INTERNATIONAL MARKETS: A Trojan Horse for Europe & Asia

International markets are trading on 3 key factors and several other points today. Turkey continues to weigh heavily, though after the Turkish central bank action and aggressive wording, it is lifting its neighbors to the west today. U.S. Fed action from Wednesday drove all markets lower to start Thursday, but then a strong American GDP data point lifted them back up. Direct measures of economic activity out of Spain and Germany are reflecting well for Europe today, save the black market notation. Two key markets are closed in Asia on the Lunar New Year. That Year of the Horse their ushering in might be an appropriate yet disappointing one, should that horse be a Turkish Trojan version.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

International Markets

EUROPE	9:54 AM ET	ASIA/PACIFIC	CLOSE
EURO STOXX 50	+0.4%	NIKKEI 225	-2.5%
FTSE 100	-0.1%	Hang Seng	-0.5%
CAC 40	+0.4%	S&P/ASX 200	-0.8%
German DAX	+0.2%	Korean KOSPI	NA
Athens ASE	+3.7%	BSE India SENSEX	-0.7%

ASIA Today

Markets are closed today in China and Korea for the celebration of the Lunar New Year – The Year of the Horse. Markets will be shut until February 7 in China and until the end of the week in South Korea for the celebration.

ASIAN MARKET ETFs	Today
iShares MSCI Japan (NYSE: EWJ)	-0.34%
SPDR S&P China (NYSE: GXC)	+0.91%
iShares MSCI Australia (NYSE: EWA)	+1.35%
iShares MSCI S. Korea (NYSE: EWY)	+0.97%
iShares S&P India (Nasdaq: INDY)	+1.91%

Asian stocks mostly fell on the day after the U.S. Federal Reserve pushed forward with its asset purchase tapering effort. Global investors are worried that the U.S. consumption economy could falter without the Fed’s extra efforts, after previous signs of such faltering. Basically, Asia just followed the lead of American shares, which dropped precipitously on Wednesday. Even as Asia develops its economies, U.S. and Europe continue to represent important sources of life for Asian business. Emerging markets have been in turmoil since the weak manufacturing report from China, which remains unsettling and unresolved.

The NIKKEI 225 was stripped bare as it fell 2.5% on the day. Japan is having its worst month in nearly two years. Shares of Toyota (NYSE: TM) and Honda (NYSE: HMC) are down about 0.3% each this morning in U.S. trading. However, American traded ETFs are up for most of Asia this morning, reflecting what is likely to occur in Asian trade Friday. The SPDR S&P 500 (NYSE: SPY) is bouncing back today on a solid GDP report and on strong earnings from Facebook (NYSE: FB) and others.

EUROPE Today

Look at those volatile Greek shares, as the Global X FTSE (NYSE: GREK) soars 2.8% after a very rough recent period. Greece is of course Turkey’s neighbor and deemed more closely tied to the Turkish economic turmoil than other euro-trash brothers. The Athens Stock Market Index (ASE) is higher by 3.7% at this hour, but the other indexes we follow here are relatively unchanged.

EUROPEAN ETFs	Today
Vanguard FTSE Europe (NYSE: VGK)	+0.04%
iShares MSCI U.K. (NYSE: EWU)	+0.12%
iShares MSCI France (NYSE: EWQ)	-0.07%
iShares MSCI Germany (NYSE: EWG)	+0.18%
Global X FTSE Greece (NYSE: GREK)	+2.79%

Still, European ETFs started the U.S. trading day much higher than they are trading at this hour, as the Vanguard FTSE Europe ETF (NYSE: VGK) chart shows. If we looked back before the U.S. market open and the good news about GDP, though, we would find a hump at around 8:30 AM ET. Europe started the day lower, similarly following the path of Asian shares on the U.S. Fed decision and American stock decline yesterday.

Chart at Yahoo Finance

Europe is still unnerved by Turkish and other emerging market issues. Turkey’s Borsa Istanbul 100 Index marked a 1.0% gain on the day, and the iShares MSCI Turkey (NYSE: TUR) is up 2.3% in U.S. trading after the Turkish central bank acted aggressively.

Spanish & German Data

In other news, Spain’s GDP grew 0.3% in the fourth quarter, as expected, but some estimates show the Spanish economy is growing faster in the shadows. The black market is now estimated to be roughly 25% of total economic activity, as distrust of government and distaste of taxes results from tough times. The iShares MSCI Spain (NYSE: EWP) was up 0.9% near noon in US trading.

German unemployment declined more than forecast in January. The number of unemployed declined by 28K in January, better than the 5K predicted, to 2.93 million. The unemployment rate stuck at 6.8% after adjustment to the December rate, where it marks the lowest rate in two decades. Shares of major German corporation, Siemens (NYSE: SI), were still down by 0.8% on the day.

The Year of the Horse is here. Let’s hope it doesn’t open and offer up a sour surprise.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

International Trade Data for Dummies

This month’s International Trade report required an intensive study to understand the many dynamic factors it contained. On the surface, the play of the trade deficit contrasted with what would normally reflect a healthy American economy today. Few, save perhaps we econo-nerds, could see what was wrong and finally what was not so bad with it after all. It was full of information, so much so that no one specific theme could define our analysis here. We expect we can add some value to your perspective and entertain you in the process.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

International Trade Report

The trade deficit narrowed to $48.7 billion in May, meeting the consensus of analysts’ views. I suppose that’s where most market mavens moved on to the next news item, but while doing so missed some important information about the American economy and sectors within it. Of course, that information will affect the value of financial securities, so you patient and loyal followers just keep on reading and glean your reward.

