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The lead indicators of the San Diego economy rose 1% in September from August, the seventh straight month of gains. The index is still lower than it was in January, however. Building permits, consumer confidence, and the national economy moved in a positive direction, but help wanted advertising, initial unemployment claims, and stock prices moved unfavorably.

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Comments

Don Bauder Oct. 27, 2009 @ 8:28 a.m.

Note: I should have noted that the indicators are compiled by Alan Gin of the University of San Diego. Best, Don Bauder

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SurfPuppy619 Oct. 27, 2009 @ 11:44 a.m.

The indicators are giving off false positives.

We are not out of this mess, not by a long shot.

We will be having a second wave/round of home foreclosures within 6-12 months.

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JustWondering Oct. 27, 2009 @ 2:21 p.m.

Johnny...always a ray of sunshine even when the weather at the beach is cool and overcast all day.

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SurfPuppy619 Oct. 27, 2009 @ 4:23 p.m.

Oppss. I forgot-we have another gov employee trougher feeder here in JustWondering.

Always trying to rip off the public for something they didn't earn or deserve.

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PistolPete Oct. 27, 2009 @ 4:32 p.m.

I hate to say it but this hardly a recession. More of a dip in the overall lazy American way of life if you ask me. I constantly see grocery stores,gas stations and restaurants PACKED with people. I'm hearing one thing but observing the complete polar opposite.

The foreclosure crises happened by two sets of greedy people:Mortgage finance companies and Joe Blow. They are reaping what they sowed and I sit back and laugh.

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Don Bauder Oct. 27, 2009 @ 4:39 p.m.

Response to post #2: The economy has been pumped up with funny money -- short term interest rates around zero, etc., along with various consumer stimulus strategies such as Cash for Clunkers and the subsidy for first-time homebuyers. However, 2010 is an election year. The funny money and stimuli will probably continue. Commodities and the stock and bond markets are all in a bubble -- higher than fundamentals would dictate, buoyed almost completely by the liquidity. The banks are as broke as they ever were and the Federal Reserve's balance sheet is in tatters because it is holding so much of that lousy derivatives paper. When will reality set in? Damned if I know. But I do know that the prognosis is not good -- globally, nationally, and in San Diego Best, Don Bauder

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Don Bauder Oct. 27, 2009 @ 4:41 p.m.

Response to post #3: SurfPuppy's aura of perpetual optimism brings sunshine to everyone's life. Best, Don Bauder

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Don Bauder Oct. 27, 2009 @ 4:43 p.m.

Response to post #4: Are we shifting the focus of this blog away from the lead indicators? Best, Don Bauder

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Don Bauder Oct. 27, 2009 @ 4:45 p.m.

Response to post #5: Japan has been in and out of depression (not recession) since the early 1990s, but the populace doesn't seem to know it. The stores and bars are filled there, too. Best, Don Bauder

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SurfPuppy619 Oct. 27, 2009 @ 5:58 p.m.

Japan has been in and out of depression

It is/was bad in Japan, especially the early to mid 90's, but are you sure they are in and out of depression?

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Don Bauder Oct. 27, 2009 @ 10:27 p.m.

Response to post #10: Yes, beginning in the late 1980s, rolling into the 1990s and continuing into this decade, Japan's economy went nowhere. It was working off the massive corporate debt piled up in the bubble years. Some said Japan floated in and out of recession, some said it was more like a long depression, still others said that it was a depression at its worst, a recession when it would seem to recover. Japanese stocks are still down more than 60% from their 1989 highs. Best, Don Bauder

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johnsd Oct. 27, 2009 @ 10:38 p.m.

I think the political class is at best clueless and incompetent. At worse, they know what they are doing and do not care about the future beyond the next election and their personal well being and power.

There is no way anyone, city, state or country can continue to borrow money and spend it non-wealth creating activities without negative long-term consequences. We seem to be living in a house of cards and I have no idea how it will end and how to prepare for it.

It is funny that the liberal media is trumpeting the statistics that indicate growth and conservative talk radio saying that there is no recovery until unemployment improves. Both were saying exactly the opposite when a Republican was president.

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PistolPete Oct. 27, 2009 @ 10:52 p.m.

When the house of cards fall,arm yourself and pray.

