Dear rss free blog,


Nearly 20 years ago, Milton Friedman and Rose Friedman reviewed the Socialist Party platform of 1928 and were appalled to discover that most of the labor reforms it called for had been enacted by the USA: public unemployment insurance and job agencies; health and accident insurance; old-age pensions; laws limiting child labor; and shorter work hours. The Socialists also called for a national flood control program; reforestation; irrigation; and land reclamation.

Milton Friedman believed that economic freedom and political freedom are inextricably linked, a key tenet of his Chicago School. So had the U.S. become socialist, abandoning capitalism? Have we given up our economic and political liberty for flood control and unemployment insurance?

As we go off for our Labor Day weekend (founded to keep the U.S. worker from celebrating on May 1 with foreign socialists), it’s worth noting that the answer is: no. We have a capitalist system still. But like capitalism wherever it applies, there are modifications, except they differ depending on which capitalist country we are talking about. In France it is state-ownership; in Germany and Austria it is workers representation; it Asia it is dominant families.

And a reformed health program for Americans will not bring the NKVD to our doors at 3 a.m. either. (I am indebted to Mark Chandler’s new book, Making Sense of the Dollar, Bloomberg, 2009 for this thesis. Mr. Chandler is Chief Forex Strategist at Brown Brothers Harriman, with no links to the SPUSA, but none to the Chicago boys either.)

A reader in Chicagoe-mailed me that in the heartland (which he thinks includes Chicago and which he thinks he speaks for), they don’t like liberals like me. But I worked on the Senate Foreign Relations Committee for, among others, Chuck Percy, a Chicago liberal Republican. Is he now being seen as an effete East Coast softie?

Germany has launched a Baltic Dry Index fund, with a capped return. People have been looking for an ETF covering the shipping index, deeply underwater after the summer’s drop in Chinese imports of coal and iron. We are not recommending the German fund, just noting its arrival. Chances are there will be another variant offered in our own market especially if the index recovers. Deutsche Bank must be looking for a new ETF entry.

I happily report that one of our shares was the best-performing ADR yesterday; and that another, a gold stock, went stratospheric. The ADR reports on its most recent quarter on Tuesday, presumably with good news. The gold stock fell back with the price of the metal today. The ADR is up again today. Read on if you are a paid subscriber.

*A Canadian reader sent meDesjardins report on which echoed my own optimism after the poor quarter ata company. It is always nice to know that my quick reactions to news are being confirmed by the slower analysts.

*I have a new theory on the impact of capital increases. They draw investment bank attention to stocks and rather than cratering (because there are more shares out), the stocks actually go up. There is one such in the model portfolio and two more are coming.