The deficit narrowed from $50.6 billion in April, revised from $50.1 billion reported initially. That seems like good news to the naïve or to the idealists, but truth be told, we like the deficit here today, because it signifies a healthy American state of affairs. You see, we’ve come to accept the fact that America has grown into a fat consumer of goods and a provider of services and nonsense. As it’s still hard to sell services and nonsense to frugal and suspicious third-worlders who can more easily copy those anyway, and since the Europeans can’t afford anything any longer, we live and love our deficit.

What troubles me, though, is that as exports rose by just $0.4 billion, imports decreased by $1.6 billion, driving the deficit expansion. That means we bought less stuff, or the prices of the stuff we bought declined. Take note of that last point, because that’s part of what happened. Anyway, the narrowing deficit is not often representative of a healthy American consumption economy, nor does it reflect good news about Europe. Most recently, in a healthy American state, our imports tend to exceed exports in growth, driving widening deficits.

The long-term American dream, though, is that eventually our manufacturing sector might benefit from China’s growth by serving its burgeoning middle class. Unfortunately though, we cannot control how many illegal copies of American Idol winner Phillip Phillips’ Home MP3 are made and sold in Shanghai. As far as the benefit of the deficit, well we already enjoy low priced goods available at Wal-Mart (NYSE: WMT) and Target (NYSE: TGT) made in China and thanks to importing.

Unfortunately, we left some workers behind who only knew how to make something we then outsourced to India or China. And the patriotic that stayed behind with their unionized labor ended up putting their firms underwater when they couldn’t compete with Chinese men, women and children working 24/7 for a quarter and a shoelace. We gave up some quality as well I suppose, and occasionally our kids chew on lead laden lollipops, but net-net, we’re happy campers chomping on McDonald’s (NYSE: MCD) and buying stuff we don’t need from Sears (Nasdaq: SHLD) or wherever else... right?

Guess what? We managed to sell some services and nonsense to third-worlders in May, like seminars on how to flip a foreclosure property; exports of services rose $0.3 billion in May. We bought some advice too, as service imports increased $0.1 billion; maybe we needed more yoga gurus around town so we could sell more lululemon (Nasdaq: LULU) gear.

But never fear, because a big reason why imports declined and the reason the trade deficit narrowed was probably not indicative of new trouble. In recent articles, I’ve recommended investors sell their industrial and basic materials shares, like Alcoa (NYSE: AA), Rio Tinto (NYSE: RIO), BHP Billiton (NYSE: BHP), Freeport McMoRan (Nasdaq: FCX) and Vale (Nasdaq: VALE). I was right by the way. So, what drove the decline in imports was a $3.6 billion decrease in the imports of industrial supplies and materials. I think that reflects the drop in industrial commodity prices, so never fear.

Looking at the trade with specific partners, the trade deficit with China expanded to $26 billion from $24.6 billion; okay, good enough. The deficit with the European Union expanded to $10.5 billion from $8.7 billion, but that was probably because of decreased European purchases of American exports rather than our buying of more imports. The deficit with OPEC narrowed to $11.2 billion from $11.5 billion, probably partly due to the isolation of Iran and declining oil prices. We’ll see more of that in June’s data, based on what we’ve just reported on in the Import and Export Price data. The increase in advanced technology imports ($3.1 billion) far surpassed the increase in technology exports ($1.1 billion) in May.

Clearly, things are changing fast, with fuel price decline speeding up in June and agricultural prices on the rise. China’s economic growth is likely slowing and as the unofficial EU recession seems to be getting even worse. U.S. economic data is showing signs of catching the EU cold, and so clearly delineated lines in trade data are going to be hard to find, as the global community slides together.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Interpreting the International Trade Report

The International Trade Report for the month of March showed an enthusing trade deficit expansion of $6.4 billion, as it widened to $51.8 billion. Economists surveyed by Bloomberg had forecast expansion to a lesser $49.5 billion at the consensus. We think the news was an important driver for stocks Thursday, killing a six day slide, but just barely. Through this report, we attempted to determine whether the trade data was truly the ace it seemed to be. In our study and after accounting for several important catalysts, we found it to be less enthusing than the market’s initial reaction might imply. This may be why stocks retraced ground Thursday into the close.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative tickers include the Industrial Select Sector SPDR ETF (NYSE: XLI), Caterpillar (NYSE: CAT), Boeing (NYSE: BA), General Motors (NYSE: GM), Ford (NYSE: F), SPDR S&P 500 (NYSE: SPY), SPDR Dow Jones Industrial Average (NYSE: DIA), Starbucks (Nasdaq: SBUX), McDonald's (NYSE: MCD) and Yum Brands (NYSE: YUM).

International Trade Report

The good news implied in the expansion of the trade deficit may be counterintuitive, but I believe it continues to apply today. It is two-fold. When America’s economy was most healthy over the last decade, the trade deficit was wide and expanding. Of course, America’s leaders have engaged China over the last few decades for two reasons. The first was for American companies to find cost savings in manufacturing overseas. This widened profit margins for American companies while offering our consumers lower prices for goods. The impact to our labor markets and the tendency for China to bend the rules of fair trade has cost us though.

