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New Years Greetings

January 1, 2009

A new ear is upon us and I hope all had a wonderful time. We stayed in as we find going out is expensive and problematic on New Years Eve. No taxis, ride programs, drunken crowds all seem to take their toll.

We made game hens, a gratin, creamed spinach and of course some wine. At midnight , while we were eating btw we had A'Dorah from Mastronardi, a truly wonderful sparkling wine.

I have hope for this year and I suggest that we all be positive. The economic situation just cannot be as bad as the press makes it out to be. Parking lots are full and it just isn't like 82. It just doesn't have that feeling.

Let's look at the fundamentals: interest rates are very very low, oil had gone down by 2/3'rds since the peak in the summer, grain prices have collapsed and there is a new president. I am not a big fan of Obama, but economically the Bush administration was weak. He will have both houses so he can get things done. Infrastructure projects will be good for us all.

Locally when the bridge work, the jail, and Windsor Western start we wont have the workers. Essex Engine is rising from the ashes so we may get better here.

So to me, the big challenge is bank liquidity and that seems to be working its way through the system. Those huge give aways by the fed must soon cause the wheels to turn.

Gas was $1.59 on Tuesday in Detroit. What does that mean? SUV's which mean profits for Detroit. Trucking cost should fall and profits should be realizable again.

Commodity prices have collapsed. Steel is ½ what it was so business base costs are now falling. They can make money again.

Grains are way down from the summer so food will be cheaper.

The Canadian Dollar is trading around 85 cents which is where it should be and where the Bank of Canada wants it. We cannot survive at a par dollar as our costs are higher than America's and that's where we send our goods.

T Bills went for zero interest and sold. This means the traders are crazy, but that is usual. In reality the cost of capital is very cheap. Banks will have to start lending and projects will resume.

You see a trend. All the prices and exchange rates were at their peaks in July'ish and now are back into reasonable states. They all rose together like a Perfect Storm and we are feeling the effects now. It will pass, just like a kidney stone

.

So I am positive and will stay positive. The press likes Obama and will soon say how good things are. The stock market is underpriced, housing is cheap(does anyone want to buy my house???), and mortgages are cheap and available. We are in a phase of deflation and if it doesn't go on too long all will be rosy. So there are the good fundamentals. The economy could jump out of the gates by summer or we could go into a Depression. I would rather be positive.

You can comment at essex_wine_report@yahoo.ca

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