01.03.08 News & Notes

ECONOMICS:
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"We were taught in Economics 101 that countries could not for long sustain large, ever-growing trade deficits. Our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4% more than they produce - that's the trade deficit - we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own." Warren Buffett, as quoted in the article Winning Attitude: Ten Resolutions That Will Help You Survive The Coming Bear Market, by Paul B. Farrell, in his column in today's MarketWatch. Not all Mr. Farrell's resolutions are specifically market related. I enjoy his writings whether or not I agree with him or not, and I do not always agree with him. For instance, he does not believe that anyone can beat the markets consistently. Yet our NoTouch Portfolio and OOPs portfolios detailed on our financial blog have done so consistently over the years.
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Debt reduction ranks 2nd among the most popular resolutions for 2008, according to another worthwhile article on today's MarketWatch by Marshall Loeb. Sound advice in the column towards a very worthwhile goal. The Bible says that the debtor is servant to the lender. A system that makes it easy to borrow and penalizes you for saving by confiscating those savings with inflation and taxes is like children getting to pick their own menus every day. Candy and sweets may be tasty, but that doesn't mean that they are good for you on a regular basis, especially as your main diet.
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The dollar making new lows, oil and natural resource prices rising, and foreign investors now buying up our businesses rather than take as many of our increasingly devalued dollars, are all signals that we are looking at trouble. Watching CNBC yesterday in another rough day on Wall Street, I heard one of their regular anchors railing against people who recommend gold and oil buys as only saying those things because "that is what they are selling."
...Laughable. Like the regular Wall Street shills aren't doing the same every day?
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INFLATION CALCULATOR:
...Here is a neat tool provided by the Federal Reserve Bank of Minneapolis. You can measure the rate of inflation on goods and services you have purchased (using their data, of course, for what that is worth.) You just plug numbers into the fields on their form. For example, if you say I bought $1.00 of goods in 1997, what would they have cost in 2007? Their answer is $1.29.
...Of course, government inflation numbers are severely distorted to the conservative side. But if you know what you paid for something, say a food item several years ago, you can put in the current rates and see how much the price has increased on an annualized basis since?
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H5N1 Avian Flu. This is starting to come back on the radar. The link is to the government site covering the bird flu. Note their map showing cases with confirmed cases of the H5N1 flu. There's a lot of information on the site regarding how families should prepare for a potential emergency. This information would also be useful for any other potential emergency.
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