A TANGIBLE GIFT - Dec 17

Dec 17, 2004

"When right, I shall often be thought wrong by those whose positions will not command a view of the whole ground."

-Thomas Jefferson

MARKET NEWS DIGEST

Housing Starts Fell by Most Since Jan 1994 -BL

Dec. 16 (Bloomberg) -- U.S. home construction fell in November by the most in almost 11 years, suggesting housing will contribute less to the economy.

Housing starts plunged 13.1 percent to 1.771 million residential units at an annual rate last month, from a high this year of 2.039 million in October, the Commerce Department said today in Washington. The level of building permits, a sign of future activity, declined 1.5 percent to 1.988 million.

The level of starts was the lowest since May of last year, and the decrease from October was the largest since January 1994. Home construction declined in all four U.S. regions, suggesting a lack of pent-up demand. The National Association of Realtors expects new home sales to drop in 2005 after a record this year.

``There are certainly a lot of reasons to be expecting the housing market to slow down, but I'm a little bit surprised to see this level of decline,'' said Steven Ricchiuto, chief U.S. economist at ABN Amro Inc. in New York. ``Mortgage rates have stopped moving lower and prices look to be petering out, but the decline is a little bit quicker than you would expect. It's pretty broad-based weakness throughout. We have to assess these numbers after several more months.''

Residential construction added 0.1 percentage point to third- quarter growth of 3.9 percent at an annual rate, recent government data show. The contribution from housing was the smallest since the fourth quarter of 2001. Today's statistics suggest homebuilding will subtract from gross domestic product in the current quarter.

Forecast

Starts were forecast to fall last month to 1.98 million, the median estimate in a Bloomberg News survey. Starts in October were previously reported as 2.03 million. Forecasts for November starts ranged from 1.93 million to 2.12 million.

The National Association of Realtors said Dec. 7 it expects starts to drop to 1.87 million in 2005. Sales of new homes are forecast to rise to 1.18 million this year, the highest ever, before slowing to 1.13 million in 2005.

Starts of single-family homes declined 11.7 percent in November to a 1.448 million-unit pace after a 1.64 million rate a month earlier. Starts of townhouses, apartments and other multifamily dwellings dropped 19 percent to a 323,000 annual rate.

By region, starts fell 13.2 percent in the West to 468,000 at an annual pace; 19.4 percent in the Midwest to 312,000; 14.2 percent in the Northeast to 151,000; and 10.4 percent in the South to 840,000.

Under Construction

The number of homes authorized but not yet started rose 4.8 percent in November to 204,100. Houses already under construction last month rose 0.3 percent to a 1.265 million rate. Housing completions declined 6 percent to a 1.705 million rate. Single- family completions fell 5.6 percent to 1.424 million.

The housing market had been buoyed this year by increased job creation and wage gains, rising consumer confidence, hurricane rebuilding efforts, falling oil prices and the failure of long- term mortgage rates to rise in response to higher short-term lending rates.

The average 30-year mortgage rate has remained within a percentage point of the record low of 5.21 percent in June 2003, even with the Fed's increases to the benchmark U.S. lending rate, according to figures from Freddie Mac, the No. 2 buyer of U.S. mortgages. The rate has averaged 5.8 percent this year.

Mortgage costs may be slow to rise after the Federal Reserve's rate announcement two days ago indicated that inflation was under control. That boosted purchases of government bonds and pushed their yields to their lowest in more than a month.

http://www.bloomberg.com

Related:
12-16-04 -- Fannie Mae Chief May Lose His Job After SEC Ruling -BL...Fannie Mae Chief Executive Officer Franklin Raines may lose his job after the Securities and Exchange Commission ruled that the company violated accounting rules, shareholders said. Raines told Congress in October that they would accept responsibility if the bookkeeping at the largest source of U.S. mortgage money was found to be flawed.

Fed raises rates again -CNNfn
Central bank boosts fed funds rate to 2.25% but after 5 hikes in this year what's in store for '05?
December 14, 2004

NEW YORK (CNN/Money) - The Federal Reserve raised a critical short-term interest rate by a quarter of a percentage point Tuesday -- the fifth increase this year and one that was widely anticipated on Wall Street.

The central bank increased the target for the federal funds rate, an overnight lending rate that helps banks determine the rates they charge for many types of loans, to 2.25 percent, from 2 percent.

The Fed's Open Market Committee added in a statement that inflation is expected to remain relatively low and that it would likely keep raising rates at a "measured" pace. This sentiment, similar to what the Fed has been saying since it first began boosting rates in June, also does not come as much of a surprise to Fed watchers.

Stocks were barely budged, if not a fraction lower, following the Federal Reserve's decision to raise the benchmark overnight interest by an as-expected 0.25 percentage points to 2.25 percent and keep its policy statement mostly the same.

The Dow industrials were last up 20 points at 10,658 after being up 24 points at 10,662 just before the Fed announcement. The S&P 500 Index was up 3 points at 1,202 vs. its pre-Fed level of 1,202 and the Nasdaq Composite was trading up 9 points at 2,157 vs. its pre-Fed level of 2,158.

http://www.cnnfn.com

Related:
12-14-04 --US Trade Gap Seen Trumping Dollar Yield Advantage -Reuters ...The Federal Reserve's move to raise interest rates could help support the dollar on the margins, but the currency's long-term trend is still likely to be dictated by the record U.S. trade deficit. The dollar has fallen roughly 5 percent against the euro this year and some 4 percent against a basket of major currencies as investors fret about the funding of the huge U.S. current account gap, 95 percent of which comes from trade.

Trade Gap Widens to a Record $55.5 Bln -BL

Dec. 14 (Bloomberg) -- The U.S. trade deficit widened to an all-time high of $55.5 billion in October, boosted by a rise in oil prices and record imports from China as retailers geared up for the holidays.

The gap in goods and services followed a revised $50.9 billion deficit in September, the Commerce Department said today in Washington. The deficit reached $500.5 billion in the first 10 months of the year, surpassing the record for all of 2003.

Factory production rose for a second month in November, reflecting greater demand for machinery and computers, the Federal Reserve said today. The two reports suggest a growing economy that will allow Fed officials, who meet today, to stick to their policy of ``measured'' interest-rate increases.

``Consumer spending is strong, the economy is doing OK and manufacturing is plateauing at a good pace,'' said Cary Leahey, a senior economist at Deutsche Bank Securities Inc. in New York. ``These numbers suggest continued modest tightening by the Fed.''

Americans bought more imported televisions, clothing and stereos. Consumers and businesses, undaunted by higher prices for foreign goods as the dollar falls, keep snapping up imports as the economy strengthens. Exports also rose to a record.

Fed policy makers are forecast to raise their benchmark interest rate a quarter point to 2.25 percent later today, according to the median estimate in a Bloomberg survey. Central bankers, at their Nov. 10 policy meeting, said the economy was growing at a ``moderate pace'' and monetary policy ``accommodation can be removed at a pace that is likely to be measured.''

Industrial Production

``I think this measured pace, which the markets have come to define as 25 basis points per meeting, and that's what the Fed has been delivering, is likely to continue,'' Alan Blinder, a Princeton University professor and former vice chairman of the Fed, said in an interview.

Industrial production rose 0.3 percent in November, as oil and gas drilling increased. Manufacturing, which accounts for 82 percent of the report, rose 0.3 percent after a 0.5 percent rise. Utility output declined on warmer weather.

Computer and electronics production increased during the month along with output of machinery.

The recent slowdown in the semiconductor industry has been more a product of rising inventories than a slowdown in demand, said Edward Barnholt, chief executive officer at Agilent Technologies Inc., in an interview from New York.

The Dollar

``The end-markets are strong, GDPs around the world are relatively strong,'' Barnholt said. ``We have about two-thirds of our business outside the U.S. We get a short-term benefit (from a decline in the dollar). Clearly our products are more competitive with a weaker dollar in the short term.''

