Guns and Ammo

So, I’ve heard about the legislation that doesn’t have sponsors at this point on gun control. I’m talking about H.R. 45. You can find the link here: http://thomas.loc.gov/cgi-bin/query/C?c111:./temp/~c111tCkvxA

Essentially the bill will severely limit gun rights once again impinging on our freedoms. Don’t expect this to pass unless we have a national emergency. The financial deterioration could have such implications.

I wasn’t all that suprised to learn about this bill, but I was recently suprised to learn about various states introduciing legistalation tracking all ammo purchases via a database and having a laser imprint on all ammo.

So, essentially there will be a record of all your ammo purchases including which calibers your purchased. There are other details about owning non-coded ammo and taxes that vary per each state proposing the laws.

Check it out here: http://ammunitionaccountability.org/

I just can’t help but wonder 1) the implications if such legislation is passed, and 2) why such legislation is being proposed.

Something is amiss and doesn’t feel right. All I can say is that it isn’t for the better. We are about to hit the transition period in the crisis. It is the inflection point where the crisis was only affecting various groups of people to affecting almost everyone.

I think many people are still in denial that anything is wrong or if they realize something is wrong they think it is a temporary blip in the timeline. They don’t understand the global reach and implications of the present crisis, what caused it or when it began.

All I will say at the moment is that subprime is only a piece of the puzzle.

Now is the time to start taking actions. Now is the time to think about various scenarios that may or may not happen. Think about planning for a major natural disaster and that will give you some food for thought. Hey if nothing happens at least you prepared for the possibility and if an earthquake hits you will be ready.

Airline in Crisis…

I wrote this post last week while traveling on Delta, but let it sit a bit.  For all my grumblings, my return trip was nothing like my departure from SEA.  Therefore I’m going to conclude that either this is an isolated issue with SEA or perhaps larger airports.  Anyways, here is a bit about my adventures on Delta.

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I arrived at Sea-Tac, which is Seattle’s main airport for commercial flights. If I were flying private then there would be no need for this post. As per my usual routine I park my car and goto check-in. Generally this is a fairly pain free process, and can take from no time to a long time depending on the number of departing flights. Ironically this isn’t a complaint about security and the TSA.

I checked-in online to “save” time. If you aren’t checking a bag then perhaps this is a time saver, but if you are don’t bother. There is a redundancy in the system where it all has to be done again at the airport <at least the was SEA has things setup at the moment>.

Delta forces you to check-in again at the kiosk so your baggage check label is printed. From there your name should be called. In theory just like communism this sounds great, however we know what happened to Russia.

I happen to check the special bag field, which told me to see an agent. Okay so is my bag label being printed or no? I waited for a bit, while becoming quite frustrated. The system is broken when a random person goes and checks in ahead of the others who are waiting for their name to be called. My name wasn’t being called… after having an agent ask me if I used the kiosk… my name still wasn’t being called, and as I said random people were jumping ahead of the kiosk users.  Efficient right?

In Europe this might work because lines don’t seem as prevalent and they are able to find order in a chaotic mass while waiting. We United Statizens don’t do so well and get frustrated and confused.

What happens when someone comes along and needs to talk to an agent? They have to wade through a mass of people who are also waiting, but nobody really knows who is first second etc….

I’m going to leave the absurdity of the system at that, but it doesn’t work. Nobody knows they have to goto the kiosk to be put in the queue for their name to be called. There were so many frustrated agents and customers…. Not good for business Delta.

On other airlines I’ve seen every agent helping to get the job done, but there were the First Class agents and some further down who were not helping to expedite the process.

Yes, I was frustrated. To continue to be isn’t worth the energy, but I will now think again about flying Delta until they figure out their customer service situation. This is a first for this kind of problem with Delta and me.

At times there are problems at check-in. I can deal with that and I’m patient, but this confusion at the beginning of the flying process is going to lead to greater problems in the entire supply chain.

When a customer enters the airline they expect or at least hope for a certain level of service. There is no arguing that air travel is more difficult and anxiety ridden than in the past. Now we are searched, scanned, herded, and made to feel as though we are guilty of something.

The airline’s first physical contact with its customers happens either at check-in or perhaps at curb side. In an already hostile environment the step one of check-in needs to have the sense that the airline is taking care of you the customer.

Granted the airlines are losing money, they are adding service fees to stay afloat, and trying to trim every possible cost. The one area they need to invest is in service and starting their customers off on a happy flight. That will make the jobs of the flight attendants, airport staff, TSA, and every person their customer comes in contact with that much faster and efficient.

