Cartoons

Here's a political joke

Here's a real joke that Ben and Tim pulled on us and nobody is laughing!--- (newspaper ad LA Times pg 5A 5/17/2012).

I can just envision a fun-time retirement. I'll mosey down to Walmart and pick up a shopping cart--before they run out. And if I'm lucky Maytag may have a "collapsible mobile home" that I can snag.


Copyright 2012 by Jim Brubaker

Lost in the Woods

In California, tax income shortfalls have increase from 9 billion to 16 billion in 3 months. Governor “Moonbeam” Brown has proposed new bond issues to raise the revenue. Does anyone think that we are in a better position now to pay more in taxes than we were, when times were good? The logic escapes me. The State governments have to have a balanced budget. And the way to do that is by hook or crook—(Also known as creative financing). The trouble is, we have run out of hook and crook. Kind of looks like Moonbeam hasn't run out of rope to smoke - - yet.

If we shift to Greece, there is all of this doom and gloom. Why? If Greece repudiates its debs and gets off the Euro - - hey, we have another Iceland (A country that can now live within its means after telling the world to “go fly a kite”). Of course the people who loaned the money have a different perspective on this. The rich euro counties loaned money to their poor neighbors without regard to their ability to repay the loans. Mobilizing the military to get them to pay, would solve the European unemployment problem and bring in some cash--hmmm.

In the United States, the government has decided that if you bought a home with nothing down, you entitled to government subsidies to help pay it off. No Money down for a GSE home. And if you are upside-down they will forgive that part of the loan. Of course if you buy a Fannie or Freddie home, no money down, and need to sell right away, you’re already upside-down (with the 6 percent Realtor's fees). On the flip side, if you lose your job, you can live in the home rent free for two years while they go through the foreclosure process.

The debts are real, and the expectations that the debtors will pay back the loans, is nothing more than wishful thinking. The governments of the world have only postponed the final outcome. Reality is just around the corner. To quote Obama, “We are not out of the woods yet,” - - I wonder if he’s noticed that the smoke is getting thicker?

Copyright 2012 by Jim Brubaker

The Gold Behind THIS Dollar is Gone FOREVER

Anyone ever ask the question, “How did gold and silver disappear out of our coinage system?” We had them both until you could make more melting the coins down and selling them as bullion.

Go back to 1920, they actually used gold and silver coins. You had the option of paper, gold and silver. There was no real shortage of metal coins for one reason, they paid no interest. Money in the bank could be loaned to someone else with an expected rate of return.

There was however a bond between the currency and gold and silver. They were one and the same. People that understood a currency backed by gold and silver knew the paper was as good as gold. Well, we have progressed a bit. The twenty dollar gold coin is still minted by the US Mint, but they’re not selling it for $20 anymore.

Inflation as far as the general public is concerned has nothing to do with government; it’s just a fact of life. Things over time just cost more.

The only thing that has kept pace with the value of a $20 gold piece is the Dow Jones Average. A move of 500 points on the DJIA reflects your loss or gain from the year 1890. Not many people today have been holding stock that long. Of course I digress.

The thing to really examine is that in the 1920’s your bank loan was payable in gold to the bank. There was a certainty to that that every banker could appreciate. Plus even if the saver knew nothing about inflation, they were protected from it and got a real return on their savings. Twenty dollars of paper money was just as good as a 20 dollar gold piece, they were interchangeable.

Fast forward to today. Interest rates are at 1% and inflation is at 8%. People marvel at the cost of silver and gold. The real disconnect is between the banks and government inflation. The banks’ loan money long and have to cover short term. Inflation leaves them with a built in loss. In today’s world, borrowers are paying back, a hell of a lot less in real dollars than they borrowed 20 years ago. In the 1920’s with gold as base, this couldn’t happen. A dollar WAS a dollar and time had nothing to do with it. The concept that the dime you loaned would buy the same can of beans 20 years later was a given. In today’s world, that isn’t true. Bankers lose over the long term as do savers. Today’s dollar isn’t going to have the purchasing power it does today, in 20 years.

The masses have been weaned off of their commons sense that revolved around the interchangeability of printed currency for Specie. What if we returned to using silver and gold in our currency? How would it work out? We could value silver at $100 per ounce and gold at $2,000 an ounce.

