Market Review: Homeland Insecurity
Your editors recently returned from a weeklong trip to Vancouver, B.C., where we attended the annual Agora Wealth Symposium.
We always enjoy being in Vancouver, with its beautiful weather and friendly people, and the conference itself was a huge success. We had the chance to meet a lot of our readers, which is always nice, and our editors didn’t disappoint in their speeches. All in all, a good time was had by everyone.
That is, until we tried to return to Baltimore. We were stuck in line to go through customs for over an hour (at six in the morning), our flight was delayed in Las Vegas for hours…and we didn’t make it home until 3 a.m.
We thought we had the worst experience traveling home, until we read this note from Kevin Kerr:
"First of all, let me tell you I was flying Cathay Pacific Airways direct from Vancouver to New York.
"When I arrived in New York, I handed my passport to the customs agent, he scanned it and scanned it and then paused and said in an official tone, ‘Please come with me.’ I was taken to this back room that looked like something out of the old Barney Miller police sitcom. I was told to sit and wait as the officers from Homeland Security perched on their desk and looked down from about four feet above me. The room was dingy and poorly lighted; it was like being in a low-budget Kafkaesque film.
"Three officers proceeded to question me, one after the other, like I was a criminal. Let me just tell you some history: For some reason, there is another Kevin Kerr in the system, and he has been for about 15 years. Supposedly, this guy did some very bad things, but nobody will ever tell me what. Bottom line: It’s not me. Anyway, they always flag this and can see from the picture it’s not me. In fact, the guy isn’t even the same race as me, supposedly. No matter.
"Having said that, they demanded my fingerprints and asked me about 25 questions. After they confirmed I wasn’t this guy, they asked me to repeat my social security number. I asked why, and they said, ‘Are you refusing?’ the officer said in an intimidating tone.
"I dare not, I thought. What’s next?
"I was really feeling like I was in a Kafka type film now, and wondered how it was going to end. I said, ‘Why are you interrogating me?’ Apparently, that was the wrong thing to say. One of the officers started yelling at me, telling me they weren’t interrogating me. Maybe I missed something, but except for the lone light bulb on a string and beating me with a rubber hose, it sure seemed like interrogation. They then insisted I repeat my social security number and looked up my records. Suddenly, one of them said, ‘Have you been under a doctor’s care recently?’
"I said, confusedly, ‘What?’ He said, ‘Well, the computer shows a missing persons report was filed for you back in May by the hospital near your home.’ Again I said, ‘What?’
"Now let me clarify, I was at the hospital back in May; which I had completely forgot. I was having severe headaches and went to the emergency room, but the wait was over five hours and I felt better, so I decided to go to my doctor the next day instead.
"But as I was leaving the hospital, I told the orderly I decided to go to my own doctor and couldn’t wait another five hours, and he said fine. So I left. I never thought anything of it.
"Turns out the hospital reported me as a missing person. So presto, Homeland Security, in its infinite wisdom, has me as a missing person now returning from abroad. I was never notified by the police, never called at my house (which has a listed number), never contacted by the hospital that had all of my records – hell, I had surgery there in the past they know exactly where I live. No, instead they reported me missing to Homeland Security.
"After about 45 minutes, two calls to my lawyer in Italy and three to the Connecticut police, the immigration people said I could go, but pointed out that it wasn’t their fault. It must be the Connecticut police’s mistake. Yeah, right!
"What’s my point in all of this? Let me first say that I am a staunch believer in security and in tight immigration. I worked in the World Trade Center and was in the building for the first attack [in 1993], I lost my car in the garage that day, and nearly my life. Then, on 9/11 I lost many friends, too. I am a believer in doing things by the book when it comes to immigration. Just ask my wife Katrin, who is an immigrant from Estonia, or my first wife Nicola, who was an immigrant from Spain. Dealing with immigration is a long, arduous process, and costly, too. I never plan to do it again.
"However, it’s my firm belief that things have come full circle, and we are now living under the thumb of a system that is squashing our civil rights, freedom and all due process. In this one incident, my rights to privacy, to freedom, to representation, to innocent until proven guilty were all thrown out the window. I have heard of numerous cases of this, yet had not experienced it. Now I see what everyone has been saying is true.
"Homeland Security is nothing of the kind. The department is a mockery of a way to get people to sleep better at night. The irony is that all of the rights we hope to protect are simply set aside for some agenda that I, quite frankly, have little interest in anymore. I have lost too many friends and too much time dealing with the results – or lack thereof – of the current administration’s policies. Enough is enough.
"Oh, and by the way, I am a registered Republican, and have been since I was old enough to vote. I didn’t vote in the last election, and in the next I am praying for a good independent candidate so I actually have someone to vote for. Hell maybe I will run, I can’t do any worse.
"I love America more than anything, but lately, it just doesn’t feel like it anymore, and that’s sad."
Kevin Kerr and Kate Incontrera
The Daily Reckoning
August 21, 2005
P.S. Kevin has had overwhelming response to this note, which he ran in his newsletter – seems as though many Americans are feeling fed up with Homeland Security and the efforts done by our government to make our country "safe." We will be printing many of these reader comments in The Daily Reckoning next week, so stay tuned, and feel free to write in yourself
— Daily Reckoning Book Of The Week —
The Demise of the Dollar…and why it’s great for your investments
by Addison Wiggin
The DR’s own Addison Wiggin recently spent around a week in the #1 slot on Amazon’s bestseller list – knocking Harry Potter to number two. The book also debuted on The Wall Street Journal’s Business bestseller list this week at #13!
The Demise of the Dollar examines the reasons for the dollar’s slide – including the nation’s historic trade deficit, the euro, government spending habits, globalization, and other international factors – and offers an up-close look at the Federal Reserve’s attempts to "manage" the dollar’s value.
