market began to adjust during the economic slowdowns in late 2000 and into 2001 until 9/11 brought significant uncertainty to the market and the sharp decrease in the third and fourth quarters of 2001. However, as nervousness subsided and the market recovered, the onset of war, the continuation of war, accounting scandals, and general economic slowdown led the market to a trough in late 2002 and early 2003 at 7891 points. Since that time, economic results have been strong due to fiscal, monetary, and global policies in recent years. Currently, the index rests at 10796, just 700 points below its peak, with reasonably stable performance throughout 2004 and gentle climbs and apparent leveling in late 2004 and early 2005 following presidential elections and elections in Iraq—both said to have significant impacts on the market.


The chart below tracks the Nasdaq market index over the last five years.

(Again, http://finance.yahoo.com Nasdaq, 5y)

In 2000, the Nasdaq was reaching record highs on the tail of the tech boom. However, as 2000 progressed, the overvalued tech stocks that had been driving gains in Nasdaq began to be adjusted downward by the market and the composite steadily declined until 2001, where, again, the effects of 9/11 can be seen in a third quarter fall and subsequent fourth quarter readjustment. However, in 2002, the market continued to fall and bottomed at just over 1170 points in September. Since that time, the Nasdaq has regained some of its strength amidst the growing economy and increased tech spending in 2003 and 2004. However, the market rests steady for the last 13 months at around 2000 points—well below its peak near 5000 point in the year 2000—and currently rests at 2076 points in the composite.
Money Supply and Financial Condition

Interest Rates

In consideration of interest rates, this analysis will focus on money market rates as produced by the 3-month LIBOR rate, 3-month U.S. Treasury Bill rates, 20-year U.S. Treasury Bond rates, and 20-year A grade corporate bond rates.

In February of 2004, the 3-month LIBOR rate was quoted at 1.35% and, in February of 2005, at 2.77%.[3] This international measure of money markets expresses the rate at which financial institutions borrow from one another and has more than doubled in the last 12 months.

The 3-month U.S. Treasury Bill is currently trading at 2.4%. A year ago, in February of 2004, the 3-month T-Bill traded at 0.93%--a substantial increase in T-Bill rates as the rate has increased by 258% in the last 12 months.[4]

Unlike the rates previously discussed, the 20-year U.S. Treasury Bond has experienced a downward rate movement between February of 2004 and February of 2005. Current 20-year T-Bonds are quoted at 4.54% compared to 5.00% a year ago.[5]

20-year A grade corporate bonds have also experienced downward pressure on interest rates. In February of 2004 the 20-year corporate bond rate was 5.68%. 20-year corporate bonds are currently trading at 5.47%.[6]

Money Supply and Inflation

Over the past 12 months, the money supply has increased by 345 points—a relatively substantial amount of growth—from 6,114 in 2004 to 6,459 in 2005. Also, the money supply grew 48 points in January of 2005—suggesting that the money supply is growing at an increased rate in 2005 and may produce an increase of as much as 576 points in 2005.

The Consumer Price Index (CPI), the leading indicator of inflation has also been increasing in recent history. At the end of 2003, the CPI stood at 184.0 after experiencing an inflationary increase of 1.9% during the year. At the end of 2004, CPI measured 188.9, an increase of 3.3% during the year. Thus, the economy is experiencing inflation at an increasing rate.[7]

Global Economic Performance[8]


Within the OECD, GDP growth generally remained between 2% and 4%, with 6 countries, mostly Western European, growing at less than 2% while 4 countries grew at rates greater than 4% with Turkey growing quickest at 9.8% in 2004. Note: China and many Asian countries are excluded from the OECD.

Interest Rates

Interest rates throughout the OECD are quite varied. Short-term rates within the EU are set at 2.1%, while the majority of the OECD members’ rates range between 2% and 7%. Meanwhile, countries such as Hungary and Turkey have exceptionally high short-term rates at 11.5% and 22%, respectively, in 2004. Long-term rates vary on a much smaller range. Euro area rates average 4.1% while the rest of the OECD ranges between 4.2% and 6%, with Turkey again showing the largest exception at 24%.

Inflation Rates

Inflation rates around the world appear to be relatively stable. EU inflation is set at 2.1% as much of the rest of the OECD experienced inflation between 2% and 4% in 2004. Exceptions to average inflation rates were Hungary, 6.9%, the Slovak Republic, 7.7%, and Turkey, 10.7%.

OECD GDP Projections for 2005

The OECD issued GDP projections for its member countries for 2005. On average the OECD is expected to generate GDP growth of 2.9% in 2005, while the EU is projected to grow at 1.9%, and the US at 3.3%. Leading the OECD in GDP growth for 2005 are Ireland, Iceland, and Turkey.

Exchange Rate Forecasts

The OECD is forecasting its members’ currencies to appreciate against the dollar in 2005. The Great Britain Pound is expected to gain on the dollar by $.01 while the Euro is anticipated to appreciate against the dollar by $.03. While this is minor value depreciation for the dollar comparative to previous years, it is significant as every currency in the OECD continues to appreciate against the dollar in 2005.

Leading and Coincident Indicators[9]

Summary of Movements of Leading Indicators

During the second half of 2004, the leading indicator index continued its downward trend that began near the beginning of 2004. However, this was diagnosed by The Conference Board as “a pause in the rising trend” that began in March 2003. November and December each brought increases in the composite index, signaling a positive outlook. A breakdown of the index reveals that four indicators produced positive results in December. These were: consumer expectations, stock prices, money supply, and unemployment (inverted). The remaining indicators produced negative results with the exception of hours of production, which remained constant.

Please find the leading indicators and select graphics from 2004 listed below:

(Charts and Spreadsheets available at the Conference Board)

Summary of Movement of Coincident Indicators

In December of 2004 all four coincident indicators showed positive motion as industrial production, non-agricultural payrolls, personal income, and manufacturing and trade sales all increased. This is consistent with their positive movement throughout the second half of 2004—with a 1.2% increase during the six month period. The positive indication given by the coincident indicators suggest that the economy is functioning well in the immediate term. Additionally, many of the data previously discussed supports this assertion.

The Figures on the following page outline Leading Index, Coincident Index, and Lagging Index movements over time.
Other Indicators

CEO Confidence Survey

Each quarter, The Conference Board conducts and publishes the CEO Confidence Survey, which serves to evaluate the views and outlook of 100 CEOs across various industries.

The fourth quarter survey produced a positive outlook, with a score of 61 points, when scores above 50 are generally considered positive. However, this is down from the third quarter survey, which produced a score of 63 points. Lynn Franco, director of The Conference Board’s Consumer Research Center says, “CEO confidence has now slipped for three consecutive quarters…However, expectations are that the economy will continue to grow in 2005, just not as fast as it did in the first half of 2004.”

Consistently, when asked about current conditions, short-term future conditions, and industry expectations for their industries, CEOs produced positive, yet tempered, expectations for 2005—only half of those surveyed expressed opinions that economic conditions would improve in coming months. As CEOs are responsible for influential strategic decisions, the CEO Confidence Survey may serve as a good indicator of economic development in future periods.[10]

Merger Activity

Although not often discussed as an economic indicator, merger and acquisition transactions are usually a bullish activity—at least they were in the last economic cycle. During the bullish outlook and subsequently booming stock market, M&A transaction counts and values soared—increasing each year from 1991 to 1998—thus, effectively creating large merger waves before the economic and market growth that would come. Interestingly, M&A activity also indicated the recession that would follow as transaction rates fell in 1999 and 2000 before reaching lows in 2001.

If this is not an anomaly, as is relatively unlikely, merger activity should be a leading indicator for future market performance in the short-term—1 to 2 years. As such, it is important to note that deal volume and size again began to pick up in 2003 and continued throughout 2004. Now, a new wave of mega-deals are sweeping the markets as P&G buys Gillette, SBC buys ATT, Verizon buys MCI, and more as growth and consolidation continues to occur in telecom, financial services, consumer goods, and other industries.[11]
Existing Forecasts

Typically, there is much dispute and debate over economic outlooks and forecasts for the coming year. However, an examination of six forecasts from diverse sources—ranging from governments to independent organizations to commercial forecasts—reveals amazingly consistent data.


