May 29, 2005-France officially rejects

Found this on the Drudge site. It says what I have been stating all along. The article hits on all the relevant points and of course the Turkey factor. ACJ Infinitespeculator.com

France rejects EU treaty, Europe faces crisis
By Timothy HeritageReutersSunday, May 29, 2005; 4:06 PM

PARIS (Reuters) - France overwhelmingly rejected the European Union's constitution in a referendum on Sunday, pollsters' projections showed, plunging the EU into crisis and dealing a possibly fatal blow to a pact designed to make it run smoothly.

The heavy defeat dreaded by EU leaders could weaken France in the 25-member bloc, stall European integration and unsettle some financial markets. It also wounds President Jacques Chirac two years before presidential and parliamentary elections.

Projections by three polling groups based on partial results from the referendum suggested around 55 percent of voters had opposed the EU's first constitution, designed to simplify decision-making following the Union's enlargement last year.

Such a heavy defeat in a country that has long been one of the main pillars of the EU reduces the chances of a repeat vote, which French leaders had ruled out anyway before the referendum.
Many voters wanted to punish Chirac and his conservative government over unemployment that is at a 5-year high of 10.2 percent and other economic problems. Other critics were angry at what they saw as France's declining role in the Union.

"I voted 'No' in all conscience, having read the text, due to the lack of will to solve Europe's number one problem today, which is unemployment," said Armel Bompart, 52, a civil servant in Strasbourg, home to the European parliament.

First official results were due around 2100 GMT after people flocked to vote in fine weather following a fierce campaign that divided France and became a debate on the government's economic record and the state of France, as well as the future of Europe.

Two-thirds of voters had cast ballots three hours before the last polling stations closed, the Interior Ministry said.

Chirac, 72, said before the vote he would not quit even though opinion polls showed his gamble on a referendum rather than a safe ratification vote in parliament was likely to fail.
However, he is expected to dismiss unpopular Prime Minister Jean-Pierre Raffarin. Interior Minister Dominique de Villepin leads the race to replace him ahead of Defense Minister Michele Alliot-Marie and center-right party leader Nicolas Sarkozy.

EU LEADERS FACE CRISIS
The constitution was signed by EU leaders last October in Rome after long and tough negotiations and requires the approval of all member states to go into force. Nine countries have approved it and is intended to take effect in 2006.

EU officials said before the vote the treaty could be doomed if a large majority of voters in France rejected it and Dutch voters threw it out in a vote on Wednesday. Dutch ministers urged voters on Sunday to ignore the result in France.

EU leaders are expected to urge other member states to continue the ratification process despite the rejection by a country that has traditionally been the motor driving EU integration alongside Germany.

If the constitution does not survive, the EU will continue to operate under its current rules. But the system is widely seen as unworkable for a Union intent on enlarging further, and voting could soon become paralyzed.

French leaders have repeatedly ruled out a repeat vote and dismissed suggestions it could be renegotiated, although they say it would help make Europe and France stronger in the face of economic threats from other countries such as China.

Opponents want the EU to redraft the treaty and improve it. They say the charter enshrines economic policies that have failed to stop the loss of jobs to low-wage economies, including countries outside the EU.

Concerns over the constitution's fate have contributed to the euro's recent weakness and economists said before the vote that the currency could fall further in the event of a "No."
The impact of the French rejection could also be felt on the Turkish lira because it could be interpreted as a protest against Turkey's efforts to join the Union.
© 2005 Reuters

May 27, 2005...China and America.

News on your author's mind is when will China's economy pop. In 2004 there was $2.6 billion in foreign investment in the country and for the moment the economy still grows. A nice note was to see the recent boost in America' GDP, however this was completely mitigated by increased consumer and three year low savings rate. I have often wondered why if Americans are so upset about the outsourcing of jobs and goods production to China, why not stop buying their products that you really dont need and sticking the funds in the bank?

Back to China...
The rumbles of the world watchers was not if but when China will remove the 8.28 Yuan peg to the US dollar. Your author has noticed this mention continues to creep up in the news with repetiveness. Imagine what will happen when the Chinese central bank decides to allow their currency to float. It will appreciate in leaps and bounds probably like nothing that has been seen in the last 100 years of any speculation with the exception of the 1920s US stock market rallies or the dot com boom of the late 1990s. The currency will force the Chinese production and output to be uncompetitive on simple pricing of goods. Then the viewer will see the first pop in the economy. It will be during this predictable downturn that your author will buy into Chinese shares because like it or not, China is here to stay.

Thanks for reading...
Enjoy the Memorial Day weekend and remember that some gave all.

ACJ
InfiniteSpeculator.com

May 25, 2005

The biggest news for the week on wall street isn't stem cell research and Congress attempting to put forth initiative to advance laws for the industry. True this is significant but not as apparent as the $9.4 billion buy-out of energy supplier PacifiCorp by Berkshire Hathaway. Warren Buffet, Berkshire CEO, obviously is seeing the same element of truth as your author. This factor being that energy will continue to be a non conventional growth stock. The cash flow and consistent growth the energy sector has experienced is quite obvious along with the perceived inflationary hedge trait.