The second hope was for American companies to find opportunity to participate in the development of the bursting populations of the Far East. Clearly, the hope is that trade will work to our benefit over the long run as well as it has up until now, depending on China’s willingness to play fairly. If it all goes according to plan, Chinese demand would support the growth of American companies and eventually drive a trade surplus with the nation. While I have my doubts about that, today, the widening trade gap still reflects a healthy situation in my view. Over the long run, I anticipate China will simply steal American intellectual property and know-how and advance its own home grown versions of our companies and products, so that the projected benefits will prove overstated. I’ll talk more about the trouble I see with China in a future article.

Another positive sign of the trade data (on the surface) was that the report showed that both imports and exports increased on a monthly basis. It’s good news, reflecting a growing global economy in March, but there’s a fly in the ointment we discuss further along here. On a year-over-year basis, the deficit expanded by $5.8 billion, with exports up 7.3% or $12.8 billion, and imports higher by 8.4% or $18.5 billion.

Exports increased 2.9% in March, or by $5.3 billion. This seems like fabulous news given 20% of American exports are sold into Europe, or have been historically. Unfortunately, closer inspection shows the goods deficit with Europe expanded to $9.8 billion in March, from $5.9 billion in February. This is probably due to a decline in exports sold into the struggling region, but might also be partly driven by increased imports into America. Of course, dynamic currency markets are playing a role as well.

Given the importance of China, the increase of the trade deficit to $21.7 billion in March, from $19.4 billion in February, seems enthusing. It’s probably being driven by more demand for Chinese made goods here at home. It may also be driven by lower exports into China, but given the latest expansions of General Motors (NYSE: GM) and Ford (NYSE: F) in China, that seems less likely. Also, despite the recently slowing of economic growth in the important developing nation, recent data from Starbucks (Nasdaq: SBUX), McDonald’s (NYSE: MCD), Yum Brands (NYSE: YUM) and others continues to show increasing demand for American goods and services. And China has taken steps to spur growth, including opening up to more foreign investment, which not coincidentally, has sparked a rally in many of China’s small and microcap names.

The market also found it enthusing that American imports increased by 5.2%, or $11.7 billion. With the microscope on the globally tied American economy and on consumer spending under today’s unique unemployment situation, we found reassurance in the growth of imports. Growth was attributed to capital goods, consumer goods, industrial supplies and materials, and automotive vehicles, parts and engines. We have to agree that those would be the best places to find increased activity.

That aforementioned fly in the ointment could be found in this report and through the study of a second report. The trade deficit with OPEC expanded by $2.7 billion to reach $9.1 billion. This was obviously being driven by price increase in petroleum and imported distillates. In fact, higher fuel prices skewed the growth of both factors in international trade. Import and export prices were reported the same day as the international trade data, as always, but for April. If we want to compare apples to apples, we have to dig up the March data. Unfortunately, it shows that March saw steep increases in both import and export prices. Therefore, fuel prices contributed to both sides of the trade scale, but especially to import growth, which we hoped to attribute American economic demand to. I suspect that this realization helped to quell some of the day’s enthusiasm Thursday, and the realization that the jobless claims data was not as exciting as the headlines portrayed.

The shares of the most likely benefactors of the data were mixed to modestly higher, before fading into the close Thursday. Much of the export growth was attributed to industrial goods and supplies, but the Industrial Select Sector SPDR ETF (NYSE: XLI) ended only fractionally higher. Shares of major industrials like Caterpillar (NYSE: CAT), Boeing (NYSE: BA) (see my report) and General Motors (NYSE: GM) all closed in the red, as they also contended with soft Chinese trade data published the same day.

As time passes, the suspect positives from this report will lose their impact, and the market will continue to look forward to new data points for insight into what is developing in trade. My outlook is modestly negative, with a view for the cliff’s edge that we should reach soon enough, given the disruption driven by Europe and potentially Iran this year.

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Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Import & Export Price Rise Corners Central Bankers

Inflation

One could point to many reasons for Tuesday's percentage point plucking of the broader indexes. Still, one would be negligent to not attribute at least partial blame to the morning release of monthly import and export price data. Both rose at significantly faster pace than in February. Thus, Central Bankers still dealing with a vulnerable economy and unemployed workforce are faced with creeping inflation at the same time.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Import & Export Price Rise Helps Corner Central Bankers

The Bureau of Labor Statistics reported Tuesday on March Import & Export Prices, and the news was not good. Any economist worth his salt would have foreseen an inflationary trend, but the pace of change was quite sharp. Of course, the factors behind the trend have been well document, and they include rising energy prices on the chaos that has unfolded in the Middle East. The catalysts also count rising agricultural and commodity prices.

Somewhere along our "Inflation" thread at the blog you should find warning from us with regard to unfolding events in the commodity space. We definitely felt, and likely stated, that as economic growth revived across emerging markets and renewed within developed ones, supply stresses would once again drive commodity price increase and force inflation down proud central bankers' throats. Well...

March import prices were reported up 2.7%, which compared against the 1.4% February increase. It was the biggest one-month advance since June of 2009, when the entire price spectrum bounced off of the panic-driven floor. The rising trend in import prices has now extended for six months.

