Friday, November 21, 2008

The Big L – Gloom and Doom Part 3

Here's what Richard Russell (Dow Theory Letters) -- one of the few market commentators with first-hand experience of the Great Depression -- has to say:

“The market is warning of a coming depression. Next year there’ll be a huge problem of unemployment, job openings will have disappeared, and every business will be going over its personal thinking in terms of who the business can do without.

“The sentiment in the country will be dark grey to jet black. Fortunes will have been wiped out. Thousands of savings plans and 401Ks will have been shattered. Americans who have never experienced true hard times will be living hard times. Confusion and fear will be rampant. How do I know all this? I’ve been here before, I know the signs.”

By now, even those among us that think economists are people who know what they’re talking about, realize this: that the genie is now out of the bottle. Few believe that the government has a handle on where this ship of state is headed, financially. Despite Wall Street and its current health, next year and quite possibly the year after, 2009 and 2010, will almost certainly be a disaster. Even if a traditional-style recovery on Wall Street were to start happening now, there is no imaginative vehicle, like CDO’s or SIV’s, that will be the “next big thing” to bail out this economy. Wall Street may recover slowly from here, but it is more likely that any rally that occurs will be a Bear Rally, to be followed by pain -- a lot more pain.

What lies ahead is not a V or a U – traditional symbols of a bounce in Wall Street that signals we are recovering. The big L is now what is predicted if we are lucky enough to avoid the big D.
This describes a long, long, slide down – followed by a very long period of flat or low economic activity accompanied by deflation. It is clearly NOT a period of recovery – it is a period of economic stagnation. Few new jobs, little housing activity and disasterous, permanent downsizing. Only afterwards, assuming that rational economic policy – worldwide – is put into place, can there be any growth.
If you doubt this, contemplate the fact that Japan was in the dumpster for 17 years before it began to recover. Contemplate the fact that real economic activity after 1929 did not occur until World War II – and that any stock purchased in 1929, which was followed by SEVEN major drops before it ended in 1932, did not regain its value until 1954.

We are now still on the slide. Housing has another year or two before it hits bottom. Many houses in the Hamptons have already dropped by 50% in value and Manhattan condos and coops are just now beginning to fall in value. Many of the sales figures that real estate companies provide are hype. Few brokers will tell the truth that activity has fallen by 30-35% and that prices are buoyed only be the averages artificially skewed by a few extremely upscale new developments which are as close to speculating in tulips, as one can imagine.
Price drops are now common. They will soon be the norm.
With 50,000 Citigroup pink slips, 10% of JPMorgan Chase employees being dropped and the combined redundancies at the Merrill/Bank of America merger, the Lehman fiasco and the disappearance of WAMU, not to mention the bank failures across the country – credit, capital and investment is fast disappearing. The recovery figures in housing are based upon limited sales – foreclosures and short sales. By the end of this year and next, several million more people will be out of work and the foreclosures may INCREASE rather than decrease as a result.
There are convincing arguments that we are, in fact, no matter what anyone does, headed into a Depression by 2011. This is based upon the cumulative begging, borrowing and stealing now going on by the Federal government – which uses printed money to solve an essential problem with our economic model. And, that is, there is a limit on how long you can pay your bills and the interest on your bills by borrowing yet more money. That process, created by massive leveraging, does end somewhere. And, since we are still leveraging our way out of this mess by printing more money, issuing more Treasury Bills, and bailing out more inefficient businesses, the end will not be pretty.

What is to be learned from this?
Nothing. This is our future.
Everyone needs to understand where we all going.
To know is to be forewarned.

Buying gold is a hedge but until grocery stores start accepting gold coins for bread, the only transactions that can be had are with Steve, the coin dealer. It is neither realistic nor practical to hoard gold. And, don’t forget, those who bought gold at $950 an ounce a few months ago, have lost $200 on that investment already.
Reducing expenses, downsizing your business, limiting unnecessary purchases and increasing your productivity are among the few things you can do personally. If you MUST attend a political fundraiser, be damned sure that he or she represents your needs and will give you real promises.