Economists forecast the deficit to widen to $53 billion for the month compared with a previously reported $51.6 billion gap in September, according to the median estimate of 64 forecasts in a Bloomberg News survey. The previous record gap was $55.3 billion, reached in June.

The dollar, which initially fell against the euro after the trade data, pared its loss, and rose against the yen before an expected interest-rate increase by the Fed later today. The dollar was at $1.3303 per euro at 10:37 a.m. in New York, from $1.3310 late yesterday. The dollar rose to 105.23 yen, from 104.84.

``The dollar is about halfway through a multiyear correction,'' said C. Fred Bergsten, an economist at the Institute for International Economics. ``It has come down about 15 percent on a trade-weighted average. I think it has another 15 percent or so to go before we cut the trade deficit roughly in half.''

Oil Imports

The benchmark 4 1/4 percent Treasury not maturing in November 2014 fell 7/32, pushing up the yield 3 basis points to 4.18 percent, at 10:42 a.m. in New York.

Imports rose 3.4 percent for the month to an all-time high of $153.5 billion. The rise was the largest since November 2002. Imported crude oil prices jumped 11 percent in October to a record $41.79 a barrel.

The value of U.S. oil imports increased in October to a record $13.2 billion from $11.4 billion the previous month. The nation imported 315.8 million barrels for the month compared with 303.6 million barrels. The increase also reflected the ability of tankers to reach ports in the Gulf of Mexico after hurricanes disrupted deliveries the previous month.

Cheaper oil may help narrow the deficit in November. The price of imported crude oil dropped 6.8 percent last month, the Labor Department reported last week. Excluding petroleum, the U.S. trade deficit widened to $39.6 billion in October from $37.4 billion.

China

Americans bought 5.4 percent more foreign-made consumer goods and businesses spent 0.3 percent more on capital goods. Imports of autos and parts fell 1.1 percent in October.

The trade deficit with China widened to $16.8 billion from $15.5 billion. Imports rose to a record $19.7 billion from $18.4 billion. Exports rose to $2.94 billion from $2.86 billion.

Consumer spending rose 0.7 percent in October after a 0.6 percent gain the previous month, a government report showed earlier this month. Retail sales unexpectedly increased for a third month in November, suggesting shoppers entered the peak of the holiday buying season in a mood to spend, a report yesterday showed.

The spending increases follow a 5.1 percent annual rise in consumer purchases last quarter, the most in almost three years, a separate report showed.

http://www.bloomberg.com

Related:
12-13-04 --Rubber checks that don't bounce -Arnaud de Borchgrave, INSIGHT ..."Foreigners put up 90 percent of the $2 billion required every day to make sure Uncle Sam's checks don't bounce. The profligate uncle thus can write checks that are accepted as payment as long as they are never cashed. This sleight-of-hand shell game is what keeps the international monetary system from imploding. Shakedown rackets and Ponzi schemes are usually less transparent. American foreign creditors now hold an estimated $11 trillion in U.S. "paper," or 43 percent of the superpower's privately held national debt, up from 30 percent since Mr. Bush became the 43rd president. China, Japan and Saudi Arabia are among the biggest dollar stakeholders, and they have seen their assets fall 35 percent against the Euro and 24 percent against the yen."

12-14-04 --THE IN-CREDIBLE SHRINKING DOLLAR By Craig R. Smith, CEO, SATC ...Devaluing the dollar is the market’s way of correcting the U.S. trade deficit. Alan Greenspan recently said that either the value of the U.S. dollar... or the trade deficit... has to decline. Both cannot continue rising, but interest rates WILL rise in 2005. The U.S. dollar has now lost over 40% of it's buying power since 2001 -- and that's under a "strong dollar" policy from the the White House! Can you image what the next four years hold in store for the debt-burdened dollar? I can.

9-24-04 -- CAUTION: DEBT CRISIS AHEAD - Craig R. Smith ... "Chilling" and "infeasible" are the words U.S. Comptroller General David Walker uses to describe the budget outlook. Perhaps the best word to describe America's looming debt/credit crisis is irresponsiblility -- at all levels...The size, role, and intrusion of today's Federal government would be unfathomable from our founder's perspective. It was the dream of our forefathers that "government" would begin inside each citizen, or self-government. That means putting the future ahead of the present.

Gold Centers On $440/Oz -Dow Jones
Dec 17 2004

NEW YORK (Dow Jones)--Comex February gold futures treaded water in a $438.70- to $441.20-per-ounce range Friday morning in low-key trade as the quiet tones emerging from the currency markets sedated activity elsewhere.

February prices had gotten off to a firm start as players jostled to square positions early ahead of the release of the Consumer Price Index at 8:30 a.m. EST.

As the price data matched expectations gold lost some of its appeal as an inflation hedge and so lost ground in the wake of the release.

However, players proved reluctant to pressure prices while crude oil prices edged higher and the U.S. dollar struggled to find clear direction.

As a result, February futures meandered mainly sideways through the morning on either side of the $440 mark, and more such low-key ambling is expected the balance of the session.

March silver nosed higher midmorning Friday on light short covering and peaked at $6.805 before sagging to the $6.72-$6.73 region later.

A quiet $6.65-$6.80 channel is seen hosting near-term trade.

http://www.reuters.com

Related:
12-16-04--Future is still bright for gold investors -London Times ... ALL that glisters has been gold of late. The price of an ounce of the regal gift to the baby Jesus has soared from $375 in May to nearly $450 recently, a level not seen for at least 16 years. A combination of political uncertainty, economic fears and the slide in the dollar is being blamed for the yellow metal’s strength. As Jill Leyland, economic adviser to the World Gold Council (WGC), puts it: “Bad news is good news for gold.”

Gold tipped to reach a 20-year high -Times
By Kathryn Cooper
Dec 13, 2004

THE gold price could surge to a 20-year high of $500 next year, despite a sell-off last week.

The precious metal was at $434 an ounce on Friday — 4% off the 16-year high of nearly $453 that it reached at the end of last month.

However, more than two-thirds of analysts polled by Reuters, the data firm, predicted that the price could rebound to $500 in 2005 — 15% above current levels and the highest for about 20 years.

Investors have rushed to buy gold this year as an alternative to the ailing dollar. The American currency has weakened by 9% against the pound over the past 12 months; gold is up 7% over the same period and 70% above its low of $253 in 1999.

Gordon Brown, the Chancellor, sold 395 tonnes of UK gold reserves between 1999 and 2001 at an average price of only $275, costing taxpayers about £700m, according to latest official figures.

The dollar bounced back last week, sparking the sell-off in the bullion market.

But many experts think that the currency will resume its slide over the longer term because of America’s $660 billion (£346 billion) trade gap. The country imports more than it exports, which puts pressure on the dollar.

Ross Norman of The Bullion Desk, an analyst, said: “We think it is a good bet that gold will retrace its 16-year high early next year. It could even go as high as $575 if, as we expect, the dollar continues to weaken and demand from investors picks up.”

FULL STORY

Related:
12-3-04 -- CNN rediscovers gold with Craig Smith, IFN ... CNN: Gold is up 73% since 2001 and shows no sign of pulling back. How do you explain golds’ rocket higher? ... CRS: A lot of it has to do with the drop value of the U.S. dollar, and a lot of it has to do with the fact that for the first time in many years the world is returning to something that throughout the millennia has been a common denominator amongst nations (GOLD). Everybody agrees that gold is money. It has been sought after for thousands of years by various civilizations and now when we live in the age where currencies are fluctuating, there is so much uncertainty gold has become very attractive again.
12-11-04 -- Back to the Basics by Mary Anne & Pamela Aden ..."Gold is a leading inflation indicator and its quiet rise since 2001 has been signaling inflation is coming. This year we began to see this with the most obvious sign being the super rise in the oil price. Energy prices, for instance, soared at an annual rate of 82% in October and nearly 22% in November, pushing producer prices up the most in 14 years to a whopping 13% annualized rate in the past two months. This strongly suggests inflation is far more likely to be the economic concern moving forward rather than deflation." Gold's BIG Picture - The Adens (must read!)