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JustWondering Oct. 28, 2009 @ 7:22 a.m.

As the Obama Administration moves the nation towards a European styled socialism, billions, if not trillions, of dollars of other peoples money must be spent to reach his goal. As you mentioned the stimulus monies will continue at least through November 2010 and the general elections. I'm just wondering, as Margaret Thatcher did so many years ago, what happens after we run out of other people's money?

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SurfPuppy619 Oct. 28, 2009 @ 7:56 a.m.

I'm just wondering, as Margaret Thatcher did so many years ago, what happens after we run out of other people's money?

By JustWondering

What happens?????.... your unearned, retroactively scammed pension crashes and burns, that' s what happens, and you will have to earn your keep instead of living at the trough.

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SurfPuppy619 Oct. 28, 2009 @ 7:59 a.m.

Johnny...always a ray of sunshine even when the weather at the beach is cool and overcast all day.

By JustWondering

Here is some more sunshine for you (part of that "recovery" the public employees claim is here) ;

New home sales fall 3.6%

Associated Press October 28, 2009 | 7:25 a.m.

WASHINGTON -- Sales of new homes dropped unexpectedly last month as the effects of a soon-to-expire tax credit for first-time owners started to wane.

The Commerce Department said Wednesday that sales fell 3.6 percent to a seasonally adjusted annual rate of 402,000 from a downwardly revised 417,000 in August. Economists surveyed by Thomson Reuters had expected a pace of 440,000.

It was the first decline since March. Sales in September were down 7.8 percent from a year ago.

The median sales price of $204,800 was off 9.1 percent from $225,200 a year earlier.

http://www.latimes.com/business/la-fi-new-homes29-2009oct29,0,5576292.story

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Don Bauder Oct. 28, 2009 @ 8:48 a.m.

Response to post #12: Yes, politicians live only for the next election. But what about Wall Street? It can't see beyond its nose. Wall Street consists of a bunch of day traders -- buy one second, sell the next. Corporations live from quarter to quarter. So we have no long term thinking among the politicians, and among the people who manipulate the politicians: Wall Street and corporations. Best, Don Bauder

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Don Bauder Oct. 28, 2009 @ 8:50 a.m.

Response to post #13: To mix a metaphor, the chickens have come home and are pecking at the pyramid consisting of credit cards. Best, Don Bauder

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Don Bauder Oct. 28, 2009 @ 8:52 a.m.

Response to post #14: Our problem is corporate/Wall Street socialism, not European-style socialism. This is socialism for the rich and capitalism for the poor. Best, Don Bauder

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Don Bauder Oct. 28, 2009 @ 8:54 a.m.

Response to post #15: But right now, the stock market moves up as the dollar moves down. One factor making the dollar move down is our continuous printing of more of them. That creates the liquidity that is fueling stock, bond, and commodity markets. Best, Don Bauder

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Don Bauder Oct. 28, 2009 @ 8:56 a.m.

Response to post #16: Statistics are spotty. Green shoots are around, but not in abundance. The green shoots greatly exist because of the artificially low interest rates. The dollar carry trade is inflating markets and to some extent buoying the economy. Best, Don Bauder

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SurfPuppy619 Oct. 28, 2009 @ 11:40 a.m.

The green shoots greatly exist because of the artificially low interest rates.

Don't forget the car deals (cash for clunkers) or the first time time buyers deal either. ALL an artificial "recovery".

This "recovery" is all smoke nad mirrors and means nothing until small businesses start creating jobs again. That is when we will know the depression is over-when jobs start being created. There is no other way to confirm the end is over except by job creation.

That is not happening right now, and in fact I have my doubts if anything will happen because these mega "too big to fail" banks are not lending money-money they had forked over to them by the feds.

That lack of lending is the kiss of death, no credit or capital to lend out= death of small business, death of the economy, death of the American dream.

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Don Bauder Oct. 28, 2009 @ 12:35 p.m.

Response to post #22: The recovery is not ALL smoke and mirrors. You cite employment. The U.S. was losing many more jobs early in the year than it is losing now. Admittedly, there are statistical problems (deliberate, in my judgment) that make employment numbers look brighter than they are. Still, it's not as bad as it was. The artificial liquidity is probably the main factor in the creation of a few green shoots, but it is not the only factor. Best, Don Bauder

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SurfPuppy619 Oct. 28, 2009 @ 3:58 p.m.