What may be helpful in knowing what is about to happen, assuming that GM, Ford and Chrysler do get a bailout or bridge-to-nowhere loans (since non are viable business models), is that voters need to keep a sharp eye on the politicians.
Forget Bush and forget Paulson – the Goldman Sachs CEO who bailed out his buddies on Wall Street first -- and then scrapped plans to buy the toxic debt which he used to convince Congress to give him the money. Paulson had resigned effective January even before he got the green light from Congress, so he’s already accomplished what he needed for his friends.

But, local politicians need to be watched like a hawk.

In the Hamptons, where a bankruptcy in the Town of Southampton is not unlikely, more local residents need to understand that the Republicans have been running things for decades. They are used to living off of the fat in the real estate game – by taking the property taxes and the transfer taxes intended for the Community Preservation Fund to run the government. Fred Thiele, former Town of Southampton Supervisor, buddy of Democratic County Chairman Rich Schaeffer and friend of racist County Executive Steve Levy – created the Preservation Fund to buy vacant land not to be developed. That fund has now been raided by Supervisors in East Hampton and Southampton in order to pay salaries and other expenses. In other words, instead of the painful decisions, they have dipped into that money improperly, if not illegally.

What does this tell you? It tells all of us that the source of funds to run the government – the money used to abuse New Yorkers, landlords, non-resident taxpaying property owners – has dried up. The entire local economy in the Hamptons is in deep, deep trouble. And still, like before, they exclude the ONLY source of money in their planning or government. Calls for a Hamptons Advocate fell on deaf ears in the past. That is unlikely to change with another administration of Republicans who only want power.
With wins by Obama, Pope and Schiavoni, the economy as well as the political landscape may change without their cooperation.

In Manhattan, there is more subtlety. But, change in Manhattan will come in the form of alternative political structures. The fact that Democrats control the agenda in a liberal or progressive city, may be challenged. As the economy tanks in Manhattan, politicians may find that they do not have guarantee of a sinecure in office.
Fundraising will change. The money will not be there.

As the budget decreases, as tax revenues dry up, and the City and private workforce decreases – and as deflation takes hold, politicians will have to work harder to retain the trust of voters. The Obama win will comfort many but change is the message – not status quo.

Wednesday, November 12, 2008

Politics and The Mundane Media

Politicians are like diapers. They both need changing regularly and for the same reason.
-- Unknown

There used to be a point in criticizing the media in the Hamptons.
There was the drunk who was rumored to have abortions in his own family pontificating to the general public about his support of “Right to Life” candidates, like virtually all local Republicans. Fortunately, Suffolk Life went the way of his abusive “whiskey ideology” which crucified any and all free speech that his politician friends wanted targeted. Wilmot was a guy whose best characteristics were his Stalinist methods at the “news.”
He and his reporters routinely serviced Republicans in the County, Town of Southampton and Villages like Westhampton Beach when they needed to even the score with anyone who disagreed with them. He and his publication were an extension of the police state.

Further down the food chain is the Southampton Press, whose advertising base is supported by the Republican Party as well. Having sucked off the ruling party elite for decades, news reports of DWI’s that went missing from police reports and evaporated from the “Police Blotter” that exposes anyone and everyone whom they want to embarrass – they too, have begun to read the tea leaves. No longer are the glowing reports of “Skip Heaney's” bouts with the Town Board such important press. But, the sycophantic need to report trivia and utter failure to check facts in their articles remains.

Currently the Press is pandering to the Village of Westhampton Beach’s Mayor Conrad Teller, a former cop who is scorned for his anti-business attitude, irresponsible handling of Village crime, and inability to govern without a gun. The Village Board and every appointment in this anti-Semitic and racist government grasps at straws in its attempt to silence opposition and free speech. Business it merely tolerated and no help is on the way.
So, who to call?
Well, the Southampton Press, of course.
When the glowing reports of the latest fundraising maneuver, like Highway Superintendent Bill Masterson who is one of the bagmen for the Republicans – by virtue of cash for highway contracts -- are losing interest – what to do?
Enter Conrad Teller.

Recently, finding that a critical point of view of the Democrats is dicey after Dan Russo was canned, a favorite of the Republicans, it seemed a better ploy was to fish around for less problematical stories. What better than do some favors for the Master of Disinformation in Westhampton Beach, Conrad Teller. Actually, Bugs Bunny would be better at hiding the fact that he is not only anti-Semitic but also anti-Latino and anti-business. He never saw nightlife that he didn’t like. Of course, when you fall asleep at Village meetings, there’s hardly a conflict.