2005: Year of the weak dollar -AFP
Dec 12, 2004

WASHINGTON (AFP) - The Americans may be playing a dangerous game in letting the dollar slide, some analysts say, and 2005 could be the year of reckoning.

Since a recent peak in May 2004, the dollar has plummeted 12 percent against the euro, and the trend is unlikely to change.

"The dollar slide that began in 2002 is likely to continue, especially if, as we expect, the US current account deficit (the broadest measure of the trade gap) hits a new record and US capital outflows pick up," said Citigroup chief economist Kermit Schoenholtz.

In effect, the deeper the trade deficit, the more the US economy goes into debt. To narrow the shortfall, either the dollar must slide or interest rates on US investments must rise to lure investors.

In 2003, the current account deficit broke above 500 billion dollars for the first time. In 2004, it is set to reach a new record.

For the US economy, the dollar slide is not all bad. "Made in USA" exports are now comparatively cheaper for foreigners, supporting production in the United States.

US President George W. Bush's administration is broadly believed to be deliberately allowing the dollar to go with a policy of benign neglect, repeating a mantra-like support for a "strong dollar policy" while also stressing that the open markets must decide its value.

The strategy has been viewed by the markets as clearance to sell.

But it is a risky game.

"The latest down-leg in the US dollar, a trend expected to continue into the second quarter of next year, is likely to provide some positive offsets, though not as much as in 2003 and 2004," said Merrill Lynch economist Ron Wexler.

FULL STORY

Related:
12-13-04 -- A million isn't what it used to be -Tribune
THE IN-CREDIBLE SHRINKING DOLLAR - Special Report

Stocks strained by drug woes -CBSMW
Pfizer study finds Celebrex heart risk; crude tops $45
By Susan Lerner, CBS.MarketWatch.com
Dec. 17, 2004

NEW YORK (CBS.MW) -- Negative developments in the drug sector, including findings of cardiovascular risk in Pfizer's Celebrex drug, pressured stocks Friday while PalmOne led a string of disappointing announcements in technology.

At midday, the major stock indexes stood at session lows. The Dow Jones Industrial Average was down 54 points, or 0.5 percent, to 10,651, while the Nasdaq Composite Index fell 6 points, or 0.3 percent, to 2,140 and the S&P 500 lost 9 points, or 0.7 percent, to 1,194.

Also dampening sentiment was a spike in crude-oil prices back above the $46-a-barrel mark. January crude futures were last up $1.57 to $45.75 a barrel on the New York Mercantile Exchange, after trading as high as $46.20. See Futures Movers.

Friday's trading may be seeing some extra volatility due to the effects of "quadruple witching" as contracts for stock index futures, stock index options, individual stock options and individual stock futures expire simultaneously.

"There are a lot of crosscurrents today," said Peter Boockvar, equity strategist at Miller Tabak. "So it's tough to read too much into this action."

If the Dow fails to close higher, it will snap a four-day winning streak for the blue-chip gauge.

Art Hogan, chief market strategist at Jefferies & Co., said that the pressure from Pfizer makes it difficult but that there's still a chance markets could see gains by day's end.

"I just think the bias this month has been to the upside and I think if we look at what's happened over the last week or so, regardless of how negative news can be, the market tends to hang in there," Hogan said.

http://www.cnnfn.com

Dollar Ends Rally as Deficits May Widen -BL

Dec. 13 (Bloomberg) -- The dollar ended a three-day advance as some traders took advantage of last week's rally, the first in two months, to renew bets on the currency's decline.

Speculation that government reports this week will show the U.S. trade and current-account deficits widened are undermining support for the U.S. currency, said Niels Christensen, a foreign- exchange strategist in Paris at Societe Generale SA.

"The data should be negative for the dollar," said Christensen. "Last week's correction for the dollar after a two- month drop was inevitable, but it definitely won't last."

Against Europe's common currency, the dollar weakened to $1.3269 as of 10:50 a.m. in London from $1.3223 late Friday, according to electronic dealing system EBS. The U.S. currency also fell to 104.94 yen from 105.21. It may weaken this week beyond Dec. 7's record low of $1.3470 per euro, said Christensen.

The U.S. currency has dropped 6.4 percent against the euro and 4.7 percent versus the yen this quarter, partly on concern the U.S. will fail to attract enough international investment to compensate for the shortfall in the current account, the broadest measure of trade. The dollar is down 5 percent versus the 12- nation euro this year and 2.2 percent compared with the yen.

"The downtrend in the dollar isn't over yet," said Jake Moore, a currency analyst in Tokyo at Barclays Capital Inc. "The U.S. still has funding issues. I'd be looking to go short again at these levels." Short positions are bets on a drop in price.

Barclays predicts the dollar will decline to $1.35 per euro and 100 yen in the next three months.

Deficits in U.S.

The trade shortfall widened to $53 billion in October from $51.6 billion in September, a report tomorrow may show, based on the median forecast of 50 economists surveyed by Bloomberg News. The U.S. current-account shortfall grew to $171 billion in the third quarter from $166.2 billion in the prior three months, a report Dec. 16 will show, based on a separate poll.

To compensate for the gap in the current account and maintain the value of the dollar, the U.S. needs to attract from overseas about $1.8 billion a day, or about $55 billion a month, based on Bloomberg calculations.

The possibility of a further slide in the dollar and a decline in demand for U.S. assets has become one of the potential risks to financial stability, the Bank of England said in its semi-annual Financial Stability Review.

Investors increased their holdings of U.S. assets in September by $63.4 billion, the Treasury Department said on Nov. 17. The October report is scheduled for release this week.

Federal Reserve

The dollar's decline may be limited on expectations U.S. interest rates will rise this week above Europe's and on signs Japanese economic growth is slowing.

The Federal Reserve policy-making Open Market Committee tomorrow will lift the benchmark overnight lending rate between banks for a fifth time this year, to 2.25 percent, based on the estimates of 62 of 85 economists surveyed by Bloomberg News. The European Central Bank's benchmark rate is 2 percent.

``Higher short-term rates in the U.S. should stop the dollar from falling off a cliff,'' said Benedikt Germanier, a currency strategist in Zurich at UBS AG, the world's largest currency trader, according to the latest survey from Euromoney magazine.

At the same time, the Bank of Japan's Tankan survey on Dec. 15 may show that business confidence among large manufacturers dropped for the first time in 18 months in December, economists surveyed by Bloomberg News estimate.

http://www.bloomberg.com

Related:
12-13-04 -- A million isn't what it used to be -Tribune
THE IN-CREDIBLE SHRINKING DOLLAR - Special Report

Central Banks Short-Circuit U.S. Savings? -Reuters
Dec 13, 2004
By Mike Dolan, Economics Correspondent

WASHINGTON (Reuters) - Have Asia's central banks lulled Americans into a false sense of security?

While the collapse in U.S. household savings rates over the past decade to near zero make it appear at first as if American consumers have discarded all caution, economists reckon they are responding rationally to increased wealth.

Housing and equity markets have done workers' saving for them, many argue, freeing families to spend all their income.

But some experts fret that households have not yet rediscovered prudence after what will likely prove an exceptional decade of asset price gains, particularly given looming economic strains from an aging population.

The problem now, they say, is the traditional economic mechanisms -- such as rising borrowing costs -- that would encourage a healthy and gradual normalization of savings behavior have been neutered.

Underpinning 10 years of heavy household borrowing and asset price gains has been sliding long-term interest rates for mortgages, consumer finance and corporate borrowing.

Ten-year rates are half what they were 10 years ago while the broad S&P 500 index of U.S. stocks has almost tripled. House prices have jumped some 40 percent since 2000.

While balanced federal budgets and deep Federal Reserve interest-rate cuts justified the drop in long-term interest rates for much of that period, levels look more puzzling now in light of ballooning government deficits and rising Fed rates.

