Sunday, October 07, 2018

Legislative Budget Tricks

It is getting close to election time and the voters are being bombarded with all sorts of bond measures and other goodies to vote on. The plea for money for roads, infrastructure, and schools sound like a very honest necessity, but hold on for one minute. The logic at work here is just that logic, commonly called smoke and mirrors.

In California they passed the gambling lottery for “Our Kids.” The premise was that the additional money would help the schools. What happened? The funds that the state was previously paying to the schools could now be used somewhere else, the lottery money didn’t appreciable increase the dollars for the schools. The legislature already has money for road repairs, pass the tax measure for new roads, and the money that they budgeted for roads will be spent on the homeless.

We are looking at roads falling apart, that were designed to be replaced after 30 years. Current age is more like 60 years for many of LA’s concrete highways. The water system dates back to 1900, no wonder at why so many pipes are bursting. There is no budgeted scheduled replacement of the infrastructure, repair is the main option. This deterioration took time. The tax dollars were deemed better spent somewhere else by the Legislature. The new bullet train that is to run from LA to San Francisco could probably replace a lot of the infrastructure in LA an San Francisco.

Sales taxes are approaching 10 percent in California. Jerry Brown said the state had a 16 billion dollars budget surplus this year. The fact that CalPERS needs more than twice that to be solvent is probably too insignificant to even mention. See if that surplus carries over to next year—we know where it is going. The state will distribute it to the cities and the cities will send it to CalPERS.

In high school when I was a kid, it was a common joke, if you dad couldn’t get a job, go work for the government. They didn’t pay good, but if you were an outstanding employee the private sector would offer you a real job.

Where is the logic that we can afford to pay public employees more that the same ones in the private sector? And to top that off, offer them 100K yearly retirement.

When we go to the polls this year, don’t let the bleeding-heart liberals bring up our kids, widows and orphans as an excuse for new funds. We need to cut them off completely. They need to do more with what they already have.

I didn't mean this to sound like an editorial, but I get the feeling that politicians are a bunch of con-artists that consider every voter a goodie-two-shoes Samaritan that they can rob blind. The thing that bothers me is that they are probably right in their assumption. The road to hell is paved with good intentions and the politicians want to charge extra for a hand basket. Go Figure!

Sunday, August 26, 2018

Idealism verses Realism or “Perspective”

There are 2 different classifications of voters in the general election, Idealists and Realists. Their education ranges from the educated to the uneducated.

The idealists are for health care provided by the government and higher education for all. There has to be a minimum wage and open borders for all. Government has a blank check to solve all of our problems

Whereas, the realists, want prisons, walls around the border, no government health care and a balanced budget.

The main thing about health care and higher education, if the individual can’t pay for it, It doesn’t become more affordable if the government pays for it. Anything the government tends to produce or supply is done very inefficiently and becomes increasingly expensive over time. Sometimes the goals set are not even questioned. What good does it do to send everyone to college? Has the question even been asked??? No!!! Everyone should be entitled to a higher education? What makes that a given truth. This is idealism speaking. Trade schools could offer a better life than the promise of a college education. Many never make it through their sophomore year at college and by God, they have the student loans to prove it.

Many mothers want their kids to go to college and become a doctor, lawyer or scientist. A carpenter, plumber, merchant seaman or oilrig worker might not seem like much, many make very good money.

The big problem is the elections. As a Republican, I did not vote for the president that won the election 6 years ago. But I kept quiet and lived with the results. What we need to realize is that there is a fringe element that determines the elections. 43 percent are Democrats and 43 percent are Republicans (guesstimates on my part). Notice that over the two last elections most of you remained faithful to you party. What happened is that the fringe people, the non-committed who were one issue voters, came into play. It was this 14% that elected the president.

Sadly, for the next election, we are again looking at one item voters. Save the whales, abortion, non-abortion, gay rights, black lives matter, border security, immigration etc. So, when you see CNN of MSN deliver the news you have to wonder. Why are they are reaching to absurd levels to stretch the truth? They are working the fringe voters.

It is kind of funny the idealist will protest for a minimum wage and the realist will sell them signs for their protest. You want a college education; a realist will make it happen for you. Want to buy a home you can’t afford; a realist will make it happen.

