The report of February rail freight movements was released Thursday March 6, by The Association of American Railroads. Again this month the report reveals some mentionable trends. The report on the AAR website indicates a gain in rail freight volume of 2.8 percent, for the first nine weeks of 2008. An estimated 296.1 billion ton-miles total volume was reported for the period.

There are declines showing in inter-modal traffic. Trailer and container loading is down 3.4 percent for the first two months of 2008. This means that a higher volume of freight is moving by rail, yet less of it is getting to the rails via truck. I could speculate that railroads shall continue to become increasingly more cost effective for volume shipment of freight. Watch for new possibilities with direct-from-rail distribution centers. Watch for rapid growth and development in the RFID sector.

I don't normally watch the stock of Harley Davidson Inc. (NYSE: HOG). Lately though, I've had a look at how it's doing and things look pretty ugly right about now. Value investors might be tempted to buy in or to build on an existing position at this time, and that may be a good choice, but as far as a seasonal investment, this year HOG may be scheduled for intake to the slaughter house. In the face of a worsening economy and a kaleidoscope of consumer credit woes, that big bike maker probably won't be faring so well. It's my opinion that domestically, Harley Davidson is going to become it's own largest competitor, at least in the near term.

For the last 20 years, buying a Harley has been a purchase of status far more than an expenditure of need. As much as 85% of the Harley Davidson fleet has been purchased by pleasure riders rather than commuters or hard-core biker types. This reality puts those classy machines into the realm of consumer toys rather than consumer needs. Add to this the fact that Harley riders are getting older. They say: If you won't be able to pick up your bike when you lay it down, it's time to give up the ride.

My point here is that more and more Harley Davidson motorcycles are entering the secondary phase of their life cycles. First phase owners are beginning to sell off their bikes. I noticed the increase of used Harleys for sale beginning two years ago, and last year I noticed the start of a very slight decline in asking prices. This does spell good news if you're in the market for one, and if that's the case, I envy you. However, this signals tougher marketing domestically for that classic American icon, hence the Harley Davidson push into India and China.

Inflation: "An increase in the amount of money and credit in relation to the supply of goods and services; An increase of the general price level; An excessive or persistent increase in wages and costs causing a decline in purchasing power."

Recession: "A temporary falling off of business activity during a period when such activity has been generally increasing."

(Source: Websters New World Dictionary, Third College Edition)

Rather than an opinion piece, which is what I generally write, this little snippet is meant more as a discussion generator than a statement of my own economic view. I earnestly invite our readers to weigh in on the matter. Inflation or recession, are we now experiencing either or both?

Someone might want to explain this to me because it defies nearly all palatable logic that I can apply to it. I read earlier this week that China carries a large debt portfolio and that about 70% of it is American debt. Additionally, China is buying up American debt at break-neck speed, while possibly neglecting their own populace in order to do so.

As I was taught, there are two potentially profitable reasons to buy debt obligations. The first (and best) reason is because there is a reasonable expectation that the debt will be repaid, supported by documentation, collateral security, and research. The second reason is because there is an expectation that the debtor shall default, resulting in the expeditious seizure of pledged security assets that are desired.

I've become aware of an unsettling third scenario regarding the value of buying debt. You can easily use it to buy control of the debtor's assets through their weakness.

Asian manufacturers, especially those in China and Japan, are beginning to feel the pinch from weak purchasing power here in the United States. A report in the New York Times highlights some of the attitudes and adjustments which shall be guiding world industrial output going through this year and into 2009. Prudent cuts are being made by Asian manufacturers across the board to offset costs, while demand growth is in decline.

It's not all doom and gloom however, depending on how you look at it. Chinese economists are actually feeling a bit of a relief from the slowdown in the face of their own inflationary pressures and indications are that merchandise inventories aren't yet getting bloated. This means that while industrial output might be cooling in the near term, available manufacturing capacity should remain relatively flush while the banks figure out the details of stinging money supply issues.

I read a quote in an article recently which stated, "What Wall Street is about is smart guys thinking about ways to make money from dumb ones." That quote is attributed to one John E. Fitzgibbon, the publisher of an online newsletter, in an article from Eric Dash via The New York Times. While Mr. Fitzgibbon's remark might validate special investing skill on the part of some smart and timely investors, I take exception to the notion that all those investors who lost money in the markets over the past year are the dumb ones.

The question now is, where is the smart money headed?

There's much speculation today about the possibility of yet another interest rate reduction by the Federal Reserve. Some people indicate they think another rate cut would be a good thing. Pardon me while I ask: Are they nuts?

The dollar is already devalued to the point that our trading partners are getting edgy about their export values, and you can forget about foreign investors sticking their money into American companies to help spur development. Low level municipal bond issues could soon become a thing of the past, and that concept of placing money into conventional savings accounts? Yeah okay, I'll get right on that.