What worries some economists is that surging U.S. government bond holdings by foreign central banks, particularly in Asia, may keep long-term interest rates artificially low.

http://www.reuters.com

Related Story:
For Savings, Nowhere to Go but Up? - LA Times
12-5-04 -- From Spending to Saving -RMP

Republican Warns Bush on Social Sec. Reforms -Reuters
Sun Dec 12, 2004
By David Morgan

WASHINGTON (Reuters) - A Republican congressional proponent of Social Security reform warned President Bush on Sunday not to rely on a sharp increase in government borrowing to overhaul the federal retirement program.

U.S. Sen. Lindsey Graham of South Carolina said reliance on borrowing to finance an estimated $1 trillion to $2 trillion in transition costs would be irresponsible and could undermine Bush's tax- and deficit-cutting goals.

"What I'm asking of the president, when it comes to the transition costs, be flexible," said Graham, who has proposed a temporary rise in payroll tax contributions to finance Social Security's shift to partial privatization.

"I think it's irresponsible to borrow the whole trillion dollars," he told "Fox News Sunday."

Bush, who has made Social Security reform a top priority of his second term, last week reiterated his opposition to an increase in payroll taxes to pay for reforms he says must include the creation of new personal investment accounts.

Personal accounts would allow workers to hold a portion of their Social Security payroll taxes as private stock and bond investments.

But by ruling out higher payroll taxes as a means to fund the transition to personal accounts, Bush appeared to leave few financing options aside from new borrowing.

White House officials say borrowing would not endanger the president's other financial goals, which include a pledge to cut the federal deficit in half by fiscal year 2009.

http://www.reuters.com

Related:
12-11-04 -- Bush Says Social Security Faces 'Looming Danger' -Reuters
12-10-04 -- SOCIAL INSECURITY - The Problem and Solutions

COMMENTARY

TRUE WEALTH -Craig R. Smith, CEO SATC
July 2000 Issue, NRB Magazine

According to Scripture, true wealth is a tool to advance the Kingdom of God created by our hard work and good stewardship, not only for our own benefit, but to help others (I Corinthians 10:24). But knowing what true wealth is and understanding it are two very different things.

Did you know that the Bible has more verses that discuss money than discuss salvation? I've counted more than 783 direct biblical references to money, yet few economists can define it properly.

Defining Wealth

* True wealth is more than money and things, although money and things are required to advance the Kingdom.

* True wealth is based on a relationship with God through His Son Jesus Christ, without whom we are deceived in thinking ourselves wealthy.

* True wealth is also denominated in our earthly relationships, such as our family, friends and church community.

* True wealth is characterized by servanthood.

* True wealth is reserved for the righteous (Proverbs 13:22) both now and in eternity.

The truth seems clear enough, so where does the confusion enter about wealth and stewardship? First, Christians are admonished to stop comparing eternal wealth to the world system's temporal wealth, which is very often empty and deceptive. And second, some Christians still have the mistaken notion that work is a curse, which is not taught in the Bible.

Cleaning Windows

Economics can be likened to a window into our soul. If that window is dark or cloudy, it is difficult for the light of God to shine in on the subject. God wants to wash our minds with His Word on many subjects ^^ including economics.

My interest in money began with childhood coin collecting. In 1963, I heard that U.S. coinage was going to change the following year, so I decided to buy all of the older coins I could afford. I had no idea that our money was soon to be transformed from a value-based currency to a debt-based currency. Somehow I intuitively knew that gold and silver coins would always have a special value to someone.

Little did I know that in 20 years that hobby would become my business. In 1982, I began my walk with the Lord and founded Swiss America. My goal was to take the knowledge I acquired about gold and silver coins and couple it with my passion to serve God.

During 1988, I accelerated the process of understanding Christian economic principles by interviewing top Christian money experts on World Economic Perspective, a national daily radio broadcast. I interviewed men such as Dr. John Avanzini, Dr. Ed Cole, R.E. McMaster Jr., Larry Burkett, Mark Skousen, Dennis Peacocke and scores of others. As I progressed, I was struck by the unanimous consensus that our present money system was based on a deceptive debt standard. In the words of McMaster, "We have an occult money system, no doubt about it."

Understanding History

Christians today are engaged in an accelerating battle between godly and ungodly economic worldviews. Biblical economics and money are always based on substance, while the world system is based on symbolism. Therefore, if we are to win the war for true money, we must learn from history.

Beginning in Genesis (13:2) the scripture associates the blessing of wealth given by God to Abraham as consisting of four primary substances: gold, silver, land and livestock.

True wealth must have four basic characteristics: it must be scarce, portable, divisible and maintain a store of value over time. Gold, silver and other tangible assets have been the money of choice for centuries because they fulfill these four essentials.

From the beginning of recorded history, men have perverted true money and sought to counterfeit it with everything from clay tablets (dating back to Babylon) to modern credit/debt systems used on computers today. In fact, our modern credit/debt system originated in 5000 B.C. when Babylonian bankers loaned credit (which they "created" from thin air) and then charged interest (usury) on top of it.

Notice that symbolic money (credit and debt) are intangibles and can be easily manipulated by the powerful to enrich themselves at others' expense. Our modern banking system is patterned after the Babylonians and based on the premise that God's laws of wealth are not true. Therefore, modern banking principles have usurped God's system and created a credit system using nothing but money substitutes. Sadly, most of us have given our consent to the credit system without understanding the consequences.

Consuming Debt

Debt is enslaving and consuming modern American culture. It should not surprise us to learn the root meaning of the word debt is "death." The Bible teaches that no debt should extend beyond seven years, yet gradually over the last 60 years, banks have extended mortgage loans from seven to 10, to 15, to 20 and now 30 years to the lender's financial benefit.

Today's government, corporate and personal debt is a growing threat to our children. Debt has become the legalized drug of the last generation ^^ after being shunned for the previous 10 generations in America. There are many reasons for the explosion of debt and credit, but the gospel solution is still the same: "Owe no man anything except to love him." So, how can we learn to overcome the temptation to borrow?

1. Study and obey God's rules on tithing, offerings and debt.

2. Prioritize expenses. Include both a tithe to your local church or nurturing ministry, and give yourself a 10 percent savings cushion for emergencies. If you don't have enough money to pay your bills, you have two choices: earn more or spend less. This may mean reducing your lifestyle to fit your pocketbook.

3. Establish a money-management system that works for you and begin training your children in these principles before they fall into the credit trap.

Giving Obediently

According to Barna Research, less than 20 percent of Christians tithe, which means 80 percent of Christians merely tip God occasionally. Why do some Christians faithfully pay their tithe and give offerings and others feel no guilt in disregarding the tithe?

I've done a lot of thinking and praying about this problem and my conclusion is that people who tithe are more interested in laying a solid foundation for the next generation than people who don't tithe. In fact, many Christians may never tithe because their level of faith, understanding or obedience is stunted. Other Christians may have tried tithing for a while, but quit when they did not experience a financial blessing in the short-term.

The tithe is not something that Christians "give" to God ^^ it is paid, similar to paying taxes. You don't give the IRS your taxes each year, you pay them ... or else.

But within the Kingdom of God we are never coerced to do anything, including supporting the local church. However, we are admonished in the Old and the New Testaments that a tithe belongs to God, and if we keep it we are robbing His Kingdom of the resources to get the job done in the future.

I have not always been a tither. About 15 years ago I was confronted with the truth about tithing from my pastor. He challenged me to become a faithful tither of both my personal income and the income of my business. Yes, I have stumbled a few times along the road, but I stand as a witness that God is faithful to those who obey Him.

Malachi 3:10 teaches us that the real purpose of tithing is to demonstrate our obedience to God and our love for our children. When we tithe and give offerings, at least two things happen ^^ one on earth and one in heaven: 1) provision (meat) goes into the House of God in preparation for the expansion of God's Kingdom on earth, and 2) heaven's windows are opened over our life. According to Luke 6:38, we can affect the measure of blessing that God pours out to us by the measure that we freely give offerings. I have personally chosen to give with a large shovel. Some are giving by the cup, others by the teaspoon. It's your choice.