So we pay for checked baggage, we pay for food, and I’m sure there is another fee around the corner. The airlines really need to make sure this is the correct approach. As we moved from full service gas station to self-serve kiosks we have lost a large portion of service we once used to receive. For more we now get less.

Let’s say on average half the flight checks a bag and the other half only carries on bags. Instead of implementing a per bag fee, which annoys people and slows down check-in, add a fee to everyone’s ticket. Yes, those not checking bags will be paying for a portion of those checking bags, but I would imagine over time it would all even out. Sometimes I check a bag and sometimes I don’t.

In regards to food in-flight. What is with the crappy snack packages? They are junk food and ought not be considered a meal. Why not have people pay for food at the time of ticket purchase. If you want a meal you pay for it ahead of time and know you will have a decent meal versus being left stranded with crap. Airlines would be able to plan ahead the required number of meals and avoid throwing out excess.

In an industry where margins are thin, and competition fierce what will make an airline standout from another? Customer service!

I don’t want angry or frustrated agents helping me. Forcing people to use self-serve check-in only slows down the process because they don’t know what they are doing. Give them the option, but make sure to have agents available that people can wait in line for.

If an agent has to handhold many people’s hands at a kiosk then there is a problem. The idea of the kiosk is to enable people to check-in without agent assistance. On most airlines I like being able to check-in online, get my seats, select how many bags and then proceed to a bag drop where I show my ID and boarding pass. Simple and fast for the most part.

I don’t know what happened at the Seattle Delta ticket counter, but they are going to have continued problems until they modify the layout and process. Having frustrated people isn’t good for anyone all the way down the food chain.

On a bright note there isn’t anyone sitting next to me, and I have an exit seat!!

Withdrawal Symptoms

If my emotional barometer is any indication of where people’s minds are at the moment then I can only label it as coming down or recovering from a major hangover. It is the Sunday afternoon after a big night out sipping on your bloody mary to ease the pain.

We have been living on credit and tons of it.  At some point it becomes unsustainable and the house of cards tumbles down.  

Getting back to my analogy, think of drinking a ton of alcohol or coffee.  You keep wanting more and more when you finally get to a point where your body is completely dependent.  Any reduction in the drug will cause mild to severe withdrawal symptoms, any increase doesn’t do anything. 

This is what happens with credit expansion.  Too much and everyone goes on a spending spree with all the cheap money.  Take away the cheap money and people stop spending, jobs vanish, incomes decrease, and the previously incurred debt can’t be paid off.

So, instead of going through withdrawal you decide to take a lesser amount of the drug to make your hangover go away or slightly abate. However, you are still hungover. This pattern will continue until either you are completely free of the drug or your tolerance is now much lower enabling you to start increasing the amount as it now has a new profound effect as it did when you first started.  

It seems to me that we are in the post-crash hangover stage, but we aren’t completely free from the addiction.  We have taken a bit of the drug to ease the suffering.  The more of the drug we took the more likely we are to repeat the cycle.  We still need the drug to continue, otherwise we are going to feel like crap.  Hence, we still have a ways to go before we can recover.

If all goes as planned we will have a new President tomorrow and no longer will have to listen to the political banter at least for a while.  One piece of the uncertainty puzzle will be put into place, and we can focus on other issues.

In a NY Times article:

“We don’t know if it’s the end of the bear market yet, but it looks as though the bear has taken a nap,” said Sam Stovall, chief investment strategist at Standard & Poor’s equity research. “So investors are thinking, let’s enjoy a bit of a relief, both from the market’s lows and from the endless pre-election rhetoric.”

Other factors seemed to be playing into the rally as well, including a continuing round of coordinated interest rate cuts worldwide, the ongoing thaw in the credit markets, and the increasing resiliency of the markets to the daily drumbeat of bad economic news. The extreme volatility of recent weeks has calmed in recent days, though trading volume remained light.

Yes, the bear is taking a nap, but we are still very hungover and have taken a bit of the drug to help relieve the pain.  People haven’t completely capitulated and given up on equities.  They are hesitant yes, but still hopeful that things will turn around.

There is a major bear lurking around the corner and it isn’t just in the US.  They are giving birth around the world and China is no exception.  In a Financial Times article:

Wen Jiabao, China’s prime minister, warned that high growth was needed to maintain social stability as fresh evidence emerged on Monday that China’s economy was slowing quickly.