The Research Seminar in Quantitative Economics (RSQE) at the University of Michigan projects GDP growth of 3.7% for 2005, with a CPI of 2.5, a T-Bill rate of 2.8%, a T-Bond rate of 4.8%, and a -7% dollar depreciation in the world market. The RSQE forecast is founded on continued consumer spending, dollar depreciation, parallel growth by partner economies, and decreasing oil prices predicted for 2005.[12]


The OECD published only a brief forecast for the United States for 2005. It forecasts GDP for 2005 at 3.3% based on decreasing energy prices, continued production efficiency, supportive monetary policy, and low core inflation.[13]

Federal Reserve

The Federal Reserve polled 34 analysts to determine its forecasts for 2005. It is projecting GDP at 3.5%, CPI at 2.0, T-Bill rates at 2.7%, and T-Bond rates at 4.8%, citing a cooling, but steadily growing economy with reasonable inflation rates and steady, but climbing interest rates. However, the projections from the Fed are an average, with 18% predicting GDP between 2.0 and 3.0, 46% between 3.0 and 4.0, and 21% between 4.0 and 5.0 for 2005.[14]


For 2005, Wachovia, a private institution, is forecasting GDP of 3.2%, CPI of 2.3%, T-Bill rates of 3.34%, T-Bond rates of 4.74%, and unemployment of 5.3%, citing continued consumption, income growth, moderate inflation, and continued levels of investment as well as depreciating dollar values and government spending to support consistent, average GDP growth.[15]


Briefing.com, a market analysis website, has also issued its own economic forecasts for 2005. It is forecasting GDP at 3.5%, an S&P 500 gain of 5%, a T-Bond rate of 5%, and a CPI of 2%-2.5%. The bases for its forecasts are strong economic fundamentals, average growth rates, moderate inflation due to energy prices, and slowing corporate earnings growth.[16]

Congressional Budget Office

The Congressional Budget Office, or CBO, is projecting more optimistic economic figures than most others, with GDP at 3.8%, CPI at 2.4, Unemployment at 5.2%, T-Bill rates at 2.8%, and T-Bond rates at 4.8%.[17]

Summary of Forecasts

Based on the forecasts presented, analysts’ opinions on GDP remain within a rather tight grouping. GDP is consistently forecast to underperform 2004 and is instead expected to grow at a rate between 3.2% and 3.8%. As this consensus originates from a wide variety of analysts and sources, it is fair to conclude that it is representative of general analyst sentiment for the 2005 economic outlook. Also important to note in this section is the tight grouping of CPI forecasts, which range from 2.0 to 2.5, and play an important role in each economic forecast in determining performance in 2005. Equally interesting is the relative level of stability of interest rates predicted. There is very little variance in forecasts for either T-Bills or T-Bonds. Finally, economic performance is said to be consistent, steady, and on-average in all forecasts studied. This shows a more stable economic situation, albeit moderate, than any year in nearly a decade.

Analysis and Economic Forecast


Real Gross Domestic Product can be forecast at a growth rate of 3.3% for 2005. On a macroeconomic trend level, GDP grew at an average rate of 3.14% from 1970-2004. While 2004 produced above-average GDP growth at 4.4%, it cannot be reasonably forecast that this is sustainable. As seen in other economic forecasts, GDP is expected to settle closer to average growth rates.

When considering factors to predict results for 2005’s economic performance, it is essential to approach the forecast from multiple perspectives. The perspectives valued in this analysis are: the stock market approach, the financial conditions approach, the global economics approach, and the cyclical indicator approach. These perspectives are then compared to other analysts’ forecasts for consistency.

The Stock Market Approach

From an examination of the stock market trend line for the DJIA and the S&P 500, a clear leveling can be seen beginning in January of 2004. Since that time, the stock market has been relatively flat, with only minor fluctuations between 10,000 and 11,000 points. While the fourth quarter of 2004 produced a slight upward trend, I associate a large portion of this to the removal of uncertainty regarding United States presidential elections and the future of U.S. economic policy for the next election term.

The leveling of the stock market is significant as the stock markets are known to be a leading indicator for the macro economy and GDP. The flat trend line, with slight fluctuations and cumulative growth, indicates that the economy is preparing for a year of more certainty and stability—thus suggesting an average GDP growth rate. Additionally, the market currently rests at 10,796—a mere 700 points below its peak level in December of 1999. This suggests that the market has reached a point close to capacity barring a revolutionary innovation—such as the technology boom of the 1990s—to create new capacity for growth and added value. Without this, I predict the market to remain steady with few winners and losers and average gains of approximately 5.5% on the S&P 500—translating to average GDP growth for 2005.

The Financial Conditions Approach

The analysis of GDP growth potential through the financial conditions approach entails a focus on the growth of the money supply, interest rates, and the rate of inflation. The money supply is currently growing at an increasing rate. The point change predicted for 2005, 576 points, exceeds the 345 point increase experienced in 2004. Growth in the money supply is consistently linked to subsequent economic expansions; typically after an 8 month lag. Given this, and a growing money supply in the last two years as well as a projected growth for 2005, the money supply element of the financial conditions approach suggest a period of economic expansion for 2005.

Also indispensable to the financial conditions analysis is the consideration of interest rates and rates of inflation. As seen in the data overview of financial conditions, short-term interest rates experienced drastic increases in 2004 as the LIBOR increased to 2.77% from 1.35% and T-bill rates increased to 2.4% from 0.93%. However, during the same period, long-term rates for both government debt and corporate bonds have fallen slightly. This suggests that it is not inflationary pressure that is increasing interest rates, but rather an adjustment to a more traditional economy as it emerged from a recession. While the economy has been experiencing inflation at an increasing rate (up to 3.3% last year compared to 1.9% in 2003), it is being moderated by tightened fiscal policy and realistic market expectations.

The financial conditions index, first developed by Goldman Sachs, measures monetary variables from a weighted-average index perspective that considers LIBOR, corporate bond rates, the trade-weighted dollar index, and the equity market capitalization to GDP ratio. Changes in the FCI correspond to subsequent changes in real GDP. A 1 point decrease in FCI produces a 1% increase in real GDP. The above data were used to calculate an estimated change in FCI between 2004 and 2005 based on available information. The calculation showed a 2 point decrease in FCI, which translates to a 2% increase in real GDP. While this estimate is more conservative than my forecasted position, it does not fully consider other elements of the economy and largely neglects some elements of the money supply. However, it does serve to make this forecast more conservative than other published forecasts.

The Global Economics Approach

The global economics approach focuses on the interplay among economies around the world. For the purposes of this analysis, economic data was gathered for OECD member countries. This analysis yielded global economic conditions very similar to that of the United States. The majority of OECD countries are experiencing GDP growth between 2% and 4%, with some of Western Europe below 2% and some of Eastern Europe above 4%. This places much of the rest of the world in the same growth pattern as the U.S. Second within the global analysis, interest rate conditions are very similar to that of the U.S., with short-term rates between 2% and 7% and long-term rates between 4% and 6%. While short-term rates show more variance than the U.S. and the EU, it is once again due to the emerging, and somewhat unstable, emerging economies in Eastern Europe. Similar to GDP rates and interest rates, OECD inflation rate are also comparable to U.S. rates of inflation, with the majority of countries experiencing inflation rates between 2.1% and 4% compared to the U.S.’s current 3.3% and projected 2.25%.

Together, these international data combine to form a global economic picture that mirrors current and forecasted U.S. economic conditions. The OECD GDP composite is anticipated to grow at 2.9% for next year, which aligns to the forecasted U.S. GDP growth of 3.3% as much of the European Union’s GDP growth falls below 2%, thus lowering the OECD composite. Also helping improve the U.S. forecast is the continued depreciation of the dollar against every currency in the OECD group of nations. This, too, will boost U.S. GDP projections above OECD averages as the export sector of the U.S. economy continues to increase. The OECD conditions and projections validate the reasonableness of the forecasted U.S. GDP projection.

The Cyclical Indicator Approach

The cyclical indicator approach examines various economic data and factors that have been shown to predict with reasonable accuracy cyclical economic trends over time. The examination of the most recent indicators showed mixed results as only four of the ten indicators showed positive trends in the fourth quarter of 2004. However, while the data is mixed, the outcome is generally positive and indicative of a moderate economic period. First, the coincidental indicators support the assertion that the economy is currently strong and functioning well in the immediate term. This provides a strong basis to enter 2005.

Additionally, the indicators showing positive gains traditionally have long lead times to peaks. Unemployment, which decreased by 18 points in the fourth quarter, has a 12 month lead time, the stock index, which increased by more than 80 points between October and December, has an 8.5 month lead, the money supply, which increased by nearly 40 points in the fourth quarter, has a 10 month lead, and consumer expectations, which increased 7 points between October and December, have a 14 month lead. Together, these combine to take the potential for moderate, but positive, economic growth well into 2006. Also in support of this assertion is the cumulative value of the index, which despite a majority of negative trend indicators, is producing a positive index value that climbed in the fourth quarter of 2004. Together, a strong coincident indicator, suggesting a strong initial economy, and a moderate, but increasing, leading indicator index suggests that the economy is ready for average to above-average growth. The suggested GDP forecast of 3.3% directly coincides with this indicator series.

