Sunday, July 19, 2015

The Foolish Iranian Nuclear Agreement

Kind of a weird agreement. Iran doesn’t really need nukes. Once the sanctions are lifted, they will go into full production of armaments. Their economy will supply that part of the world with oil and weapons. Talk about full employment, everyone will have a job, building something that explodes -- everyday can be the 4th of July somewhere in the world!

Israel is a state of 6 million Jews surrounded by 40 million Arabs. Do you get the feeling that Iran feels the need to nuke Israel? Why even bother? It is the passion of Islam’s radical followers, to destroy Israel. That unites them and gives them resolve. For that reason, the target is allowed to exist.

Iran will export religion. Of course this will be the fanatical form of religion with the standard promise of 70 virgins in the afterlife (no inflation there yet--I'd hold out for at least 90). Nobody has come back from the hereafter to contradict the validity of the purported promise; so it is a done deal without argument. You explode and kill Christians and live the good life for ever after.

Look for the consolidation of Iraqi, Egypt, Libya and possibly half of Africa. Iran will welcome them with open arms or with more arms if they need them.

We are dealing with religious zealots, whose primary goal is to spread Islam by eliminating non-believers (a religious war if you think outside the box). If Congress votes down this Mickey Mouse arms agreement with Iran, Israel may provide the solution that could be more stable; nuke the radicals and take over the country.

We have a president who we mise well call “Slick,” The Car Salesman. He’ll sell you a health care plan, a student loan program, a nuke agreement, a Cuban cigar and a government paid sex change.

Iran doesn’t need to go nuclear with numbnuts Obama running the show. The nuclear option is a form of miss direction. It’s kind of like Brer Rabbit (Iran) pleading with Brer Bear (Obama) to not throw him into the briar patch (no nukes). Iran gets everything they need by signing off on a nuclear option. They can consolidate their position and extend their boundaries using religion and small arms.

Our leader is giving pink slips to 60,000 more American troops this year. Great for the unemployment numbers. There is much world unrest because we have a President with no balls and the rest of the world knows it. You can lead with the projection of power, or you can talk with the projection of weakness.

Thursday, July 02, 2015

Greece, What Happens Next?

Greece over the last 50 years has implemented a retirement and government bureaucracy that has become a very large portion of their tax expenditures. Notice one thing, retirement and government expenses contribute nothing to the economy. They are like leaches that live on a host. Like most governments, the bills got bigger and bigger and the bureaucrats figured out a way to pass the financing of these contracts of debt into the future. Why does that mythical country, Obamaland come to mind, for some reason?

Greece is about to have a referendum on whether to accept the terms of the EU or to refuse them. It doesn’t really matter. All transfer payments that deal with support for non-working citizens will be eliminated or reduced by about 70 percent. The Army will get paid either way. If the vote is yes, I expect a rebellion with the military taking control. If the vote is no, expect everyone on a pension or government subsidy to be out of luck, no more funds. Savings in the banks will go poof.

So next Sunday with Greece, it really doesn’t matter how the vote goes. If you are retired, you will pay for passing this mess onto the youth of your country. Their banking system is in ruins. Their educated youth has fled to other countries.

The preservation of the Euro is a Non-Sequitur for Greece. The old “farts” need to realize that they can’t tax the youth of their country for their future retirement. They can try, but I think it will fail this time. Let's not single them out as the only guilty country; it was the world bankers that "Cleaned their plow." The PIIGS as a group will fall together, one at a time.

The vote on Sunday revolves around; "Do you want to keep your government pension" or "Do you want to default on the EU loans?" Greece is in a depression. Chancellor Merkel of Germany is demanding repayment from Greece --- funny, how in 1933, "someone" in Germany repudiated the war reparations that had impoverished their country. To say that solution worked OK for them is a gross understatement of fact; it eventually led to a world war.

Moral: Don't expect a politician to get you out of a problem they helped you get into.

Tuesday, June 16, 2015

Congressional Mentality -- Idiots Rule

I was listening to the radio yesterday and heard that Congressman Charles Schumer is trying to get the airlines to stop their downsizing of the luggage size limits for passengers. I mentally thought it through, and realized that many passengers abuse the carry-on luggage to a ridiculous level. The airlines idea to make the luggage bags smaller would be a partial solution. But that is not the real problem.

