by Mark Scheinbaum
Angel Fire, N.M.
March 15, 2007
WALL STREET'S POLITICAL DISCONNECT
ANGEL FIRE, N.M. -- Perhaps if Wall Street analysts paid more attention to political news than micro financial news, they would have a better handle on the roller coaster of global markets in recent weeks.
When President George W. Bush played tourist in a country that
doesn't like him, and didn't need his visit, his stroll through ancient ruins in
Mexican's Yucatan should have been viewed not as a diplomatic mission but an
allegory for the ruins of his own Administration.
The big problem for amateurs trying to make sense out of equity and fixed income investing, is that the big boys who supposedly know more than you are quite selective about connecting the political dots to the pocket book dots.
When it is obvious and convenient, political kamikaze Islamic zealots killing more than 3,000 Americans on 9-11 certainly should, and did impact markets.
The prestigious Chicago econometrics firm of Ibbotsen & Associates will sell you charts showing the market reaction to JFK's assassination, the Japanese attack on Pearl Harbor; President Eisenhower's heart attack while in office, and Monica Lewinsky trying to keep from getting her hair caught in Bill Clinton's zipper.
If we take it as a given that markets, economies, and crowd psychology do not happen in a vacuum, but rather in the environment of governments, politics, politicians, regulators, and bureaucrats, then how do you explain the two steep market declines and partial retracements of the past two weeks?
We are told by pundits and various talking heads that the cause for fears among many investors is variously: Japanese Yen policies; the bubble of the Shanghai stock exchange; the revelation that sub-prime mortgages, "flippers," and real estate touts months ago led to a crisis in this sector, and "technical support levels" were violated in the S&P 500 Index.
I'll assume that parts of some of these items are part of the explanation for market volatility, but I would suggest that parts or all of the following political considerations also make for the uncertainty and lack of faith in stable governments which also spook markets domestically and internationally:
Albertogate: Umm, let's see, all U.S. attorneys "serve at the pleasure of the President" so the White House's ill-fated Supreme Court nominee cum political bag lady says "let's fire them all."
The nation's highest-ranking lawman fires an underling for canning eight of the U.S. attorneys, but too many of them had told stories of political pressure to not only prosecute Dems and ease up on investigating GOP hacks, but to prosecute the Dems faster, ahead of the off-year election.
His total manipulation of the U.S. court system became clear through emails, where we learned that New Mexico's U.S. attorney who Alberto Gonzales fired "for cause" was given a letter of recommendation from his boss!
Iraq and Pinocchio: It's pretty well etched in stone that the decision to "disappear" Saddam Hussein was made before or just after the first alleged election of Dubya. In the process Colin Powell's UN swan song finished off his political career, and both sides of the aisles are left explaining how they were easily hoodwinked.
Water under a Tigris bridge? Well, the additional 20,000 troops finagled by the Commander-in-Chief were supposed to be the last, last straw and great whitewash hope of the Coalition of the Unwitting.
This week, before the 20,000 troops are all rounded up from guys who have already been deployed one, two, or three times, the President orders 4,000 more troops to serve as Officer Friendlies in neighborhoods hiding cowardly assassins.
Vetting Your Feelings: Chances are the vet who takes care of your Lopsided Apshole or little Dorky works in a cleaner, safer, more humane environment than some of the Vets who had their legs blown off in Iraq or brains turned into flan. The medics and field hospitals are the best of the best.
Some VA hospitals have improved in recent years and regular Army folks at Walter Reed or other Army hospitals - despite bad publicity - usually do right by our wounded men and women. Yet the after-care, the follow-ups, the financial support to give the Vets' families basic resources and dignity are a disgrace.
Sort of makes you want to drop big bucks into the stock market, feeling all good about your country and its leaders and how we are the model for the world? Not.
For Oil Times' Sake: Unleaded gas - the commodity - traded around $1.90-1.93 in recent days. Wholesalers or "middlemen" claim their honest mark-up has always been 40 to 45 cents. Who's going to quibble over a few drops of premium? So, let's call it $1.35 to the dealer.
The Ma 'n Pa gas station owners (who really don't exist anymore) claim the folks at your local Lotto, liquor, car wash, Krispy-Kreme and gasoline parlor only get to tack on another dime per gallon. Okay, hell, I'm a spendthrift, so let's say fair market value in most parts of the United States should be $2.50 a gallon right now.
How come, then, here in the fourth-largest oil-producing state in the nation, $2.70 hit the signboards today? Why are many Californians and Hawaiians paying well over $3.00? Where is the national leadership investigating how milder weather, no hurricanes, and three months from the peak driving season have produced higher prices? Refinery problems you say? Yeah, like any politician has voted for a new petrochemical refinery in their hometown in 40 years!
Sarbanes-Oxley, which no one really understands except that it makes U.S. corporations obey some basic rules of fair play, transparent executive compensation, and shareholders' rights which might not be in their inherent corporate nature to disclose on a voluntary basis. Workshops, conferences, and symposia all bemoan the fact that London, Tokyo, or Shanghai have more favorable ("relaxed") climates for corporate governance and capital formation.
In plain English, they argue, "Why is the SEC forcing us to be more honest than crooks overseas? We are at a disadvantage! In fact, well, we might just pack up our Tinker Toys and move to Dubai!"
A nation of corporate managers and directors who think the moral high ground is beneath the Enron building - not exactly the stuff stable markets are made of.