This month, Import prices were largely swayed by the 9.0% spike in fuel imports. Fuel imports are up 36.6% over the past six months, which I'm certain has not been lost to you. Petroleum prices drove the advance, which again is no surprise, as prices climbed 10.5% in March. Yet, there was an interesting contrast in natural gas price decline of 14% through the period. Natural gas had made up ground previously, and now as we find ourselves exiting a draw period in good inventory position, prices are in a stress free position, which is a marked contrast to oil. Goldman Sachs' (NYSE: GS) recent report warning of demand destruction would beg to differ, with regard to oil, and certainly there's a point where consumers cut back (as much as they can anyway – would you take a sick day to save gas?).

Import prices excluding fuel were not contained, marking a 0.6% increase in March after a 0.5% rise in February. These prices were up 4.2% over the trailing twelve months, which oh by the way, is the biggest such advance since October 2008. Inflation anyone? Skeptics will find enough reason to contest it nonetheless, as the drivers of non-fuel import prices included industrial supplies and materials (+14.2%) and foods, feeds and beverages (+18.9%). Indeed, the argument still goes unsettled as to whether food and energy price changes deserve consideration in the inflation debate, given the often cyclical and seasonal factors behind price volatility within the two sectors. If you ask Tunisians if it mattered though, you're answer will be that it made a world of difference. We expect that over time, the contest for the earth's limited resources could make the world different.

Price increase was not limited of course to imports, as export prices climbed higher by 1.5%, which followed February's 1.4% price rise. The difference between the two months was pronounced though. In February, agricultural export prices increased by 4.6%, driving the overall rise, but in March, agricultural exports only increased by 2.3%. Instead, non-ag goods contributed more significantly to the overall increase, with those exports getting 1.3% more expensive in March. Over the last twelve months, export prices are up 9.5%, which compares to the summer of 2008 increase. I say, I say, I say, inflation anyone?

Corn and cotton led all agricultural exports in price rise. In March alone, corn prices rose 9.2%, and over the past 12 months, 77.7%. Cotton, which you think you’ve noticed more, rose by 10.5% in March and 154% over 12 months. The thing is that corn is in so many foods, not to mention gasoline, and the feedstock for proteins, so that it has likely driven subtle price increase in food goods across the board. With regard to the non-agricultural export price increase, industrial supplies materials rose 3.2%.

In conclusion, it's clear that prices are rising and have been on the rise for some time now. Later on this week, we will receive better indication of how well commodity and raw materials prices are passing through to end product, as the Producer Price Index and the Consumer Price Index come due Thursday and Friday. That Friday reporting of CPI coincides with the Reuters/University of Michigan Consumer Sentiment reading, and certainly the two go hand in hand. We expect to see price pass through and consumer sentiment destruction (or rather continued malaise), because you cannot take a sick day to save gasoline. Thus, consumers will spend less on discretionary goods.

Central bankers are caught between a rock and a hard place. We have a vulnerable economy that could certainly still use inspiration to expand and hire, consumers that still need help to spend, a housing market that remains supply side heavy, an unfair global trading field, but also creeping inflation driven by a supply constrained / demand diversifying resource environment. Thus, as the ECB raises rates, the US contemplates QE3, though with lessening enthusiasm. Indeed, it would seem we were right when we said the Fed is running out of bullets. Meanwhile, the enemy is surrounding us.

Article should interest investors in Ford (NYSE: F), GM (NYSE: GM), Toyota (NYSE: TM), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), State Street (NYSE: STT), Janus (NYSE: JNS), T. Rowe Price (Nasdaq: TROW), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM). The day also offered news from: Novartis' (NYSE: NVS) new Afinitor cancer treatment gets reviewed by an FDA advisory panel. IPO lockup curbs expire on Body Central (Nasdaq: BODY) and Tower International (Nasdaq: TOWR). Nordson (Nasdaq: NDSN) splits its shares 2-for-1. Analysts meetings are scheduled at Hewlett-Packard (NYSE: HPQ), Posco (NYSE: PKX), Quidel (Nasdaq: QDEL), Supergen (Nasdaq: SUPG) and Transatlantic Petroleum (AMEX: TAT). The ISI Group Retail Summit highlights a presentation by Wal-Mart (NYSE: WMT). IPAA OGIS New York highlights presentations by Pioneer Natural Resources (NYSE: PXD), Range Resources (NYSE: RRC), Berry Petroleum (NYSE: BRY) and Energen (NYSE: EGN). The day's EPS schedule includes Art's Way Manufacturing (Nasdaq: ARTW), Biomet (Nasdaq: BMET), Fastenal (Nasdaq: FAST), Mistras Group (NYSE: MG), Streamline Health Solutions (Nasdaq: STRM) and a few others.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

International Trade Forecast and US Relevance Strategy

As the International Trade deficit was reported expanded in January, we suspect some are questioning the Admini- stration's efforts to even the playing field. We offer here reassurance that this restoral of wider deficit reflects an improving economic state, and provide what we believe are the keys to America's long-term International Trade relevance.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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International Trade Forecast and US Relevance Strategy

International Trade data was reported today for the month of January. The trade deficit expanded broadly, to $46.3 billion, which was far wider than the -$41.0 billion forecast by the consensus of economists surveyed by Bloomberg. While you are likely concerned, be at ease, as the report reflects positively, at least through January.