We have a split of the electorate 43 percent Republican and 43 percent Democrat. It is the 14 percent of the undecided voters that the news media is interested in influencing. This is where the 2020 election will be won or lost. And it could have very interesting results in the coming election in November. The average voter has no idea that the news media is assuming how the majority of the people will vote. The hard-core votes are fixed in stone. What the committed voter doesn’t understand, is that the media is focusing on the 14 percent “one item uncommitted voters.” They may be hoping, to sway these voters, with their rather absurd hate Trump rhetoric. I believe they have a good chance to accomplish their goal.

The line between realism and idealism is fading. The realist has lost the argument that the government has to pay for what it borrows (this camel has a strong back as far as straw is concerned). From here we only have Republicans and Democrats as two distinct classes of voters. But there is one more now, the news media. This is the organization that speaks for the swamp that lost control of the government when Trump got elected.

Imagine how much money could be lost by ethanol suppliers if we got rid of ethanol added to gas? That is swamp money. Less miles per gallon and it costs more. HMMMM.

Lets see if the media can sell the uncommitted voters "a pig in a poke."

Wednesday, July 11, 2018

The Tariff wars are Good for the US

Many people believe that tariffs are bad for the country. Let’s point out that the first 100 years of our country, those tariffs paid almost all of the revenue needed to run our government. And of course, we stole and abused patents back then, from all over the world, like China is doing now.

We could completely get rid of our steel and aluminum production if we cut our tariffs to zero. The only trouble is that if we got in a war, we might have to purchase the steel and aluminum from the party we are fighting. It’s a little like our civil war. The South lost because they did not have an industrial base.

In today’s modern world, any manufacturer can pick up and move to a cheap labor country for production. Every time I iron my button-down shirts, I tour the world; Singapore, India, Panama, Vietnam, Pakistan, Bangladesh to name a few. I can’t document it, but I would guess that most Ex-American manufacturers that produce product in another country get to avoid a lot of the overhead that was generated from production in the USA. What they would have paid in expenses over here, disappear over there, and surface as extra profit for the entrepreneur.

China thinks by limiting soy beans from the US with a tariff will be retaliatory. Sorry you’re wrong there. Fewer farmers will plant soy beans next year and prices will jump just because of the shortage. The Chinese government might understand tariffs, but they have no idea of what the futures market is all about. Food and raw materials are not really taxable with tariffs. If China wants to import soybeans from another country, go for it.

It cracks me up when Europe says it will put a tariff on Harley Davidson and Jim Beam whisky. Why not put a tariff on the cars we export over there? The reason they don’t is because they already have a tariff in place on our auto exports. Europe will pay for our whisky and our motorcycles whatever the tariff. Luxury items are immune to tariffs. You have to be part of the upper 10% to afford them.

The tariff problem could work out. If we don’t make the item, the tariff would imply that we should. Tariffs protect infant industry just starting up. In the past, letting imports crush our local industry with cheap foreign labor and production, changed our country in a bad way.

It scares me when everything I pick up in my office says “Made in China.” There was a time when you bought American because of the quality. If you are a frog, it has been a very slow boil, 50 years since they turned on the heat.

What we can be certain of is that before Trump, everyone was very comfy with all of the existing trade agreements. In return the US got cheaper goods and lost their industrial base. On top of that, the transition was gradual and everyone got used to it. Or so we thought. Ross Perot ran for president on the "Giant sucking sound in Mexico called the Nafta agreement." Who wanted to believe him? Give the peasants cheaper toys and they will be happy.

What happened over time? American industry moved to Mexico and then from there to China. The consumer got very little benefit. Of course, food stamps and unemployment insurance are benefits. Let’s see how Trump's tariffs work out over the next 3 years. Our industrial production over the last 30 years hasn’t been that great for the country as a whole.

Sunday, June 10, 2018

The Future Housing Crash In Kalifornia

If you are a veteran and want to live in California or have been living there for years as a homeowner, boy, do we have a deal for you. California veterans are entitled to buy a home up to $649,999 dollars with no money down. At present interest rates, that's about a $3,000 a month payment.

My wife and I bought our home for about 500k and put 50k down for a down payment about 18 months ago. We have been getting 3 to 10 letters a week like the one below to refinance our mortgage and drag out another 100K in cash.