The real problem is space per passenger. If you remember air travel 30 years ago, you had some space when you sat down and some leg room too. This “lebensraum” gave you some peace of mind and comfort. I used to be able to get up from a window seat and squeeze between the other two persons to get to the bathroom or stretch my legs. That isn't so anymore. The two passengers in your row have to get out of their seats in order for you to access the isle. God help you if the drink cart is blocking your access to the restrooms. Don't even try to use the first class rest rooms.

In today’s seating on airlines, you mentally have to discuss with yourself who has access to the arm rest next to you. Do you dare recline the seat? This invasion of your body space is very stressful. Just as a test, move real close to someone you are not familiar with and you can observe it firsthand. Violating someone’s body space (unless you are romantically involved with them) is very irritating, if not intimidating. It is this close confinement on airlines that results in a lot of bad behavior. You feel uncomfortable and claustrophobic and don’t really know why. Your perceived envelope of body space is yours alone and the airlines should understand this concepts from a physiological perspective. Airline management has to ignore that, if they are trying to pack the plane for max profit. "Sardine can" comes to mind for some reason.

Of course Congressman Schumer wants you to believe the discussion revolves around bag size, not the number of people stuffed into the airplane. Why don’t we do something different, instead of making the carry-on baggage smaller, why not lengthen the space between seats by about a foot and make the seats 3 inches wider? Guess what, you can’t fit as many people on an airliner and therefore, there is more luggage space.

Do we need Congressmen that can only think inside the box? --suitcase mentality! Or people that really understand the problem? I'd like to see standards set for airline seating space, not suitcase size. Schumer impresses me as a complete ID-10T that is 404 in the internet world. His solutions address the business world of money not the airline traveler. Give me a break, give me more leg and elbow room on my next flight.

The real question; "Are we getting more for our dollar or less?" That is what this Great Depression is all about.

Monday, June 01, 2015

Under the Mattress and Backyard Shovel Banking

Getting old and ready to retire, a lot of the benefits you receive from that point out depend on how much money you have in the bank. We are not talking safety deposit boxes, just cash in a bank account. So if you have a stroke and have 100k in the bank, and need to be parked in a rest home, that savings goes poof (rest homes costs 50k per year). Sell your home to move into a rest home, that money goes first before you can qualify for Supplementary Security Income in addition to your Social Security.

Former Speaker of the House Dennis Hastert could go to jail for giving someone hush money. The funny thing is, it was his money and he earned it. It's against the law to make cash withdrawals of less than $10,000 to avoid having the banks report it. They track every cash transaction over $10,000. The government looks at large cash transactions as a sign of illegal commerce. It very well could be. But more to the point, these transactions are invisible from taxation.

Legally you can only give each of your kids $10,000 a year tax free. What is to stop you from giving them, cash? Hmmm.

I purchase gold and silver now and then to add to my retirement funds, (leaving it in the bank to collect interest is an excellent waste of time). I usually pay by cashier’s check, I feel uncomfortable carrying cash. You want to buy one million dollars of gold, go right ahead write a check, no one will question it, you are breaking no laws. I’ve seen two different people show up at one coin shop I frequent, with ledger checkbooks, writing company checks for gold around Christmas time. I could swear the one guy wrote “cleaning supplies” on the check memo.

People are shifting to cash. If you have a debt collector after you, or an ex-wife looking for alimony, you don’t want direct deposit. Your paycheck will vaporize when it hits your account. The same for student loans. If you have a part time job under the table, you’re not going to put the dollars in the bank, it will screw up any government benefits you are currently collecting. Bust your butt to earn an extra $10,000 and find out it goes into your healthcare that was free, until it showed up in your tax return.

Hurricane Katrina showed the Federal government how invisibly large the cash economy was in that city, after the disaster. All of the Federal support checks being mailed down there, all of a sudden had no valid addresses. The words fraud and abuse never surfaced, and if they had, many high up government officials would have qualified for jail time. They whistled by the graveyard on that one.

The mechanic down the street has two prices, one for credit cards and the other for cash. When the phone says press one for English, you know there are two economies, one is hidden.

So what is going on, we have an economy that is collecting less taxes and having more expenses to cover. In order to participate in this "Free lunch program," you have to be broke (excluding your Mercedes and million dollar home--they don't count against you). The new trend is to hide your assets in a safety deposit box or under the mattress. The banks don't pay any meaningful interest. $100,000 in the bank at 1% will pay $1,000 a year. Hide the dollars and get a bonus of $3,600 in food stamps an EBT debit card.

The neat thing about keeping your money out of the banking system, is that no one from Nigeria can get on the phone with you and drain your retirement account. They can’t touch your mattress or the box buried in the back yard. Home Depot has shovels on sale at $15. Tip--don't bury currency or hide it in the walls, rats love the stuff for nesting.