Jim Cramer sings a gloom and doom song about 7 million home owners becoming renters, and declares that the nation will be required to swallow $500 billion in losses. He alludes to a wholesale crumbling of major banks. I see no mention in his blog about possible alternate solutions to the trouble that sloppy bankers have caused themselves. Personally, I don't think that ruining the dollar with yet another round of artificially created economic stimulation based on cheap credit is a good long-term solution for our country, although it might allow some of those sloppy bankers another breather before they have to face the music. The thinking that cheap bank credit will help the economy by infusing borrowed money into the stock market and loosening up spending habits is nothing short of a sucker's bet.

Judging by the most recently available statistics from the American Association of Railroads, the trade and productivity numbers currently coming out of Washington appear to be a bunch of bunk. Will someone please tell Ben Bernanke that cold hard facts will supplant pipe dreams any day?

Rail freight numbers for the week ended June 9 continue to trend downward and are consistent with trending for the year so far. By now, industrial surpluses and inventories should have been reduced to the point that manufacturing would be demanding an increased influx of raw materials, but such is not the case. Plainly put, consumer demand and domestic manufacturing are down, and it shows plainly in reduced freight numbers. The breakdown for the week ending June 9 is as follows:

• Intermodal freight (truck trailers or shipping containers): Down 3.2 percent from last year.
• Carload freight (not including intermodal): Down 5.6 percent.
• 4.0 percent fewer carloads originated from the West and 7.8 percent fewer originated from the East.
• Total cumulative rail freight volume for the first 23 weeks of 2007 was an estimated 754.9 billion ton-miles, down 3.1 percent from last year.

Canadian and Mexican railroad reports show similar trending, though not as significantly as the American declines. The single remarkable exception is the Mexican railroad, Kansas City Southern de Mexico (KCSM), which has reported intermodal volume of 4,878 trailers or containers, up 18.4 percent from the 23rd week of 2006. That significant increase, my friends, is reflective of manufactured goods they're shipping up to us.

Bear these numbers in mind the next time you get your statistical hogwash from Washington. They can tell you that more people are working and they can tell you that companies are manufacturing more stuff, but the true facts come out when the train cars get loaded (or don't).

One of the stocks that I like to keep an eye on is AutoNation (NYSE: AN). It interests me due to their number one position in online auto sales and because of their robust size. I'm getting a bit curious about how quiet it is over there in terms of news items. I'm not the least bit worried about what they're up to. As I've said before, generally a lack of news means that things are going in a business-as-usual fashion.

As of this writing, the most current news item you'll find on the AutoNation website is their Oct. 26, 2006 news release of their third quarter earnings report. . The most current news piece I can find on the web is a reference to the AutoNation Inc. presentation at the China Auto Services Market Summit, December 5, 2006 at JW Marriott Hotel Shanghai . What this signals to me is that AutoNation is yet another active participant in the massive movement to exploit China's blooming economic opportunities. The summit seemed to be geared more towards automobile service operations than towards outright retailing of automobiles. The logistics of moving cars to market, the financing of new vehicle purchases, underpinning the retail segment, leasing, renting and mechanical service were among the topics of focus. The entire summit signals to me that the groundwork is being carefully laid for a major influx of automobiles into mainland China.

I like the feel of the whole thing. "Detroit's" big three are surely in full preparation for this impending boom. Aren't they? I want to see some advertising fliers showing Chevrolet (NYSE: GM) Silverados parked along the Great Wall. I want to see pictures of the streets of Peking jammed with Nitros (NYSE: DCX) and Explorers (NYSE: F). I want to see some of the money we've spent on cheap Chinese die cast tools and toys coming back as wages for American workers. I want my piece of their economy now. C'mon gang, it's time to bring it on home!

Okay, so my title is a bit misleading. No, I don't mean a bigger trade deficit is a good thing. What I'm getting at here is that bigger thinking could help lead us down a better road. Beginning with the introduction of transistors in 1947 and then progressing from transistors to integrated circuits and on through to today's computer chips, the trend in electronics manufacturing has been to make things smaller and smaller. While this shrinking of electronics has been an overall good thing, the concept has crept into nearly every class of consumer merchandise. This has made the manufacturing, shipping and importation of foreign manufactured items that much more lucrative.

In the 1970's we were faced with much screaming and yelling about how crude oil was going to run out in 20 years. There was a world wide mad dash to do something to prevent that from happening. The mantra for auto makers became "if it's not a compact car it'll be a subcompact car." People didn't like those cars much but they were sold to us as fun and practical. At .95 cents a gallon for gas, people were eager to use less oil in order to help save the world. Chromium steel was replaced with ugly black and gray plastic. Roofs were lowered to eliminate glass. Tires had their sidewall area reduced and tire widths began to narrow. Japan began to salivate as the proposition of exporting cars to America became lighter, leaner and cheaper. .

(photo courtesy of: www.njscuba.net/ )