Tuesday, January 5, 2010

New Years Resolution

Over the Christmas holidays I did some self reflecting. This reflecting is done on all aspects in my life views be they political, social, economic, family etc. You get the drift.

One item of self reflection that I want to share with you is my stance on free trade. To many this means NAFTA the North American free trade deal between Canada the U.S. and Mexico. I have been a free market guy all my life, survival of the fittest type thing. I used to argue for hours with my father on many things as a young buck and politics was our speciality in our household debate menu.

I used to extol the virtues of unfettered access to markets, unrestricted flow of people and goods, blah, blah, blah. My father on the other hand has significant doubts about the benefits of this and those drawing up the attendant rules. My dad is no longer with us but I owe him a very large apology in yet another admission on my part that he (yet again) was right and I wrong.

You see my father was not a Harvard MBA, but rather a graduate from the school of hard knocks on the street, with a PhD in dissecting bullshit artists, con artists and the like. He could never understand our dear Prime Minister, at the time Brian Mulroney, and his incessant trumpeting of free trade benefits.

My father could not understand how you could export jobs to Mexico, replacing labour up here with labour down there at a faction of the cost would ever work. He could never understand who was going to be able to afford to buy all these wonderfully new innovative and extraordinarily cheap products made south of the border.

"Who is going to buy the cars made in Mexico? Those workers there making $4/hour? Good luck!" I can still hear his voice !

He obviously did not have access to all the fancy formulae and hypothesis that the great economic leaders of the day possessed showing wonderful mutually assured benefits. NO wait synergies, isn't that the buzz word trotted out every time a merger or deal is announced, like AOL Time Warner right?

His prediction at the time that the massive manufacturing relocation to Mexico, that we saw as a result of free trade, would eventually be trumped by yet another manufacturing relocation to Bangladesh, Thailand, India, and China in a spiral to the bottom was spot on. The evolution from cheap labor to slave labour around the globe continues today and if you doubt this then a trip to Thailand and a local shoe or garment factory is in order. Better yet a quick visit to a Dubai work complex might be a better idea.

I argued all the points a young Gordon Gekko, Reaganite (deficits don't matter right?) would be proud of, problem is I could never address his query. Little did I know free credit from Easy Allan Greenspan and homes that would function as an ATM machine could keep the charade going far longer than any thought possible.

We kept buying those cars and toasters and DVD players, shoes and game boys.

Simply put there is no way we can compete. You invent a new gizmo today where are you gonna make it? Here, in Michigan? Land of the run amok union and socialist governor from Canada? Ha ha. nice one! South Carolina? Land of the government give aways of free water and utilities? No, You're gonna go to China.

You need a coating for your product? Why pay exponentially more for eco-friendly water based epoxy when you can pick up lead based product for a mere faction of the cost. Easy choice for the conscience light executive. Nice.

You have toxic commercial waste you need disposed of? Why pay exponentially more to collect, truck and treat the waste when you can simply dump it in the river. Again, easy choice for that one child executive in China. Really nice. The whole trade game is played on an distorted, unfair playing field. A boxing match as it were with one opponent fighting with only his left hand while the other uses both. Further, now add kicking and head butting and you start to get a more appropriate picture.

Yes it all sounds crazy, even to me but this seems to be a big global game of Daimler Chrysler. What the heck is that? Well, back when Daimler b0ught Chrysler in another merger full of synergies, I vividly recall an analyst, (whose name I cannot remember) remarking that either Chrysler needed to come up to Daimler's quality or Daimler needed to come down to Chrysler's. It sure appears to this simpleton that we a sinking to the 3rd world level as jobs outsourced leaving only an abundance of Wendy's, McDonalds, Starbucks and KFC "manufacturing jobs. By the Way, they're really not manufacturing jobs and could only be classifed as such by a politican or government statistician.

So as a result of this self reflection combined with a desire to make a New Years resolution I am embarking on a plan to buy exclusively American made! Now that I am married to an American. No more China for me. They can keep their lead paint toys and toxic pet food for themselves. I am buying whatever is made here. Further to this I am buying local to support local merchants.I would also encourage you to do the same.

And while I'm at it. Patronize your local bank or credit union. I mean, do your homework, but the odds are they didn't lend money to any sap who walked in and could fog a mirror like BAC, Citi and Wells did.

Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 1 unit Direxion Tech 3X Bear ticker TYP @ $10.68
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97

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