Therefore, as a first step of recovering a biblical view of economics, we must be accountable to the truth that we presently understand. Tithing as well as giving generous offerings is the foundation to restoring true wealth into the hands of the righteous.

Speaking Bluntly

According to a growing number of leaders, the world system is on a collision course with biblical Christianity. This places Christian leaders as the watchmen, discerning the times responsible for applying the Bible to all areas of life and leading the flock by example.

For the sake of the next generation, let us establish a biblical foundation of economic truth and then take this dynamic message into the marketplace for all to benefit. This requires Christians who can separate fact from fiction on the topic of money, based on God's Word. I am dedicating this next decade to that goal and established a Web site (www.true-wealth.com) that helps people separate true wealth from counterfeit. Will you join me?

True-Wealth.com ... a collection of thoughts on Christian economic principles and practice.

The Big Picture -Comstock Partners
Dec 10, 2004

In our view the early 2000 peak in the stocks marked an end to the extraordinary 18-year secular bull market than began in 1982. Now, four and a half years later, the market remains well below its highs, lending support to our belief that this is indeed a secular bear market that will produce below average or negative returns in the years ahead. The sharp upward move since October 2002 is most likely a cyclical bull market that will end soon at levels far below the previous high.

After the bursting of the massive economic and financial bubble of the late 1990s, the monetary and fiscal authorities took historically extreme measures to avoid the type of deep deflationary recession that occurred in the U.S. after 1929 and Japan after 1989. The Fed lowered the funds rate by 550 basis points to one percent along with the promise that the rate would remain at that unusually low level for an indefinite period with the hope that long rates—and therefore mortgage rates—would stay low as well. This policy was also accompanied by two major tax cuts that put more money in the hands of consumers. Essentially, in the absence of adequate employment and wage growth, the Fed used soaring asset values (stocks, bonds and houses) to create a wealth effect that got the economy going. Various estimates indicate that cash-outs from mortgage refinancing (REFIs) alone put hundreds of billions of dollars into the hands of consumers.

These measures kept the recession relatively mild and allowed the consumer to continue to increase spending throughout the downturn. This was the first recession in which consumer spending never turned negative on a year-to-year basis for even a single quarter. Instead of cutting back, consumers were able to maintain their standard of living through a drastic cutback in the savings rate, refunds from the tax reductions, a huge rise in debt and the cash-outs from REFIs. As a result, however, the massive structural imbalances created by the bubble have not been corrected, and have actually been exacerbated. These include a record trade imbalance, an all-time low consumer savings rate, soaring consumer debt, and a major budget deficit. As can be seen in the increasing concern about the weakness of the dollar, these chickens are now coming home to roost and are creating strong headwinds against sustainable economic growth at a time when the Fed is tightening, the tax refunds are played out, and REFIs are down 75 percent from the peak.

Unlike past economic recoveries, the current expansion was fueled by extreme monetary and fiscal ease leading to bubbling asset values, rather than the rapid rise in employment and wages that leads to more sustainable growth. For example non-farm payroll employment in the current recovery is up only a paltry 0.9 percent since the official recession bottom in November 2001, an average of only 32,000 per month. This compares to an average increase of about 7.5 percent in other post-war recessions. If employment in the present expansion had risen by that amount there would be about 8.6 million more jobs than there are today, and the average monthly gain would have been about 273,000. Instead, this number has been surpassed in only three of the past 36 months, and as a result, the growth of wages and salaries has been far under the increases posted in the past.

The strains are evident in the current economic numbers, which are decidedly mixed. Retail sales look tepid with store traffic slow and sales sluggish. Auto sales drop off markedly whenever incentives are lowered, and GM and Ford have announced substantial cuts in upcoming production. Durable goods orders other than defense and aircraft also look lackluster, while the Conference Board leading indicators have been down for five straight months. At the same time the Fed is tightening and promises to continue doing so, albeit at the so-called measured pace. Nevertheless, despite the conventional wisdom that rates are still too low to impact the economy, past periods of low interest rate levels indicates that direction counts, and that a series of rate increases, even from low levels, leads to sub-par growth or recession. This seems particularly true when the recovery has been below average and heavily dependent on asset value inflation rather than rising employment and wages.

It also appears significant that the market is back on one of its speculative binges. Internet stocks are once again in vogue and the leading Nasdaq stocks are selling a huge P/E ratios. We are seeing late-1990s types of craziness in stocks such as Google, Taser, Travelzoo, Research in Motion and scores of others. We now even have the big conceptual merger between Sears and K-Mart, bringing back memories of the Time Warner AOL deal near the 2000 peak. Overall stock market valuations remain extremely high, whether measured by P/E ratios, price-to-sales, dividend yield, or price-to-book.

In sum, given the continuing high valuations, the uncorrected economic and financial structural imbalances, and the lack of further fiscal and monetary options, we believe that the market is in a secular decline that will resume shortly. During the previous secular bear market (1966-1982) presidential post-election day rallies petered out between mid-December and mid-January, followed by major declines that extended into the next year. If the pattern holds this time, as we think it will, time is running out.

FULL STORY

Related:
12-1-00 --The BIG Picture: The Shape of Things to Come -IFN

A GOLDBUG'S LIFE -Bill Bonner, Daily Reckoning
Dec 10, 2004

Mr. James Surowiecki wrote a wise and moronic piece on gold in the New Yorker. His wisdom is centered on the insight that neither gold, nor paper money are true wealth, but only relative measures, subject to adjustment.

"Gold or not, we're always just running on air," he wrote. "You can't be rich unless everyone agrees you're rich."

In other words, there is no law that guarantees gold at $450 an ounce. It might just as well be priced at $266 an ounce, as it was when George W. Bush took office for the first time. That was just four years ago. Since then, a man who counted his wealth in Kruggerands has become 70% richer.

But gold wasn't born yesterday...or four years ago. Mr. Surowiecki noticed that the metal has a past, just as it has a present. He turned his head around and looked back a quarter of a century. The yellow metal was not a great way to preserve wealth during that period, he notes. As a result, he sees no difference between a paper dollar and a gold doubloon, or between a bull market in gold and a bubble in technology shares.

"In the end, our trust in gold is no different from our trust in a piece of paper with 'one dollar' written on it," he believes. And when you buy gold, "you're buying into a collective hallucination - exactly what those dot-com investors did in the late nineties."

Pity he did not bother to look back a little further. This is, of course, the moronic part. While Mr. Surowiecki has looked at a bit of gold's past, he has not seen enough of it. Both gold and paper dollars have history, but gold has far more of it. Both gold and dollars have a future too. But, and this is the important part, gold is likely to have more of that, too.

The expression, "as rich as Croesus," is of ancient origin. The king of historic Lydia is remembered, even today, for his great wealth. Croesus was not rich because he had stacks of dollar bills. Instead, he measured his richness in gold. No one says "as poor as Croesus," do they? We have also heard the expression, "not worth a continental," referring to America's Revolutionary-era paper money. We have never heard the expression, "not worth a Kruggerand."

Likewise, when Jesus said, "Render unto Caesar that which is Caesar's," he referred to a denarius, a coin of gold or silver, not a paper currency. The coin had Caesar's image on it, just as today's American money has pictures of Lincoln, Washington or Jackson on them. Dead presidents were golden back then. Even today, a gold denarius is still about at least as valuable as it was then. America's dead presidents, whose images on printed in green ink on special paper, lose 2% to 5% of their purchasing power every year. What do you think they will be worth 2,000 years from now?

A few years before Jesus, Crassus, who had made his fortune on real estate speculation in Rome, decided to put together an army to hustle the east. Alas, such projects almost always meet with disaster; Crassus's was no exception. He was captured by the Parthians and was put to death in an unusually cruel and costly way. But he did not end his days with paper money stuffed down his throat...and certainly not dollar bills. No, they poured molten gold down his gullet - or so the story has it.

