Greenspan's Body Count: Mike Upham, stucco businessman

We are just three days into the new year, and already another Greenspan victim has been discovered. Mike Upham had a stucco business dependent on the Florida construction boom. When Greenspan's bubble burst, it was too much for Upham:

The 38-year-old father of two struggled with depression, his wife said, since losing his Palm Coast stucco business two years ago because of the downturn in the economy and construction industry. While he was working for someone else, his pay was cut almost in half, Denise Upham said.

Rest in peace, Mike.

Greenspan's Body Count now stands at seventy:

Mike Upham
Randy Motts
Kristy Hunt
Joseph Nesheiwat
Tom Brisch
Alex Widmer
Brian Pugh
Marilyn Lewis
Sid Agrawal
Kirk Stephenson
Barry Fox
Dallas Dwayne Carter
David Hetzel
Sharron Hetzel
Cliff Kendall
Pamela Ross
Roland Gore
Mrs. Gore
Wanda Dunn
Karthik Rajaram
Subasri Rajaram
Krishna Rajaram
Ganesha Rajaram
Arjuna Rajaram
Indra Ramasesham
Joe X
Isabelle Jarka
Robert Wagner
Lt. Michael Howe
John Roberts
Palmer C. White
Dianne Pittman White
Ed Boesen
Edwin F. Rachleff
Carlene Balderrama
Troy VanderStelt
Scott M. Coles
Dawn E. Armstrong
Thomas Lizotte
Jonathon Calvin "40-Cal" Jacques
Salvador X
Lupe X
Jade X
Little Boy X
Little Girl X
Kashmir Billon
Bill McMurtry
Lisa McMurtry
James Hahn
Raymond Donaca
Deanna Donaca
[redacted]
[redacted]
Michel Veillette
Nadya Ferrari-Veillette
Marguerite Veillette
Vincent Veillette
Mia Veillette
Jacob Veillette
Maurice Pereira
Natasha Pereira
Mark Achilli
Raed Al-Farah
Andrew Kissel
Rufus Shaw Jr.
Lynn Flint Shaw
Mr. Pierce
Walter Buczynksi
Marci Buczynski
Jason Washington

It's great when you can turn your passion into a business

New York Times opens Barack Obama memorabilia store.

Unliveable at any price 541 Guidero Way Encinitas 92024

"U must See" Very close to Moonlight Beach and Freeway.

I'll grant you very close to freeway.



Moonlight Beach, not so much.

2008 Report Card and 2009 Outlook

The past few years, the W.C. Varones Blog has done a year-end review of our trading recommendations. Here are the 2006 and 2007 report cards.

While we weren't able to recommend specific stocks this year, we did espouse some pointed views. How did they turn out? Let's take a look.

First, as we noted in the 2007 report card, we entered the year long U.S. and foreign stocks, emerging markets, gold, silver, and foreign bonds. We were expecting a recession and dollar weakness. We were right on the gold, silver, foreign bonds and recession, but brutally wrong on stocks, emerging markets, and dollar weakness. We were more defensive than most, but underestimated the crash and overestimated Zimbabwe Ben's ability to print his way out of it.

Likewise, we didn't predict the Treasury bubble that we are now in. That will pop. When, I don't know. It may take more than a year. But if you are willing to lend long-term to the government at 3% pre-tax when federal obligations are growing at double-digit rates with no conceivable way to pay them down, you're insane.

There were a couple of great calls in 2008. Our October 16 "epic opportunity" call came with the GDX at 22. It closed the year at almost 34, a 54% gain in 1 1/2 months. And if you played it with call options, as we did, you multiplied your money many times over.

And in July, we were the first to spot the Calpers fraud, which became big news in December.

My outlook for this year? I'm still sticking with what I said in October 10's What comes next:

Stage 1: Paulson/Bernanke [now Geithner/Bernanke, a distinction without a difference] continue throwing ever greater amounts of money at the problem in increasingly radical and unprecedented ways. In addition to direct purchase of toxic waste and equities, don't be suprised to see direct government refinancing of mortgages or direct government issuance of new, low-rate mortgages to home buyers.

This may have the positive effect of downgrading The Second Great Depression to The Really Bad Recession. But it will also have the decidedly negative effect of destroying the government balance sheet.

Stage 2: As the recession deepens, job losses mount and business activity drops, cutting tax revenues and making debt service on the $11 trillion+ debt impossible. Uncle Sam becomes Casey Serin, and Treasury bonds are no-job, no-income, no-assets liar loans. The government faces two choices: default or the slow puncture of inflation. Inflation is probably the lesser of two evils, but it's no picnic, as Argentina, Zimbabwe, and Weimar Germany can attest.

The intersection of economics and politics

For anyone who needs a refresher course on why politicians and government officials should stay out of economics, please read Mike Shedlock's post How "Something For Nothing" Ideas Become Policy.

Here is the conclusion:

1) Those with money control policies in Congress. In return for sponsoring policies that make no economic sense, corporations pour massive amounts of money into campaign coffers of those who will support whatever legislation the corporations want. The first thing corporations want is government sponsorship at taxpayer expense. The last thing corporations want is a free market.

2) Inflation (expansion of money and credit) is a stealth tax (theft), demolishing the middle class over time. Inflation allows government to collect more every year in property taxes, sales taxes, income taxes, etc., typically to pay for war mongering and social redistribution activities sponsored by the corporations that benefit from war mongering and social redistribution activities. The expansion of credit scheme "works" until it all blows up in deflationary bust every few generations.

3) Academia is a breeding ground for socialists. I discussed this aspect at length in Fiscal Insanity Virus Rapidly Spreading The Globe (Part 1) and Fiscal Insanity Virus Rapidly Spreading The Globe (Part 2). Academia likes to promote socialism and blame the free market for failures caused by excessive regulation.

4) People want to believe someone is in control. Even though it is crystal clear that the Fed is a huge part or the problem, people want to believe the Fed is in control. It is very discomforting to think the Fed has no idea what it is doing, so people simply refuse to accept the fact that the Fed has no idea what it is doing.

5) People want to trust the experts even though the experts screw them time and time again. The same thing exists in the stock market. People want to believe stocks will go up so they believe anyone who tells them stocks will go up.

6) There is an overwhelming propensity by everyone to seek something for nothing. People will listen to and vote for anyone promising something for nothing. Economic professors and members of Congress are both particularly adept at promoting something for nothing.

Back to the future

Over the holidays, I took a little trip to the year 2015 to see what the future holds for us. Now I'm not going to ruin all the surprises, and I won't tell you what team to bet on in the 2014 Super Bowl, but I hope you'll be reassured to know that we still have Chili's restaurants, and the menu is much the same:


(click to enlarge)