Previously your author has recommended ABB Ltd. (ABB) for review. The company engages in the installation and maintenance of utility suppliers. The recent news on the company has been a series of acquisitions of assets and like companies that has (predictably) not garnered much attention. As the demand for energy outpaces the supply in several areas of the world, Asia specifically, ABB is poised for continual growth. Additionally the average daily volume for the past several weeks has either met or surpassed the average daily volume for the trailing three months. The latter indicating that institutional money has been coming in droves and picking up stock. If this issues crosses over $7 per share your author will accumulate an additional stake.

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Another buzz that everyone appears to have on their mind is the pricing of homes and real estate in general. How much longer can this continue, how much appreciation is left before the bubble pop? There is no doubt that the speculation bubble is in full pursuit and has for quite some time. The problem can first be seen in the historically low rates. Banks are competing with a frenzy for business and with each corner the credit analysis involved for perspective borrowers appears to be lessening. The proof is with the newest gem in mortgage brokering, the interest only loan for 12 months and monthly P&I payments beginning in the 13th month. Originally the interest only phase was to allow a building phase for developers. However this type of lending has been opened to the average mortgage borrower. With every rate hike by the Fed Reserve comes a rush to book financing. Now since the interest only phase is based on the prime rate with usually several 100 basis points floating, what would occur if the Fed decided to engage in a series of rate hikes. More importantly what happens in the 13th monh when there are no immediate buyers?

Two news articles of noteworthy that are marching inline with my thesis is the first that came across the AP recently. The article more or less indicated that only 20% of married couples living in California could adequately afford the median priced home. I'm of the belief that many trends, particularly ones in technology, begin in California. How long will this indicator take before it reaches the east coast?

The second article detailed that a major concern for all 50 states is how to properly evaluate these properties for the purposes of assessment? The mileage rate, the rate used to calculate the property tax, has been grossly lagging as of recent. Will local government reevaluate or will they miss out on capturing these dollars? Will Rogers once said, "Buy land, God doesn't make anymore of it". On a very long term analysis I have a tendency to agree with this statement except when caution is thrown to the wind. I predict by the close of 2005 it will be closer to a sellers' market.
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On an international level the biggest news (still) is France's lack of enthusiasm to sign the new EU constitution. This has also been inappropriately factored in the admittance of Turkey to the organization. Whether France or Portugal would like to admit it or not, they need Turkey. Certainly Turkey needs immeidate access to European markets but how much longer will Germany (an exporter) go along with shoring up the dying economies of Italy and Portugal? Additionally the author would suggest another look at the UK's economy. Following the closing of the last UK auto maker, Rover, none of the Queen's citizens batted an eye. Regions of the UK continue to prosper as others falter. The social programs are being overhauled, which may provide a glimmer of hope and hope is what will be holding the eocnomy of the entire EU in the future.

Watch for economy of the Phillipines to be firming up. China was long cheered or criticized for monoplozing the outsourcing of jobs. It now appears the architect of these actions are now outsourcing or will be outsourcing to the Phillipines. The country itself, barring the rampid links to terrorism, can do it. The population is there and the education levels vary. Whether they have totally shaken off the remnants of the government corruption, which truly were shown in the Marcos regime, remains yet to be seen. The author would suggest lightening any investments in Australia. This is a long overdue warning that has gone largely ignored. The continent is too reliant upon their Asian neighbors, in particular China and your author believes you will see at least a curbing for that region.

Brazil still appears to be the most promising for South America. The government has been for several months now hiking rates up to curb inflation. Additionally early trade talks with China remain positive. However the bubble burst will hit the land of the rising sun, only because nothing lasts forever and only then will your author rush to buy into their country.

Thanks for reading....
ACJ
infinitespeculator.com

Week of May 16-20

Well as of this date, France's Jacques Chirac has yet to sign the EU constitution and Italy is still bleeding from job losses being exported to China. Each passing week your author grows more certain and with greater conviction that the EU and Euro are slipping out of control. The idea of a whole EU as a major factor in global economics is becoming less believable and rebellion will be on the way. T0ny Blair and the Labour Party have slid into the captain's chair at Number 10 Downing Street London. As far as a US ally, everyone seems to love Blair and his colleagues. As far as economic problems and social costs facing the UK, not even a team of Thatcher and Churchill can save the inevitable doom.

Some big news for the States-a recent report, now finally printed in the Wall Street Journal (WSJ), states that only 20% of the married couples qualify for the median priced home in California. You hear that all trends begin in NYC or California, is this a possible battle cry for the rest of the US? It has to stop, all booms whether they are stock, commodities or land come to an end. The question is not-Will it? but rather When? It appears that every time the Fed raises their rates, everyone rushes out to refinance an existing mortgage or attempt to gain funding for first time mortgages. Chairman Greenspan as of today has warned (again) the US Congress to place limits on the mortgage amounts that can be held by Fannie Mae and Freddie Mac. While the two merely pool home mortgages together and place them accordingly to their respective tranches (maturity timing) to form bonds, it is the US govt who backs these instruments.