Other Indicators

As discussed in the “other indicators” section of the data presentation, other, non-traditional data may be considered indicators as well as the generally accepted analyses outlined above. This forecast focuses on two such alternate indicators. The first of which is CEO expectations. The results of the CEO expectations survey helped to moderate the overall GDP projection as it expressed significant conservative and hesitation among the country’s top business leaders. While positive, it, too, anticipates moderation and average growth and performance. Not only does it support the current GDP forecast, but it serves to influence GDP projection in a more moderate light.

Working to the opposite effect is the use of merger activity as an economic indicator. The size and volume of recent merger activity suggests that perhaps the market and the economy is more bullish than current predictions. This serves to influence a bit of optimism in projections. However, the use of merger activity as an indicator currently has weak statistical value and must be used much like an opinion survey until more data become available.

Conclusions on GDP

The GDP forecast of 3.3% outlined in this section aligns with all four forecasting approaches and analyses. It produces a strong, yet average and stable outlook for the economy that mixes growth with realistic expectations, moderate financial conditions, a parallel global marketplace, and generally positive indicators in addition to a strong economy coming off of a large year of GDP growth. Furthermore, the forecast outlined here aligns well with other forecasts of its kind from professional analysts from varying organizations around the world.

Consumer Price Index and Interest Rates

The Consumer Price Index as a measure of inflation can be reasonably forecast at 2.25 for 2005. First, after emerging from an inflationary year and strong economic results, fiscal policy can be anticipated to work to moderate inflationary tendencies. This can be seen in moderately increasingly short-term rates from the Fed while long-term rates continue to decrease—thus indicating that interest rate and inflationary pressure is moderate in the intermediate and long term. In an attempt to seek a balance between 2004 and 2003, the CPI should settle around 2.25 by year end.

Additionally, due to the close relationship between inflation and interest rates, the factors regarding inflation are influential in forecasting interest rates for 2005. Due to the projected economic stabilization, a slightly stiffer fiscal policy, and a goal of moderating inflation, T-bill rates and T-bond rates should be expected to remain stable throughout 2005 with only minor increases. Continued fiscal conservatism should provide moderate, but steady short-term rate increases—possibly as much as 0.4% to reach a rate of 2.8% by year-end. Similar to T-bills, T-bonds can be expected to increase rates to a median between the rate of 5.0% in 2003 and 4.54% in 2004. As fiscal policy gradually raises short-term rates and the economy grows at a steady pace, long-term rates can be reasonably forecast to move slightly upward and settle around 4.7% by the close of 2005.


Current unemployment rests at 5.4% percent. As economic growth is forecasted to be moderate, this rate can be expected to decrease. However, unless economic breakthroughs as mentioned in the Stock Market Approach occur, drastic changes in unemployment are unexpected. Nevertheless, unemployment is anticipated to decrease approximately 2 points to 5.2% in 2005.

Economic Forecast Summary

GDP 3.3%
S&P 500 5.5%
CPI 2.25
T-Bill 2.8%
T-Bond 4.7%
Unemployment 5.2%

Industries to Watch in 2005

Based upon the GDP projections, Stock Market assertions, and financial conditions outlined above, I suggest the following industries:

1) Financial Services—This industry had been consolidating over the last decade and was among the first to revive itself in 2002-2004. Look for increasing efficiencies and increasing consulting and information services.

2) Electronics Manufacturing—Increasing personal income levels, increasing business spending are driving this market. It posted large gains in 2004 and I anticipate it to continue these gains in 2005 as technology becomes increasingly essential and business tech budgets expand once again.

3) Hospitals and Nursing Care Facilities—Rising healthcare needs are increasing costs and revenues for this industry. I anticipate growth both in 2005 and in the long term as the country’s population continues to age and healthcare rates continue to climb.

4) Food Services—As disposable income continues to rise, so will the rebound of food services and drinking establishments. With American savings rates at nearly zero, look for recreational activities such as restaurants and bars to make a comeback.

5) Telecommunication—While competition is becoming incredibly fierce in the telecom industry—particularly in wireless services—deregulation and consolidation are paving the way for value-added services that could monopolize the emerging conglomerates’ efficiencies and returns.

6) Chemicals—Quietly consolidating, the chemical industry is poised to grow as it continues innovation in manufacturing techniques, raw materials, and possibly energy sources of the future.

7) Air Transportation—While experiencing bloodletting and bankruptcies, the airline industry may benefit from cheap sell-offs and asset purchases as well as new management theories for maintaining routes and pricing as well as lowered costs from newer, more fuel-efficient planes.

[1] All GDP data is taken from the Bureau of Economic Analysis and is available at www.bea.gov.
[2] All data are taken from http://finance.yahoo.com
[3] www.bba.org
[4] http://able.harvard.edu/rates/ca004q/, http://finance.yahoo.com
[5] http://www.federalreserve.gov/releases/h15/data/b/tcm20y.txt
[6] www.mellon.com, http://finance.yahoo.com
[7] Consumer Price Index. U.S. Department of Labor. 1/19/2005
[8] Global Economic Data taken from the OECD at Source: Groningen Growth and Development Centre and The Conference Board, Total Economy Database, January 2005, http://www.ggdc.net/)
[9] The Conference Board U.S. Business Cycle Indicators, 1/20/2005
[10] http://www.conference-board.org/economics/indicatorsExpectations.cfm
[11] Keough, Jack. “Merger activity to rise in 2003.” Industrial Distribution. Feb 2003, Sikora, Martin. “M&A volume in the 90s” Mergers and Acquisitions. Feb 2000.
[12] “U.S. Economic Outlook for 2005 and 2006.” RSQE, University of Michigan. www.umich.edu/~rsqe
[13] “OECD Economic Outlook No. 76”
[14] “Fourth Quarter 2004” Federal Reserve. November 22, 2004
[15] “Monthly Economic Outlook”. Wachovia. January 14, 2005
[16] www.briefing.com
[17] “CBO’s Current Economic Projections” January 25, 2005. www.cbo.gov

Time For Some Small Discussion

Warning: Read the Previous 5 Posts Before Starting the Witch Hunt!

(For those of you searching for witches, I have the timber and matches and will give you my address upon request)

What do I think about all of this garbage I just wrote? Well, essentially, I'm short on the American economy. I'm not a proponent of consumer spending as a means of sustainable development. I think the economy of the last two years doesn't hold much water. I think we are approaching capacity and will see continually slowing economic growth over the next 1-5 years--barring a drastic event or technological breakthrough. I think the shift in government spending is hurting the economy in the long run. I think international pressure on the US will offset any impact the lower dollar is having on exports and will hurt the US economy far more than it helps. I think only large, consolidated sectors will continue to do well, but that is oligopoly theory and international competition in the works...I have a whole thesis in the making about that.

Where do my classmates stand? Well, this is the hard part for me. I consider my forecast to be relatively optimistic for the economy as I see it...moderate at worst. Of my class of 20, I have the lowest GDP prediction by 5 points! What does this tell me? This tells me that a large portion of senior finance students in a "liberal arts-based" university are the CEOs of fantasyland! To hear them argue their points is a complete buy-in to the doctrines some officials/networks broadcast. Here are students who, in theory, understand analysis, but are predicting GDP growth in the US near that of Eastern Europe for 2005! Well, i'm out of time for the moment, so sound off, tell me what you think, like, hate, disagree, i'm stupid, whatever comes to mind.


Thursday, February 24, 2005

Two Good Links / HST Final Wishes

First, Jon Stewart's piece on journalism, Jeff Gannon, and bloggers.

Second, The Party Party

We miss Hunter S. Thompson already. I hope you toasted a drink, or a bottle, for him. I found this on IMDB yesterday
Thompson To Be Blasted Across Estate

Hunter S. Thompson's ashes will be fired across his Colorado estate by a cannon, in keeping with his final wishes. The journalist and author committed suicide at his secure compound in Woody Creek on Sunday. He was 67. The Fear And Loathing In Las Vegas author wanted a simple, but bizarre funeral, during which his body is cremated and his ashes blasted across the ranch, according to his lawyer George Tobia Jr. Thompson's friend, journalist Troy Hooper explains, "I believe he wanted to be shot out of a cannon. I understand it's in his will. That's Hunter's style. That's how he would want it. He was a big fan of bonfires and explosions and anything that went bang and I'm sure he'd like to go bang as well."