Something is wrong here, this refinancing with nothing down as a veteran is insane. The 10 solicitations a week to refinance our home loan sounds like an exaggeration of what we are receiving in the mail but it isn’t. Back in 2005 I wrote Greenspan a letter about the abuses in the real estate market and got a form letter back and these were published in my blog back in Aug 28, 2009. Here is a Link


You have to wonder why a lender would want to give any VA home owner all of the equity in their home including the appreciation. I am still trying to figure out why they wrote me a thirty year loan at the age of 70 , I'll be a hundred years old when I pay it off.


Saturday, May 26, 2018

What Happens When Natural Laws of Expectations are Turned Upside Down?

Have you noticed lately that there is a short supply of available housing inventory and a large number of homeless people?

If interest rates were to increase to the level of inflation, say six percent, you’d see a severe drop in the price of housing. This would drop property taxes, and most of the time those future tax dollars have already been spent by the municipality.

In California now, I would guess that the average 4-person home now has 8 people living in it. Basically, when you double the price of housing, over a large area, you double the occupancy rate. The first time we saw that effect was in the 1960’s, it went unnoticed. Dad worked and mom took care of the kids. Later women went to work and the kids took care of themselves. At that point we had two wage earners financing a home. Now in today’s world, we have mom and dad working, and now the kids living at home as adults working to make ends meet.

Politicians don’t really reflect upon the laws passed and see how ineffiective they are. The free needle program might have stopped some disease, but now the casual stroller can be stabbed by a discarded needle while walking. People are “starving” and need to be fed. Human waste on the sidewalks is a big step above dog crap. Now we have hepatitis to worry about also.

At some point California needs to address the problem. Our national parks have a solution; they put up signs that say “Do not feed the wild animals.” We need to move the homeless into a controlled area for about 10 days that restricts their access to drugs and booze with no ability to pan handle for money. The people that just want to get high, would leave the area, confinement is a threat to their way of life. Those left would be the ones for rehabilitation.

California wants to make small homes for the homeless. A noble idea, but why? I pay taxes and expect fire and police protection. Why do these people that contribute nothing to the tax base, get a free home because they are homeless?

The real story about California is the number of people living in each home. Some streets are so packed with cars at night that they look like used car lots and remember each home has a driveway and a two-car garage (in the front of the house no less). So that’s parking for 4 cars.

So, the question in the title “What Happens When Natural Laws of Expectations are Turned Upside Down?” You learn to expect less and pay a lot more for it. And when you run out of money paying taxes, you’ll be entitled to a Gov. Jerry Brown "Free Shopping Cart," and will be inducted into the "Fraternal order of the Homeless." The only bad thing as far as liberals are concerned, is that there are no graduation ceremonies---go figure.

Tuesday, May 01, 2018

Free Trade A Bridge Too Far

Everyone appears upset over the possible tariffs being proposed by Trump. The demand is for free trade. There is one problem with the concept. The minimum wage is not the same worldwide - - $68 dollars a month in Bangladesh or $321 dollars a month in China. How about Mexico at $3.48 a day and a 48-hour work week.

If you are a manufacturer in the US, and something is labor intensive; where will you eventually be forced to relocate? Three things happen when you move off shore; labor costs are lower, lawsuits for product liability drop dramatically and taxes drop to relatively low levels. The manufacture that moves to say, China is no longer a manufacturer paying taxes in this country, he is now an importer that pays taxes on his mark up from the foreign production location.

On an individual level, we examine our location and environment and make decisions as to what is the best monetary return for our family unit. An awful lot of what goes into the decision revolves around government regulations. If you have acquired wealth, you obey government regulations if you have none, government regulations be damned.

To tie this all together, government tariffs can be a leveling force, on an economic level, for trade between countries. Let’s hope this works

Tuesday, March 20, 2018

Liberals Verses Limited Resources

If everyone in the world was enabled to live as we do in the advanced world, there would be one problem. Not enough resources to go around.

On the other side, have you noticed that with Liberals, there is a solution to any problem that faces mankind?

We often point to the bottle with a banana inside and a few fruit flies with a cork in it. Lets just take a city like Los Angeles. How many days would it take to evacuate the city if everyone was ordered to leave? Answer, about 8 to 10 days if fuel trucks could continue deliveries. Or how many days could you survive in Los Angeles if it was not being supplied with food? Maybe 20 to 30 days. How far will a tank of gas take you if the roads are jammed with stalled cars? How many people might all of a sudden want to shop at your home for food to eat?

