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Today's Market WrapUp 04.09.2007 Mon Tue Wed Thu Fri Kirby Archive Prospecting
In Your Own Back Yard In conducting proprietary macro economic research to get to the unseen crux of the who’s, how’s and why’s of the economic landscape - I am guided by the maxim of ‘follow the money.’ I choose to follow this course because of my belief that the methodology is fundamentally non-partisan [perhaps a fancy way of saying that greed is a universal constant]. But biases do exist. Isn’t exercising of our ‘right to choose’ nothing more or less than the manifestation of our biases? When one ‘sets out to explore’ – is there not an ingrained assumption in the very thought that ‘travel leads to discovery.’ Or perhaps we could view exploration instead as a quest for knowledge; in which case, perhaps, no steps are physically taken but great distances are traveled in mind. Over the past week or so, I’ve been busy rediscovering the Financial Sense web site and the enormous wealth of knowledge contained within. When you are close to something, it’s easy to take it for granted and overlook some of its finest attributes – or in the case of Financial Sense – some of its more interesting nooks and crannies. Grandfatherly Wisdom Today’s market wrap is a tribute of sorts. Having spent time this past weekend – exploring the realms of FSO contributor Michael Hodges’ website, Grandfather Economic Report – I can attest to how packed with relevant information and insights this site really is. Specifically, I would like to draw everyone’s attention to one particular item which I learned while browsing through Mr. Hodges site: USA Leads the World in Lawyers "America has 281 lawyers for every 100,000 people, compared to Britain with 94, 33 in France and a mere 7 in Japan. Americans have a proper contempt for the vast mass of lawyers."
Why this particular item made me stop and take notice was the EXTREME disparity in the above chart between Japan and the U.S. To be honest, I’m still having trouble getting my head around the notion that the U.S. out-lawyers Japan – on a per capita basis – by a factor of 40 to 1. Mr. Hodges' analysis of this: [DOES] MORE LAWYERS EQUATE TO LARGER TRADE DEFICITS AND HIGHER INFLATION ?? Author's comment: It is interesting that the chart ranking of the nations regarding lawyer concentration correlates with the same ranking concerning trade competitiveness and inflation rates. Trade: while America has the highest density of lawyers it also has the greatest current account (foreign trade competitiveness) deficit ratio to GDP. Japan with the fewest lawyers has the world's highest trade surplus. If we take lawyers as a proxy for the ‘service economy,’ this suggests that we might be over serviced, over regulated or perhaps both. Ratios as extreme as 40:1 suggest, or are perhaps the manifestation of, a GROSS MISALLOCATION of resources – aren’t they? Doesn’t this fact raise other serious questions like:
An interesting aside and something that you might all want to try at home, if you Google ‘causes of misallocation of resources’ – like I did here – you might be amazed to find that your results will expose the culprit as INFLATION – something which the Federal Reserve and government claim is subdued or virtually non-existent. It begs the question of how long this ‘unacknowledged threat’ of inflation has really been around – doesn’t it? I mean, the relative glut [only if you consider 40 times more than your largest competitor] of lawyers didn’t appear yesterday – did it? An apparatus – education, universities and training – involving conscious decisions was required before any of this could occur – correct? This is highly suggestive that [masked and undeclared] inflationary pressures have been with us much longer than anyone cares to admit – no? You see folks – and I point out again – that the claims by officialdom are inconsistent with empirical realities. This is why everyone needs to ensure that they have adequate exposure to ‘real stuff’ – like energy, precious metals and staples like food and water - as protection against this unacknowledged threat to their financial well beings. Today’s Market Overseas equities began the week on a positive note with Japan’s Nikkei Index gaining 259 points to 17,743. North American markets didn’t fare quite as well with the DOW adding 8.9 to 12,569.10, the NASDAQ off 2.16 to 2,469.18 and the S & P ahead by .35 to 1,444.60. NYMEX crude oil futures plummeted 2.56 to finish at 61.74 per barrel. On foreign exchange markets, the U.S. Dollar Index gained .13 to end the day at 82.89. Interest rates were virtually unchanged in the 5-year maturity ending the day at 4.67% while the 10-year bond finished the day at 4.75%. Precious metals ended the day mixed with COMEX gold futures falling 2.50 per ounce to 672.60 while COMEX silver futures added .10 to close at 13.85 per ounce. The XAU was ahead .17 to 142.78 while the HUI was off .15 to 354.00. With no major economic news due out tomorrow I would like to wish you all a pleasant evening! Rob Kirby Copyright © 2007 All rights reserved. Contact
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