So, Teller, who leaks policy through his appointees, like Barbara Ramsay of the Planning Committee (a local anti-Latino with direct control of the police) and Paul Houlihan of the Building Department, as well as Bridget Napoli, the NKVD-styled Code Enforcer who takes orders from the “insiders.” (Ramsay and Houlihan among them) -- and then denies or disagrees with these positions – manipulates the Press coverage of his dictatorship. Of course, only a newspaper, which is seeking to fulfill its mission as the Republican Party organ, would follow that ploy.

Tellers most recent manipulations have been the Eruv, which pits local residents against Marc Schneier of the Hamptons Synagogue and Jews – whereby he supports a fictitious separation of church and state movement (about black plastic on telephone poles), while voting for the issue in order to attempt to confuse his opponents. No one buys it.

The Southampton Press, of course, primes its reporters to follow the phony independent reporting mantra. The slant of stories is careful not to give away the farm. But, what they cannot control is the planned intent of their writing – which comes through by is massive ignorance of facts as well as its complete lack of fact checking. That was one of Wilmot’s major tools.
So, now that Teller and his racist-anti-Semitic bureaucracy have pulled some strings, a few “news” stories have started to focus on Westhampton Beach.
There is the major piece about “Silly String” which Teller planted for a friend in the Chamber of Commerce to create problems for a local business owner – and there is the Sunset Café story, which gained traction because it has the only Spanish Night in the area.
Barbara Ramsay and her husband, who live in the back rooms of two businesses on Sunset Avenue –a bureaucrat and insider in the Village –, managed to kill the application of the Sunset Café for outdoor music. The Village Attorney played along with the charade and, of course, no proof was necessary. No written complaints were ever produced. Only the words of the Secret Police. One local resident describes Ramsay is “tense.” Another way of saying that is “wrapped too tight.”
Of course, the no music, no nightlife, no fun – and certainly no Jews or Latinos – thrust of Teller and all of his bureaucrats – which is against public policy and racist – is also phony. Predictably, Teller followed up what he must have considered a devious press ploy – to kill the rest of the nightlife in his little Village. What better than to use this carefully crafted news story cooked up by Teller and Ramsay, of complaints about loud music one night a week INSIDE of the building 100 feet away from their back bedroom at 11 pm? In normal circumstances – if you don’t control the police – you knock on the door and ask people to turn down the volume.

Of course, that does not stop the Southampton Press. Because, it is the mission of the Southampton Press to interfere with any social trends that do not serve the Republican Party. In this case, no interviews were sought that would completely counter the news impression fostered by the Village.
While only Suffolk Life would give interviews to people like Joe Lombardo (Southampton Town Attorney), who trashed people that he was prosecuting -- the Southampton Press panders to Republican Party Chairman Marcus Stinchi (who lives and works in Westhampton Beach) in the guise of reporting news. And, Stinchi, of course, was acting on orders to create a problem for those who have sued the Town of Southampton for the same racism that works for Teller and Ramsay.

Don’t buy the media ploy.

And, don’t buy the one-sided news stories reported in the Press.
Silly String is a fun toy and the Sunset Café makes great coffee. Their Obama party was a success. And, it serves everyone, even Village bureaucrats. The fact that the owners of many year round businesses serve the Village at a loss most of the year, providing employment and life to the community – is never part of the news story.
Debates and healthy Free press are what made America great. More of it is on the way.

Saturday, November 08, 2008

Hamptons Election Notes

The great masses of the people... will more easily fall victims to a great lie than to a small one.
--Adolf Hitler (1889 - 1945)

What most people don’t realize about the Hamptons is that it was one of the few locations that voted for Herbert Hoover. Residents of Villages and Towns were upset over what they percieved as Democrats who are infiltrating the Republican bastions. There has been much Republican hand-wringing over the incursion made by what they perceived as candidates riding Obama’s coattails to victory. The fact that Obama signs were being stolen or destroyed apparently didn’t help to change the election. A Democrat, Sally Pope, ran for Town Board in Southampton Town and edged out a hand-picked Republican incumbent. Linda Kabot selected Dan Russo, on the instructions of the Republican Party after a real Primary, which ejected Skip Heaney as Supervisor last year. And, Andrea Schiavoni forced out Tom DeMayo in the Justice Court. His penchant for signing stacks of search warrants for the Town Attorneys and the Code Enforcement police will not be missed by many civil libertarians.

