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Time to be Brave and Independent

I'm hosting "Varney & Co." today beginning at 9:20 AM EST. Check out the show!

In 1973, "The Block" was established in Redfern, Australia to provide housing for aboriginals. It was set up as the first urban rights claim in the country, and others were established, too, in areas like the poorly named Waterloo. Because aboriginals faced staunch discrimination in finding housing, the Aboriginal Housing Company was established to maintain buildings in the neighborhood. Like housing projects in America, including the infamous "Cabrini Green" projects in Chicago, The Block became a cesspool of crime, drug use, and despair. Backers blame government funding drying up and the entrance of drug dealers into the neighborhood. I say it was attitude that began with a lack of self esteem.

The narrative, it seems, is that these people were unable to fend or defend for themselves. While The Block might have begun with good intentions, the project established precedence for government spending on essentials, taking away such impetus from the individual. In 2004, a 17-year kid was killed while running from police officers, triggering race riots that left 40 police officers injured. That was the last straw for many. The apologists said it underscored how vulnerable the neighborhood was, while others saw it as typical of any situation where cradle to grave entitlements take the place of hard work and self-determination.


The place is dilapidated these days, with only 15 habitable properties remaining. The entire project will be taken down and in its place, 62 homes will be developed and called "Pemulwuy" project. Pemulwuy is a famous figure to aboriginals in Australia. In 1790, he attacked the governor's gamekeeper thought to have killed aboriginals. After that, he and a band of men (including escaped Irish fugitives) engaged in guerrilla warfare tactics. Pemulwuy was eventually captured after being shot seven times, but escaped with those wounds while in leg irons.

Needless to say, that is the stuff of legends. It was said that British bullets could not kill him.

He was eventually killed in 1801, and decapitated with his head sent to London. Along with the head the governing king enclosed a note:

"Although a terrible pest to the colony, he was a brave and independent character"

I'm sure the 62 homes will look beautiful and the neighborhood will feel like a new beginning, but unless the people there resist the urge to become wards of the state and instead embrace education and join the economy, Pemulwuy will revert back into The Block. The people there, and around the world, that have been sucked into the false belief government can and should pay for their needs like housing and food throughout life will always fall into the trap. It's time for people around the world to embrace the spirit of Pemulwuy and remember independence can't be bartered away, even for a new house.

The new Pemulwuy project will not be ready until 2013, so I hope the aboriginals find there is a different way. Social programs that go back to the 1960s and 1970s have largely been failures. I can only hope we abandon efforts here to widen the reach of such programs and mindsets. It's not about being mean, but rather being smart and truly compassionate. It's about an innate instinct to survive. Men in hewed logs making their way downstream to capture fish and other sources of food were common throughout the world. Sure, it's great to be able to pick up a can of tuna fish on the way home from work, but we are completely detached from our humanistic roots when we go straight from the mailbox to the supermarket.

I'm hopeful we will work ourselves out of this predicament. British bullets couldn't kill our forefathers and their dreams. I certainly hope complacency and the evolved thinking that food and shelter are rights haven't become so rooted that we can't reach back to our true gifts. It's time to be a pest to government and its measures draped in niceties with the bright red bow reading "hope" and wake up the nation.

Town Hall

Yesterday, President Obama tried to sound more conciliatory, which some read as extending an olive branch. I don't buy it. I think his policies are etched in stone and it's going to take being pushed to the center rather than charming a friendly crowd before we can say the coast is clear. The fact is tax hikes for the rich and so-called rich are still a go, as is defending massive spending plans justified in part through revisionist history. There were a few sincere questions that got the same old, but highly polished responses. In the end, it was clear nothing has changed and the war on prosperity continues, although it could become more covert.

I have to give a shout out to Anthony Scaramucci for asking President Obama about his heavy handed treatment of Wall Street.

Speaking of heavy handed government, did anyone see Broadway Empire? I don't think it lived up to the hype, but it put many pieces into play like an early chess match. I was just hoping for something more dramatic, maybe a check or checkmate. I think it gets better. In the meantime, the real story is government is inherently gangster.

Technical View

The Dow is well above its 50 and 200-day moving averages, and at the last hurdle between yesterday's close and testing its 52-week high.
 
Economic Data

Housing Permits and Starts

Housing starts came in at an annual rate of 598,000 in August, representing an increase of 10.5% from July, and the highest level since April before the tax credit ended. The results came in above the consensus estimate for a slight increase to 550,000. It seems apparent that the bump higher in housing starts represents bottom feeding coming back after the tax credit plunge, and a crawl off of the bottom for home sales in the months ahead.

Housing is in a very delicate position now, and because of that we need to keep a level head, so I'm going to be the devil's advocate now and point out the (potential) weaknesses. Although sales may be picking themselves up off the ground, they are still going to be well off from the tax credit highs, and considering we are currently seeing record high levels of home repossessions by banks, demand may not be able to outrun the amount of supply hitting the market, risking a further decline in prices. Single family units only increased 4.3% annually adjusted, and actually decreased slightly on a non-adjusted basis - the brunt of the increases came from multifamily projects. Also remember that homebuilders have already cut inventories to the bone so a lot of the additional homes sold will have to be built first instead of having a sizeable inventory ready to go like usual.

Overall, it was certainly good to see the positive number on the headline though.