Are Red Chinese and N. Korean leaders insane or just stupid? Perhaps it is time for free China and Japan to arm themselves.

Are Red Chinese and N. Korean leaders insane or just stupid? Perhaps it is time for free China and Japan to arm themselves.

Countries like Red China and N.Korea are still throwing their intellectual capital and profits down their toilet bowls making more weapons for mass destruction. Are the Red Chinese and N. Korean leaders insane or just stupid? Do they think they can become great by imitating Hitler, Stalin and other insane and infamous leaders? Is it time for the free world to break off intellectual and economic cooperation with Red China? They seem to want to be known as aggressive Red hoards again instead of China. Even Russia would fight against more Red hoards. Red China could join N. Korea and be in abject poverty once more if they wish to be strong and stupid instead of strong and great. It is their choice.

American consumers in 2000 were in debt up to 70% of their annual income. In 2008 when the bubble burst their personal debt was at a record 130% of their annual income. Today the USA consumer is still at 120%. This is not a good harbinger for the world economy because the American consumer cannot bail out the American cities much less the worldwide recession. China cannot either. The pace of American home foreclosures has slowed since revelations that thousands of foreclosure documents may have been improperly prepared, but for all 2010, almost 2.9 million U.S. properties received foreclosure filings, a record high, and up 2% from 2009. The paperwork hurdle is clearing now putting new pressure on housing. But when it is finally over housing can begin to rise once more.

Rabbi Boteach defended Sarah Palin's use of the term "Blood Libel" to describe the leftist lunatics who blamed the murders last Saturday on conservatives and radio hosts. He said, "Indeed, the belief that the concept of blood libel applies only to the Jews is itself a form of reverse discrimination and should be dismissed. " "as the Hebrew Boble condemns accusations of collective guilt against Jew and non Jew alike." By the leftist liberals pretending to embrace civil political discourse and by "simultaneously violating it and engaging in blood libel against innocent parties is both irresponsible and immoral." Unfortunately Sarah Palin did not understand what she was talking about when she opened her mouth and inserted her foot. Had she presented an intelligent case in writing as this article in the Wall Street Journal today did, instead of going on another rant, it might have shown she is capable of thought and leadership. Good leaders do not surround themselves with incompetent advisors and writers the way Sarah does.

World Markets:
China is prepared to participate in any future euro zone stabilization measures, seeing the euro as a key pillar of a multi-currency global financial system, deputy central bank governor Yi Gang said on Wednesday. Speaking at a briefing in London by the People's Bank of China (PBOC) and Chinese government officials, Yi also said Beijing would take into "positive consideration" the question of investing in the euro zone's emergency fund for member states. "China indeed supports the series of stabilization measures adopted by the European Union, the ECB (European Central Bank) and the IMF (International Monetary Fund)," Yi said. "China is a stable and continued long-term investor in European financial markets and I'm sure if there's need of the European emergency fund or the stabilization mechanism, we would like to actively participate in these mechanisms -- of course with your permission."

Business trends
Wholesale Inventories Nov were down -0.2 with XMASS sales from being up 1.7% in November.
MBA Mortgage Purchase Index 01/07 up 2.2 % after improving 2.3% last month
Export Prices ex-ag. Dec up 0.8% after being up 0.8% last month. That is almost three times the rate of the FED inflation target.
Import Prices ex-oil Dec up 0.6% after being up 0.8% last month. That is twice the rate of the FED inflation target.
Crude Inventories 01/08 decline 2.2M after declining 4,2M barrels last month.
Treasury Budget Dec was $80Billion last month or about $1trillion per year. That is three times higher than President Bush's highest deficit. That is more than the accumulated Bush deficit from eight years of office. And most of This Obama waste is thrown away on indigents, unions, and ACORN type organizations that do not create jobs.
Fed's Beige Book Jan reports from the twelve Federal Reserve Districts suggest that economic activity continued to expand moderately from November through December. Residential real estate markets remained weak across all Districts. Commercial construction was described as subdued or slow. Most District reports cited comments by both retailers and manufacturers that costs were rising, but indicated that competitive pressures had led to only modest pass-through into final prices. The labor market may have stopped declining.

Yesterday
Initial Claims 01/08 rose to 445K from 409K last month. Not good.
Continuing Claims 01/01 declined to 3879K from 4103K as more Americans lost their coverage.
PPI Dec rose 1.1% after rising 0.9% last month. That is now at more than a 13% inflation rate and too much. Core PPI Dec rose 0.2% or 2.4%/yr which is what the FED wants but food and energy were ignored.
The USA Trade Balance Nov held at about 38.3B down slightly from 38.7B

Today
Jan 14 8:30 AM CPI Dec
Jan 14 8:30 AM Core CPI Dec
Jan 14 8:30 AM Retail Sales Dec
Jan 14 8:30 AM Retail Sales ex-auto Dec
Jan 14 9:15 AM Industrial Production Dec
Jan 14 9:15 AM Capacity Utilization Dec
Jan 14 9:55 AM Mich Sentiment Jan
Jan 14 10:00 AM Business Inventories Nov

Market Outlook Jan 14, 2011
Foreclosures to Push Home Prices Down another 5% in 2011according to RealtyTrac

Currently investors remain at historic levels of optimism, although there were very few to be found actually investing in recent weeks. Most are already fully invested. Short Selling Against S&P 500 Companies is at a one-year low, lower than before the May Flash Crash.

Commodity carriers, already reeling from the biggest slump in freight rates in more than two years are poised to plunge another 32% due to the glut off ships of flooded Australia. Should the flooding persist in Australia the Baltic Dry Index may drop as much as 31 percent in the coming months.

By mid year we expect state and federal worker layoffs because the socialists have not put their government houses in order and the Tea Party wants smaller government. Raising taxes would allow states go even deeper in the hole with union contracts and tip into default. Many predict a major sell off at mid year when several individual states also are in budget crisis. But typically the stock market is six months ahead of economy. QE2 ends mid year but that is likely to be extended.

World Markets
Asian markets were down sharply last night. China's market was down -1.3%, Hong Kong up 0.2%, India down -1.7%, and Japan down -0.9%,

European markets are down this morning in a range of about -0.4% to -1.1% half way through their day.

US pre-market futures are down about -0.1 % at 7:30 AM EST.