Examine an old 20 dollar gold piece. Even the newly minted gold coins say 20 dollars. The copper penny had to come to an end in 1982. It cost more for the copper than the penny was worth. There was nothing stopping you from melting the pennies down and selling them back to the government to make new coins. So now we have a copper clad zinc penny (FYI a copper penny 1982 weighs in at 3.11 grams and a zinc clad weighs in at 2.5 grams).

Reality could be a new government edict. Issue a new currency backed by gold and silver (Chances are slim to none on this). But take everyone’s savings and divide it by 100 and convert it to new dollars. We would be back to 1920 and it would take two zeros off of the national debt (don’t think for one moment that it would in any way solve that problem). The penny would again represent buying power (four cent a gallon gasoline, WOW!). It could work, but what do you do if prices go up again? Gold and silver will again start to disappear out of the system. There is a saying, “bad money chases out good money.”

The sad thing is that the present financial system is working “Just Great!” No need to change anything. The European Euro is in its death throes, our real estate market has had the “Cesspool” sign removed and replaced with one saying “Government Financed Housing.” The only drawback, the smell is not going away. The thing that cracked me up today was a comment I read, “Everyone figures that they have to work to the age of 80 before they can retire, and that’s two years longer than they are expected to live!” Go Figure.


Copyright 2012 by Jim Brubaker

It's Never Been This Bad Before (Reprinted)

This is a reprint from January 16, 2008 that is worth a second look. Have been short of spare time lately, will get back into the writing mode this weekend

Here is a little bit of history. It gives you an insight into real estate during the Great Depression from people who lived through it. Quoted from: http://xroads.virginia.edu/~HYPER/ALLEN/ch11.html

By 1927, according to Homer B. Vanderblue, most of the elaborate real-estate offices on Flagler Street in Miami were either closed or practically empty; the Davis Islands project, "bankrupt and unfinished," had been taken over by a syndicate organized by Stone & Webster; and many Florida cities, including Miami, were having difficulty collecting their taxes. By 1928 Henry S. Villard, writing in The Nation, thus described the approach to Miami by road: "Dead subdivisions line the highway, their pompous names half-obliterated on crumbling stucco gates. Lonely white-way lights stand guard over miles of cement side- walks, where grass and palmetto take the place of homes that were to be .... Whole sections of outlying subdivisions are composed of unoccupied houses, past which one speeds on broad thoroughfares as if traversing a city in the grip of death." In 1928 there were thirty-one bank failures in Florida; in 1929 there were fifty-seven; in both of these years the liabilities of the failed banks reached greater totals than were recorded for any other state in the Union. The Mediterranean fruit-fly added to the gravity of the local economic situation in 1929 by ravaging the citrus crop. Bank clearings for Miami, which had climbed sensation- ally to over a billion dollars in 1925, marched sadly downhill again:

1925.............................$1,066,528,000
1926................................632,867,000
1927................................260,039,000
1928................................143,364,000
1929................................142,316,000

And those were the very years when elsewhere in the country prosperity was triumphant! By the middle of 1930, after the general business depression had set in, no less than twenty-six Florida cities had gone into default of principal or interest on their bonds, the heaviest defaults being those of West Palm Beach, Miami, Sanford, and Lake Worth; and even Miami, which had a minor issue of bonds maturing in August, 1930, confessed its inability to redeem them and asked the bondholders for an extension.

This next bit discusses the dire straights of many states in 1933: Pg 285 America’s Great Depression by Murray Rothbard. Quoted from Agricultural Discontent in the Middle West, 1900-1939,Wisconsin Press 1951 p.448

As in most depressions, the property rights of the creditors in debts and claims were subjected to frequent attack, in favor of debtors who wished to refuse payment of their obligations with impunity. We have noted the Federal drive to weaken the bankruptcy laws. States also joined in the attack on creditors. Many states adopted compulsory debt moratoria in early 1933, and sales at auction for debt judgments were halted by Wisconsin, Iowa, Minnesota, Nebraska, and South Dakota. Governor Clyde Herring of Iowa asked insurance and mortgage companies to stop foreclosing mortgages. Life insurance companies protested that they were being very lenient, yet in many areas the courts would not enforce foreclosures for insurance companies, enabling many borrowers arrogantly to refuse to pay. Minnesota forbade foreclosures on farms or homes for several years.

So we can say without a doubt that we have never seen anything like this, but it did happen here about 78 years ago. We could be on our way to an experience of a life time. Are you ready?


Copyright 2012 by Jim Brubaker