This blog entry was written on July 15, 2007:
Over the past few months, weaknesses in the US economy have been reported frequently in the blog entries in this space and of course in the financial press. Yet despite these weaknesses and the ongoing misery of ordinary folks dealing with the housing slump and higher gas & food prices, the nation's stock markets have ignored hedge fund and sub-prime loan problems, and soared to record levels. On Friday July 13, 2007 alone, the Standard & Poor’s 500 index closed above a high set in March 2000 and the Dow Jones industrials blew by 13,900 for the first time in history.
In related news, US retail sales dropped 0.9% in June, and the US Trade DEFICIT widened again in May. The United States’ oil import bill alone increased to $19.0 billion - the largest since September 2006. The US trade deficit with China widened 3.3% in May to $20.0 billion, and the June gap could be even larger. Meanwhile, China posted a record trade SURPLUS of $26.9 billion in June. China’s overall surplus for the first six months of 2007 was $112.5 billion, up 83% from the same period in 2006.
For the same period, China's surplus with the US alone was $73.9 billion, despite shipping large numbers of products arriving on US shores from China with poisonous contents. Let's just count a few of these noxious items: pet food and pig & chicken feed contaminated with melamine; counterfeit toothpaste with diethylene glycol; fish contaminated with antibiotics and a suspected cancer-causing agent; the use of carbon monoxide to make decomposed fish look fresh. Oh, not to worry; our crack United States FDA is on the job checking those toxic imports, just like it is "protecting us" from Canadian prescription drugs. What's that you say? The FDA has nowhere near enough resources nor inspectors to stop them? Even though it has inspectors at only 90 of the more than 300 American ports, the foods the fDA inspects can come into any of the 300. Saywhat? Yes, folks, since 2003, the number of inspectors has decreased significantly while imports of food alone have almost doubled. Meanwhile, the FDA said it intends to close 7 of its 13 laboratories that test for these problems. Hello? The current administration once more has its priorities exactly backwards.
By the way, the US expenditure for the IRAQ war has just passed half a trillion dollars and is now costing the US some $12 billion every four weeks, to say nothing of the death & injury tolls on GI's and Iraqis. It's no wonder the cost to US taxpayers is so high; Bush has deployed a rented army of 130,000 civilians to support 160,000 United States soldiers and marines. Taking the place of enlisted troops in every American army before this one, these contract employees cook meals, wash clothes, deliver fuel and guard bases. Let's hear it for outsourcing! And, oh, the way, the smooth-running Iraqi Parliament has decided to go on vacation during August, while US soldiers fight and die in 130 degree heat.
Oh well, at least we're a lot safer now than ever, according to the president. What's that you say? Six years after the 9/11 attacks, and the hundreds of billions of dollars and thousands of lives expended in the name of the war on terror, we're not safer? Not according to the National Intelligence Estimate just released. The authoritative NIE says the threat of terrorist violence against the United States is growing worse, fueled by the Iraq war and spreading Islamic extremism. How do you like them apples?
Folks, this bad news cannot continue without affecting the markets!
Meanwhile, our friends at Blackstone Group were back in the news. The AP reported on July 13 that executives at Blackstone Group will get back a big chunk of the taxes they owe on billions in profits from the private equity firm’s recent IPO. Members of the US House and Senate said they plan to examine Blackstone’s IPO tax strategy as part of an ongoing inquiry into whether private equity firms, hedge funds, venture capital firms and other investment partnerships are paying their fair share of taxes. This examination will probably be as effective as Congress' attempts to cut off funding for the Iraq war.
Oh yeah. The Blackstone Group closed at $29.85 on July 13, just about flat with the day after the IPO.