Another good thing, if your care taker wants to make $1,000 the hard way, you have the cash on hand (that’s when having a bad memory is a good thing). You don’t have to go shopping with the wife to have fun—you can have fun, while the wife is shopping.

Interest rates are real low and no one is borrowing, but God help you if you want to withdraw your saving in cash. Retirees have gobs of money in banks, they have monthly statements to prove it. Bernie Madoff’s problem started when people wanted their dollars back. So far, most retirees are content to play the game of “Leave it in the bank.” The problem is, low interest rates have changed the way you play the game. You get more from government, if you can prove you have nothing. What would happen if more people (who have savings) wanted their savings in cash? The government wouldn't be able to borrow those dollars, to give it to those, that have none. But while they have the dollars, get in line and make Bernie proud.

Friday, May 22, 2015

Rental Housing in California Sucks

Statistically speaking, rentals on paper are a goldmine but there is one problem. Abuse of the asset. It’s great if you have a two bed room unit for rent. The real trouble is the other 4 people you didn’t meet that want to call it home. Basic cleanup repaint and carpeting can run about $12,000. And the neat thing, is if you have someone managing the place, they are going to want another 15 percent for management expenses.

The basic thought premise, is that rentals are a godsend with the low interest rate returns. The reality is that you may wish you had ever thought of the idea. You may have to evict them and that could take about 8 months. And you might have to pay them $1,500 just to move out even though they haven’t paid rent in months.

Rental prices may be high in California, and if you are strapped for cash, you can rent a garage for about $900 -- split 6 ways, that’s about $150 a month. Of course that is illegal, and probably the people living in the garage are also illegals.

Housing prices are going up in California, and the number of cars parked in front of each house is also going up. Kind of makes you wonder what line of work your neighbor is in, to have 6 cars parked outside his house with a three car garage—three cars in the driveway and three at the curb. Of course, he could have three more cars in the garage. I walk by several, every day that have a sofa and TV in the garage or a garage that is packed full to the ceiling.

IMHO if the Federal government had let the real estate bubble crash in California, we would not have everyone moving home to survive. Prices would be realistic to where you could afford to buy a home without sharing it with another couple. 10 years ago, in my area, there were maybe one or two cars parked at the curb. Now days, on trash day, finding a space along the curb for three trash cans can be a real chore.

Just pause for one minute and think when has it been this bad before? If you have a job, life is great, if you don’t have one, life sucks. This is a bad time for a lot of people. This isn’t a depression, everything is just hunky-dory (the government told me so).

From the million dollar home, the owner can see the guy across the street with his car up on jacks trying to get it to run. While that guy can watch the soccer mom back out of their McMansion in their Mercedes SUV. You do have to admit that the guy with his car up on jacks has a better view out his front window than the guy in the McMansion. Two different lifestyles that are worlds apart and on the same block.

Let’s boil this mess down to its basics. If a house rents for $1,250 a month, 2 people need to live in it, $2,500 4 people. If a house is selling for under 250K two adult occupants, 500K 4 adults. What happened in California? The occupancy rate of homes depends on the amount money earned by the average worker. At 9 dollars an hour, you only make $1,440 a month, your max for rent is $800. You'll need a roommate.

The government effort to save housing prices, by supporting the price of housing with the Fannie and Freddie supports, has only increased the number of occupants per residence. The economics of it are a little like squeezing on a balloon. You get one desired effect with several unknown ones.

Of course to the untrained observer, looking at all of the cars parked outside all of the homes out here, auto sales must be booming. But it could be a bunch of kids unemployed, living at home and too poor to pay on their student loans. And we dare not mention car loans.

So let me think, who gets to cut my lawn this week? -- Jose living in the garage, or the neighbor's son Jesse with a BS degree and a student loan? The answer "me," my wife doesn't have to pay me.

Tuesday, May 12, 2015

Obama the Manipulator

Not sure where this fits into the meld of world events, but I though it worth giving it a link. Its about the death of Osama Bin Laden. The reporter that did this also did the My Lia incident in Viet Nam and has a Pulitzer prize for journalism. It kind of portrays our President as a real manipulator. It is a little long, but it seems to explain why his cabinet and appointees tend to be distancing themselves from Obama. Click on the link below.

