A Christmas Reflection

Christmas Day has visited us again.It is interesting that Christmas, the day that commemorates the birth of Jesus Christ, has joined that select two or three Holidays in the course of the year ( Thanksgiving and New Years are two others that come to mind) where retail life comes to a virtual standstill ---except for the NBA and the ubiquitous Chines restaurant. Christmas is as secular a Holiday as we have in modern day America. This Holiday, embraced by almost all, is of recent vintage however.



Christmas wasn't institutionalized as a Church Feast until the mid 4th Century. Even then, the major Feast celebrated was the Feast of the Epiphany ---the Baptism of Jesus by John the Baptist--- commemorated on January 6. The celebration of Christmas was banned by the British Parliament in 1647 and even though the celebration was restored by Charles II in 1660, the Presbyterian Church of Scotland continued to discourage celebrating the Feast. This antipathy carried over to the British colonies in the New World. The celebration of Christmas was actually banned in Boston from 1659-1681. The venerable George Washington led his troops in an attack on the Hessian troops at the Battle of Trenton 1777. These historical tid-bits add to my amusement at some of the current arguments about whether we are taking Christ out of Christmas in our modern world.

One of the most common images of the Nativity is the manger scene, the "babe in swaddling clothes". While this imagery is accurate, I believe that too much of a focus on " the baby Jesus" almost softens the awesomeness of this Feast.

We Christians believe, that this Jesus, born in Bethlehem is the Son of God, the Word of God, through whom all of creation was made. How awesome is that!!! John, in his Gospel says it this way:

John.1
[1] In the beginning was the Word, and the Word was with God, and the Word was God.
[2] The same was in the beginning with God.
[3] All things were made by him; and without him was not any thing made that was made.
[4] In him was life; and the life was the light of men.


This same Jesus we so sentimentally think of as the "babe in the manger" was with God the Father before the Creation of the world. This Word of God spoke with Abraham, Isaac and Jacob in the Book of Genesis. Gave the Law to Moses and spoke with David as well as the Prophets. The mere thought of the Word of God taking on flesh and becoming like us is incomprehensible, ineffable, inconceivable. It's almost too much to take in . As presents our opened and greetings of the season are exchanged the "big picture" of the Feast is worth a quiet reflection.

Taxes--history says they are going up.

Wow! I came across the chart above on Jim Sinclair's site. It's hard to believe that we went from a 25% marginal tax rate in 1930 to 79% in 1940. That was all done smack in the face of the Great Depression. It sure looks like we could be looking at a repeat of history and from where I sit that would not be a good thing. Given the poor state of the American household balance sheet, a tax increase like the one above would decimate what is left of our consumer economy. It's a conundrum our leaders wish they could avoid if at all possible. Kick the can down the road, that is the politicians way.

Take a look at the tax rate for the war years 1941-45 --- a jump up to 94%. Can you imagine a 94% tax rate? That is the definition of shared sacrifice. While I am not a fan of higher tax rates, I believe that if we as a country decide that war is necessary we should also be prepared to pay for it. 90% + tax rates might put a damper on some of the banging war drums.

Paper Money

I stumbled across an interesting article while browsing on Jim Sinclair's site last night. The article is entitled :

GOLD IS NOT GOING UP-- PAPER MONEY IS GOING DOWN by Egon von Greyerz

Here's a snippet that really needs to be read more than once:

The chart above shows how the purchasing power of the dollar has declined in real money – gold – in the last 10 years. And if we take the period from 1909 to 2009 it shows the total destruction of paper money. In 1909, $1,000
bought 50 ounces of gold. Today it buys 0.83 ounces. This means that in the last 100 years the dollar has declined by 98.3% against gold. So in real money terms
the dollar is now only worth 1.7% of what it was worth a
century ago. Thus, the US government (as well as most other governments) has totally destroyed the value of real money by issuing unlimited amounts of paper money and in the next
few years they will also kill off the remaining 1.7% of value to make the paper dollar reach its intrinsic value of zero.

This silent devaluation of our wealth is a brutal , almost hidden tax that the masses continue to be oblivious to.

Postscript To California Dreaming

How about this from the Times:


Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.

With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.

In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.

The potential for rapidly escalating interest payouts is just one of the wrenching challenges facing the United States after decades of living beyond its means.

