War Cost Update

Before we went to Iraq, Donald Rumsfeld told us the cost would be a war estimate of between $50 - $60 billion. Two academics estimate the government is spending $12bn a month in Iraq. A new book has hit the market, The Three Trillion Dollar War , by Joseph Stiglitz, Nobel Prize winning economist, and Linda Bilmes, a senior official during the Clinton presidency in the 1990s.

The authors project that 791,000 troops from Iraq and Afghanistan will claim disability compensation and benefits, noting that 39 per cent of the 700,000 troops who fought in the (brief) 1991 Gulf war claim disability. They estimate these costs from Iraq alone will be $371bn to $630bn. The extra costs to the defense budget - they estimate from $66bn to $267bn - come from the need to reset and replenish a military in which equipment has been used up at six to 10 times normal rates and human capital has been exhausted.

Their government spending estimate for the war is $1,292bn- $2,039bn, rising to $1,754bn-$2,655bn if interest is added.

Stiglitz and Bilmes add social costs not paid by the government, including the loss of productive capacity of those killed or wounded and quality of life impairments. These, they estimate, would amount to $295bn-$415bn for Iraq and Afghanistan

Add macro-economic costs deriving from higher oil prices and other effects including the impact on the economy of higher interest costs. For both Iraq and Afghanistan, they calculate this would come to between $187bn and $1,900bn. Yet, these estimates do not cover the cost outside the US.

Bilmes, who says the book leaves others to estimate the war's benefits, describes the book's 'three trillion' headline number as very conservative. She notes that the US federal government spent $108m last year on research into autism, a condition affecting one in 150 children. "We spend that in 4½ hours in Iraq. I'm sure, if they knew that, people would say it was wrong."

Hand To Mouth

We need to plan for the future and take active steps in that planning. Then we must begin executing the plan and manage it. That is the skinny for fundamental investing. Hell, that is the basis for living a fulfilling life! However during this action, I had to go to the store to get some basics. Not video games to stave off the boredom of the constant bad news, not liqueur or beer to temporarily numb the effects of the current market. I had to go and get things like milk, eggs, bread, meat, and vegetables.

About every two weeks I go, get in the car and drive to the local Costco or Sam's Club for these things. And... if I don't want to be gone long, I go to a Meijers because it is closer. It recently dawned on me that every time, I've been wide-eyed when the final total lit on the register. I pick up the few bags and head back. Now normally you take this in stride as each year prices rise, like gas prices which we become accustomed to over time. Soon, the $3.05 per gallon will be cheap compared to the $3.80 we'll start seeing pop up here and there. Till a time when even that is cheap as we begin seeing the start of $4.05 per gallon.

But back to the food. I've started to see a few people carrying grocery sacks by hand as they walk home on our sidewalk-less streets. Which shows you that some people are starting to save the cost of transportation by walking (a novel idea?). Sadly perhaps they've even lost their job and they've even canceled their car insurance. They risk their lives by walking our sidewalk-less streets, crossing crosswalk-less intersections, all because it is too expensive to drive; but that they still must eat! They still must feed themselves and their families.

So as agflation - rising prices of agricultural products, affected by ethanol production and the rising oil prices (transportation of goods), increasing fertilizer costs hits us squarely in the mouth, we should probably look at profiting here while everyone is noticing. By some estimates, it takes ten to fifteen pounds of grain to get a pound of pork. Wheat price increases relate to higher cereal prices. Everything affects everything. So why not play on the side of those who are doing the very same thing; profiting from the ag-sector? Perhaps then we could also take on a little risk and save a Mother or Father from orphaning their children by giving those walking with grocery sacks a ride back home. Maybe the feeling that you've done a good thing will be payment enough for the bit of gasoline you consumed being a human being.

Will We Finally See The Light?

One of my big investing interests is in solar power. The Bush administration was sharply criticized by environmental groups for walking out of a round of informal discussions aimed at finding new ways of curbing greenhouse gases. That was in the year 2005.