Walmart Fails to invade New York

Wal-Mart had their eye on property in Rego Park, Queens. The neighborhood groups didn't buy the snake oil that Wal-Mart sells
A Wal-Mart spokeswoman said the company was still exploring other sites in the city, but the possibility that the company would open a 132,000-square-foot store in Queens had immediately stirred a storm of opposition by neighborhood, labor and environmental groups as well as small businesses. Wal-Mart also faced opposition from many City Council members and several members of Congress.

Labor unions fought Wal-Mart with a special intensity because they believe its wage levels and benefits are pulling down standards for workers through the United States...

...Small-business advocates declared victory after the decision was made public, but predicted that the battle would resume in other neighborhoods. "Vornado saw the writing on the wall and responded the way a developer needs to when he knows he's holding a losing hand," said Richard Lipsky, a spokesman for the Neighborhood Retail Alliance, an anti-Wal-Mart coalition in New York. "We stopped Wal-Mart this time, but they are going to continue their efforts to open in New York and we will be sure to meet that with significant opposition wherever else they try to locate."

The article has some quotes from residents about Wal-Mart's sales or variety, but apparently are not that aware of what Wal-Mart is and their business practices. Watch the PBS Frontline special on Wal-Mart. As posted in an article below from CNN Money
a study released last February by Rep. George Miller that concluded taxpayers pay about $421,000 a year for every Wal-Mart store with 200 employees.

Congrats to NYC for winning this one. But Wal-Mart will eventually invade and we will pay for it.

Spitzer Endorces Ferrer for Mayor

I find future NY Governor Eliot Spitzer's early backing of Fernando Ferrer a bit odd - mostly because we have not had the primaries yet. Certainly there is a history between the two, but it is not typical. However, AG Spitzer will be running against a three term Governor, and whether you think he is done a decent job or not, Mr. Pitaki has name recognition. Either way here is a bit
He said his support for Mr. Ferrer stemmed from Mr. Ferrer's work in revitalizing the Bronx when he was its borough president and Mr. Ferrer's being "a voice for the middle class" and smart government. The endorsement was first reported yesterday in The New York Observer, and Mr. Spitzer spoke publicly about it for the first time after the article appeared.

For his part, Mr. Ferrer, who worked to get Mr. Spitzer elected attorney general in 1998, said that he and Mr. Spitzer, a fellow Democrat, share similar values and that he was humbled to have the support of a political figure with statewide and national stature.

"Look, this is going to be a race in the city that will have national repercussions, but it also has local repercussions," Mr. Ferrer said in a telephone interview.

"He gets the fact that people from minimum-wage workers to the middle class are getting squeezed," Mr. Ferrer continued. "I will be asking him to lend his prestige and presence in every corner of the city. Every corner."

Mr. Spitzer has been a vocal supporter of Mr. Ferrer in the past, and even went so far as to help him raise money at recent fund-raisers. Neither the attorney general nor the campaign has yet disclosed specific plans about how he will work on Mr. Ferrer's behalf.

Still, experts said that although Mr. Spitzer's endorsement may help burnish Mr. Ferrer's appeal among white voters, it may also work to the advantage of Mr. Spitzer next year among Hispanics, a critical swing bloc in recent elections for governor.

"There is absolutely no downside for Spitzer to do this," said George Arzt, a consultant who is not affiliated with any of the mayoral candidates. The two men share political advisers, he continued, and "the Hispanic vote is a linchpin for the gubernatorial race."

Norman Adler, another consultant not working on any mayoral campaigns, saw a similar strategy. "People generally frame out their grand campaign with the advice of their advisers," he said, "and those political consultants are no doubt saying that Spitzer is in better shape if his urban base is stronger, and Ferrer represents a part of that base."

Monday, February 21, 2005

Goodbye, Mr. Thompson

The Washington Post reports that Hunter S. Thompson committed suicide.
He was the author of books on politics and American society that were regarded as groundbreaking among journalists and other students of current affairs in their irreverence and idiosyncratic insights...

...Thompson was known for a style that he described as "gonzo journalism," a form of "new journalism." It was rooted in the idea that absolute fidelity to the indisputably factual and provable did not always provide the best avenue to truth.

Instead, "gonzo journalism" and its practitioners suggested that a deeper truth could be found in the ambiguous zones between fact and fiction.

"Objective journalism is one of the main reasons that American politics has been allowed to be so corrupt for so long," Thompson told interviewers in a characteristic pronouncement on both institutions.

"You can't be objective about Nixon," he said. "How can you be objective about Clinton?"

Hunter S. Thompson and Tom Wolfe

Thursday, February 17, 2005

CIA: Bush's War Fuels Extreemism

The Bush Administration and their think tanking neo-cons turned policy makers grand plan to bring democracy by gun point to Iraq is actually making the US and our "allies" less safe. Dana Priest and Josh White of the Washington Post write in their article War Helps Recruit Terrorists, Hill Told
"Islamic extremists are exploiting the Iraqi conflict to recruit new anti-U.S. jihadists," CIA Director Porter J. Goss told the Senate Select Committee on Intelligence.

"These jihadists who survive will leave Iraq experienced and focused on acts of urban terrorism," he said. "They represent a potential pool of contacts to build transnational terrorist cells, groups and networks in Saudi Arabia, Jordan and other countries."

On a day when the top half-dozen U.S. national security and intelligence officials went to Capitol Hill to talk about the continued determination of terrorists to strike the United States, their statements underscored the unintended consequences of the war in Iraq.

"The Iraq conflict, while not a cause of extremism, has become a cause for extremists," Goss said in his first public testimony since taking over the CIA. Goss said Abu Musab Zarqawi, a Jordanian terrorist who has joined al Qaeda since the U.S. invasion, "hopes to establish a safe haven in Iraq" from which he could operate against Western nations and moderate Muslim governments.

"Our policies in the Middle East fuel Islamic resentment," Vice Adm. Lowell E. Jacoby, director of the Defense Intelligence Agency, told the Senate panel. "Overwhelming majorities in Morocco, Jordan and Saudi Arabia believe the U.S. has a negative policy toward the Arab world."

Bush the Uniter

The Guardian's Ewen MacAskill in Beirut and Duncan Campbell write in their article Iran and Syria confront US with defence pact
Iran and Syria heightened tension across the Middle East and directly confronted the Bush administration yesterday by declaring they had formed a mutual self-defence pact to confront the "threats" now facing them.

The move, which took the Foreign Office by surprise, was announced after a meeting in Tehran between the Iranian vice-president, Mohammed Reza Aref, and the Syrian prime minister, Naji al-Otari.

"At this sensitive point, the two countries require a united front due to numerous challenges," said Mr Otari.

Regarded as rogue states by the White House, Iran is under pressure over its nuclear ambitions, while Syria came under renewed scrutiny over the assassination this week of the former Lebanese prime minister Rafik Hariri.

Once again BushCo is in fact a uniter, not a divider. I wonder how many more countries we can threaten while being stuck in the middle of an occupation in Iraq. There are several theories about the bombing in Beruit floating around, but regardless of who ended up doing it - it sounds as if Syria has lost the most from it.

Un- no, Believable

In typical Bush White House fashion, they have decided to send John D. Negroponte to the Senate for confirmation, the AP reports.
“John will make sure that those whose duty it is to defend America have the information we need to make the right decisions,” Bush said. “We’re going to stop the terrorists before they strike.”

Responding, Negroponte called the new job “the most challenging assignment I have undertaken in more than 40 years of government service.”

Negroponte, 65, was at the United Nations when he was tapped to take on the delicate job of transforming the U.S. presence in Iraq from that of an occupier to that of an adviser. Bush chose him for the job last April and he went to Baghdad hours after the handover of sovereignty to Iraq’s interim government.

Negroponte has also been ambassador to the Philippines, Mexico and Honduras.

As ambassador to the United Nations, Negroponte helped win unanimous approval of a Security Council resolution that demanded Iraqi leader Saddam Hussein comply with U.N. mandates to disarm. Negroponte worked to expand the role for international security forces in Afghanistan after the overthrow of the Taliban government.

Negroponte’s confirmation to the United Nations post was delayed a half-year mostly because of criticism of his record as the U.S. ambassador to Honduras from 1981 to 1985. In Honduras, he played a prominent role in assisting the Contras in Nicaragua in their war with the left-wing Sandinista government.

Human rights groups alleged that Negroponte acquiesced in human rights abuses by Honduran death squads funded and partly trained by the CIA. Negroponte testified during the hearings for the U.N. post that he did not believe death squads were operating in Honduras.

