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February 11, 2016


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All I have heard for the past few years is that the long running Bull Market was overdue for (and FED protected from) a 10% correction. Now we have one and the world is ending. This is technically a Bull market but in effect all we have done is creep our way back from 15,000 in 2008 to 15,000 in 2016 in the longest, slowest recovery in history.

Virtually everything that has happened in 8 years is that the Fed took the wheel from Congress in 2008 to control the economy through the banking system and money printing. They printed money and put it on the bank balance sheets regulating that they NOT lend it then held interest rates low to keep the incentive low for banks to lend. Community banks that support small businesses disappeared. Congress has sat on their hands while the administration used executive orders to extract fees, fines and taxes from the American economy.

Technology created a new gusher of oil in the US and reversed the OPEC (Saudi) strategy to maintain high prices. For 5 years this US gusher produced the only economic stimulus in the US and 25 states benefited. Then, boom, the Saudi strategy of flooding the world with what is likely to be $20 oil destroyed high debt American oil producers driving rigs down 75%. Even Chevron has cut it's dividend.
Meanwhile Americans bought cars at record rates. Now, the world waits for the oil companies to consolidate or fold. At the same time oil rich countries are on the verge of economic collapse. Yesterday I bought 10 gallons of gas for $13.33. If I had gone inside and bought 10 gallons of water it would have cost me less. So, 25 states are beginning to struggle as the effects of lower spending by oil companies spreads into other industries.

Baby Boomers--the richest segment of the US consumers continue to retire and reduce spending. This is the ACTUAL source and driver of the world's economic struggle. It could continue for 10-20 more years if new industries do not create higher paying jobs for the new generation coming on line.

China is now following in the footsteps of Japan as their wages increase and International companies move jobs to Vietnam, India and Indonesia. Like oil where the profits go to the low cost producer--jobs go to the low cost competent labor. That will be India next. Millions and millions of educated $1/hour people await the jobs and their new Prime Minister get's it.

The US political environment continues to move left. Hillary is having a very difficult time looking "left" enough to fight Bernie. The battle to employ the best "Robin Hood" strategy of robbing the top 1% to feed the bottom 50% while bashing the banks and Wall Street is interesting to watch. After 8 years of Obama's socialist movement we now watch as the Democrats move even further left. The only question left is how far left will the Republicans move? Trump's boasting of taking our jobs back from China and Mexico sells pretty well but is not even remotely possible. There are no $1/hr laborers in the US. In fact the US is considering a $15/hr minimum wage. 15 x the overseas market. Once his real persona shows up Trump will likely look like a slightly conservative Democrat. Cruz on the other hand looks far too right for today's political reality. Within 6 weeks we will likely know if the candidates are going to be Hillary versus Trump or if not we are headed to a really uncertain outcome.

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