Global economic growth was evident in the latest International Trade data, as both imports (+$10.5 Billion) and exports (+$4.4 Billion) increased. The signs for the US economy were positive as well, with American demand for imports rising substantially.

The trade deficit is composed of import and export activity, and reflects the imbalance between the two. You might be tempted to view an expansion of the deficit as a failure of the Obama Administration's efforts to balance trade between our nation and China. You would be wrong though, as our current economy reflects a healthy state when a deep trade imbalance exists, as our sourcing of goods from China and others at lower cost has preceded China's domestic development and demand for our specialized goods and our services expertise.

The deep dive in US and global economic activity occurred simultaneously with a narrowing of the trade deficit, as America's consumption economy cut back in spending. Likewise, as economic growth resumes, the deficit should expand, sort of like muscle memory. We should only consider the possibility of anything near trade balance over the medium-term though, and completely depending on the Administration's (or those to follow) success in leveling the fair trade playing field and in inspiring domestic manufacturing. Moreover, the developed American market has evolved into a service oriented exchange, and as the emerging markets develop, we might increase exports from our service sector. We currently enjoy a service sector surplus of $13.4 billion, but the goods deficit is $59.8 billion, as of January.

We say trade balance has a better chance of being accomplished over the "medium term," because over the short-term we expect the deficit to expand back toward the most recent normal state for a healthier economy. Indeed, coinciding with the past year's economic growth, January's trade deficit also expanded $11.7 billion over that of January 2010. Note the broader year-to-year difference than the month-over-month change, and recall the economic situation that existed one year ago.

Over the long-term, as emerging markets evolve into economies more closely resembling our own, competition will tighten. In other words, similarly to how we compete today in the auto industry with the Japanese and the Germans, we will compete tomorrow also with the Chinese and the Indians (in the same industry and in others).

Also, if all other factors (geopolitical, etc.) hold, eventually new low-cost producer nations will replace China as sources for commodity-like and other goods, reinforcing an outside manufacturing bias. Therefore, our best chance to remain relevant requires us to continue to innovate in order to lead in the provision of high technology; to protect intellectual property (IP); to ensure free and fair trade in terms of currency policy and IP standards; and to participate more broadly in emerging market development at a corporate level (like the American automakers are currently doing within India and China). Tomorrow, we should give companies like J.P. Morgan (NYSE: JPM), Netflix (Nasdaq: NFLX) and Robert Half (NYSE: RHI) every incentive to grow into those foreign markets, and we should require our trading partners to open the playing field to them.

To see the details of January's International Trade data click through here.



The day's EPS reporters included National Semiconductor (NYSE: NSM), Pall (NYSE: PLL), Acadia Pharmaceuticals (Nasdaq: ACAD), AdventRX (AMEX: ANX), Aeropostale (NYSE: ARO), Aircastle Limited (NYSE: AYR), AAON (Nasdaq: AAON), Air Methods (Nasdaq: AIRM), Anacor Pharmaceuticals (Nasdaq: ANAC), Analogic (Nasdaq: ALOG), Apricus Biosciences (Nasdaq: APRI), Authentec (Nasdaq: AUTH), AVI Biopharma (Nasdaq: AVII), BCB Bancorp (Nasdaq: BCBP), Biolase (Nasdaq: BLTI), BioMimetic Therapeutics (Nasdaq: BMTI), CAMAC Energy (AMEX: CAK), Canadian Solar (Nasdaq: CSIQ), Ceco Environmental (Nasdaq: CECE), China Integrated Energy (Nasdaq: CBEH), China Real Estate Info (Nasdaq: CRIC), Citizens (NYSE: CIA), Clean Energy Fuels (Nasdaq: CLNE), Columbia Laboratories (Nasdaq: CBRX), Compass Diversified (Nasdaq: CODI), Complete Genomics (Nasdaq: GNOM), E-House China Holdings (NYSE: EJ), Emergent Biosolutions (NYSE: EBS), FiberTower (Nasdaq: FTWR), Fuel Tech (Nasdaq: FTEK), Incontact (Nasdaq: SAAS), Jamba (Nasdaq: JMBA), Jones Soda (Nasdaq: JSDA), Kirkland’s (Nasdaq: KIRK), Lifetime Brands (Nasdaq: LCUT), Livewire Mobile (Nasdaq: LVWR), Main Street Capital (Nasdaq: MAIN), Nexstar Broadcasting (Nasdaq: NXST), Paulson Capital (Nasdaq: PLCC), Physicians Formula (Nasdaq: FACE), Powersecure (Nasdaq: POWR), QAD (Nasdaq: QADB), Quiksilver (NYSE: ZQK), Raven Industries (Nasdaq: RAVN), Shuffle Master (Nasdaq: SHFL), Smithfield Foods (NYSE: SFD), Stein Mart (Nasdaq: SMRT), The Buckle (NYSE: BKE), TheStreet .com (NYSE: TST), Vail Resorts (NYSE: MTN), XOMA (Nasdaq: XOMA), Zumiez (Nasdaq: ZUMZ) and more.