If you are wondering what the fuss about Mr. Negroponte is, this In These Times article gives a quick summary
As U.S. ambassador to Honduras from 1981 to 1985, Negroponte abetted and covered up human rights crimes. He was a zealous anti-Communist crusader in America's covert wars against the leftist Sandinista government in Nicaragua and the FMLN rebels in El Salvador. The high-level planning, money and arms for those wars flowed from Washington, but much of the on-the-ground logistics for the deployment of intelligence, arms and soldiers was run out of Honduras. U.S. military aid to Honduras jumped from $3.9 million in 1980 to $77.4 million by 1984. So crammed was the tiny country with U.S. bases and weapons that it was dubbed the USS Honduras, as if it were simply an off-shore staging ground.

The captain of this ship, Negroponte was in charge of the U.S. Embassy when, according to a 1995 four-part series in the Baltimore Sun, hundreds of Hondurans were kidnapped, tortured and killed by Battalion 316, a secret army intelligence unit trained and supported by the Central Intelligence Agency. As Gary Cohn and Ginger Thompson wrote in the series, Battalion 316 used "shock and suffocation devices in interrogations. Prisoners often were kept naked and, when no longer useful, killed and buried in unmarked graves." Members of Battalion 316 were trained in surveillance and interrogation at a secret location in the United States and by the CIA at bases in Honduras. Gen. Gustavo Alvarez Martinez, the chief of the Honduran armed forces who personally directed Battalion 316, also trained in the United States at the School of the Americas.

Negroponte tried to distance himself from the pattern of abuses, even after a flood of declassified documents exposed the extent of U.S. involvement with Battalion 316. In a segment of the 1998 CNN mini-series Cold War, Negroponte said that "some of the retrospective effort to try and suggest that we were supportive of, or condoned the actions of, human rights violators is really revisionistic."

By the time Negroponte was appointed ambassador by President Reagan in 1981, human rights activists in Honduras were vocally denouncing abuses. Former Honduran congressman Efrain Diaz Arrivillaga pleaded with Negroponte and other U.S. officials to stop the abuses committed by the U.S.-controlled military. "Their attitude was one of tolerance and silence," Diaz told the Sun. "They needed Honduras to loan its territory more than they were concerned about innocent people being killed."

Negroponte ignored such protests, and annually filed State Department reports from Honduras that gave the impression that the Honduran military respected human rights. But in an interview with In These Times, Negroponte's predecessor as ambassador, Carter appointee Jack Binns, tells a different story: "Negroponte would have had to be deliberately blind not to know about human rights violations. ... One of the things a departing ambassador does is prepare a briefing book, and one of those issues we included [in our briefing book] was how to deal with the escalation of human rights issues."

A quote from our President
John understands America's global intelligence needs because he has spent the better part of his life in the nation's foreign service

Wednesday, February 16, 2005

Props to the dKos Community

I'd like to give props to dKos the last few days as they have covered things that I typically want to read about. Here are a few posts:

Eliot Spitzer Interview

The changes that Sen. Reid and Rep. Pelosi are trying to make. I was never a big fan of the leadership under Rep. Gephardt and Sen. Daschle. While it is true that Mr. Daschle is great at proceedure, Sen. Reid is already surpassed Sen. Daschle in regards to message and media. Hopefully this continues - and the House of Representatives can actually put up a front that the Senate is, but I doubt it. Speaking of the Senate, it looks as if Sen. Santorum is going to have an battle to keep his seat. Despite the luxury of incumbancy he trails Bob Casey, Jr. and is under 50% against Barbara Hafer. While Mr. Casey and Ms. Hafer's positions on things will be debated, it is clear that Sen. Santorum is far from popular. Recently covered stories are the options to replace outgoing Senator Mark Dayton (D-MN), which will be a real challenge to keep. But in Rhode Island Lincoln Chafee (R) will either have to pull a Jim Jeffords or be defeated.

Anyway, I have liked what has been on dKos the last few days.

Montana to Tax Big Box Stores

Finally, a state dealing with the problems caused by Wal-Mart and their ilk. In a piece over at CNN Money titled Montana to levy tax on Wal-Mart?, they write
A bill up for debate Tuesday calls for taxing retailers like Wal-Mart (Research), Target (Research) and Costco (Research) for each store with more than $20 million in sales.

State Sen. Ken Toole, D-Helena, the bill's sponsor, says Montana residents are tired of subsidizing big-box stores whose low prices -- and high profits -- depend on paying workers low wages.

"When you don't pay workers, they get public assistance," he said. "Guess who pays for that?"...

...Foes of the legislation say it discriminates against high-volume merchants. "It's not the government's job to pick winners or losers in a competitive marketplace," said Wal-Mart spokesman Nate Hurst.

Although Toole didn't know how much the state was paying to provide services to Wal-Mart workers, he pointed to a study released last February by Rep. George Miller that concluded taxpayers pay about $421,000 a year for every Wal-Mart store with 200 employees.

Wal-Mart's Hurst said the discount chain pumped millions into the Montana economy last year and bought more than $39 million in goods and services from local suppliers.

University of Montana economist Thomas Power said claims by retailers that they would have to scale back operations or raise prices are exaggerated. "Big-box stores are fighting to get into these markets," he said.

The proposed tax met mixed reviews from shoppers at the Wal-Mart Supercenter in Missoula, a city of about 60,000 in western Montana. "If prices have to go up, so be it," said Mary Karen Caraway. "These stores should be taking responsibility for their own employees."

A Few Articles

First, Howard Kurtz weights in on Maya Keyes in his Media Notes Extra.

Second, Nicholas D. Kristoff's latest is titled Bush's Sex Scandal. Here is a quick bit
You see, for all the carnage in President Bush's budget, one program is being showered with additional cash - almost three times as much as it got in 2001. It's "abstinence only" sex education, and the best research suggests that it will cost far more lives than the Clinton administration's much more notorious sex scandal.

Mr. Bush means well. But "abstinence only" is a misnomer that in practice is an assault on sex education itself. There's a good deal of evidence that the result will not be more young rosy-cheeked virgins - it will be more pregnancies, abortions, gonorrhea and deaths from AIDS...

...Other developed countries focus much more on contraception. The upshot is that while teenagers in the U.S. have about as much sexual activity as teenagers in Canada or Europe, Americans girls are four times as likely as German girls to become pregnant, almost five times as likely as French girls to have a baby, and more than seven times as likely as Dutch girls to have an abortion. Young Americans are five times as likely to have H.I.V. as young Germans, and teenagers' gonorrhea rate is 70 times higher in the U.S. than in the Netherlands or France.

Third, Lisa Myers writes in U.S. contractors in Iraq allege abuses that
There are new allegations that heavily armed private security contractors in Iraq are brutalizing Iraqi civilians. In an exclusive interview, four former security contractors told NBC News that they watched as innocent Iraqi civilians were fired upon, and one crushed by a truck. The contractors worked for an American company paid by U.S. taxpayers. The Army is looking into the allegations.

The four men are all retired military veterans: Capt. Bill Craun, Army Rangers; Sgt. Jim Errante, military police; Cpl. Ernest Colling, U.S. Army; and Will Hough, U.S. Marines. All went to Iraq months ago as private security contractors.

"I went there for the money," says Hough.

"I'm a patriot," says Craun.

"You can't turn off being a soldier," says Colling.

They worked for an American company named Custer Battles, hired by the Pentagon to conduct dangerous missions guarding supply convoys. They were so upset by what they saw, three quit after only one or two missions.

"What we saw, I know the American population wouldn't stand for," says Craun.

Fourth, Red Sox-Yankees rivalry heats up in February. This time between Trot Nixon and A-Rod.
He [Nixon] didn't say that A-Rod had criticized his work regimen. But Nixon did say that Rodriquez boasted his own regimen.

"Like Rodriguez says," Nixon said, "he's running stairs at 6 in the morning while I'm sleeping and taking my kids to school. I'm like, well I'm not a deadbeat dad, Alex."

On Nov. 18, Rodriguez's wife gave birth to a daughter.

"He's got a kid now, too, so I guess he'll have his limo driver take her to school," Nixon said.

Fifth, a diminitive old man discussing the solar system with William James. THe old man's theory is that we exist on the shell of a turtle. When questioned what is holding up this turtle, he replies
"To this, the little old man crowed triumphantly, "It's no use, Mr. James-it's turtles all the way down."

Tuesday, February 15, 2005

forwarded from one of my colleagues

Action Alert, from David Byrom, Ph.D., President
The National Coalition of Mental Health Professionals and Consumers, Inc.

