Competency Deficits

A professor said this past week, "there are competency deficits" in the management of all this hysterical fear mongering and who is running what and seeking advice to remedy in haste all the collapsing markets. Only time will heal this human response to crisis management. Funny how the new leadership now turns back to Wall Street for help.

Syndicated loan volumes for January fell the most in ten years, more importantly straight corporate debt issuance was $170 billion last month a one month record.....i.e...a normal market is returning....companies are now substituting banks loans for regular old fashioned bonds. Just as the panic is maybe peaking.

Treasuries have already corrected for the new quarterly treasury refunding. The I share 20 year bond index has fallen 17% year to date.....yields are moving higher...this reflects many things....anticipation of economic strength probably the most important. Gold too moves higher confirming our reflation theme. Stocks so far are not making new lows....

Unions and government control...public sector jobs?? Currently 22.5 million people are employed by the government. These folks have greater wages and benefits often guaranteed by state constitutions. State and local government workers get paid an average of $25.30 an hour, which is 33% higher than the private sector's $19, according to the Bureau of labor Statistics...throw in pensions and benefits and the gap widens to 42%! Only Chapter 9 of the bankruptcy code can challenge these liabilities going forward. Expect many local city and states to go this route once tax receipts fall off a cliff later this year. Careful with municipal bonds.

In a normal year 5% of the nations cars and trucks are sold for scrap. There are roughly 250 million vehicles on the road today, that means to just replace the scrap rate, about one million new cars need to be sold each month. In January only 655,000 vehicles were sold..the lowest level in 33 years. As well. companies are not buying or spending money on capital equipment..not keeping up with current depreciation on their old equipment. This is all text book recession stuff. The "accordion effect" is about to restore a more normalized economy later this year.

The best thing WDC should be doing is nothing. The markets always self right themselves eventually. The only people that seem to be barking the most are those who are not paying their taxes....or don't pay taxes.

Venezuela is now six months behind on salaries to over 5,000 employees in their oil industry.

Capital preservation is always paramount, but sitting in treasury bills when preferreds, precious metals and oil are in no need of government guidance sure seem like a safe bet to us.

Danny Boy seen here watching for some squirrels to chase.