The Killing of Osama Bin Laden

Saturday, May 09, 2015

Democracy The Land Of Dreams

In a Democracy, there is always someone who falls between the cracks. The Democrats use these people as examples of the system failing as a whole. When in reality, no system will cover everyone. Most government programs are like training wheels with the option; you can keep them for a lifetime. The trouble is, most people will, if given the chance.

World Democracy isn’t about politics, it is about money and lifestyle. You can be just as happy in a socialist country with a lot of money, just as well as in a Democracy. The great thing about Democracy in the United States is that it provides a level playing field to acquire wealth; in other countries that option most probably doesn’t exist. When our government promises the world Democracy, realize one thing. You can’t make these people rich in their own country. In most cases their dreams of an elevated lifestyle, from their misconceptions about Democracy, fail to ever materialize.

Immigrants come here with a dream of putting their child through college and getting them a better life. They will live through the success of their kids. Now you see why they succeed, their kids are their future. Whereas in the ghetto, kids are a byproduct of Saturday night sex; they are tolerated but not pushed to overachieve. Government welfare supports this way of life. No dream, just food and a housing allowance. You want more, then game the system.

The Democrats will produce the most losers in our new economy with all of the increased subsidies. You don’t have to be black, but it helps, failure always loves a ready-made excuse. I remember how hard it was to get a job when I was young and white. I couldn’t get the job, they’d hire a minority or a woman and it hurt. I got so mad that I bought a lawn mower on my credit card and started a lawn business. Good money for 4 years, but I couldn’t stand the boredom. From there, life improved. A little push is all it took.

Most of the world equates Democracy to being rich. If you are poor, it doesn’t matter where you live, Democracy is just beyond your grasp. All Democracy provides you is a chance at success or failure. Once you understand the reason why we lost the Viet Nam war, you can understand how fragile Democracy is. The Vietnamese farmer could point to his land, his wife and kids and his crops, but he could not point to Democracy. It is an abstraction.

The US needs to be very careful about giving the rest of the world Democracy--many foreigners view Democracy as being a backward way of governing. The problem is, our leaders don't understand that the world is an entirely different place when viewed through the eyes of someone from a different culture or religion. They think everyone sees the world as they do.

Getting rich is a dream in today's world. Everyone notices those that make the grade each year. Our government is always out to tax the rich. The rich are the "evil" people keeping the rest of Americans poor. It's OK to be poor in this country. And with a lot of hard work, by God, you too can become rich so we can all envy your wealth while the government taxes you to death.

Reality is living under the freeway in a cardboard box existing on food stamps. It's an "alternate lifestyle" for those "retiring" early in life. A little meth and some good whiskey and you too can dream about the good life.

The US is still a land of hope and dreams punctuated by reality. The paradox is the dream/nightmare about saving for a lifetime of retirement in luxury. Congress has destroyed the 8th wonder of the world, compound interest, and with it the middle class. The other day, I had to explain the rule of 72 to a bank executive handling my IRA. When I explained to her that when you took .5 percent, and divided it into 72, it took 144 years for your savings to double. The confused, incredulous look she gave back to me said it all. From here, we can deduce that the hand basket is real, the destination is still unknown only due to a lack of interest (pun intended).

Saturday, May 02, 2015

Taxing The Rich

I really don’t understand the thought process involved in the government’s proposal to tax the rich. Everyone has about 70 years on this planet, and you either save for retirement or you don’t. Why should those that saved, be tax because others didn’t put money away for retirement? You want to drive a corvette and impress me with you wealth, don’t whine when you reach retirement age and have no savings.

My only question in life is, “Why do Democrats exist?” They want to give money those that never saved for retirement by taking it from those that did save. Notice you cannot take money from people who have none. And in this country, if you can prove you’re broke, you can qualify for government subsidies. How hard is that to do? They government wants to give to those that don’t have anything, and if you give everything to your kids, you too can qualify for benefits. In some families that might not be a very good idea. It could take only a couple of weeks to snort all of Dad’ IRA up your nose.

The neat thing about taxing the rich, is that the old rich have no idea what you are doing in a lot of cases. Senility has set in. Try raising the taxes on the middle aged. The only real way to do it is through inflation, the young people today don’t understand that concept, raising taxes they fully comprehend. Solar panels are selling like hotcakes because energy prices have “doubled” in the last 20 years. How do you connect the dots if you are 21 and someone tells you that cigarettes were 23 cents a pack 40 years ago?

Inflation is an "Old People's Disease." Congress's prescription; "Take two aspirin and call me in the morning if you're not dead. And in case you are dead, don't feel obligated to call."