Hello colleagues and friends,

Recently, I was asked to help present a workshop on suicide prevention among GLBT individuals, at the third in a series of five regional conferences on suicide prevention in the U.S. This particular conference covers Public Health Regions 9 and 10 (basically, the entire west coast). Following is a statement my co-presenters and I have prepared outlining recent chilling events surrounding our workshop. One interesting thing to note ­ the two previous conferences, one in New Orleans and the other in Denver, contained workshops very similar to ours and were not a problem. The difference? Both were held PRIOR to the last election.

We give permission to forward this to whoever you believe needs to read it:
Please distribute as widely as possible:

Statement of Concern and Protest

Government funders within the Bush Administration at SAMHSA (Substance Abuse and Mental Health Services Administration) notified the Suicide Prevention Resource Center (SPRC) that SAMHSA Administrator, Charles Curie, would not be allowed to attend a SPRC regional conference on suicide prevention if conference organizers went forward with a workshop title that included the words "gay," "lesbian," "bisexual", and "transgender". The conference is scheduled to take place in Portland, Oregon, February 28-March 2. The original title of the workshop was "Suicide Prevention Among Gays, Lesbians, Bisexuals, and Transgender Individuals."

On January 31, Lloyd Potter, SPRC Center Director, contacted workshop presenters Ron Bloodworth, Joyce Liljeholm and Reid Vanderburgh and requested that we come up with alternative wording for the workshop so that the words "gay","lesbian","bisexual", or "transgender" did not appear in the workshop title or descriptor.

We worked with SPRC to create alternative wording so that the workshop could continue to be offered but we expressed deep concern about government intrusion to remove any reference to gay, lesbian, bisexual, and transgender people in the workshop title and descriptor. After agreeing to the title "suicide Prevention in Vulnerable Populations", we were told that the new title would be acceptable to SAMHSA and that we could use the term "sexual orientation" in the workshop descriptor but that the term "gender identity" would "not fly with SAMHSA."

We are still planning to offer the workshop as originally planned even though the workshop title and descriptor had to be changed but we will not be quiet about the heavy handed efforts of SAMSHA to render gay, lesbian, bisexual, and/or transgender people invisible. The action of our government in this regard is the very reason a workshop on suicide prevention with gay,lesbian, bisexual, and/or transgender individuals is needed. How ironic! The discriminatory and intimidating actions of SAMHSA and the Bush administration should not go unchallenged and should be of concern to all Americans.

A Couple Articles I Saved Recently

I don't have the time to blog like I use to as my schedule seems constantly filled, but a few I saved.

Detainees Accuse Female Interrogators By Carol D. Leonnig and Dana Priest (Washington Post)

Huge Car Bomb Kills Lebanon's Former Prime Minister By Leena Saidi and David Stout (NY Times). My housemate traveled through Lebanon and Syria this summer. If I have time I will pass on a bit of our conversation on post civil war Lebanon. But this summer he was standing exactly where the bomb went off.

AIG gets subpoenas from Spitzer, SEC (AP)

Abstinence-Only Sex Education Programs Have Little Effect on Texas Teenagers' Behavior, Study Says (Medical News Today) BTW, if the budget goes through, abstinence only looks to see an increase of $39M.

Same-sex debate gets U.S. infusion by Elizabeth Thompson, with files from Kirsten Smith (National Post)
OTTAWA - Powerful U.S. religious groups are sending money and support to allies in Canada to fight same-sex marriage.

Patrick Korten, vice-president of communications for the Knights of Columbus head office in New Haven, Conn., said no limit has been set on the help his organization is prepared to offer.

"Whatever it takes," he said. "The family is too important."

Boxer Showered with Roses

As some of you may know, California Senator Barbara Boxer was given 4,500 roses today. Kos linked a pic

Boxer writes
Let's especially remember our brave men and women in uniform serving overseas on this holiday who won't be spending Valentine's Day at home. Thanks to your generosity, our wounded soldiers recovering at Bethesda Naval Hospital and Walter Reed Army Medical Center will also be able to enjoy your thoughtful gift -- we sent the roses there this afternoon.

We've got a lot of work ahead of us. But every once in a while it's nice to stop and smell the roses. Thanks again for such a warm and generous gift.

I know that no one really likes blackmail or stupid heart day, but I wanted to pass this along.

Monday, February 14, 2005


Below Elwood mentioned that the only show that he is currently watching was the new, updated, Battlestar Galactica. He isn't the only one as 3.2 million viewers tuned in for the 4 February episode. Shows like BSG must operate on many levels to have a broad audience. But what Elwood states below is true
The only show I care about now is the new Battlestar Galactica. Laugh all you want, it's the only show that takes on post-9/11 America head on. Nothing says 21st Century America like a sexy suicide bomber.

This past episode deals with a suicide bomber and the government, military, and civilian reaction to that and the idea that more Saboteurs are among then. This results in a commentary on military tribunals, fear/paranoia/panic/suspicion, and the need to assign blame. If you missed the mini-series that kicked off the first season, it starts with a genocide of the human race - a nuclear holocaust. A total of 50,000 human being survive and become refugees with lack of protection and a lack of resources, among other things.

Alan Keyes in the News

Conservative commentator Alan Keyes is back in the news, but not for a campaign.
Maya Keyes loves her father and mother. She put off college and moved from the family home in Darnestown to Chicago to be with her dad on a grand adventure. Even though she disagrees with him on "almost everything" political, she worked hard for his quixotic and losing campaign for the U.S. Senate.

Now Maya Keyes -- liberal, lesbian and a little lost -- finds herself out on her own. She says her parents -- conservative commentator and perennial candidate Alan Keyes and his wife, Jocelyn -- threw her out of their house, refused to pay her college tuition and stopped speaking to her.

Maya, 19, says her parents cut her off because of who she is -- "a liberal queer." Tomorrow, she will take her private dispute with her dad into the open. She is scheduled to make her debut as a political animal, speaking at a rally in Annapolis sponsored by Equality Maryland, the state's gay rights lobby...

...She says she was told to leave her father's apartment and not to expect any money toward attending Brown University, where she was admitted but deferred matriculation to spend a year teaching in southern India. "In my father's view, financing my college would be financing my politics, in a sense," Maya says, "because I plan to be an activist after college."

If you forgot some of the nonesense coming from the Keyes campaign, let me refresh your memory. Mr. Keyes called Mary Cheney, who is a lesbian, a "selfish hedonist." Marc Fisher's article made me away of the San Francisco based group The Point Foundation. They are an organization that helps provide scholarships for GLBT students, including students in the situation that Ms. Keyes is currently in. Here is the Point Foundation's press release regarding Ms. Keyes Academic Honrarium.

How you, too, can learn to behave like Bill O'Reilly

The Atlantic's Joshua Green has a new piece in the March issue titled "J-School for Jerks" Mr. Green writes
Masters led me to a studio jammed with state-of-the-art equipment: cameras, teleprompters, video monitors, and sleek plasma-screen televisions on which to track and critique my performance. Qorvis gives its clients a choice of goals that, as best I can determine, range from politely assertive, for nonpartisan reporters simply wishing to sneak a word in edgewise, to partisan jerk, for aspiring cable-TV mainstays. I opted for the full-blown-jerk treatment, and Masters seemed pleased.

We began with a video presentation titled "How to Feed the Media Beast Without Getting Eaten," which ticked through the basics. When answering a question, look directly into the camera, put your message in sound-bite format, and never pitch it above a seventh-grade level. (Also sit up straight: "Better breathing equals better sound bites.") To this Masters has brought his own innovation: the Message Diamond. "People think and process information in groups of three," he explained. "Larry, Curly, Moe. Beginning, middle, end. Anytime you answer a question, first hit your message, then enhance it with a story or an anecdote, then hit it again. Narrow, wide, narrow." He made a diamond with his fingers.

Not every question is a welcome one. A Republican must occasionally grapple with news that reflects well on Democrats and (more likely) vice versa. In such instances the cornered pundit must "find the gloomy lining." Masters counsels clients to either broaden the question or narrow it, depending on what suits their partisan purposes. Was Bush helped by strong job numbers this month? Then the broader issue is the continual outsourcing of American jobs. Are Hillary's favorability ratings on the rise? No problem: in red states she still ranks below avian flu.

The truly professional pundit understands that although the bickering and shouting may appear to be a free-flowing drama, television is rigidly segmented, most segments running about three minutes. This makes it possible, Masters explains, to "filibuster"—a technique he himself employs. "When you're up against an opponent and a question comes your way," he says, "start talking and keep talking. A lot of times inexperienced hosts don't know how to control the interview, and you literally run out the clock—you get to hit your message repeatedly and prevent your opponent from getting hers out at all."