Article should interest investors in Ford (NYSE: F), GM (NYSE: GM), Toyota (NYSE: TM), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), State Street (NYSE: STT), Janus (NYSE: JNS), T. Rowe Price (Nasdaq: TROW), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

INFLATION - January 2011 Import and Export Prices Fuel Worry

Inflation Signs

January's Import and Export Price Report showed significant price increase in both imports and exports, and unfortunately, across both overall measures and those excluding food and fuel. We posit that the chatter that has overwhelmed the financial airwaves of late, making an argument we made years ago mind you, is worth listening to once again. Inflation portends to blindside the market and its caretakers, the group of merry men who shrug off all evil until it is upon them.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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INFLATION: January 2011 Import and Export Prices Fuel Worry

Inflation chatter is all the rage again on the financial airwaves. You will recall our important work on this subject from several years ago (and other pieces). If not for a near depression that depressed prices as demand was desolated, the inflation topic would probably have been the highest concern globally over the last few years. However, now that the global economy is recovering, and with China firing up all engines, inflation signs and concerns are resurfacing. Once again, the scent is first found in raw material resources, including rare earth metals, but also in the high use commodities of energy and agriculture. Those factors were at play again in driving January 2011 Import and Export Prices higher. For now, talking-head speak-easies are blowing off the possibility of feed through to finished goods, but it won't be the first train that runs them over either. Stick with The Greek, and I'll do my best to keep you out of the way of the loco.

More signs of economic recovery, and also inflation, were found in the latest import/export prices data, reported today by the Bureau of Labor Statistics for January. Import prices gained 1.5% in January, marking the fourth consecutive month of plus one percent increases. That is something that last occurred in July 2008, which to help you recall the period, was a time in which the now extinct Washington Mutual beast still roamed the earth, though in small numbers.

The drivers of import price growth are the same now as they were then, commodities, including energy. Fuel import prices increased 3.9% in January, a snail's pace compared to the 14.1% jump that characterized the previous three months. But January's pace is not to be ignored, and neither is the 12.4% increase of the past year, a period characterized by economic recovery.

Behind the gains in energy prices were a 3.4% increase in petroleum prices, which have since been dwarfed on Middle East upheaval. And look deeper, as Natural Gas prices advanced 13% through the month. It was a period in which much of the US got buried in snow. In fact, cold and snowy weather so affected fuel usage, that natural gas recently fell below its five-year average for this time of year. As reported by the EIA in its weekly update, for the period ending February 4, Natural Gas Inventory stood 45 Bcf below the five-year average. If things were to continue to trend, we might test the bottom of the historical price range, though the weather is warming significantly across the country this week. Still, the hijacking of several oil tankers in a short span of time, along with raised Middle East worries, have oil supply uncertainty adding to push natural gas prices higher with oil; it being a regionally sourced commodity that is increasingly a replacement resource for oil.

"Drunken train track wandering market guides should take note of the horn in the distance..."

Drunken train track wandering market guides should take note of the horn in the distance, as non-fuel import prices increased by 0.8% in January. The noteworthy rise was driven by industrial supplies and materials (unfinished metals and chemicals drove this), finished goods, and foods, feeds, and beverages. Consumer goods prices moved 0.3% ahead, with the largest contributors to the increase coming from a 0.9% hike in apparel, footwear, and household goods prices, and a 4.0% rise in jewelry prices. Prices for automotive vehicles rose 0.5%, led by a 1.2% increase in parts prices. Here we see examples of price increase that affect every consumer.

Price increase is still mostly found in raw materials or unfinished goods, but in the case of rising cotton prices, it is finding its way through to textiles and clothing (apparel up 0.9%). Meanwhile, the government just approved increased ethanol usage in gasoline, which in the past led to mayhem within the whole of agriculture. While December's increase in non-fuel import prices was just 0.3%, November's also marked 0.8%, another measure that draws comparisons to 2008.

Export Prices

Export prices also increased significantly in January, rising 1.2%. The advance for the full year was 6.8%, the largest 12-month increase since that same late 2007 (Sept.) through 2008 (Sept.) period; just before the walls came completely tumbling in on the economy. As the economy improves, it also affects demand for agricultural goods. It is not that people eat more, though that is certainly the case as well (especially for the malnourished), but also that they eat more proteins and more processed foods. As families rise in class, which is occurring in China and India, they also consume more, and more proteins. This in turn pushes prices higher for proteins and for the feeds used to raise livestock, which are likewise derived from agriculture.

Meanwhile, what seems to be climate change driven drought in Russia and this year in China, restricting important supply sources, will only increase pressure on the whole of agricultural goods, and inevitably processed foods. Agricultural export prices rose 3.2% in January, adding to a dramatic 12-month advance of 22.6%. Price increase was driven by advances in soybeans, corn and wheat. While cotton declined fractionally in January, it has more than doubled over the past year. And a recent freeze in Mexico has completely wiped out some vegetable crops and will certainly drive prices higher for Americans.

That is not the end of the story though, as prices for non-agricultural exports also advanced considerably, rising 0.9% in January. Higher prices for industrial supplies and materials, capital goods, and automotive vehicles more than offset a 0.4 percent drop in prices for consumer goods. Higher airfares also contributed to the overall increase, and those of course are impacted and related to increased fuel costs. Consumer goods prices might also benefit from dollar play (longer term), and also economies of scale gained as sales grow. Nonagricultural goods prices are up 5.3% over the last 12 months; that's pretty inflationary for dollar pegged trading partners.

