December 2, 2003
Panama City, Panama

found first favorite restaurant in panama city....  a cuban place, called 'bolero'... just off avenida de balboa, a few blocks from the Miramar here... awesome food... good people.  a place to back to, over and over.

Jesse is stuck in customs... i overstayed my 90-day permit.. i will have to ship her straight to colombia... no more traveling here in panama.  sigh... this is taking a long time... hassle.

an email excerpt to my friend john dimit...

encapsulates my thoughts about where america is at right now.

don't agree?  well put your thinking cap on and come up with an original POV of your own  (uh... yeah... like  .. uh... in detail)   email it to me and i'll post it here in all its glory.

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ho there jd,


back in panama city, ready to head to colombia in the next week or so.

watching market closely.


john, make sure you have stops on everything here... good time to take 1/2 profit, or keep tight stops... things like twtc are still good companies, but we have had unprecedented pop... unprecedented in certainly in last 20-30 years or so, and i believe we are set for one of biggest pull backs in market history again.


yes, even as big as pull back of '00-'01 !!!


things to consider:

short-term:

• unprecedented pop... historically pre-xmas is relatively strong... post-xmas is relatively weak. look for big natural retracement & pullback of equities after first of the year. this isn't bear or bull, this is simply: what goes up must come down... and we've been due for a shoe to drop here for a couple months now...
• pull back will probably be relatively hard & sharp as complacency in the market is at near record levels.... there are a string of interesting stats to back this up.... needless to say... it will whip hard and abruptly when it comes... remember... downs are usually 2x-3x faster than ups.

long-term:

• level of consumer debt (mortgage refinancing did not pay this down) .. in fact studies show most of family savings is right back in the stock market... ouch!

• fed's back is to the wall

• jobless recovery (sure, purchasing managers are dipping toe in the water, putting in a few orders) but more and more this is a nation of corporate head offices w/ manufacturing overseas... over time this will be fine, but for next 5 years or so, this will hurt). perot was right about the 'sucking sound' of jobs leaving the country... but its not nafta ... it's CHafta! china is pegged t the dollar and laughing their heads off.... we're damned if we do and damned if we don't.... currency policy isn't the problem ... its the billion people ready to work their fingers to the bone for $10 a day that is the problem. china is moving full-tilt to restructure their entire country in a concerted effort to reverse whole demographic from rural-agrarian to urban-industrial. sure china is an old story... but the wheel is just beginning to turn. maytag, carrier... list of companies out the door is long and getting longer.

• gap between high and low income families... we are really looking at 2 americas... not one. haves and have-nots on a scale like we have never witnessed before. going to rip our country apart even worse than it is... inner city blacks and white blue-collar former steelworkers on same side of fence.

• global economy now! our working class families are going to lose their jobs to poorer people overseas... while fat cats and ceos over here and in europe, japan, control the strings. industries at risk? manufacturing... raw materials like ... steel... goodbye. even u.s. agriculture... goodbye to subsidies over next 10-20 years... we are financing the destruction of the poor farmer in other countries by flooding their markets with our cheap wheat and corn... world will force us to stop.

• internet continuing to fuel globalization and increasing efficiency in us-based businesses ... we can do more with fewer workers.

• foreign markets more and more skittish about US economy, reflected in increasing t-bill interest rates.... fed is mortgagiing our future to pay for past and future gluttony. problem is ... the rest of the world not so interested in financing our obese consumers anymore... all it takes is a slight disinterest... just the slightest shift in the wind of where world goes for stable long term, low interest investment ... for the house of cards to crumble.... essentially world has already spent as much as it can on our t-bills in order to prop up our economy (in their own self-interest of course) ... eventually they will simply let us gently go... --> world economy *can* and *will* shift from dollar focus to euro focus... then to world focus....

• us consumer is already world's worst saver by many factors. everything we make goes straight to our waistline and our gastank. i was part of gen x ... the first generation to get credit card offers in the mail as we graduated from college. our parents learned how to save.. .we did not. we spend what we do not have. it will take hard times to cure us of this, put character back on our faces, lean muscle back on our frames.

• us businesses may be (barely) ok... but the u.s. consumer is an endangered species... economy can't spring back without some u.s. based spending....