One of the fun things about Masters is that he shows clips of his own TV appearances to illustrate these techniques. We watched a snippet of him easily outmaneuvering one of the blonde replicants who host Fox News and launching into a disquisition on John Kerry. Masters's verbal dexterity called to mind the famous speed-talking Federal Express commercials of the 1980s, as he strung together diamond after diamond to draw out an impressive filibuster that left his opponent exasperated.

Also in March's Atlantic is a piece by Stanford University Pulitzer Prize winning Historian David M. Kennedy titled What "W" Owes to "WW". I've read Freedom From Fear: The American People in Depression and War and Over Here: The First World War and American Society - both were very good.

Talking Bull

Elwood emails the following article to me, "Between Truth and Lies, An Unprintable Ubiquity" by the NY Times's Peter Edidin.
"One of the most salient features of our culture is that there is so much [bull]. Everyone knows this. Each of us contributes his share. But we tend to take the situation for granted. Most people are rather confident of their ability to recognize [bull] and to avoid being taken in by it. So the phenomenon has not aroused much deliberate concern, nor attracted much sustained inquiry."

The essay goes on to lament that lack of inquiry, despite the universality of the phenomenon. "Even the most basic and preliminary questions about [bull] remain, after all," Mr. Frankfurt writes, "not only unanswered but unasked."

The balance of the work tries, with the help of Wittgenstein, Pound, St. Augustine and the spy novelist Eric Ambler, among others, to ask some of the preliminary questions - to define the nature of a thing recognized by all but understood by none.

What is [bull], after all? Mr. Frankfurt points out it is neither fish nor fowl. Those who produce it certainly aren't honest, but neither are they liars, given that the liar and the honest man are linked in their common, if not identical, regard for the truth.

"It is impossible for someone to lie unless he thinks he knows the truth," Mr. Frankfurt writes. "A person who lies is thereby responding to the truth, and he is to that extent respectful of it."

The bull artist, on the other hand, cares nothing for truth or falsehood. The only thing that matters to him is "getting away with what he says," Mr. Frankfurt writes. An advertiser or a politician or talk show host given to [bull] "does not reject the authority of the truth, as the liar does, and oppose himself to it," he writes. "He pays no attention to it at all."...

..."In the 20 years since it was published," Mr. Frankfurt said, "I don't think a year has passed in which I haven't gotten one or two letters or e-mails from people about it."

One man from Wales set some of the text to music; another who worked in the financial industry wanted to create an annual award for the worst piece of analysis published in his field (an idea apparently rejected by his superiors). G. A. Cohen, the Chichele professor of social and political theory at All Souls College, Oxford University, has written two papers on the subject.

But Jesus was a good person...

Just found this on CNN. An area in Virginia has a practice of sending first through third grade kids to Bible study during the school day. Not even getting into the church/state issues, this quote left me speechless:

Beverly Ridell, who grew up going to the Staunton schools, teaches first- and second-grade Sunday school at church and opposes religious classes during school time.

"I asked them whether Jesus was a Christian and they said 'yes.' When I said, 'Jesus was a Jew,' one girl said, 'But Jesus was a good person,"' Ridell

Makes you wonder what they are teaching.

The Gawker

David emailed me a link this morning. We were linked and referenced in The Gawker.

How funny is that!?

Sunday, February 13, 2005

Let them leave.

Some folks in Overton, Texas have created their very own little government, with currency, and want to secede.

Bye, y'all. You'll need passports to get back in.

Thursday, February 10, 2005

Perspective. Or lack thereof.

The NYTimes.com posted an article this morning about sweeps-month TV lesbian kisses. One of the sidebar photo captions references the relationship of Willow and Tara in Buffy the Vampire Slayer, but Willow's kissage partner is the irritating Kennedy. The scene is not from the episode quoted ("The Body") but from a fluffy seventh season episode ("Storyteller"? I don't know.)

When I brought this up at home this morning, I got a surprising response. Now I want to take a poll.

1) Is this error crucial enough to call to the NYTimes' attention? You may include your support or disapproval of Kennedy's character in this answer.
2) What larger role does this error play in your opinion of the NYTimes? Bonus points if (like Elwood) you can include William Safire in your response.


Tuesday, February 08, 2005

State of the Pandemic: The Good, the Bad, and the Personal

Maybe it's just my line of work or something, but it seems that HIV/AIDS has been cropping up everywhere... in the news, that is. The NYTimes ran an encouraging article by Marc Santora entitled, "US Close to Eliminating AIDS in Infants, Officials Say". I quote freely, since it was published on 1/30 and already archived. If you'd like the entire article, let me know.

In 1990, as many as 2,000 babies were born infected with H.I.V., the virus that causes AIDS; now, that number has been reduced to a bit more than 200 a year, according to health officials. In New York City, the center of the epidemic, there were 321 newborns infected with H.I.V. in 1990, the year the virus peaked among newborns in the city. In 2003, five babies were born with the virus. Across the country, mother-to-child transmission of H.I.V. has dropped so sharply that public health officials now talk about wiping it out.
...success in treating AIDS has raised the concern that the public may be growing complacent about AIDS prevention. A survey conducted by the city's health department in 2003 showed that 40 percent of people who had sex with multiple partners said they did not use condoms.
But as the struggle with pediatric AIDS shows, much can be accomplished when there are a clear focus and a concerted effort. Not only are children born with H.I.V. living longer, mothers now can take action to make sure they never pass on the virus, and there is anecdotal evidence that many now feel free to have more children.

The article is quick to point out that in the developing world the story is much different--more than two million people in sub-Saharan Africa died of AIDS last year alone. And it's not just abroad that people are getting left out. Yesterday's "Health and Science" segment of "All Things Considered" pointed out that black women are 23 times more likely than white women to be infected with HIV and five times more likely than Hispanic women. 53% of African Americans believe that a cure for AIDS is being withheld. Distrust and suspicion of the medical community is widespread. So now that we've made AIDS easier to prevent and easier to treat, will we push further to eradicate the disease worldwide, or will we let it fester among underprivileged nations and communities?

However, epidemiology only gets one so far. One of my acquaintances on LiveJournal is a woman named Christina, who was infected with HIV by her mother in infancy. She is just a few years younger than I am, and hasn't yet developed AIDS. Reading about her life has changed the way I answer questions from my students in class: yes, it is possible for someone to live for 15 years or more with HIV. Yes, it is possible to be born with HIV and grow to adulthood. Change a few circumstances, however, and you get a much different outcome. Without the right drug regimens, a well-informed doctor, or the medical care and concern that one gets for being young, white, and pretty, the prognosis dramatically worsens. A distrustful patient who can't afford or can't withstand the medical rigamarole will certainly not fare so well. And when parents die before their kids reach adulthood, someone--extended family, school systems, foster care--has to pick up the slack, emotionally and financially. The medical breakthroughs of the last two decades are stunning but meaningless if we cannot back them up with a conviction to provide care to every patient in every nation, improving their quality of life as well as our mortality rates.

There is still much work to do.


There are a few articles I am thinking of sending my new Hannity loving housemate. Here they are, based on our conversations:

What got so many counties to shift from blue to red? (USA Today)
CIA Corrects Itself on Arms (LA Times)
Social Security Reform Fact Sheet (Public Policy Collaboration)
Oil-For-Food Facts
Bush Budget Calls for Cuts in Health Services (NY Times)
Bush Like Me (Rolling Stone)
End-Timers & Neo-Cons (ZNet)
Goldberg v. Cole Redux (Professor Juan Cole of Informed Comment: Thoughts on the Middle East, History, and Religion)

Thats a decent list, not very complex.

Addition: I was sent this a few times, and Kos has it on the main page.
The Right-Wing Express (AlterNet)

Saturday, February 05, 2005

Bush to Cut Health Services

To deal with the large deficits, Mr. Bush promised Wednesday night to cut spending. Because there is not a lot to cut and this administration does not believe that US citizens, specifically the wealthiest, should pay for their governments/infrastructure, health services will get the axe. Health and security isn't a top priority. Robert Pear writes
WASHINGTON, Feb. 4 - President Bush's budget for 2006 cuts spending for a wide range of public health programs, including several to protect the nation against bioterrorist attacks and to respond to medical emergencies, budget documents show.

Faced with constraints on spending caused by record budget deficits and the demands of the war in Iraq, administration officials said on Friday that they had increased the budget for some health programs but cut many others, including some that address urgent health care needs.

The documents show, for example, that Mr. Bush would cut spending for several programs that deal with epidemics, chronic diseases and obesity. His plan would also cut the budget of the Centers for Disease Control and Prevention by 9 percent, to $6.9 billion, the documents show.