Since then, focus has shifted to China because of its awesome hunger for energy. China and the United States, pollute more than anyone else. The U.S. pollutes more per person.

Thanks to this focus, more people are seeing the effects of pollution world wide and the consequences it will have on our very near future. For instance, the Florida Keys may no longer be inhabitable in just 20 years as sea water continues to rise.

One of the best answers for global carbon reduction and alternative energy is with solar power. Germany has taken the lead in helping communities embrace solar usage. Rooftops everywhere are being populated with panels. Farmers are beginning to devote a percentage of their fields to farm the sun's energy. And the 1st video below shows a combination of technologies in use today.

Solar is a good investment in the future and something we should all start talking up. The U.S. needs to see the light, not ethanol as a viable source of alternative energy. Scientists, engineers and the United States need to step up and take a lesson from Germany. Why not take the proven technology, improve it even more and put it to use in the this country!

Check out a couple of these videos:

Scientists of the University of Kassel in Germany prove that the entire country can be powered by renewables only. They connected biogas, wind and solar power in a distributed way and show it can deliver both baseloads and peakloads.

Solar energy breakthrough in Israel

To illustrate the decisions on the energy package presented to the European Commission on 23/1/2008, the EC's audiovisual service has produced an infoclip on photovoltaic energy. The Serpa Solar Plant, in Portugal, is one of the largest producers of solar energy in the world. Its construction was completed in January 2007 and the plant's 52,000 panels cover an area of 60 hectares. Enough electricity is produced to power 8,000 homes and farms in the Alentejo Region which reduces greenhouse gas emissions by over 30,000 tons per year. The European Union granted 3,675,576.63 euros to help co-finance the project.


How solar works and at the cost savings, value added to the home, environmental benefits and security and energy independence benefits.


Lawrence Kazmerski, director of the National Center for Photovoltaics in the National Renewable Energy Laboratory, discussing the prospects of solar-photovoltaic (PV) technologies. Ashamedly, the current prospect for future energy resources in the U.S. does little to reduce carbon emissions. It is time we changed that fact!!

War Funds Clarification

I received a question from someone asking me to clarify the content of my last post in which I mentioned: "the money pouring out of the U.S. for the “war on terrorism”".

Sure. One would argue that the United States profits by going to war no matter what the reason. While I am not disagreeing that the U.S. profits from war, I would say that the profit has a narrow focus in that it benefits only employees and shareholders of the specific companies which profit from war.

The point which I meant to express was that all these billions of U.S. dollars which is the money of the people largely through taxes has no benefit for them. That through expenditure of funds for war, the programs of the people get cut and others get grossly underfunded. This of course as a direct result of the war spending.

There is no doubt that war means big money. But it only benefits a very tiny percentage of Americans. Millions of Americans however are being and/or will be affected by program cuts. And amazingly, even our men and women serving in the armed forces who are sacrificing their lives and quality of their lives will be seeing further program cuts in veteran medical care. So even here, what is bad now gets worse. Why must we use these dedicated men and women like expendable pawns? Anyway, I hope this clears up any uncertainty.

Hail Mary Play!

Last Monday at my investor's meeting we had an interesting presentation on the money pouring out of the U.S. for the “war on terrorism” and the big $30 billion dollar Hail Mary play that the Fed used to get JP Morgan to rescue Bear Stearns. Then I received the stimulus letter from the government promising to pay me up to $600 of my 2007 taxes back.

Point is this is money that is being taken away from programs that we need for ourselves, our community, and our children. With the money spent for Iraq we saw that every household could have been outfitted with renewable energy, cutting our electric bills dramatically and even more dramatically, reduce the carbon emissions which are choking the planet and the future of our children. Would not this be the stimulus package that could have made the U.S. turn a corner and climb back up the economic and financial ladder? A strategy like this could have inspired every U.S. citizen to think and work towards our immediate future, one far more positive than what we now face as we continue our spiral downwards.

