Tom PaukenYesterday, DallasBlog reported that the federal budget deficit hit a record level in November with a $83.1 billion shortfall. Today, we learn that the U.S. trade deficit for October hit an all-time hit at $68.9 billion. If this rate continues through the 2006 fiscal year, our annual deficit for FY2006 will be in the range of $800 billion. Our resident economist, Carl Pellegrini tells me that he does not believe that higher interest rates will be able to stem the ongoing problems associated with the huge U.S. trade deficit. In Carl’s words, this will constrain the incoming Fed Chief Ben Bernanke "in fighting his deflation demons".

All of this bad news about the huge budget and trade deficits should be a warning shot to the Congressional and Executive branches of the federal government that they had better start addressing these issues before we have a major economic crisis on our hands.

One Texas businessman who has a plan to address the loss of manufacturing jobs in the United States and reduce the trade deficit by reforming our corporate tax system is David Hartman. Hartman’s proposal, which we will be talking more about in the weeks and months ahead here at DallasBlog, would replace the corporate income tax with a border adjusted tax which would level the playing field for American businesses seeking to compete in the U.S. and export their products overseas. The current tax system provides incentives for companies to ship jobs overseas which adds to our trade deficit and causes the loss of good middle-class jobs here at home. The Hartman plan would encourage savings and investment in the United States. We will provide the details of his plan in the upcoming weeks here at DallasBlog.

This week PepsiCo overtook Coca-Cola in market cap for the first time in the 112 years of fierce competition between the two "cola" companies. Pepsi’s stock is now valued at $98.4 billion while Coca-Cola’s shares are worth $97.9 billion. Steven Reinemund, the current CEO of Pepsi, is given a lot of the credit for Pepsi’s move to the number one position over Coke. Previously, Reinemund was CEO of Pizza Hut and Chairman of Plano-based Frito-Lay, which is owned by Pepsi. The Frito-Lay snacks have played an important role not only in helping grow the revenues and profits at Pepsi but also in developing management talent to run the parent company. Wayne Calloway, who succeeded Don Kendall as Chairman of Pepsi in 1986, earned his management spurs as CEO of Frito-Lay. Steven Reinemund followed the same path in his move upward into the CEO spot at Pepsi.

In January of this year, Business Week named Reinemund as one of the best managers of 2004. As the writer put it, "Reinemund’s greatest achievement is in developing people more than products … PepsiCo has developed one of the deepest executive benches in Corporate America."

Hats off to Steve Reinemund and all of the fine folks at Pepsi. We are pleased that the company has a major presence in our area with its Frito-Lay headquarters located in Plano.

Jim CramerWe decided to tape-record a recent broadcast of Jim Cramer’s Mad Money on CNBC, but not for reasons you may suspect. You see, we would like to show our children & grandchildren one day what a mania really looks like. Until the last year or so, we regretted not saving some of the funky late-1990s Ameritrade television commercials with the nose ringed Stuart talking about online trading. Or another one was the E*Trade ad where two men are talking about investments in a well-appointed office. The older gentleman asks the younger, "Do you have a retirement plan?" The younger, with perfect arrogance, responds with "Get rich, retire at 45". The list is endless and it is fun trying to think back of the public’s infatuation with net stocks six or seven years ago. While the real estate craze has replaced the infatuation with the stock market in recent years, we still like to pop on CNBC at times to see what is being hyped to the general public. After all, CNBC is a profit-seeking business that wants to get ratings – so they are usually a great indicator for "what’s hot" in the investment world as well as overall market sentiment.

We can remember watching CNBC one day in late 2002 when the market was in free fall and the anchors’ facial expressions looked like someone had died. Then they went to their reporter (it was Maria Bartiromo at the time) on the floor of the NYSE and a discussion ensued about the coming long-term bear market. Sure enough, that day happened to coincide with the market forming a bottom. It took a few more months of a sustained rally before the wall of worry had been climbed, but by the middle of 2003, the permabulls on CNBC were back. Those bears claiming that the market was still overvalued were relegated to sporadic appearances on bull-bear debates.

The last two years on CNBC remind us of 1997 & 1998. The extreme bullishness of 1999 has yet to be repeated, but we are coming closer and closer with every broadcast of Mad Money. It is funny to watch the day-trading schizophrenic Jim Cramer take out a knife and repeatedly stab a bear figurine saying something like, "Take that, you bears." Cramer’s show is revealing because his callers seem to exhibit classic herd mentality behavior. Even more illuminating than Cramer’s show are the attitudes of the various anchors on CNBC. Viewers can literally hear the anchors’ groans when oil prices rise or market indices trade lower. When the occasional non-bullish guest is invited on a CNBC show, the tone becomes more confrontational and the bearish views aren’t even considered.

