Just Thinking Chronology

Stratfor Global Intelligence is in my opinion among the better international news sites.

At about $30 a month, it's probably not worth it to most folks.

They have a one week trial deal.

I like it.

From an article titled,

"Mexico a Struggle for Balance"

“…Mexico was nearing the status of a failed state.

A failed state is one in which the central government has lost control over significant areas of the country and the state is unable to function.

In revisiting this issue, it seems to us that the Mexican government has lost control of the northern tier of Mexico to drug-smuggling organizations, which have significantly greater power in that region than government forces.

Moreover, the ability of the central government to assert its will against these organizations has weakened to the point that decisions made by the state against the cartels are not being implemented or are being implemented in a way that would guarantee failure…

“…The United States consumes vast amounts of narcotics, which, while illegal there, make their way in abundance.

Narcotics derive from low-cost agricultural products that become consumable with minimal processing.

With its long, shared border with the United States, Mexico has become a major grower, processor and exporter of narcotics.

Because the drugs are illegal and thus outside normal market processes, their price is determined by their illegality rather than by the cost of production.

This means extraordinary profits can be made by moving narcotics from the Mexican side of the border to markets on the other side…

“…each smuggling organization has an attached paramilitary organization designed to protect its own supply chain and to seize its competitors' supply chains.

The result is ongoing warfare between competing organizations…

Membership in such paramilitary groups offers impoverished young men extraordinary opportunities for making money, far greater than would be available to them in legitimate activities…

“Indeed, what the wars are being fought over in some ways benefits Mexico.

The amount of money pouring into Mexico annually is stunning. It is estimated to be about $35 billion to $40 billion each year…

From Mexico's point of view, interrupting the flow of drugs to the United States is not clearly in the national interest or in that of the economic elite…

The following charts pretty much speak for themselves.

Both are from the Tax Foundation and link to their fine site.

2005 is the freshest analysis that I could find.

DC does good!!! 

Michigan? ..... Not so much! 

"Nearly everybody I read or talk to is convinced that we're in a new bull market -- a primary bull market which they claim started at the March 2009 low.

If the March 2009 was a bear market low, it was unlike any bear market low that I have ever seen.

Where were the "great values" that always present themselves at a bear market bottom?

Where were the juicy Dow dividend yields that we invariably see at true bear market bottoms.

For instance, back in 1981 the Dow dividend yield was 6.42%.

At the bear market low of 1974 the Dow dividend yield was 6.12%.

In 1940 the Dow dividend was 6.84%.

In the dark year 1931, the Dow dividend yield was 10.78%

Where were the fabulous values in March 2009?

The answer, March 2009 was not a true bear market bottom.

The next great bear market low lies ahead!"

The Canadian Dollar has again achieved achieved parity with the US Dollar.

Closing at $1 Tuesday 4/6/2010.

Professor Robert Shiller (Yale) is probably best known for his book "Irrational Exuberance" and the "Case-Shiller US Home Price Index he developed with Professor Karl Case (Wellesley) .

In his spare time, he came up with the Shiller P/E ratio.

The Shiller P/E ratio is calculated as follows: divide the S&P 500 by the average inflation-adjusted earnings from the previous 10 years.

Got that?

Don't worry about it.

Up is good if you're selling stocks.

Down is good when you're buying.

The chart below was taken from an article at The Daily Reckoning written by Dan Amoss having to do with a speech given March 24, 2010 by Russell Napier of CLSA (no clue) at the CFA Society (Certified Financial Analyst).

Excerpts from this most quotable speech, one of which I've posted below, are all over the place.

Recommended. 

The following chart from The Seeker Blog shows the same chart with it's historic average in red.

From Barry Habib at Mortgage Success Source

“So the Fed stopped buying Mortgage Backed Securities, and people are wondering if this will affect mortgage rates.

There's been plenty of whistling past the graveyard, guesswork and denial, where so-called experts have been trying to tell us that there will be minimal - if any - change to rates. 

That pipe dream is just nonsense.

During the past fifteen months, the Fed purchased $1.25 Trillion in MBS, which represented 80% of the mortgage market.

Prior to this program, mortgage rates were above 6%.

Now that the Fed program has ended, it's reasonable to assume that mortgage rates will rise back towards those levels…

“Additionally - sovereign debt has come into question. 

Downgrades in the sovereign debt of both Greece and Portugal are a warning to the US that the same can happen here, which would drive the cost of borrowing much higher.

Our government currently spends $1.49 for each $1.00 it brings in. 

Our debt is now 57% of GDP...and rising.

Does anyone really believe that Treasury yields are headed lower?

As Treasury yields move higher from their current levels, mortgage backed security coupon yields will also need to move higher in order for investors to want to purchase them.

“When all the factors are considered - the chances of higher interest rates are a virtual lock.

And anyone in the market to borrow should consider acting sooner rather than later.

With such low rates still in our hands...and all these various factors pointing at the inevitable fact of rates moving higher.”  

Barry Habib, Mortgage Success Source

It'll be OK Hamid.  Everybody feels like that from time to time.