China

Prices of goods imported from China increased 0.3% for the fourth month in a row. Chinese goods are up 1.4% over the past year. That's healthy price rise, and you will see more of this if the US government gets its way with regard to the Yuan. You might see more US jobs return too, but that is debatable, since they might simply find a new foreign home, say maybe Indonesia. Prices of goods from Japan and all our major trading partners were up, with significant increases from the EU, Mexico and Canada, due to fuel.

Conclusion

The pace of price increase should intensify as competition for scarce resources squeezes them. With factors at play like civil unrest, wild weather and even pirating and regulation (like with off-shore oil drilling), it seems clear to me that the inflation train is roaring our way. We think dollar dilution, and the Fed's inflated view of its ability to reverse the curse, should also burden the economy in the future, especially if US Treasuries lose their luster globally. Meanwhile, outside of recent stock market gains, wealth is down due to home value declines. Income should be down also, given high unemployment. Banks may be opening up a bit, but it should take some time, to maybe never, before free capital flow comes to be again (and good riddance). Thus, there's a tight rein around economic horsepower.

We must look towards the expansion of the developing world as the cure for what ails us. In this regard, the birth of new democracies is a good thing, but global instability and weak human nature are ugly flies in that ointment, and could ruin everything.



Article should interest investors in Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), State Street (NYSE: STT), Janus (NYSE: JNS), T. Rowe Price (Nasdaq: TROW), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM), Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), General Employment Enterprises (NYSE: JOB), Alliance Resource Partners L.P. (Nasdaq: ARLP), Alliance Resource Holdings (Nasdaq: AHGP), Atlas Pipeline Partners L.P. (NYSE: APL), Atlas Pipeline Holdings (NYSE: AHD), Atlas Energy Resources (NYSE: ATN), Boardwalk Pipeline Partners (NYSE: BWP), Breitburn Energy Partners (Nasdaq: BBEP), Buckeye Partners (NYSE: BPL), Buckeye Holdings (NYSE: BGH), Calumet Specialty Products (Nasdaq: CLMT), Capital Product Partners (Nasdaq: CPLP), Cheniere Energy Partners (AMEX: CQP), Constellation Energy Partners (PCX: CEP), Copano Energy (Nasdaq: CPNO), Crosstex Energy (Nasdaq: XTEX) and TeamStaff (Nasdaq: TSTF).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Pro-Business Obama

Obama's Approval Rating is Gaining

Who is this guy flying around in Marine One and giving speeches on podiums reserved for that liberal loose-canon the Republicans were getting ready to unseat in 2012? Oh hold on, that's pro-business Obama, the guy who is taking back opinion poll points like the Bush boys on Iraq.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Pro-Business Obama

It looks as though the President scored pretty well last week, even by Wall Street investment banking standards. In fact, I suppose the President would be raking in a huge bonus in short time on his accomplishments, had he a VP position at Goldman Sachs (NYSE: GS) or Morgan Stanley (NYSE: MS). As farfetched as that is, he is still going to get some credit for the roughly 60 business deals secured in a whirlwind trip Chinese President Hu Jintao took through the Midwest; though those deals were clearly part of a pre-prepared effort, and the President's role was somewhat questionable. Still, it's his economic panel that his administration put together, and that he is making decisions with, that is helping make the inroads for American-made exports into China, India and beyond.

That's more than the GOP can say. Under the last Republican regime, our government was more focused on the cost saving, profit margin boosting opportunities American corporations could find via China, and let it be at the cost of American jobs.

The United States exports more than $100 billion in goods and services to China per year. According to the President, as a result of the deals completed this past week, US exports to China will increase by more than $45 billion and China's investment in America will grow by several billion dollars. More importantly to Midwesterners, who were very likely seething when they first heard Hu was coming, the deals will support some 235K American jobs, many of which will be in manufacturing. In related news, Mitt Romney had a bad day and Michigan ain't looking like a given no more (BTW: I supported Romney, and ended up voting for Obama).

His latest pre-stump speech has Obama talking also about his South Korean trade deal, which will support more than 70K new American jobs. Trade deals with India, including one arranged by GE (NYSE: GE), will generate $10 billion more for American businesses while creating more than 50K new American jobs. While the President was big in China, he hit Schenectady, NY too, visiting a GE plant there that is manufacturing steam turbines and generators for a project in India, which supports more than 1600 jobs in New York.

Obama's got a big goal too: he wants to double exports in five years time. He says, "China sells their stuff here, and that's alright, but we want them to buy our stuff too. We need two-way trade." He says, "We've got to sell outside of America, because that's where the customers are. It's that simple." And in the meantime, he is sneaking up on the GOP and taking away the big anti-business card that they had hoped to use against the President in 2012.

Now I know many of you small business chums will weigh in with your health care complaints, but somehow you get the feeling he might just find a way to help the small businessman in a bigger way too before he's through. So far, the tax incentive provided to firms for hiring guys, just isn't inspiring the hiring. I've been pointing out why over recent months, along with my old Dean from Temple University, Bill Dunkelberg, now Chief Economist of the National Federation of Independent Business (NFIB). No smart small businessman who wants to keep his shop operating is going to hire new help without the revenues to support them. In fact, in December, when the Small Business Optimism Index slipped, 33% of the small businessmen surveyed said sales were simply their greatest concern. Dunkelberg said that marked about the highest percentage the NFIB has ever measured. Thus, what the government has offered us up to now has come up just short of a solution to that key issue. But give the kid a minute, because he's focused now on his so-called weakness (business), and aiming for a vote of confidence in 2012.