Let's say the forecasters get it right for once. Think about $700 billion just in INTEREST expense. It's almost unfathomable. I know the political pundits will heap a lot of blame on the current Administration and while I have my problems with the direction this Administration has gone so far--this financial catastrophe didn't just happen. It's been years in the making.

California Dreaming

There is a simple reality that we as a society are having a tough time grasping. It doesn't matter, Federal, State, County or Municipal: our collective governments are all spending far more money than they have available and even if they don't want to acknowledge it, are all essentially bankrupt.

It's with that background that the following stories out of California this week have me incredulous. We have students at UCLA protesting upcoming tuition hikes ( I wonder how a 32% increase gets figured in the CPI) but at the same time the state of California is trying to get a handle on a $21 billion budget deficit. It doesn't get any better on a municipal level as San Francisco is staring square at a budgetary disaster or so says Steve Kawa, Mayor Gavin Newsom's chief of staff.

" I don't even know if I have words to describe how bad this is,".......

Next year's budget deficit is likely to top $400 million, Kawa said. That forecast could get even worse with federal stimulus money coming to an end next year and the state likely to help balance its own budget woes by cutting money sent to cities and counties.
"It may be the perfect financial storm," Kawa said. "It's going to be incredibly difficult to find a way to balance next year's budget without some severe impacts."

It gets even better. Check out this story in today's NYTIMES, With F.H.A. Help, Easy Loans in Expensive Areas :

SAN FRANCISCO — In January, Mike Rowland was so broke that he had to raid his retirement savings to move here from Boston.
A week ago, he and a couple of buddies bought a two-unit apartment building for nearly a million dollars. They had only a little cash to bring to the table but, with the federal government insuring the transaction, a large down payment was not necessary.

Great. It doesn't take a genius to figure out how this will end. Speculators praying for a real-state uptick on the back of the taxpayer. I think more pain in on the way.

Trade Shows in the Second City

When I started this blog one of my intents was to focus on the B2B world. As time has gone by my posts have tended towards economics/politics. Here's a brief return to original intent.

As an amateur student of business and markets a daily read of Mike Shedlock’s blog (Mish) has not only helped keep me out of investment problems in this tough environment but his writing has also generated money making ideas for me as well. In one of his posts over the weekend he addressed a situation that is dear to all of our hearts---some of the outrageous costs associated with Trade Shows. Worth a read by everyone who has to deal with this kind of stuff.

http://globaleconomicanalysis.blogspot.com/2009/11/conventions-say-good-riddance-to.html

http://www.wbbm780.com/High-costs-drive-major-trade-show-out-of-Chicago/5660124

It was a painful decision for the Chicago-based trade association, whose first trip here for its annual convention impressed its members, until they got the electricians' bills."Our costs were about $200,000 more," said Lieber. "So it went from $40,000 to $240,000 for the electrical work alone…….

The city got the word Wednesday that the huge medical convention wouldn't return. They're also sweating out a decision by an even bigger show.The International Plastics Showcase has been in Chicago since 1971, but now a spokesman says: "We are looking at other options."

Seventh Inning Stretch

This past World Series battle between the Yankees and Phillies was an entertaining match up as far as baseball goes. Because I just don't have the patience to sit and watch a complete baseball game I'm a couple years removed from the pomp that accompanies a Major League baseball game.

What is the deal with the 7th inning stretch? I remember going to Memorial Stadium in Baltimore back in the '80's and being serenaded to "Thank God I'm a Country Boy" by John Denver as the game moved into the bottom of the seventh inning. It was fun and light-hearted.

What a different scenario now. As the Yankees left the field at the end of the top of the seventh inning the PA announcer asked all"to rise, take off your hat, and join in the singing of God Bless America." It was presented as a spiritual event. I guess there is nothing inherently wrong, but it reminds me of an experience I had while visiting the Soviet Union during the summer of '81. One evening our group attended a performance by the Moscow Circus and smack in the middle of the program was a PA announcement followed by a group of soldiers goose-stepping into the circus ring carrying various flags and banners to commemorate the heroes of the Great War ( which had been fought 35 years before). We as a group of Americans were struck with how out of place and strange the demonstration seemed. I got the same feeling last week as I watched this quasi-religious ceremony between innings. God Bless America was a song the Flyers used to dust off before must win playoff games as a good luck charm. If they really needed the game they would bring Kate Smith in to sing the song live. We've gone from that to an almost Leni Riefenstahl moment.

Very strange.