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Ship Shape


The only port I wanna share is with Jeff Saut at MiM3!


Wooden ships on the water, very free and easy
Easy, you know the way it's supposed to be
Silver people on the shoreline, let us be
Talkin' 'bout very free and easy...

(Crosby, Stills & Nash)

"Toddo, I understand your concerns about foreign ownership of the U.S ports but isn't this another example of the isolationism you so often refer to? How is this different from when China's CNOOC Ltd. attempted to take over of Unocal? I read your afternoon Buzz a few times-

"Globalization" was a default rationalization as we climbed up the front of the bubble. Now it seems that we're trying to avoid it (via isolationism) on the other side. Haven't we learned that we can't have our dim sum and eat it too?"

Do you believe we should open our doors to more free trade--which would mean that we must be open to these types of acquisitions--or should we go it alone, us against the world and let the chips fall where they may? I don't know the answer but I'm curious as to your thoughts. Thanks, Minyan Andrew."

Minyan Andy,

Thanks for writing. I don't think the Dubai try is a proper proxy for isolationism. It's a different situation (homeland security) in a different (post 9/11) world with unique ramifications. And it's not about Dubai--I would harbor similar concerns if, say, Zamunda was trying to assume control of our ports. It just doesn't seem consistent with our stated mission of protecting our borders and watching our backs.

That is a bit different than the CNOOC situation which, ironically, was postured as a national security concern by the powers that be when they put the kabosh on it. And it might have been--if crude is deemed a dwindling natural resourse, I understand how that argument can be made. However, it seems to me--and this is just my opinion--that the actions and agendas in both instances were motivated by money rather than a consistent commerce policy. And that's a subtle yet disturbing disconnect when weighing the legacy of this administration.

I don't have an "answer" as I'm not sure there is one. For better or worse, we've become a debt-dependent, rate-motivated economy that relies on foreign policy--theirs, not ours--for continued economic survival. We can't compete from a labor standpoint--China and India have cheaper resources--and that's already reflected in the sorry state of our manufacturing sector. The "out," for lack of a better word? The elasticity of debt and continued liquidity by Bennie & the Feds. The fatal flaw with that approach, of course, is that the dollar will devalue in kind. It's simply a matter of time.

Uno mas, por favor....

Before I go, and in response to a bevy of (positive) responses I received regarding yesterday's late day mailbag, I wanted to share Professor Succo's response that was posted on the Buzz.

Perception versus Reality (3:49)

My two cents on that last mailbag is the following: We have consistently tried to point out facts that do not jibe with the perception of most folks. A few of the more important facts are:

1) We have pointed out that economic statistics put out by the government have been skewed over the years so that they do not reflect reality as they have in the past. We have repeatedly given supportive data to this.

2) We have tried to explain the macro situation as very unique, a degree of globalization and credit expansion that has never been seen before. In conjunction with that we are seeing central bank intervention in the markets as never seen before. There is proof of that. We have labeled this "high risk."

3) And we have made sure that you understand that none of that matters in the short run. Asset prices in the short run are driven by investor sentiment, their desire for risk. Because of central bank intervention we have pointed out that more than ever long term asset prices are being monitored or targeted by governments by their own admission.

Last night, as John and I drove to
New Jersey to pay respects to the Fokker family, we discussed the disconnect between perception and reality. I offered that we often talk about the world that surrounds the markets with hopes of provoking proactive thoughts. Others choose to view the markets that surround the world and gauge our financial 'health' as a function of the mainstay averages. That's a subtle yet important difference as we collectively edge through these interesting times. Knowledge is a powerful ally, even if that means we must sometimes hear news that isn't necessarily pleasant.

Good luck today.


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