THIS WEEK in THE DAILY RECKONING: A bad omen in the markets…moving American jobs overseas…corporate fraud…a falling dollar…it’s all in this week’s essays, below:
Facing Extinction 08/19/05
by Bill Bonner
"In this DR Classique that originally ran on August 18, 2000 Bill examines ‘Digital Man,’ a mutant fully equipped to provide you with obscure song lyrics, train schedules and the secret to VCR programming…"
A Modern Dilemma 08/18/05
by Addison Wiggin
"Given the lack of control over how much fiat money is placed in circulation, we can only expect that the currency will continue to lose value over time. Addison Wigging shares the grim truth about the U.S. dollar…"
A Short Course in Cooking the Books 08/17/05
by Mark Tier
"With Bernard Ebbers (WorldCom) in the slammer, and Ken Lay and Jeffrey Skilling (Enron) most likely hot on his heels, if you think we can now invest with more safety and security, think again. Mark Tier explores…"
Exporting American Jobs 08/16/05
by Hans Sennholz
"In the United States, offshoring – the business practice of moving operations overseas, usually to less developed countries with lower labor costs in Asia – has become a major political controversy. Dr. Sennholz explores…"
Conspiracy Theory 08/15/05
by The Mogambo Guru
"The Mogambo Market Indicators have found that banks have been getting rid of government securities over the last month. The Mogambo looks closely at this bad omen…"
———————–FLOTSAM AND JETSAM: "You don’t make money in the market looking in the same place as everyone else." That was the premise of Carl Waynberg’s speech last week in Vancouver. Below, he explains why going against the grain will often make investors the most money…
INVESTORS’ WHITE WHALE
by Carl Waynberg
This past Tuesday, in Eisenhuettenstadt, Germany, a little town near the Polish border, a fisherman was lured to his death by a fish that snapped the rod out of the man’s hands, swam about 300 feet, and wiggled free of the hook. The 46-year-old fisherman, who, evidently, had never read Hemingway’s "The Old Man and the Sea" or Melville’s "Moby Dick," promptly stripped and swam after the fish’s ill-gotten booty. But when he reached the pole, the fisherman suddenly stopped moving. Dragged back to shore by a witness, he was pronounced dead on the spot.
It’s not the first time fish got the better of man.
Back in April, I told my subscribers about Riza Malaj, Albania’s "Last Cowboy," who had managed to evade that country’s long arm of the law for five years, but was finally snagged thanks to his own arrogance and a few trout. Instead of employing the tools of the trade that have proven themselves as proficient bait – worms and flies – the fugitive opted for a less obvious option – dynamite. The creative, if ill advised, bait blew up (as dynamite is wont to do), transforming Mssr. Malaj into a mélange of mangled body parts. Evidently, the cowboy had also eschewed the sage advice to "measure twice, cut once," badly miscalculating the length of the fuse.
If there is one thing investors can count on, it’s that investors as a group are almost always wrong. We are our own white whale, allowing ourselves to be reeled in by the mainstream media, lured to focus on situations that do not deserve our attention, and persistently, as if positively allergic to profits and our own happiness, adopting strategies that not only do not produce profits, but have been proven to cut into them.
I have been urging my readers to do the opposite for…well, for as long as I’ve had readers. On March 1, 2002, for instance, I beat my contrarian drum internationally:
"[B]eing a contrarian is relatively easy in retrospect. In real time, it takes guts. This week…I’ve got a real stomach-churner for you. Remember, the contrarian thinks independently. That’s not simply about disagreeing with the majority; it’s about avoiding the majority altogether. Whenever a company or industry or market is slammed by the media, the contrarian in us, coaxed on by a healthy bit of skepticism and…the promise of superior returns [generated from] a cynical approach, starts seeing green – or in this case, yen. That’s right. Japan. How’s that stomach holding up?"
This was a classic contrarian call. My initial, indeed primary, reason for looking at Japan as an investment was the Street’s overwhelmingly bearish attitude.
"The Economist called Japan the ‘non-performing country.’ Every article about Japan is not just tinged with negativity, but swathed in it. ‘The Sadness of Japan,’ one recent headline lamented. ‘Hard Times’ went another. My favorite, though, belongs to BusinessWeek, which dubbed Japan the ‘Land of the Setting Sun.’ It’s my fave, not because [it’s] particularly clever, but because the esteemed weekly has made a career out of being glaringly, unabashedly, energetically wrong. The most infamous miss was their 1979 cover, which proclaimed ‘The Death of Equities’ just ahead of the fantastic bull market of the ’80s and ’90s.
"Japan is sick, to be sure, and has been for years. Its banking system is burdened with hundreds of billions of dollars in bad loans, about 20% of its total lending, and, rhetoric aside, Prime Minister Koizumi has yet to show that he has the skill and courage to push necessary reforms through an entrenched bevy of seemingly disinterested bureaucrats. Not surprisingly, the Japanese stock market has been mired in gloom for most of the past 12 years. Last year saw the benchmark Nikkei 225 index plunge 34% (in dollar terms). That is, by far, the worst showing of any major market."
Three years after that call, the Nikkei is sitting at four-year highs. I owe it all to the Costanza Principle: doing the exact opposite of what makes perfect sense.
See you on the flipside,
for The Daily Reckoning
Editor’s Note: We’ll have more from Carl in next week’s Daily Reckoning…but you can check out Carl’s new special report now, hot off the presses. In it, he details his incredible "stealth" method for getting you into some of America’s best stocks…at prices so low even market "insiders" would be jealous…and in most of these opportunities, you’ll use this strategy to get in much earlier than just about every mainstream investor on Wall Street too.