Judging from CNBC, people are again beginning to view stocks as pieces of paper that go up and down, but mainly up. The ones that go up should be bought mainly because they are going up. Little if any thought is given to the underlying economics of the business they are buying. Balance sheets and cash flows are ignored. Beating the whisper EPS numbers and making new highs are considered the real fundamentals. Such a mentality seems much more indicative of a market top rather than a bottom. Valuations at near 20x earnings support that bearish view. CNBC is clearly flashing a contrarian signal just as it did in 2002, only this time it is saying "SELL".

Just a year ago, a nine-year-old Plano student had the temerity to show up at school with religious (i.e., Christian) messages inside the goodie bags he had intended for a "Winter Break" party. Whereby hangs a tale of plain old nuttiness such as you wouldn't think to encounter in the Lone Star State . Except that in Plano you seem to, and surely in other places as well.

Our poor third grader was pounced upon by his school's constituted authorities, who quickly set him straight on his constitutional trespass. He he had introduced a religious message -- something about the birth of someone named Jesus -- into the proudly secular environment of Plano public schools. Some innocent might get the idea Plano public schools actually approved of whoever this Jesus person was!

A bleak midwinter was getting bleaker from the standpoint of those unable to see why, in the Christmas season, Christmas' founder should have become radioactive. Well, lo, the pompous and prissy got their comeuppance, courtesy of a federal judge whose help two public interest law firms -- the Liberty Legal Institute and the Alliance Defense Fund -- had sought in behalf of the boy's duly outraged parents. U. S. Dist. Judge Paul Brown of the Eastern District temporarily restrained Plano from vetting student goodie bags in search of, shudder, religious messages. The lawsuit (Morgan, et al, vs. Plano Independent School District) remains active. The Liberty Legal Institute refers to it as "an ongoing case that has the potential of cementing many of the religious freedoms for our children that have taken decades to restore."

There's enough cementing to do to keep the legal profession occupied for several decades. We're reminded every Christmas just how far some of our cultural patriarchs have departed from normal understandings of the relationship between church and state "Normal" meaning, how can it be said that the singing of Christmas carols on, yes, public school property constitutes a menace to religious liberty when the truth is, seeing innocent religious acknowledgment as a menace undemines not only religious liberty but the delicately poised arrangements whereby the founding fathers sought to head off just the kind of controvery in which Plano engages.

Once upon a time, Plano , north of Dallas , was a normal Texan community of about 5,000 souls. Then the tides of population growth engulfed it from the south. Predominantly white and nominally (at least) Christian, modern Plano suffers from nicely-nicely-ism of the most suffocating and noxious kind. The city's excellent school system suffers accordingly. The idea is that Christmas can be Christmas outside the schools but not inside -- as if the schools were some cordon sanitaire between religion and irreligion.

No more Christmas holidays there! Now it's Winter Break:a frosty-sounding notion indeed. None of Christmas' traditional, pan-theological warmth glows from such a designation. A year ago, school officials patrolled the cordon sanitaire to make sure no red and green implements or party favors found their way to the Winter Break Party. Please, please -- white only! (Like snow, y'know?)

Plano is big on multiculturalism. "We have to be careful," one of its attorneys said last year, that Hindu, Jewish, and Islamic students "don't have their rights trampled on." By -- for instance -- a sudden glimpse of red and green.

Currently, Plano ISD's website features winning posters in the Holiday Art Contest, meant to foster "harmony, respect, tolerance, acceptance, and understanding among or between different racial, cultural, ethnic, and/or religious groups." Winners are selected by the district's Multi-Ethnic Committee. (I'm not making this up.)

The winning entry: Ninth grader Karen Chen's poster with a pair of ethnically ambiguous hands holding a snowflake. Close behind: 17 students, all very diverse, standing at the rim of the earth; a snowman and the inscription, "The Gift of Friendship"; a pair of purple mittens holding a round globe and the inscription, "Greetings [certainly not the Christmas kind of greetings] 2005." Ummm, very stirring -- the way this stuff always is.

Not to disparage the contest winners, or even those who preside over the thing, but this is such pallid stuff -- the hold-hands-and-acknowledge-each-other stuff -- that it's a wonder Plano doesn't keel over collectively from boredom and stupefaction.

Ah, and then there's the really feel-good project du jour. The web site informs us, titillatingly, that students and staff are "busy this holiday season [has no one ever informed the administration that "holiday" means "holy day"?] planning, shopping, collecting, and delivering thousands of gifts to needy North Texas families."

Well, yes, fine. But why? Just because? Or out of solidarity with the ancient Christian tradition of gift-giving and ministry to the poor in honor of Jesus Christ's birth? The website fails to inform us. We can't tell, accordingly, whether this gift-giving thing, up Plano way, is the new efflorescence of the philanthropic spirit or whether it's all pretense. Keeping up secular traditions, it might occur to the Plano ISD, if its let a non-secular thought enter their heads, is a harder thing altogether than continuing in the remembrance, year in and year out, of, shall we say, a Higher Call.

Seasonal secularism -- bah, humbug!

Have yourself, instead, whether the Plano ISD ap proves or not, a merry little Christmas.