The cuts are part of an attempt to control the federal deficit, while increasing spending on certain priority programs. Administration officials have said that in the budget, to be unveiled on Monday, Mr. Bush will propose that overall domestic spending, aside from entitlements, grows less than the rate of inflation next year.

But the administration is proposing to increase the Pentagon budget by 4.8 percent, to $419.3 billion in the 2006 fiscal year, according to Defense Department budget documents obtained by The New York Times. That sum does not include the costs of operations in Iraq and Afghanistan, now running about $5 billion a month. Within a few weeks, the administration is expected to request about $80 billion to cover those costs.

The president's approach to domestic programs is illustrated in the way he balances competing claims at the Centers for Disease Control.

Mr. Bush requests money to expand a national stockpile of vaccines and antibiotics. But the public health emergency fund of the centers, which helps state and local agencies prepare for bioterror attacks, would be cut 12.6 percent, to $1 billion.

As this administration winds down to a close more and broader cuts will come - probably after the administration's social security agenda concludes one way or another. Speaking of which, where will the $2 trillion in tranistion fees come from?

Monsanto in Iraq

This article was brought to my attention, For the record: ''U.S. Declares Iraqis Can Not Save Their Own Seeds''. This is the intro
As part of sweeping ''economic restructuring'' implemented by the Bush Administration in Iraq, Iraqi farmers will no longer be permitted to save their seeds, which include seeds the Iraqis themselves have developed over hundreds of years. Instead, they will be forced to buy seeds from US corporations. That is because in recent years, transnational corporations have patented and now own many seed varieties originated or developed by indigenous peoples. In a short time, Iraq will be living under the new American credo: Pay Monsanto, or starve.

Spitzer on SS Reform and Corporate Responsibility

The following is from New York Attorney General Elliot Spitzer's speech at the National Press Club, 31 January 2005.
The first is that the business leadership in the nation right now is pushing back against the effort to ensure codes of conduct, ethical behavior, objecting to Sarbanes-Oxley, objecting to the SEC’s effort to mandate disclosure, and certain behavior patterns -- the business leadership is saying “Enough, we got the lesson, back off.”

Second, the Chamber of Commerce, the U.S. Chamber, which is pehaps the preeminent - or styles itself as the preeminent voice for business leadership - is going to court to challenge the SEC’s capacity to issue the regulations relating to mutual funds, board behavior, accounting rules, and other series of rules that the SEC believes are essential to ensure integrity in the capital markets.

Third, that the president of the Chamber of Commerce, in a rather direct attack on the cases that my office has made, said recently that he felt that we were targeting individuals for honest mistakes. In an issue that I’ll come back to, Rick didn’t mention the settlement with Marsh today in “honest mistakes” and we’ll get back to that.

And fourth, there has been an enormous effort, sponsored by some of the business leadership, to pre-empt states, and my office in particular - pre-empt us from our capacity to bring the types of cases that we have been bringing over the past number of years.

Now what is this all about? Really this is a debate about the role government should play in defining the boundaries of appropriate business ethics; defining what it means to participate in our economy; and what the expectations are for our business leadership; and who is supposed to enforce those boundary lines.

Now, the interesting thing about this debate is that everybody invokes the same heroes. Everybody these days -- and for good reason, maybe it’s because of the biographies that have just been written -- harkens back to Alexander Hamilton, everybody harkens back to Teddy Roosevelt. These are the two icons, the two individuals whom we all praise and say, “They understood what government should do. They understood how the economy should function. They understood how to make the marvel of the private sector generate wealth that we so desperately want.”

And the interesting thing is that a hundred years ago is when Teddy Roosevelt was running and was elected president -- of course, he assumed the presidency after the assassination of McKinley, so he didn’t run for the presidency in 1900 -- but 1904, a hundred years ago, when he ran for the presidency, he had just had a term or a first couple years where he had become the scourge of business. Teddy Roosevelt had attacked the cartels, attacked illegal behavior, and he was reviled by business leadership. So the irony is that those who now invoke him, if they actually looked back at what he did, and what their predecessors in the business community said about him a hundred years ago, perhaps would re-think their holding him out as an icon. If any of you were to listen to the few remnant speeches that he gave that are on tape -- and a friend of ours gave us some CDs of great speeches of American history-- we listen to it, remarkable things that he was saying, about the failure of ethics in the business leadership, and the peverse effect on our economy of the cartels that he was pursuing.

On the rising costs of premiums
Now, one footnote to the insurance issue. The President of the United States, whom we all respect, is out there right now, attacking the many problems that drive premiums higher. And they’re problems, many of them. There are a multitude of problems. I have not heard a single word from the White House saying maybe premiums are higher because the insurance companies formed an illegal cartel. They pled guilty to it. The record is overwhelming. It is out there. Not a word. Not a single word. Everybody else is the causative factor. The insurance industry has corruption that is rife throughout it, rife. It touches every line of insurance that is purchased. Every line. And we will keep going until we find it.

Another case that we made, the Paxil case: pharmaceuticals. Not to bore you with details, but Paxil is a drug that was being prescribed for off-label use to adolescents, and GlaxoSmithKline, the company that makes it, was saying to the world, "It is safe and efficacious." Those are their words.

Well, the problem is, they had done five studies. One of them found it was marginally better than a placebo. The other four found, in combination, either that it was no better and/or that it generated suicidal tendencies among adolescents. Did they tell people that? No. They didn't. If I were a parent of an adolescent who had been prescribed this drug, or if I were a doctor considering whether or not to prescribe it, I would want that information.

So we sued them. We sued them -- not to say, "Take the drug off of the market." That's not my prerogative, it shouldn't be my decision. We sued them on the theory that the information, the clinical testing data, should be revealed to the public. And we said, simply, “Create a Web site. Post this data, so that people will have a full array of information, so they can make informed judgments." And they agreed, of course. They agreed, they said, "Fine." And that Web site now exists. And Forest Labs has agreed to do the same thing, and other pharmaceutical companies are getting pressured to do the same thing, because it makes sense. Getting pressured from the medical journals and the doctors who do the testing, because it makes sense.

Two observations: Where has the FDA been on this issue? Nowhere. Silence. It's simply a matter of decency, disclosure and integrity. And yet this FDA has not said a word about revealing this critically important data so that doctors can make informed judgments. And not to come back to my favorite editorial page, but the Wall Street Journal editorial page, in an editorial where they called me Paxil Man, which I thought was, you know -- I don't know how to take it, but there I am. They said, and this is a quote, they said, "The system is working exactly as it should." A system which is denying doctors and patients the critically important information about the known side effects of these drugs? And look at the array of testing data that has since come into the marketplace. It has led to changed decisions about what pharmaceuticals should and should not be out there in the marketplace. And yet they, the paragons of honesty and integrity in the free market said, "The system is working exactly as it should." Ridiculous. Flat out ridiculous.

On Social Security
We are going through a debate right now relating to the privatization of Social Security. And I would ask people this question: You have an administration that failed to protect investors, failed to protect them, and yet they are the administration that is saying, "Take the safety net that we have and invest it in a system that was fundamentally broken, before others stepped in to try to save it."

If this administration had said to the public, five years ago, "Do you know what? There are flaws. We have to protect you. We have to protect you before we ask you to invest your safety net in the system," I'd be more sympathetic. But while on the one hand they are saying, "The system does not need to be fixed, there was nothing wrong with it," they fought against the changes that we wanted. And then they say, "Take your savings and put it into that very system." Where would we be if those who are retiring had had their money in Enron and WorldCom? Where would we be? And that is the fundamental tension in what they are saying. Now, as a lawyer, I can tell you there is nothing worse than not making your best argument, except for one thing -- having the other side steal it from you.

And now I will be a partisan Democrat. Because as President Bush embraces the ownership society, and tries to claim that he is the one that is making it possible for the middle class to succeed and save and invest well, I say to myself, "No, that's not right. It is the Democratic Party, historically, that created the middle class, that protected middle-class investments, that made it possible to invest with integrity and transparency. We are the party of the ownership class that created that wealth."

The Republican Party cloaks itself right now in the language of the market, but really speaks for an ossified status quo. We as Democrats are the ones who are standing up saying, "We believe in the market. We understand the market. But the market will not survive if we do not understand its flaws, and do not understand where government has to enforce the rule of integrity."

Personally, I don't see a way that Pitaki will be able to hold on to be elected for a fourth term if his opponent is Elliot Spitzer. With Sen. Charles Schumer deciding to stay in the Senate - AG Spitzer has a clear path.