There is no recovery Don. Not yet. Just more pumping-with little to back it up.

Here is how we will settle this question about "recovery";

We will see how the holiday shopping goes. Mark my words here and now-it is going to be ugly. Then we will wait until January rolls around and we see major retailers file BK (it will be BK filing left and right).

Then will you believe me?

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Don Bauder Oct. 28, 2009 @ 5:39 p.m.

Response to post #24: My view is not far from yours, as I have stated it many times. There aren't many green shoots and most of that there are result from the flood of liquidity. I wouldn't put all your money on Christmas sales being dismal, however, for this reason: there are all kinds of organizations purportedly measuring Christmas sales. So every year figures are all over the place. Best, Don Bauder

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David Dodd Oct. 28, 2009 @ 6:02 p.m.

Are things really improving? Well, they don't seem to be getting worse, which certainly is an improvement. I agree with Don though, that the real worry now is going to be what results from all of this excessive money supply, which will be inflation, and it will be bad.

Here's an indicator for you, Surfpup: The dollar has now seemed to have settled at just below 13 pesos. This is down from over 15 at the height of this recession. Keeping in mind that Mexico is the number three trading partner of the U.S., it's a pretty important trend to follow, financially, in macroeconomic terms. While investors traditionally tend to buy gold in the U.S. as a hedge against inflation, Mexican investors invest in U.S. dollars. Suddenly, they aren't investing.

Another thing to keep in mind: The government is in control of what we read concerning economic data. Independent data do not control the flow of the market, unfortunately.

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Don Bauder Oct. 28, 2009 @ 8:38 p.m.

Response to post #26: The endless running of the U.S. printing press, and the obligation to keep printing money because of the monstrous deficits, do not have to lead to inflation of goods and services. They may result in asset bubbles. As I have said, I feel that commodities, bonds, and stocks are already in a bubble in the sense that they are valued much higher than fundamentals would dictate. I believe that our policy makers would rather have asset bubbles than inflation. Haven't they learned in the last decade that asset bubbles end badly? Best, Don Bauder

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SurfPuppy619 Oct. 28, 2009 @ 10:08 p.m.

When earning are 30 times price, then it is safe to say there is a stock bubble.

Just because things are not getting worse (and that may or may not be true) doesn't mean they are getting better, or make for a rosey outcast.

I predict massive retail BKs in the month of January and February-big ones.

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johnsd Oct. 28, 2009 @ 11:33 p.m.

Thank you for pointing out that Wall Street has done significant damage to this country in particular and to capitalism in general. There is economic value in some of the hedge instruments that corporations and investors use to bound risk. However, much of what Wall Streets does appears to be creating complex instruments that no one understands but generate fees without creating any wealth or improving market efficiency. Wall Street is about privilege, special access and insider trading, which is the antithesis of free market capitalism and classical liberalism.

The more power and money that government controls, the more corruption it creates. Every well-connected person or organization will be asking for special treatment or sweetheart deals. A Fortune article I read yesterday about Google's close relationship with the Obama administration said that three biggest corporate contributors to the Obama campaign were: (1) Microsoft; (2) Goldman Sachs; and (3) Google.

Just look at all the special deals in the "stimulus" bill, such as the Gore-connected company in Finland that received millions to develop an $80,000 electric sports car.

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SurfPuppy619 Oct. 29, 2009 @ 12:03 p.m.

Wall Street is about privilege, special access and insider trading, which is the antithesis of free market capitalism and classical liberalism.

This is a winner!

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Don Bauder Oct. 29, 2009 @ 5:36 p.m.

Response to post #28: Even though stocks are lower than they were ten years ago, they are still in a bubble, given the economic/financial crisis that has not gone away. Commodities and bonds are also in a bubble. Almost everything is going up -- a classic case of excessive liquidity. Best, Don Bauder

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David Dodd Oct. 29, 2009 @ 5:47 p.m.

"Wall Street is about privilege, special access and insider trading, which is the antithesis of free market capitalism and classical liberalism."