above photo of Sally Pope (Town Board winner) & Dan Russo

Although Anna Throne-Holst is a Democrat, holding hands with Russo was more than a romantic problem. The supposed changes after Throne-Holst became the lone Democrat on the Town Board amounted to more than misinformed press pieces given to that stellar media source And, Throne-Holst's misguided attempt at a “Green Law” was just another sub rosa route for the Code Enforcement Police to get into your bedroom ostensibly to check for illegal immigrants. Russo, of course, simply lied to reporters of the mislabeled entities known as "news" organizations on many occasions and both and the Southampton Press currently are scrambling to appear a little less right of center these days. Reporters like part-time real estate agent Andrea Aurichio must be looking for better sources after sychophantically writing what some of the Republicans handed out as facts -- which fact-checking normally would have identified as pure fantasy. Of course, most of what the Town Board, Town Attorney's Office and Code Enforcement do is actually geared towards investigating people rather than correcting problems. If that were not the case, there would be a system in place to notify owners of problems needing to be corrected. And, laws would be discussed with property owners, like New Yorkers -- who cannot vote in local elections -- yet.

Contrary to popular belief, having a search warrant issued by the Justice Court and breaking into property at 5 a.m. to check for smoke detectors is more reminiscent of the NKVD in the Soviet Union than a building inspection ordered to protect people. But, under the rules initiated by former Supervisor Skip Heaney and carried out by Fire Marshal Cheryl Kraft – the overlord of Code Enforcement – this is how Latinos, Blacks, New Yorkers and political enemies are targeted in the Town. Tom DeMayo played a big part in helping those particular wheels receive enough grease.

Thus it is useful to understand that the Razzle Dazzle was a card game made famous in Cuba when Fidel was still in the Sierra Maestra Mountains and Fulgencio Batista was still hobnobbing with Santo Trafficante and Meyer Lansky in Havana. It is a game that counts on suckers who believe that they are facing a dealer with a full deck and ever-increasing chances of winning. It’s a lot like the game played on the voters facing Republican ideology in the Hamptons. It’s rarely overtly racist or anti-Semitic – but the ante is constantly being raised when things don’t go according to plan.
The real name of the game in places like Southampton Town, Southampton Village and Westhampton Beach Village is corruption. This corruption, under the guise of a Republican ideological agenda and its sympathizers who ostensibly want to protect residents – is a form of political corruption that is anti-New Yorker, anti-landlord, anti-Black, anti-Latino, and anti-Semitic.
It also is the big threat of political targeting for those who don’t fall in line and buy the Big Lie. The police and prosecutors, the Town Attorneys, the Village Attorneys, the Suffolk County D.A. -- are the enforcers. It’s the political Razzle-Dazzle with teeth. And, in this last Town election, many people were watching what the Obama-effect would be after many years of trying to make voters believe that the anti-immigration policies that brought us the Code Enforcement “Terror” was just. These early dawn raids on immigrant women and children under the guise of searching for missing smoke detectors, replete with warrants and guns drawn, were reminiscent of the 1930's Stalinism during which even Americans were "disappeared." That we were to believe these raids were really instituted by politicians trying to protect visiting workers from faulty smoke detectors – and, that the objections to the Eruv in Westhampton Beach Village is really a “separation of Church and State issue” -- belies the corruption of these governments. None of us are stupid as they believe we are.

Donald Kauth, the head Code Enforcement cop, along with Southampton Town Fire Marshal Cheryl Kraft and Town Attorney Joe Lombardo were recently in court over one of these early morning anti-Latino raids. It was clear that they had been instructed to find a phony basis for their illegal and unconstitutional acts. The chain of command is Skip Heaney, the Republican Party, Linda Kabot, Dan Russo, Chris Nuzzi, Cheryl Kraft, Kauth and all of the boys and girls who blindly and obediently break the law to target opponents, Latinos, Jews, New Yorkers and the Democrats. Only now, with a Democrat in the White House and control of Albany, it’s not the Suffolk County D.A. but the U.S. Attorney’s Office that may have an interest in their activities.