• euro becoming the new world powerhouse... there didn't use to be an alternative to u.s. now there is. plus, people like euro politics better than ours. sure... its about business... but deep down its about sympathies as well... look around. we're not the same US that sent half a million of our youngsters to save a whole continent from hitler 50 years ago. remember that? france sent us the statue of liberty as a gift for saving their asses. now that's gratitude! is anyone even sending us a fucking fruitbasket for getting rid of saddam? people say: "they will thank us later... they'll see eventually"... i say 'don't fool yourselves... good deeds shouldn't be so hard to figure out.' what gets me is that everyone here in the u.s. thinks the rest of the world is so *dumb*! sometimes i fall on the floor laughing at that... that is when i'm not sick to my stomach thinking about it.  (statue of liberty pointed out to sea... she's had one foot out the door since she got here ... headed back home now.  our sweet liberty itself at risk... [insert your favorite Patriot act reference here].)

• us is spending 1/3 gov't budget on military, running around fighting wars of our own invention & creating new generations of terrorists that hate our guts, while rest of the world laughs ... when we ask them to foot the bill... they tell us to fuck off!  defense jobs alone cannot power the economy... and soon (god willing) even we will run out of wars to justify.

• not only military budget... but us foreign aid... we spend less per capita than any other developing nation on foreign aid for things like AIDS prevention and other programs... what does our money go to? 1/4 of u.s. foreign aid budget, $3B per year, goes to israel -- to fund purchase of u.s. weapons for use against palestinian sticks and stones... and because israel is our key 'beachhead' of our beloved u.s. democracy. and $2B goes to egypt!!! figure that one out!! no one in egypt even likes us!!! sure, the world used to be simpler... the world used to be a place where we could run around the world and enforce our will... and yes, democracy IS a good thing, but things are different now... and we are not creating a better future through our continued myopic policies. all these political issues are going to haunt us economically in years to come... unless we change our tune and quickly.

• aging world population. in 5-10 years boomers are going to start retiring.... or can they? who is going to foot the bill? social security and medicare are effectively bankrupt as far as being able to deal w/ 20% increase in retirees. how many people have effective retirement plan in place? scary few i think.

• growth? where? world's natural resources tapped + aging population w/ no young people to pay into system (us is only developed country w/ even close to a sustainable population rate... only 3rd world nations still pumping out babies). major crises at hand... fresh water crisis (5 years)... world fisheries crisis (5-7 years), natural gas crisis - 10 years, global warning - crop damage, etc. -10- 20 years, fossil fuel crisis - 20-30 years, key precious metals crisis (rare metals like palladium used in industrial processes, etc.) - 20 years, etc. most of these crises are already here now... these dates are my guesses at when the shit REALLY hits the fan. many of these like fossil fuels, precious metals, etc. we can easily sidestep -- but only if we invest heavily in alternatives. the only problem is, we have to embrace that reality and invest in kind... but republicans and democrats alike still have their heads in the sand, greasing palms of the old energy boys club and lining their own pockets as well.

• so many houses built and financed in last 5 years that apartment rates are at all time lows.... in many cities, landlords giving 1st and last month's rents free + an extra free month, no security deposit and low-ass monthly rates to boot. plus they'll knock off $50 a month if you take a box of donuts into your workplace with their info and advertising on it.... or get a friend to rent, etc. this is natural reverse suction on real-estate market that will get bigger and bigger the more homes that are built (hello! our population isn't growing any more!! duh!!!!) .... will eventually impact housing costs, as in the end it's all just the market price of a roof over your head... hey, add construction workers to the list of shortly to be out-of-work people.

• w/ consumer refi-d to the hilt if housing prices even backslide a little.... shit i don't need to spell that one out. how fast can you say 'foreclosure'?

• america has got its eyes squeezed shut and its fingers crossed right now.... lets hope to god we pull this one off.... but longer term trends are looming.... too big to shrug off.

• what gets me is that people simply have *faith* that the good times will continue as before.. that somehow we will pull through, the american spirit...  manifest destiny and our cowboy devil-be-damned entrepreneurial spirit ... and that there is a master plan.  but look around... *who* is making that master plan?  (psst... nobody... certainly not george w.)

• ps. we have an idiot for a president. ;)
  
  
  ok... so i'm a pinko liberal and the worst market bear there is... but i'm giving you fair warning.... :)
  
  
  my next essay will be to refute all these points... and take the opposite point of view (laughing)
  
  
  remember... we are probably at peak of upswing right now... though the best stocks are perhaps reasonably immune.... the average american business is poised to suffer considerably more in my estimation.  i believe the next big buying opportunity will be march-september next year... expect some BIG bargains....
  
  
  dan
  
  
  ps... wow... lost my head... Hi John! welcome from lake woebegone! how the fuck are you!!!