Gold has a long history. And during its history, many was the time that humans were tempted to replace it with other forms of money - which they believed would be more convenient, more modern, and most importantly, more accommodating. After all, gold is hard to find and hard to bring up out of the earth. As a result, its quantity is always limited - by nature herself. Paper money, by contrast, offered irresistible possibilities. The list of bright paper rivals is long and colorful. You will find hundreds of examples, from assignats to zlotys. But the story of paper money is short and always sad. Since the invention of the printing press, a new paper dollar or franc can be brought out at negligible cost. Nor does it cost much to increase the money supply by a factor of 10 or 100 - simply add zeros. It may seem obvious, but adding zeros does not add value.

Still, the attraction of being able to get something for nothing has been too great to resist. That is what makes goldbugs so irritating: They are always pointing it out. Even worse, they seem to enjoy saying that "there ain't no such thing as a free lunch," which comes as a big disappointment to most people.

Once people were able to create "money" at virtually no expense, no one ever resisted doing it to excess. No paper currency has ever held its value for very long. Most are ruined within a few years. Some take longer. Even the world's two most successful paper currencies - the American dollar and the British pound - have each lost more than 95% of their value in the last century, with is especially remarkable since both were linked by law and custom to gold for most of those years. For the dollar, the final link to real money was not cut until August 15, 1971. That was when the world found out what the greenback was really worth - nothing much.

Whatever promises the Feds made with regard to the dollar, they could unmake whenever they wanted.

Some paper currencies are destroyed almost absent-mindedly. Others are ruined intentionally.

But all go away eventually. By contrast, every gold coin (and silver, for that matter) that was ever struck is still valuable today - and the coins almost always have more value than when they first came out of the mint.

Regards, Bill Bonner, The Daily Reckoning

http://www.dailyreckoning.com

Editor's Note: Bill Bonner is the founder and editor of The Daily Reckoning. He is also the author, with Addison Wiggin, of The Wall Street Journal best seller Financial Reckoning Day: Surviving the Soft Depression of the 21st Century (John Wiley & Sons). The Best Investment Book I've Ever Read!

“Me the People” -JB Williams

December 9, 2004 - The founding fathers knew this day would come, when “we the people” would become so focused on our own individual desires, that we would no longer act in the interest of our nations needs.

They talked about America’s most fatal threat coming from within, in the form of self-servitude. They spoke of America’s eventual fall from the weight of decisions made by “me the people” without regard for “we the people”.

They knew that America’s long term future would depend on “the people’s” ability to resist the urge to vote ourselves money from the treasury, once we figured out that we could. In short, they knew that a truly free self-governed people would be free to self-destruct.

They knew that the one flaw in America’s original design would surface once “we the people” realized we held the power to vote strictly in our own self-interests. Consequently, they knew that America’s success would produce the seeds of failure as well.

The fall of America will come from within, just as they worried. It begins with each of us putting “me” ahead of “we”.

Our society is based entirely on this premise today, with all the hyphenated American’s who are more concerned with where they came from than where they are going, more impressed by that which makes us different, than that which makes us the same.

Everyone talks about the divide in America today, but nobody takes personal responsibility for it. Many talk of the need for national unity, but nobody really wants to unite. It might be counter-productive to our own self-interests. In most cases it would be, at least in the short term.

The “me the people” system of self-governance provides a special opportunity for would-be career politicians. It gives them the ability to deal with us as voting blocks instead of as individuals. It makes it possible for them to divide up segments of the populous based on mathematical electoral equations, pandering to the wishes of a chosen few, at the expense of “we the people”.

During election season, everything becomes a wedge issue, and today, we start the next campaign season upon completion of each election. So wedge issues are perpetually in our headlines, making certain that “we” never forget about “me”.

Because all of the focus is on “me”, we naturally gravitate towards those who speak to our individual ideologies and desires. We accept as fact, only that which supports our agenda, even when there is no factual basis.

If someone challenges our set of facts, we simply discard them as partisans, as political operative’s intent on advancing their agenda at our expense. We assume there is no validity to their case, simply because it doesn’t support our agenda, our ideology.

Anyone who is “anti-me”, must be a bigot, a “con” of some type, a “brown shirt”. We recognize that our opponents have a clear agenda, but we don’t realize that we do too. The only question is what is our personal agenda?

Today, that defines which voting block the DNC will stick you in. Gay Right’s advocates go into that block, Abortion activists in theirs, Affirmative action folks in theirs, and so on. Add them all together, and you have a party of single issue voters.

Ask yourself a question, and no matter which voting block defines you today, answer it honestly.

If the Republican Party were willing to accept same-sex marriage, affirmative action, abortion, illicit drug use, removing religion from public view, free stuff for everyone, and a kinder gentler means of dealing with our enemies abroad, would Democrats even have a Party today?

We all know the answer to this question; it was just a reality check. Move these voting blocks to the “R” column in the last 30 years of elections, and the DNC would not muster 10% of the popular vote, or have a party. That makes these the “issues of division”, and those who profit by them, the dividers.

The problem is, while each of these issues is supported by some people focused on their own self-interests, none of them are supported by the majority of “we the people”. The reason they don’t have broad public support has nothing to do with anyone’s desire to trample on anyone’s personal liberty.

It has to do with what is in the best interest of our country, and it is after all, “we the people” who are charged with the responsibility of making such judgments in this self-governed Republic of ours.

Now sometimes, Republicans are guilty as well. This word “mandate” seems to get batted around a lot these days, implying that a certain magical margin of victory gives them the Right to tyrannize the other side of the aisle. This view is equally wrong and every bit as short sighted…

Let’s face it, we all know the dismal future of a divided country, and anyone paying half attention has already figured out that only wannabe career politicians benefit from our division.

What nobody seems willing to admit is that we have created this division ourselves, by focusing all of our attention on “me” issues, forgetting that the “we” issues are of much greater importance, of much greater consequence too.

Can a house divided stand? Never in history has one been able to, so there is no reason to believe our experience will end any differently.

Can our house be united? Only if “we” take the focus off of “me”.

Is anyone willing to change in order to unite our nation? Only those willing to face the reality that this divide is entirely self-inflicted. Promoted and exploited by political operatives for sure, but created by us, as a direct result of our self-centered single issue agendas.

America has united in the past, and it will again, when America comes first… Not one day sooner!

http://www.therant.com

Social Security Reform, With One Big Catch -NYT
By EDMUND L. ANDREWS
December 12, 2004

WASHINGTON -- OF all the arguments being made to replace part of Social Security with private retirement accounts, few are more seductive and more misleading than the prospect of earning higher returns.

Get ready to hear a lot about this next week, when President Bush is host for a two-day economic conference that is expected to focus sharply on Social Security.

Under the current system, investment returns from Social Security are "abysmal," Mr. Bush said in one recent speech, because the trust fund is allowed to hold only low-yielding Treasury bonds.

Letting working people invest some of their Social Security money in the stock market would allow them to earn higher returns, giving them more money at retirement than they would have if they let the government do everything for them, the logic goes.

It sounds like a no-lose proposition. According to the Social Security Administration, Treasury bonds can be expected to yield a real annual rate of return of about 3 percent. Equities, by contrast, can be expected to earn 6.5 percent.

That assumption is crucial to arguments that personal accounts can reduce Social Security's long-term shortfall - which the government estimates to be at least $3.5 trillion. Most of the proposals to overhaul Social Security call for steep reductions in future benefits that would be offset by the higher returns people would presumably earn on their investments.

Stephen Goss, the Social Security Administration's chief actuary, has endorsed the assumption of higher returns. In evaluating the major proposals for putting some payroll taxes into personal investment accounts, Mr. Goss estimated that even people who hedged their risk by mixing stocks and bonds could expect an average return of 4.45 percent.