Last Monday’s stock pick was Visa (V) which on Wednesday (3/19/08) proved to be the biggest IPO in U.S. stock history. The volume showed how positive this IPO was as Visa has no connection with the financial crisis. It gave banks a gain on the books, it gave private investors hope of a sunnier 2008. It my opinion it also showed how sick most of us are of the current stormy climate.

The market continues to be unusual in that many areas went opposite what was expected. Traders are calling many of these moves it is suggested as they work hard to make a living on the stormy seas.

We saw that analysts continue to be as wrong as ever. One day here and again they are pushing this stock or that, only to see that the recommendations goes south in the following days leaving us trapped in the purchase. This brings me back to something that I have been meaning to write about. We’ve heard it time and time again; don’t let emotions into your buying/selling decisions. This holds true too as excited friends, relatives, and investment club members talk about the stock they’re going to buy. While your confidence in these people are important; what’s more important is that regardless of what they are going to do, you MUST investigate it for yourself; in other words: Do Your Homework, your own homework BEFORE you too jump on the stock. If you do not continue the practice of doing your homework and making a complete decision based on your research…if you too are going to buy a stock and you tell someone about it…if you don’t encourage them to do their homework first before making a decision to buy along with you…then you could risk putting your relationship at risk!

Investing must be all you! Meaning that every decision to buy or sell should always be completely yours. While someone like me presents my opinions and my suggestions, no matter how much you believe me or believe in your friend, your business associate or your financial advisor, you should still do your own homework. In this way, you’ll have no regrets.

It is too easy for people after the fact to parrot: “Woulda - Coulda – Shoulda” But in the end, it is on you to take full responsibility for your decisions. So make them based on your own research. If you don’t have the time to do so, guess what?

• You better make the time.
  
• Why? It’s your money isn’t it?
  
• It’s your future isn’t it?
  
• You care about your future don’t you?
  
• If you can make the time to go to a party
• to do your laundry
• to go out to dinner
• to watch TV

Then you have the time to do the homework on a stock before making a decision to buy or sell. Don't be a wus and blame someone for the decisions you should make for yourself. Care about your future by taking an active part in it today and every day.

U.S. News Ruffles World Markets

Early news of Carlyle Capitol's demise to -70% has affected world markets today.

I wish that I had more money to buy more stock! The over reaction to bad news has driven stock prices down, down and down further.

Great time to invest by getting good stocks very cheaply. Problem is, no one knows when the markets will stop dropping and start moving back upwards again. Japan suggests the U.S. will rebound from its ills late 2009 to early 2010. Others think end of 2008, while one man suggests March 21, 2008 will be the end of our problems.

I'm getting tired of people telling me that they've lost 30% or whatever. You don't loose unless the stock you hold looses everything or if you sell below your purchase price. If you own stock in good companies, the chance of loosing is minor. The down side however is the length of time you may have to wait to reach the break even point and then the profit point (positive sell price).

I've been up all night watching the market day in Asia. With more bad news on the way from the less than stellar U.S. market, I'm heading to my pillow for a nap before I go bike riding. No sense watching our market today!

Déjà vu

This truly is déjà vu.
You see, I was a budding entrepreneur until the Dot.com crash of 2000 which wiped out $5Trillion smackaroos in market value of technology companies.

I painstakingly learned another trade and went into service in the corporate world.


Today I'm back working for myself in the stock market. It is truly déjà vu because we are now in a recession that I annoyed my work-mates in the corporate world about a year ago. This time it isn't technology that has been the center of trouble. It is the people who decided to make a market of selling mortgage contracts and persuaded that lenders not act in a fiduciary manner when it came to working with applicants. In this way, more contracts could be written (to many people who had no business borrowing the amounts they were persuaded to borrow).

I left my business following the recession of 2000 and I went back to my own business during the 2008 recession. Deja vu? I'd say so!

Introduction

This is my rant about my investing thoughts as I follow the stock market. It also questions many things about the world as it relates to the companies, sectors, and people affected by the the money we seek to make.