We don’t think about things like this. But it could happen from several different corridors. A massive bank failure could paralyze food deliveries nationwide. Why would a truck driver, drive a load of food from NY to LA, if he had no way to be paid? A massive power outage could limit communications for several years. There is only one company in the US making power transformers and I am told it would take 20 years to replace them all. One good solar flare and we are back in the dark ages again.

We have reached certain limits of supply, that demand things continue in a normal fashion, for our standard of living to continue uninterrupted without glitches. The average liberal has no idea of what logistics is all about. Unlimited Government funding, ready access to fuel, food, water, and housing are assumed as a given, for any area. But what if they aren’t? Reality will set the tone. Three fourths of the world cannot afford political philosophies like Liberalism in their daily life, dreams don’t pay the bills.

We as a nation need to comprehend that our consumption of resources is so intense, that there is no way we can offer this life style to the rest of the world. The reason being, our standard of living must drop to accommodate them.

Liberals don’t realize is that most problems without any help, work themselves out very successfully given time. You still have the flask; the banana is gone and fruit flies are all dead. Funny how global warming was the perceived problem when in reality it has always been overpopulation.

Our national debt just hit 21 trillion dollars. Has anyone bothered to ask, who the government borrowed the money from? The answer is they borrowed it from banks and retirement funds. They borrowed it from people who saved money. If you are worried, talk to a Liberal to calm your nerves. Everything is under control. That last straw to break the camels back is probably years away. Probably while you are retired enjoying the good life.

The Liberals are going to give this country away, and I haven’t figured out who they are going to give it to yet. But I do know, if you if you are approaching retirement, a decent shopping cart to store your belongings in is highly desirable; now might be a good time to start looking for one.

Tuesday, March 06, 2018

Economics a Flawed “Science”

Trump just issued import quotas on Steel and Aluminum. And then you hear the press talk about trade wars and I am mentally reviewing my 3 semesters of advanced economics. I kind of nod my head but then I remember back to the birth of this country, up to World war I and reflect that tariffs are what funded the Federal Government.

I’ve looked at several economic models and the theory behind them and often marveled at what is holding these bubbles up in place. You throw up you hands and throw in the towel, what makes sense shouldn’t and what shouldn’t violate the models.

Somebody once said that Astrology was made a science so that they could also include economics as a science. If you think about it, economic theory is almost 99% an explanation of what went wrong and why during financial and economic collapses. It in no way explains where we are right now.

A trade war has economic implications that in most cases is undesired. At the same time, a country’s inability to produce steel to support a war could lead to it being conquered by a country with a large steel base. Our country has literally trashed steel production as a part of GDP. Remember Bethlehem Steel or US Steel? They built the ships that won World War II.

Any way we look at all of these economic revelations, is the assumption that tariffs will ruin trade. We have been turning a blind eye to the blatant trade violations of the rest of the world. Right now, I wouldn’t be surprised to learn that probably the USA is the largest consumer of Chinese dry wall in the world and the trouble is, it isn’t dry wall that we are buying, but prescription drugs stuffed full of calcium sulfate dehydrate (gypsum). You buy a Fram oil filter and the name is miss spelled or the directions make absolutely no sense.

We hear that Europe will ban blue jeans and Jim Beam Kentucky bourbon. Why don’t we just set 1000 BMW’s and 1000 US Cars in a group and say you can import 1 to 1. And of course, you cannot forget the VAT tax. Net result, our cars and theirs will not sell.

The net thing we need to realize is that over the long haul of history, economic theory works. The trouble is over the short term is that it is abused to create a desired outcome that can have very bad consequences in the future. It has been glossed over for the last 30 years.

The science of Economics is not exact. It can only judge the past. It’s a mistake to try to use it to portend the future.

Let’s back off and give President Trump his earned 4 years to do his magic –economic theory be damned.

Monday, March 05, 2018

Gun Ownership

You want to buy a gun. Well by god, you had better fill out all of the required paper work and go through a background check. And then you get the gun of your choice. Everyone upon turning legal age, has the right to purchase a weapon if they have not yet committed a crime.

Of course, if your dad bought a gun or two, the kids don’t need to register to get their hands on the weapon if they want to use it.

If Grandpa dies with several nice weapons, grandma could sell them to a gun dealer at about 20 cents on the dollar or go out and find friends of her husband that would want to own them at a reasonable price. The unrealized condition here is that this gun is worth far more money to any gun purchaser because it is untraceable at this point.