But that logic is as flawed as a perpetual motion machine. If it were true, the government could erase Social Security's entire projected deficit by selling bonds at 3 percent and buying stocks that yield 7 percent.

Why doesn't the government do just that? Because higher returns are inseparable from higher risk. No risk, no reward. And if the goal is to enhance security, if people are to have a solid reason to expect a particular level of wealth at retirement, the risks have to be relatively low.

"The entire argument is absurd," said William C. Dudley, chief United States economist at Goldman Sachs. "These returns weren't free. You are getting these returns precisely because you are taking on risk."

To be sure, one of the biggest ways to reduce risk is to have a long time frame. People who invest at age 30 or even 50 have the time to ride out most of the ups and downs of the stock market.

But there are no guarantees. According to Ibbotson Associates, which publishes data showing average returns over different periods, large-cap stocks actually suffered a loss of 1 percent, annualized, from early 1929 to the end of 1942.

Granted, it is somewhat unfair to pick a time period that begins just before the great stock crash of 1929 and continues through the Depression. But many analysts contend that it is even more misleading to suggest that people should have complete confidence in their ability to earn above-average returns with no risk whatsoever.

Surprisingly, the Social Security Administration actually goes further than that. In addition to relying on the premise that equities will yield higher returns than Treasury bonds, Mr. Goss of the Social Security Administration suggested that returns in the future might be even higher than those of the past.

"A consensus is forming among economists that equity pricing as indicated by price-earnings ratios may be somewhat higher in the long-term future than in the long-term past," wrote Mr. Goss.

"This is consistent with broader access to equity markets and the belief that equities may be viewed as somewhat less 'risky' in the future than in the past," he added.

If investment funds or stockbrokers made that kind of claim, they would probably be breaking the law.

In an interview last week, Mr. Goss acknowledged that many experts believe investment returns should be adjusted for risk and that the common proxy for a risk-free return is the real yield earned on Treasury bonds.

The Social Security Administration's analyses do include lengthy disclaimers, noting that the projected returns are highly "sensitive" to what happens in the markets.

But other government analysts take a much more conservative approach. The nonpartisan Congressional Budget Office, which is run by a former chief economist in President Bush's own Council of Economic Advisers, assumes that equities and bonds will earn no more than Treasury bonds.

Strikingly, the White House's own Office of Management and Budget recently made the same assumption. The issue was not Social Security but rather the projected growth of assets in the railroad retirement trust. In evaluating the railroad retirement system, the White House budget office also assumed that investments would yield the same as Treasuries.

BUT the more basic question is this: Should a rational person believe that Social Security's very real financial shortfall can be reduced just by shifting from bonds into stocks?

Those who imply that stocks can promise higher returns without higher risk are essentially arguing that Social Security can be fixed with a huge exchange of paper.

If that is the government's strategy, people should by all means push for the right to shift all their payroll taxes to personal accounts and invest the money in gold.

http://www.nytimes.com

The family-first generation -Marilyn Elias, USA TODAY
Work is fine — in its place. But hard-charging baby boomers have placed too high a priority on it, their kids seem to think.
Dec 13, 2004

Generation X and Generation Y workers, who are younger than 40, are more likely than boomers to say they put family before jobs. And that's not just because their children are younger, says Ellen Galinsky, president of the Families and Work Institute in New York. "There has been a real generational shift," she says.

She's comparing the institute's new survey of 2,800 employed adults with comparable surveys it did in 1992 and 1997. A 1977 Department of Labor survey fills out a picture that shows:

• Both sexes are more accepting than ever of working mothers.
• Among younger workers, "job success at any cost" has become less appealing.
• In two-parent homes, children get more time with their parents than they did 25 years ago; mothers do about as much child care as they used to, but fathers are doing more.

Nobody knows why the change is happening, but there are several possible causes, Galinsky says. "What I hear all the time from young men is that they want to be different than their fathers, who often worked long hours. They want to be more involved in their children's lives."

Many young workers grew up in an era of rising divorce rates and corporate layoffs. "They saw the 'rewards' parents could get for work loyalty," Galinsky says. Gen X'ers and Y'ers also saw stressed-out boomer parents multitasking, Galinsky says. And fears of terrorism may have increased the value of comforting families to young Americans, she says.

Flexibility at work is a prized benefit for young working moms, according to another recent survey by Galinsky's institute. On a scale of 1 to 10 (with 10 most valued), employed mothers gave flexibility a 9.2 and advancement 5.5.

That's not to say working mothers are quitting in droves to go home. Even if they wanted to, most can't afford it. "The idea that mothers work for pin money should have died a long time ago," says Stanford University economist Myra Strober.

A generation glossary
Year of birth
Generation Y 1980-1994
Generation X 1965-1979
Baby boomers 1946-1964
"Matures" 1945 and earlier

Single-mother households have grown in the past decade. Plus, about one-third of wives earn more than their husbands do, Strober says.

More than half of infants' mothers have jobs, and about three out of four women work if their kids are ages 8 or older, federal figures show.

Although dads still do less child care than mothers, most Gen X men think fathers can parent as well as mothers and should be equally involved in kids' lives, says Sandra Hofferth, a University of Maryland sociologist and demographer who studies family life.

FULL STORY

Osama's War on American Wealth -Gal Luft, FPM
FrontPageMagazine.com
December 15, 2004

Although battlefield victories are crucial, history shows that global wars have been decided on a different kind of front: the war between economic powers. World War II soldiers clashed on the beaches of Normandy and Guadalcanal, but only when the German and Japanese war industries ran out of cash and raw materials did the wheels of the Whehrmacht and the Imperial Army finally grind to a halt. The Cold War could have gone on for decades if not for the depletion of the Kremlin's coffers.

The war on radical Islam is no different. Osama bin Laden plans strategies based on his victory over the Soviets in Afghanistan during the 1980s. The way to bring down a superpower, he has learned, is to weaken its economy through protracted guerilla warfare. We "bled Russia for ten years until it went bankrupt and was forced to withdraw in defeat," bin Laden boasted in his October 2004 videotape.

The October video, released just before the U.S. election, offers a glimpse into the jihadist strategy. "We are continuing in the same policy to make America bleed profusely to the point of bankruptcy," said bin Laden. His logic is simple: To bring the U.S. to suffer a fate similar to that of the Soviet Union, the terrorists need to drain America's resources and bring it to the point it can no longer afford to preserve its military and economic dominance. As the U.S. loses standing in the Middle East, the jihadists can gain ground and remove from power regimes they view as corrupt and illegitimate while defeating other infidels who inhabit the land of Islam.

Three methods comprise al Qaeda's economic war against the U.S. The first is the destruction of high-cost qualitative targets by low-cost qualitative means. The 2001 attack on the World Trade Center is a perfect example of how terrorists can get more bang for their cheap buck. Bin Laden cited estimates that al Qaeda spent $500,000 to carry out the attacks of September 11, which caused America to lose more than $500 billion. "Every dollar of al Qaeda defeated a million [U.S.] dollars," bin Laden concluded.

Bin Laden's second form of economic warfare involves forcing the U.S. to sink unsustainable amounts of funding into its defense agencies. The more the U.S. invests in defense, the more its domestic investment suffers neglect. Not much is needed, bin Laden reasons, to provoke America into expensive military interventions: "All that we have to do is to send two mujahedeen to the furthest point east to raise a piece of cloth on which is written al Qaeda, in order to make generals race there to cause America to suffer human, economic and political losses without their achieving anything." Bin Laden exaggerates -- but there's no denying the fact that between 2001 and 2004 U.S. military spending grew by more than one fourth since 9/11. America now spends an extra $100 billion per year on its military. Add to this the creation of a $30 billion-per-year Department of Homeland Security, and the billions directed to the State Department and other agencies aiding allies in the War on Terror and we discover a price tag of at least $150 billion annually to defend the U.S. against terrorism.