No it isn't. It's about suckers who throw money into a machine they know nothing about. You go to Las Vegas and drop coin into the slot, you get what you get. You work for Las Vegas and you get paid. You want to blame Las Vegas? Ha! Who's the sucker?

You can invest in anything you wish. You don't have to buy stocks, you don't have to take positions in commodities, and you don't have to grease any wheel you see as evil or corrupt. People make choices and then cry about the results. You don't have to bank. I don't. Why support it?

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Don Bauder Oct. 29, 2009 @ 5:49 p.m.

Response to post #29: As I have said several times, contrived complexity is the essence of financial fraud. Wall Street is an expert at contriving complexity and covering it up with legal mumbo-jumbo. The government wants full disclosure, but lawyers obfuscate the disclosures so fiendishly that no one understands how much money is being stolen. You are quite right that Wall Street's behavior is the antithesis of free market capitalism. You can point your finger at corporations, too: grossly excessive chief executive salaries have done more to harm capitalism than Karl Marx ever did. Best, Don Bauder

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SurfPuppy619 Oct. 29, 2009 @ 6:46 p.m.

No it isn't. It's about suckers who throw money into a machine they know nothing about. You go to Las Vegas and drop coin into the slot, you get what you get. You work for Las Vegas and you get paid. You want to blame Las Vegas? Ha! Who's the sucker?

Gringo, come on.

Our capital markets are NOT the same as games of chance in Vegas.

They are certainly not on the up and up-but comparing them to slots is beyond you.

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David Dodd Oct. 29, 2009 @ 6:57 p.m.

SurfPup, I really see no difference. Honest. I mean, Vegas doesn't disguise the machine, and perhaps Wall Street does. But otherwise, it's gambling. Where will IBM be in six months? No one knows. But there are plenty of people, through 401K's or other means going one way or another on that offering.

Seriously, I have not had a bank account in over ten years. They play with my money, and it makes me nervous.

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Don Bauder Oct. 29, 2009 @ 9:05 p.m.

Response to post #30: Agreed. Well said. Best, Don Bauder

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SurfPuppy619 Oct. 29, 2009 @ 9:21 p.m.

Where will IBM be in six months? No one knows.

But people can make educated inferences based on market research where IBM will be in 6 months.

There are tools galore that can help a person analyze a stock.

And that is what makes it different from a game of chance.

Now, I am not saying research is fool proof, in fact there are stusies that show a monkey throwing darts at the stock page of the NYT can return as much as an average stock broker can, but research does allow you to make an informed decision.

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David Dodd Oct. 29, 2009 @ 9:29 p.m.

SurfPup, if people really want to invest, power to them! But, my problem is when the losers on the investment side want to blame Wall Street. I know quite a few people who do very well in either stocks or commodities, but holy crap, they are so connected. To me, it's like people who rail against horse racing, when they bet and lose. Hey, it isn't as simple as it looks!

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Don Bauder Oct. 29, 2009 @ 9:41 p.m.

Response to post #37: To the best of my recollection, the analysts usually beat the monkeys throwing darts at the stock pages, but the monkeys did amazingly well -- possibly winning one-third of the time. Somebody correct me if I'm wrong on that. Of course, monkeys couldn't throw darts at the stock pages of the NY Times these days. The comprehensive stock listings of yore are gone. Best, Don Bauder

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Don Bauder Oct. 29, 2009 @ 9:43 p.m.

Response to post #38: Too true. The "connected" -- those with inside information -- do the best on Wall Street. That's true in horse racing, too. Best, Don Bauder

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SurfPuppy619 Oct. 30, 2009 @ 8:39 a.m.

Johnny...always a ray of sunshine even when the weather at the beach is cool and overcast all day.

By JustWondering

Hey, look what came out today JW....Opppsss..I forgot-the economy is firing away on all cylinders and the 8% ROI the public pensions claim the will make each and every year for the next 40 years is alive and well (at least in JW's mind if not the rest of the nation);

Consumer spending falls 0.5% in September

That's the largest decrease in nine months, underscoring the weakness of the economic recovery.*

From the Associated Press

October 30, 2009 | 5:57 a.m.

WASHINGTON — Consumer spending plunged in September by the largest amount in nine months, reflecting the end of the government's "cash for clunkers" auto sales program. Incomes, the fuel for future spending, were flat.

