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How Did George Washington Feel About the National Debt

How Did George Washington Feel About the National Debt - This item from Bloomberg is appropriate on President's Day. Here is a brief section, posted without further comment.

Every February since 1896, the U.S. Senate has observed the birthday of George Washingtonby having one of its members read his 1796 Farewell Address into the record.

The ceremony is usually purely symbolic. This year, however, it could influence policy: The country's first president had some interesting ideas about the national debt that might resonate as Congress gears up for more fights over spending and taxes.


Another paragraph, about the national debt, may be more compelling today. Washington, a Federalist, began by advising Americans to "cherish public credit" because it was "a very important source of strength and security." In the view of most of the Founders, securing life, liberty and property was the major public good that the government had to provide, so endangering public credit, especially in the service of partisan politics, wasn't something Washington would have countenanced.


Washington closed the paragraph on national debt with a few thoughts on taxation. Citizens, he wrote, "should practically bear in mind that towards the payment of debts there must be revenue; that to have revenue there must be taxes; that no taxes can be devised which are not more or less inconvenient and unpleasant." Once levied due to "public exigencies," however, Americans were duty-bound to pay their taxes with "a spirit of acquiescence."

It is important to note that Washington wasn't calling for blind obedience to the government, simply the separation of cause and effect. If Americans didn't want to suffer from "the intrinsic embarrassment" of high taxation, they needed to prevent the government from spending and borrowing too much in the first place, by ensuring that it remained focused on its "proper objects."

Global Macro Monitor: Overbought and Oversold Markets as of 15th February - My thank to a subscriber for this informative item, which is posted in the Subscriber's Area.

Today's interesting charts - Monitor the financial world by viewing price charts.

Continuous Commodity Index (CCI) (Old CRB) (weekly & daily) is a good gauge of the sector because it is unweighted and comprises 17 US-listed commodity futures which are continuously rebalanced: Cocoa, Coffee 'C', Copper, Corn, Cotton, Crude Oil (WTI), Gold, Heating Oil, Live Cattle, Live Hogs, Natural Gas (NG1), Orange Juice, Platinum, Silver, Soybeans, Sugar (No 11), and Wheat. CCI fell steeply between March 2012 and early June before finding support just above 500. It then bounced nearly 20% but did not break the overall pattern of lower rally highs since April 2011. It has been ranging gently lower over the last six months in a pattern that suggests recent supply dominance is only marginal. Nevertheless, a clear upward dynamic is required to check this drift, followed by a clear break above 600 to indicate that demand has regained the upper hand.

This item continues in the Subscriber's Area.


Additional commentary by Eoin Treacy

Shares outstanding Over the last number of years it has been a contention of mine that the shares of globally oriented companies were in many cases becoming collectors' items. This conclusion was based on the fact that monetary conditions remain conducive to share buybacks. In addition brisk M&A activity has also led to shares being delisted which reduced the inventory of stocks even further.

However, some might argue that equity issuance in the USA has been trending higher over the last four years. For example, the value of new equity offering in 2012 hit $220 billion. This is more than 50% higher than the value of equities listed in 1999. Some of this new issuance has been driven by the financial sector and other rights issues. The surge in issuance from the social media sector has also increased the supply of inventory. The question I am concerned with on this occasion, though, is on the quantity of stocks rather than their aggregated value.

In order to corroborate my hunch I went in search of an index displaying the number of shares outstanding on the NYSE. I soon discovered that Bloomberg does not have such an index. Therefore in order to depict this information I had to take a somewhat circuitous route. NYSE publishes data on the percentage of shorts relative to the number of shares outstanding. It also has an index showing the absolute number of shorts at different intervals. With this information I created a proxy index displaying an estimate of the number of shares currently trading on the NYSE.

This section continues in the Subscriber's Area.

Email of the day (1) on platinum and palladium:

I recently read an excellent article explaining the supply problems facing platinum and especially palladium - the following link I thought I should share with the collective and is most enlightening:

This explains why both Palladium and Platinum are up 7% from the beginning of this year to the end of last week, and why they are outperforming gold (-5%) and silver (-3%)

I attach an article from GS which shows that they too favour Palladium with a price target of $1,050. Given the very severe supply shortages, it seems likely that the price of Palladium and to a lesser extent Platinum, will continue to rise.

My comment Thank you for this informative email which I'm sure will be of interest to subscribers. Here is a section from the report you attached which is dated January 16th and is posted in the Subscriber's Area:

Palladium: For palladium we reiterate our bullish view on prices as production cuts in South Africa by Anglo American (c.150k oz) and the lack of a supply response from Russia (Norilsk) or North America (Stillwater) is expected to result in a deficit over the short to medium term, even allowing significant ongoing sales from Russian stocks.

Our ongoing thesis is that palladium demand will grow in the autos sector due to: a) majority of growth in global automotive coming from gasoline (petrol) markets (e.g. US, China); b) palladium continuing to substitute for platinum in diesel markets due to technology improvements; and c) implementation of Euro 6 emissions regulations in Europe seeing a subtle shift back to gasoline (petrol) from diesel, as auto makers seek to minimise implementation costs. This is expected to combine with increased demand from the broader industrial sector on stronger global GDP. Thus we believe palladium will outperform platinum over 2013-2015, and reiterate our 2013-2015 forecasts of $781/$925/$1,000/oz respectively. Other reasons to be bullish on palladium are the scope for further disruption to South African supply as well as the potential for reduced sales from Russia stockpiles.

This section continues in the Subscriber's Area.

Email of the day (2)
on fundamental data providers:

I continue to enjoy the excellent Fullermoney service-

I am looking to get recommendations for a couple of sites to provide some fundamental analysis for companies which will back up the technical info from Fullermoney-Ideally I would like a free service as I have a couple of subscriptions already.

Also are you aware of any site which provides regular information on Berkshire Hathaway investments

My comment Thank you for your kind words and this question which other subscribers may have some additional input on.

This section continues in the Subscriber's Area.

Email of the day (3- 6) on additions to the Chart Library:

Could you possibly add the following to the Chart Library?









"Can you please add the following to the chart library: Proshares Ultra MSCI Japan (EZJ:US). Thanks"


"Pls can you add KCB (Kenya Commercial Bank) to chart library? Thank you."


Please add Zoetis Inc.(ZTS on NYSE-recent spinoff from Pfizer). Thanks

My comment Thank you for these suggestions which have been added to the Chart Library.

Email of the day (7) on how funds are listed in the Chart Library:

Would it be possible to list the library in a more organized and easier-to-use fashion? Funds, for example, could be grouped by fund house in alphabetic order. Similarly, currencies grouped by their cross rates.

My comment Thank you for this suggestion which we will look into. At present funds are segregated by thematic focus, then by country of domicile. In future we hope to be able to search by currency. You can group them by fund company if you use the name of the fund company you are looking for as the parameter in the Chart Library's dedicated search engine. 

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