Tuesday, April 21, 2015

Steak For Everyone

I barbecued a few steaks yesterday for dinner with creamed corn and boiled potatoes.  The can of creamed corn was about 79 cents and we used about 4 potatoes, figure 50 cents.  The three steaks (1.79 pounds) were $19.67.  You kind of have to wonder what does a whole cow cost.

There is something very political about this, a farmer can make a hell of a lot more money selling corn for ethanol that to farmers for feed.  I’ve heard that the government ethanol subsidy for production is about to expire this year, so maybe cattle prices can drop a bit if feed becomes cheaper.

Of course with the new $15 dollar minimum wage push, I guess that steak can be on everyone’s menu.  People are concerned because they can’t support a family on $15 per hour. And we are not even talking about saving for retirement.  In today’s world you have a choice, cell phone, cable, retirement, or steak.  And of course the average person will want them all but will settle for all but one--retirement.

A nice steak used to be very delicious.  And now as I reach retirement, I realize that the cost of the steak detracted from my enjoyment of it. Of course I have other worries.  My dentist says I could lose my teeth in 20 years if I don’t spend $8,000 on bone grafts.  I advised him that I probably wouldn’t be around in 20 years. My hearing doctor wants me to spend $4,000 an ear for hearing aids, and I mentioned that not being able to hear what most people were saying wasn’t worth a quarter of the price she was asking.

 From a humorous perspective, I look at all of the young people protesting for a $15 minimum wage and wondered where all of the silver foxes are when it comes to protests.  Its real simple, a walk to the bathroom is a major accomplishment in old age.

 So let’s get this straight. Ethanol makes my steaks more expensive.  Food stamps makes my steaks free.  Somehow I am missing something here. “Eat mor chikin”  is a reality check for people that have morals when it comes to gaming the system.

Friday, April 10, 2015

The Embezzler

I’ve written on this before, but this time we will examine another avenue of deceit. Imagine we have a billionaire with a very corrupt money manager embezzling his employer’s wealth. In most cases, neither party would probably spend more than a million a year. And if no one got caught, it would take 50 years to go through 10% of the billion. Basically you have two people that share the same billionaire lifestyle. The person being embezzled from has no idea of his losses until they are discovered; his death could trigger an audit that would discover the crime.

Pretty much when we get to wealth above a billion dollars, the owner has wealth that they will never even have the time to spend. That could be argued, especially if they get married to a real gold digger.

Now imagine the 9 to 5 worker that saves 5,000 a year in his 401k for 40 years. He now has a nest egg of from 500k to maybe 2 million. So if he started at 20 years old, that makes him 60. So he has about 7 more years before retirement. Notice one thing here, if someone has embezzled his savings, he still won’t know about it for another 7 years at the earliest.

Then if we reexamine Bernie Madoff, he only had a problem when the economy was in the tank. Incoming deposits couldn't cover his clients withdrawals. The Federal Reserve and Treasury will never have that problem.

Something else can happen that changes everything. Bankers loan dollars to investors in the stock market. A stock gets bought and the seller buys a Treasury bill. If the stock market were to drop a hell of a lot, the buyers would get margin calls they couldn’t meet. At this point, interest rates have to rise to attract funds for the margin calls. Sell Treasury bills to get the higher interest paid on the stock exchange to cover margin calls. The neat thing here, is that Joe Taxpayer gets to bail out the bank.

Remember back to when we were talking about the Billionaires and how little of what they had, they really used and about the retirees with all of their savings still 7 years out of reach? As long as you don’t need it, you would have no idea that it is already gone and spent.

Here is the simple math, the population as a whole decided not to consume 18 trillion dollars of their income so they could enjoy it at retirement. The government spent those dollars and consumed product that the population had made an effort to save, for retirement. Now as retirement rolls around, the retirees are starting to spend the dollars that they had saved in the past. There is only one problem, there isn’t 18 trillion dollars’ worth of product for them to consume. I would hazard a guess that maybe there is 4 trillion of product to match the 18 trillion saved for later consumption. As long as receipts exceed outflow from the fund, there is no problem. During difficult times, more people tap into their retirement funds. And as Bernie learned, it’s a game of musical chairs waiting for the music to stop.

Consumption is different at retirement. You have worked hard and saved for the golden years. The funny thing is, the government already borrowed the cash and consumed what you would want to purchase. 43 million people on food stamps is one a hell of a free lunch. Your money is safe, they can always print more. I'm wondering what sort of salad dressing goes well with crisp one dollar bills? Or whether a ten dollar bill has more flavor than a five dollar bill?