Economists worry that the recovery could falter in coming months if households cut back on spending to cope with rising unemployment, heavy debt loads and tight credit conditions.

http://www.latimes.com/business/la-fiw-economy-consumers31-2009oct31,0,1640858.story

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Don Bauder Oct. 30, 2009 @ 11:30 a.m.

Response to post #41: Consumer confidence poll results have also dropped. The consumer is more than 70% of the economy. The consumer is vastly overleveraged. So are federal, state, and local governments. We're curing excessive debt with more excessive debt. Best, Don Bauder

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johnsd Oct. 30, 2009 @ 8:03 p.m.

"You can point your finger at corporations, too: grossly excessive chief executive salaries have done more to harm capitalism than Karl Marx ever did."

It is unfortunate that CEO pay has increased exponentially the last 25 years, particularly when it often has nothing to do the corporation's performance. There appears to be a CEO club that protects its members--no matter whether they have a successful or disastrous track record, they seem to be hired at new companies. In addition to CEO pay, two other segments that have also increased their compensation at a much greater rate than most of society are: entertainment/sports and the public sector--though to a much lesser degree. The characteristics of these groups is that they have a near monopoly bargaining position because they are competing within their own segment and not with the overall economy. They only compare their compensation to others in the same narrow market segment. Also the people who ultimately pay these salaries are often not aware that they pay them and the boards/politicians have more to gain by giving in than by taking an adversarial position. Many boards are controlled by the chairman and elected officials do not want the unions against them. Besides they personally benefit because the same benefits apply to them.

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johnsd Oct. 30, 2009 @ 8:19 p.m.

I do not see how consumer sentiment can be positive. Asides from the excessive debt that many households have, there is very little job security, non-existent pay raises and a government at all levels that is spending money that it does not have. We will probably have higher taxes in the near future, which reduces take home pay. One way to survive a very uncertain future is by minimizing fixed costs (debt, mortgage, etc.) today and increasing savings.

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Don Bauder Oct. 30, 2009 @ 10:36 p.m.

Response to post #43: Right. There is no connection between CEO pay and CEO performance. Entertainment/sports pay is out of line, too, but I don't resent that except in sports, where taxpayer subsidies bolster pay that is already excessive. And you are correct: public sector pay and fringes are excessive, particularly the latter. One reason is that there is little foreign competition for public sector jobs. Best, Don Bauder

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Don Bauder Oct. 30, 2009 @ 10:40 p.m.

Response to post #44: Consumers are acting intelligently: they are cutting spending and debt. This will hurt in the short run, but set the economy up for a nice rebound in the long run. Governments are acting unintelligently: they are trying to get consumers to go back to their old borrow-and-spend ways. That is politically expedient, but will get us right back in trouble. Best, Don Bauder

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Fred Williams Oct. 30, 2009 @ 11:20 p.m.

See:

http://biggovernment.com/2009/10/30/the-economy-is-growing-right-and-i-dont-have-a-french-accent/

Nationally, the numbers are compiled in such a way as to have little real meaning.

How do Gin's sources stack up? Do they reflect reality or the vagaries of arbitrary measurement.

This is important. When we develop and test complex systems we use two approaches...test both the structural specifications and test the actual user scenarios. We measure both because even when the system seems to meet all the technical parameters, it may not actually be useful to anyone.

I suspect a lot of the numbers the government has been using over the last few decades are technically accurate, but practically meaningless. Relying on such bogus information is useless, as we've all found out to our great disadvantage.

Are the local numbers Gin regularly releases similarly constructed, or do they represent actionable reality?

I'm convinced we're in a dead cat bounce, reflected only in offical numbers but not experienced by anyone in reality, and we have quite a bit further to fall.

Best,

Fred

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Don Bauder Oct. 31, 2009 @ 8:17 a.m.

Response to post #47: Gin's lead indicators have a good track record. The last time I checked his methodology, it seemed sound. He is not calling for any great turnaround in the San Diego economy. Best, Don Bauder

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nan shartel Oct. 31, 2009 @ 8:36 a.m.

1%...so Don...r we throwing a partay???

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Don Bauder Oct. 31, 2009 @ 8:58 a.m.

Response to post #49: "Fraid not -- not yet anyway. Best, Don Bauder

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