“We must be crystal-clear that without a certain pace of economic growth, there will be difficulties with employment, fiscal revenues and social development . . . and factors damaging social stability will grow,” he wrote in the magazine, Seeking Truth.

So, while equity markets recover mildly on noticeably low volume, bears are growling from afar.  Manufacturing is way down, consumer’s aren’t spending, banks still are reluctant to loan, major exporters are slowing.  I’d call this a worldwide slowdown of massive proportion.  We still have credit cards right?

What lies ahead…?

Recession, higher interest rates, massive inflation, higher commodity prices, continued decrease in housing, rising unemployment, and eventual devaluation of the United States dollar.  When will all of these things play out?  

My crystal ball has a few cracks, but for inflation to take hold we have to complete the current phase of de-leveraging and disinflation (which is bringing down prices).  Once this phase is complete all the newly created money will directly cause inflated prices.

The coming financial storm! Deja Vu

 

A rotten onion

I watch the markets on a daily basis, and attempt to stay informed as to what is happening in the world.  To be honest it isn’t a easy task as there is so much information to digest.  Alas, that is the beauty of the Internet.  

Anyways, I started to notice a similar feeling that creeps back in every so often.  The feeling has been apparent over the last year or so about the time this whole mess started to unravel.  After the peak of the market in October of 2007 we have had a falling market with a few cliffs and hills along the way.  After every step down there is a period of reprieve when everyone feels safe, though a bit cautious.  October has been a horrible month for equity markets.  We are now moving up slightly and into the future.  Everyone is hoping for a rally and return to a bull market.  

Unfortunately, I think this is just another calm before the storm.  We will probably continue to rally as people on the sidelines jump in hoping to make a gain or get in at a bargain.  What concerns me is that the market fundamentals are not improving, they are looking much more dire.  Take shipping for example.  Imports and Exports are down significantly from last year.  Consumer spending is way down.  Unemployment is rising.  Interest rates are looking to be on the verge of rising.  Housing is still falling.  Manufacturing is down.  

Does it suck to be in a position where all I see is an endless abyss… sure.  However, I think that it is necessary to clean out and let the market clear away all the excesses.  This post isn’t about economic theory, but a gut feeling that is slowly bubbling to the surface.  When someone with major clout such as Warren Buffett makes an announcement that he is buying equities alarm bells start ringing in my ears.  

Why I ask does Buffet need to provide confidence to investors.  For one many of Berkshire’s companies aren’t doing very well this year.  Then again what stock are really booming?  For Buffet to reassure investors makes me think that things may actually be worse than we even know.  On the surface everything is a mess, but what is underlying the mess that we don’t yet know about?

Once this recession goes into full swing, ARMs continue to readjust, and people’s credit cards are maxed out… 

I end this post patiently waiting the next layer of the rotting onion to peel away just to reveal another layer.

SkyDiving without a Parachute

 

People keep wondering when we will hit bottom, where is support, etc…  I’d say after the last couple days “what support”?  Panic YES, more PANIC YES, and so we go DOWN.  Perhaps we will get a rally, but the overall trend is down and has been down for about a year now.  The dollar is treading closely to a precipice as well.  Credit is frozen, which if this continues means shortages in supermarkets, shortages in everything that is purchased on credit.  What is bought on credit?  EVERYTHING  

Yes, I’m concerned… So, we have a choice.  Either we can freak out and panic and run around with our shorts at our ankles falling all over the place or we can take a deeeeep breath and think about what weand I can really do.  

Can we stop the market decline?   NO
Can we unfreeze the credit markets?  NO
Can we rescue failing banks? NO
Can we stop layoffs? NO

However, there are a few YES’s out there.  What are they you ask?  

Can we get a three month’s supply of food to have on hand?  YES
Can we hold Gold and Silver in case the dollar or the banking system collapses or goes on holiday?  YES
Can we better get to know those in our communities?  YES
Can we stop getting further in debt?  YES

So, eventhough our world may or may not look like is does presently there are things we can do to prepare for the what if scenario.  Really it is no different from preparing for a potential hurricane, tornado, flood, or earthquake.   If you live in an area with one of those potential natural disasters isn’t up to you to be ready for the unthinkable?  YES 

I don’t know about you, but I don’t want to wait for the National Guard to come in and save me.  It is up to us to be responsible, and prepared.

Might this all blow over?  Sure  And what if it doesn’t?  Then what?

-Trevor