While Greenspan is justified in his warnings, my question is Why now? Why is it a problem now and not yesterday? The mammoth sized Fannie Mae should never had been allowed to grow to their present size. Some would argue 'But infinite speculator, if there had not been a Fannie Mae, banks would be forced to hold these mortgages and limit the number of homebuyers'. Well then so be it but this ponzi scheme style function (passing the buck/risk off to 'someone' else) falls right inline with post 1950s thinking of the average American consumer. Now its only starting to bite us. Sadly after the predictable fallout in the post housing boom of 2002-05, banks will have to tighten down on such things as interest only mortgages and home equity lines of credit. I have never quite understood the idea of using debt to pay off debt. "Better to go to bed supper-less then wake up with debt"-Benjamin Franklin. We need him now more than ever.

All economic indicators, at least for the past several months, are positive or flat, which is always a welcomed sign. Commodity prices are starting to slowly decline but by no means are going to the toilet anytime soon. This year will be a flat year I predict with a possible easement in 06.

In the political world Bush is too busy focusing on Putin's words or a crazed Muslim to address the immigration problem of California. Maybe this issue is too hot for either party to address, which if true is very sad about current class of clowns. If Bush did put his foot down his approval ratings would sky rocket. The American society and voting public did not care about Abu Grahib prison scandal nor the questionable report detailing Bush's armed service record, pre Blog exposing it was a fraud. They do care about things like Homeland Security (by virtue that we still have such an illegal immigration problem tells me the program is a joke) and illegal immigrants who cant speak English. While we still subsidize sugar cane growers so we can have the privellege to pay for costlier sugar, GM and Ford must find solutions to their problems. Why cant they receive subsidy money to develop more fuel efficient autos or cars that use alternative fuel? Oh yeah the sugarcane people, an industry that thrives in impoverished area of the US and does not produce a long term positive impact for the local economies. Yet our government cant address or wont address the estimated 25% California poulation that is here illegally.

Despite the nasty comments uttered by Mexico's prime minister V. Fox (paraphrasing) "Mexicans are prideful and hardworking people who take jobs that even Blacks dont want", there is truth to this statement. The illegals fill a void that we here wish not to engage in. I have to wonder when did we become so lazy? Are we as bad as the French? Watching Jesse Jackson stick his two cents is pretty hillarious. Has anyone informed the 'reverend' that Fox could probably care less what he thinks?

Thats it for this week....thanks for reading.

Week of 5/2/05-5/6/05

This is the first entry for my blog. I am actually going to pitch my site infinitespecualtor.com, which is currently being fine-tuned. It is a free site with the hopes of a free flow of information exchange for matters devoted to social changes, demographic trends, and political strife that may influence the financial markets. You will also see essays on various subjects as they relate to investing and trading of securities. It will also have a blog located on it but it is my hope to have both of them (this one & the other) mimick each other.

There is quite bit of news to analyze this week. The most obvious being the downgrading of Ford (F) and Gen Motors (GM) credit. This was a predictable event. Ford had previously been warned that a downgrade was likely. Likewise the fall of these two auto giants has been coming now for over 20 years. It is no surprise or should not be, given the Japanese competition and management devoted to appeasing unions as opposed to delivering a fine product at a reasonable price.

The implications of these actions will be felt mainly in the corp. bond market. Ford is the largest issuer of debt and I am sure GM is not too far behind them. What will the implications be? Only time will tell but I would imagine this will have a severe downturn in the overall fixed income markets.

The next key event for the fixed income market is the fed govt flirting with the idea of reintroducing the 30 yr. T bond. It was a blunder that the previous Clinton admin felt they should begin to buy this back. Of course that resulted in a flush of money into the US economy and coupled with historically low rates, caused the economic headache the US has experienced since 2000 or so. Please bring back the 30 yr and do buy back the instruments with a shorter maturity, this will cause the natl debt to be less in the long run (given historical figures).

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I would suggest everyone to pick up an issue The Economist and read the article on page 50 in the European section. This article states some of the same ideas regarding the EU and particularly the Euro currency. I (I'm not alone) for one believe that by 2010 the Euro will no longer exist. If it does you will see the country currency return and trade alongside with the Euro. This would be inline with the current balderdash socialist running the EU now. Budget deficits not inline within the acceptable standards relative to GDP? No problem, we will just change the rules! France you have too much inflation so we fine you, then we turn around and remove the fines. Oh yes the Euro and EU, throw a bunch of dying economies (with the exception of Ireland) together along with bad age demographics (except for Ireland) and viola! Now take out the hard money types that originally designed the plan and replace them with socialists. No wonder they (EU) sit on their hands about admitting Turkey in, the balance of power and sphere of influence will suddenly shift. Oh yes it is all about human rights at least thats what the socialists tell the media.
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As the conventional thinking punders when the next tech rally will be, may I suggest utilities, oil and tobacco. Microsoft's less than rosey release is only a predictor for future events. Holding CG, FPL, PGN, ABB and DOM. Also long on HMC and holding XFL for a contrarian play.

Thanks
ACJ
infinitespeculator.com