The real problem I see is a rifle that can shoot more than 6 rounds. If you are stupid enough to unleash 20 rounds at neighbors during civil unrest, guess what they will do? They will burn your house down with you in it. Shotguns tend to more of a deterrent to violence, for the main reason, you don’t have to be a good shot, you’ll rarely discharge it.

I wonder how many of the gun records show people over the age of 100 still owning guns? Kind of makes you wonder what happens to those guns after the person dies. It looks like the kids inherit the weapons. Sadly, there is nothing the state can do to control the passage of guns to next of kin at death.

I would be for banning hand guns. A couple of drinks and you could end up in jail for life. Same for Assault rifles. Our youth tends to learn this the hard way. But shotguns and regular rifles for hunting game with up to a six-load magazine capacity seem acceptable for just about anyone I can think of.

Two things we need to look at. Why do we need semi-automatic rifles? Animals do not shoot back. And second, if you missed it with the firsts shot, does that mean the target may shoot back? If the answer is yes, then you can pretty well determine that the hunter and the hunted were both human. That’s why some shooters need the better rifle and more ammunition. More ammunition takes into account that they are a piss poor shot. The big lesson overlooked here, this shooter is someone who wants enough ammunition that they can kill you after you run out of ammunition. Not sure how you weed this person out of society.

The sad thing to realized is that there is no real effective legislative control of the gun user.

I do think that there should be a move to eliminate military ammunition that can be used in rifles and get rid of clip loading rifles. None of us that buys a gun to protect our family wants a round that will go through two homes before it stops.

What we need to define is Military and Civilian weapons, they are not one and the same. And of course, I have always defined our right to bear arms as those that were in effect in 1789. Ever try to hold up a store with a flint lock pistol?

Wednesday, February 21, 2018

DisUnity in the U.S.

The DACA’s in this country want legal status, and neither the Republicans or the Democrats can come to an agreement. When the Democrats had both houses, Obama failed to address the issue. The same is true with the Republicans in power.

Neither side wants the party in power to get credit for anything. It is not a matter of whether it is good for the country. The minority party wants the party in power to fail in their platform promises to the voters. It’s all about votes.

On TV, put two opposing views on camera at the same time, its like dropping a cat and a dog into a potato sack, the results are predictable.

The Russians have been accused of messing around with our elections, and it is almost laughable. They were not interested in who won the election, they just wanted to create more disharmony with our institutions and the voters. That is pretty light weight stuff, considering what Hollywood and CNN are doing. When everyone was so positive that the Russian had interfered with the election I was mystified. What were they doing? Now we know, real stupid stuff that most people didn’t give a damn about.

We have half of the population mixing illegal immigrants with legal and considering them one group that want, open borders. The other group wants to get rid of the illegal ones but they are considered racists for their beliefs. The fact that some countries are considered “Shit Holes,” strikes a chord of “how dare anyone be politically incorrect?” Building a wall seems a tad bit logical in addressing the problem

The same mess with gun control, only this group isn’t split along the same lines as the immigrant problem. The false assumption is that government can by passing laws, control the problem. Criminals do not buy their guns at gun stores. They look for an NRA sticker on your pick up or something similar and visit your home while you are at work. Passing laws against legally buying a gun might stop some people, from a purchase, but seldom discourage a person who wanted one. The real problem with guns that is never mentioned is alcohol. Mix the two and you could end up in jail forever for doing something extremely stupid. Revenge is satisfying for a fleeting moment, but once the finality of your actions are realized, it is too late to do anything to change it back.

In this country some people expect government to protect every aspect of their life and others in a like manner, want government to leave them alone. Harmony is balance of the two. IMHO the Democrats and Obama went too far, and now they are more than sore losers, they are sore haters. And surprisingly the news media went with them. Now we have an abstract label for it called the “Deep State.” Also, another abstract label is “the far left” which is inclusive of our educational institutions. And then there is just very general vulgar name calling of our President. A complete lack of respect for the office.

It’s a sad time for our country, if you cannot show respect, you deserve none yourself. Respect for other people’s beliefs, dreams and Ideal as well as respect for our leaders is expected. It’s the fiber that holds this nation together.

The lecture is over, it looks as if the economy is improving. We are moving out of The Great Depression II (I hope).