Oil, which jihadists call "the provision line and the feeding to the artery of the life of the crusader's nation," is the third component of bin Laden's strategy. Oil facilities and oil workers have been attacked around the world. In Iraq more than 170 attacks targeted oil pipelines. Rising oil prices partly reflect the "fear premium" added by oil terrorism. For the U.S., an importer of more than 10 million barrels a day, the spike in oil prices means a loss of over $50 billion in one year. The cause and effect are not lost on terrorists. "We call our brothers in the battlefields to direct some of their great efforts towards the oil wells and pipelines," reads a jihadist website. "The killing of 10 American soldiers is nothing compared to the impact of the rise in oil prices on America and the disruption that it causes in the international economy."

Attacks on oil serve jihadists in another, subtler way. Higher oil prices mean a historic transfer of wealth from oil-consuming countries -- primarily the U.S. -- to the Muslim world, where three quarters of global oil reserves are concentrated. This year, oil-producing Gulf nations increased their oil revenues by 45 percent. The windfall benefits jihadists as petrodollars trickle their way through charities and government handouts to madrassas and mosques.

Skyrocketing defense funding have already created the highest deficit since World War II and a national debt edging on its statutory limit. But despite al Qaeda's pricks, our economy is still robust and the attempts to cripple it seem like a fantasy. The billions of petrodollars flowing from the U.S. are eventually recycled as oil-producing countries buy American goods, services, and treasury bonds. This fortunate situation could change, though, if relations between the U.S. and the Muslim world continue to deteriorate. The Saudis worry that we might freeze their assets in the wake of another terrorist attack. Anti-American sentiment could inspire Muslim countries to shun the U.S. dollar, perhaps by shifting transactions to the Euro. OPEC is already considering switching to the Euro as its currency of choice for oil sales. Other Muslim countries contemplate using the gold dinar, a new gold-backed currency to be used in transactions among 57 Muslim states. Each of these moves would fulfill jihadists wishes.

Because of oil's role in the War on Terror, the U.S. stands to benefit enormously from reducing its dependence on petroleum. A coalition of hawkish Washington think tanks has shown that the U.S. can cut oil imports by half within two decades by deploying available technologies. This $12 billion "Set America Free" proposal enumerates ways to increase fuel efficiency and use domestically produced fuels that are not petroleum-based.

If we stay on the present course, America will bleed more dollars each year as its enemies gather strength. A smart combination of military and energy policies is our best hope for breaking the economic backbone of al Qaeda -- before the jihadists do so to us.Gal Luft is executive director of the Institute for the Analysis of Global Security and a member of the Committee on the Present Danger. His email address is luft@iags.org.

FULL STORY

Related:
12-16-04 --New Bin Laden Tape Surfaces -FOX News -- CAIRO, Egypt — A man identified as Usama bin Laden, speaking on an audiotape posted on an Islamic Web site Thursday, praised an attack earlier this month on a U.S. consulate in Saudi Arabia and criticized the Saudi regime as weak and controlled by the United States. Read more and request a FREE GUIDE TO COUNTER-TERRORISM...

WHY IS HOLLYWOOD SO ANTI-GOD? -Ray Comfort, ANS
ASSIST News Service
Dec 9, 2004

BELLFLOWER, CA (ANS) -- CBS’s Dan Rather quoted the Bible as if it were just another news item -- “It is more blessed to give than to receive” -- as he introduced a story of a generous California couple. Fox News reported on Time and Newsweek cover stories about Jesus Christ and His birth. MSNBC had a heated panel discussion on whether Christian television is “selling God.” All of these took place on a single night this month. Is the media finally catching on that America is interested in religion?

According to a March 2004 AP poll, 87 percent of Americans want “under God” kept in the Pledge of Allegiance. A December Newsweek poll found that an incredible 93 percent believe that Jesus really lived, and 82 percent believe He is the Son of God. Nearly 80 percent believe that Jesus was conceived by the Holy Spirit and born of the Virgin Mary.

In a story about America’s spirituality, ABC stated that evangelicals thought President Bush owed them moral legislation because their vote put him back into the White House. Many agreed.

This week, ABC reported that “a new generation of television ministers…is finding an audience in both ‘red’ Republican and ‘blue’ Democratic states.” Joel Osteen, pastor of Houston’s Lakewood Church, the largest church in America, recently released his first book. "Your Best Life Now: 7 Steps to Living at Your Full Potential" quickly arrived on the New York Times bestseller list. Osteen says “there is an enormous demand for advice that includes the perspective of God.”

As an industry that claims to just be giving people what they want, what is Hollywood doing to meet this demand? Spurned by the studios, Mel Gibson’s The Passion of the Christ burst out of the box office into the bank, leaving the critical mouths of Hollywood gaping open. The New York Times stated, “Hollywood producers and studio executives, witnessing overwhelming success of The Passion of the Christ are reconsidering whether they have been neglecting large segments of American audience eager for openly religious movies.” So does that mean we can expect a big change in entertainment? Are we going to see movies about God? Probably not. Hollywood has known for years that films such as The Ten Commandments and Ben Hur: A Tale of the Christ are loved by American audiences, yet few modern movies have a positive spiritual theme.

Still, it has been an interesting year. People magazine ran a cover story asking the question “Does Hollywood Have Faith?” Surprisingly, some do. In November, Jim Carrey told CBS’s “60 Minutes” that he draws strength from the spiritual side of his life, and those who didn’t like that he expressed strong spiritual beliefs would just have to deal with it. Big stars can let their light shine without any fear of repercussions. Madonna is big enough to make Jewish mysticism cool, with her much publicized belief in Kabbalah. Hugh Hefner even appeared on “Faith Under Fire” and talked about his belief in God.

In mid-2004 I published a book titled What Hollywood Believes (Genesis Publishing Group), which revealed that there are stars that are quietly twinkling in the darkness of Hollywood. In examining spiritual statements of Michael J. Fox, Martin Sheen, John Wayne, Frank Sinatra, Elizabeth Taylor, Kevin Costner, George Lucas, and over one hundred other celebrities, I discovered that many had deep spiritual convictions. Uncovering their beliefs took a great deal of research, and confirmed what I had suspected for some time. Many stars do have faith in God, but their light has been deliberately hidden under a bushel. In 2002, I was in Hollywood in a meeting with the managers of a well-known actor, and heard them say that talking about his faith would be the death of his career. They spoke the truth. America may not be anti-God, but Hollywood certainly is, and celebrities who are prepared to actually live out their convictions will be blacklisted unless they are too big to touch.

Why is Hollywood so out of step with the rest of the country? Why are the majority so anti-God? The answer is simple. Those in the entertainment industry are typically self-confident and talented people, many of whom admit to having rather large egos. They want to be in front of the camera—in the spotlight. They are not the type of people who gravitate toward the selfless humility of Christianity. Rather, they are offended by the principles of a religion that talks of modesty, of childlike faith, of a Babe in a manger, a Savior on a donkey, and a Redeemer on a cross. Consequently, we have a nucleus of people in the entertainment business whose life’s philosophy is godless, and this is clearly reflected in their God-less industry.

Ray Comfort is the author of more than 40 books; including 101 Things Husbands Do to Annoy Their Wives and What Hollywood Believes.

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(2004 news/views weekly summary

David M. Bradshaw is Editor of Real Money Perspectives, publisher of Rediscovering Gold in the 21st Century: The Complete Guide to the Next Gold Rush (7/01) and has been an economic commentator since 1987, when he produced the World Economic Perspectives radio show. In 1997, he produced a one-hour TV documentary, "Preparing Wisely for the Next Millennium," which was distributed free of charge at Blockbuster Video nationally. In 1999, he produced a one-hour radio special, "The Big Picture: The Shape of Things to Come" discussing geopolitical, economic and spiritual trends in the 21st Century. MORE ... NOTE: Youngest daughter Braida Zoe (10 months old) is now standing, clapping, waiving, stepping, and even saying "mama" & "dada" to the correct parent.