Article should interest investors in Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), State Street (NYSE: STT), Janus (NYSE: JNS), T. Rowe Price (Nasdaq: TROW), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM), Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), General Employment Enterprises (NYSE: JOB) and TeamStaff (Nasdaq: TSTF).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Greek Public Sector Corruption and Tax Evasion

The Greek Prime Minister has to tackle long-term reforms

Wall Street Greek's International & Economic Affairs Columnist Pietro Rabassi bravely engages Greece's Prime Minister Papandreou to tackle the real problem behind the Greek financial crisis, public corruption and widespread tax evasion.

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Greek Public Sector Corruption and Tax Evasion

For two-and-a-half millennia Greece has proudly hosted the Acropolis - the symbol of Western civilization. On 28 April 2010 the Greek financial bubble exploded: Greece has betrayed this pride by almost going bankrupt, leading critics to pompously ponder the sale of Greece's ancient and core assets, including the Acropolis and the Greek islands. However unlikely that possibility is, the hope for a long-term recovery is very slim otherwise.

On 2 May 2010 the IMF and the Eurozone rescued the Greek economy. As a guarantee for the rescue package, the Greek Prime Minister George Papandreou elaborated a detailed recovery plan to raise billions of Euros to salvage the Greek economy: public sector employees had their salaries reduced or, for levels below 2,000 EUR, frozen; the retirement age for men and women were equalized and brought on average from 61 to 65; the value added tax (VAT) was increased; taxes were raised on alcohol, cigarettes and fuel. Some measures were applied also to the wealthier population: luxury taxes were increased by 10%; bonuses were to be abolished at public banks and taxed at 90% in private ones; Google (Nasdaq: GOOG) maps have been used to track undeclared swimming pools.

Yet the recovery plan is shortsighted because it fails to solve the deep problems in Greek society: corruption in the public sector and tax evasion.

These two problems are estimated to cost the Greek government up to 20 USD billion per year and to represent up to 30% of GDP.

An Example:

Have you ever been to a public hospital in Greece? Do you want to avoid waiting longer than a year to have a medical appointment? We have a solution for you: an envelope with a couple hundred Euros. You can be quite confident that the doctor will wisely invest his yearly collection of envelope money to buy a new car or perhaps build a new swimming pool in his villa in Kifisia, one of the luxurious areas of Athens. Why shall he waste time in declaring his envelope money to the Greek authorities? And of course, he knows that all his neighbors have a pool but that nobody declares them: why shall he be different from his neighbors?

Our Letter of Suggestion to the Greek Prime Minister:

Your Excellency, we would like to remind You that it is Your duty to fight corruption in the public sector and to enforce the taxation laws. You should make sure that the rule of law is applied and respected at all levels of society, by the more and less wealthy. This means challenging and changing the current Greek way of life where it is flawed: this may be hard to implement but it is the best long-term solution to avoid future crisis and to establish a more efficient government.

How can You achieve this? There are four avenues.

First, improve the quality of the services Your administration provides by accounting for fraudulent public servants. Only when Your citizens see that the public services are of good quality, will they feel stimulated to pay taxes and co-operate with the government. Let us look at one example. You could hire some young college volunteers or NGOs (rewarded as 'Presidential fellows') to serve on a rotational basis for 6 days a week for at least 6 months in the lobby of major public hospitals. They will invite people to fill out an anonymous survey on whether they have been treated correctly with no corruption requests. If they feel they have been encouraged to bribe, the Presidential fellows will invite them to address the Ombudsman. The Ombudsman will be located in an easily accessible place in the hospital and will report to an anti-corruption team whose chief will report directly to You. This will exercise pressure on the public hospital employees to avoid corruption. If You advertise this, the media will love it and the pressure will be even higher.

Second, to encourage people to declare their assets and revenues, You could grant a tax amnesty on their first declaration. Alternatively, You should train your tax inspectors to detect any immovable asset. You should require tax payers to auto-declare the value of their immovable assets. The State would reserve its right to buy them out at a price 10% higher than their declared value if the market value was different from the declared value. This way, assets will be likely to be declared at their market value!

Third, You could run campaigns in schools, on TV and in public meetings. These campaigns would educate citizens on how important it is to declare their assets and pay taxes: only if they pay taxes, they can expect the government to provide public services.

Fourth, after implementing the other three avenues, You will be able to effect many popular actions for the Greek nation with the billions of dollars that You will have raised. For instance, you might increase the wage of the public servants that have been so angry with You when You cut it down!

If You fail to ensure a long-term recovery, You may really need to sell our beautiful Greek islands. Are You planning to sell the Acropolis soon? Before it is renamed as the AT&T (NYSE: T) or the Bank of China Palace (OTC: BACHY.PK), I would be interested in buying it, not only because it is the symbol of Western civilization, but mainly to save the dignity of our great ancestors and our national pride.

Pietro G. Rabassi
Πιέτρο Γ. ΡΑΜΠΑΣΙ



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