Monday, December 30, 2013

The Approaching New Year

Can’t quite figure out what is in store for us next year. Interest rates are a joke if you’re going to retire, and very reasonable if you want to buy a home. The Japanese stock market has doubled this last year, which isn’t bad. Our markets seem to be doing OK also. With all of the “Knowledgeable Experts” in the market, there is only one path and that is up.

The Motley Fool has sent me emails this year about the latest and greatest investment ideas. I never finished one of their links to the end. Whatever they are touting, they want about 20 minutes of your time to sell it to you (You are going to get rich and you don’t want to miss the boat on this spiel). Give me a break; if I spot a 100 dollar bill on the floor, I’m not going to point it out to everyone. People everywhere are selling a newsletters promising you unimaginable riches.

Headline today, “1.3 million people to lose their unemployment benefits,” sounds pretty spectacular until you realize that it’s for about 6 days—until Congress extends them. Currently there are 10 million people unemployed, and if you drop Detroit from the count, figure about 8 million. Of course the six million people that lost their health care through no fault of their own are not a news item, that’s just tough luck. And according to government statistics, they also all live in Detroit.

The Federal Reserve looks like it will curb quantitative easing. Interest rates could climb 100 basis points (%1.0). This could affect housing and payday loans more than anything else. It certainly won’t curb the borrowing in the stock or commodity markets. And if you're retired, the increased interest might buy a nice treat for your dog.

Robert Reich of Berkeley has been suggesting that the rich have been getting richer and that there is no trickle down into the rest of the economy. He could Reich/right. This could be a good thing. All of those dollars released into the economy went nowhere, except into the bank accounts of the upper one percent. There was no shotgun blast of new dollars into the economy with massive consumption. There is, however, another problem, kind of a time delay. The rich are mortal and die just like anyone else and the kids inherit. The expression “shirt sleeves to shirt sleeves in three generations” kind of suggests that the kids are going to spend the dollars. Three generations is a long time to wait, so grandpa gets to do some mountain climbing in his wheel chair.

When we talk about the government spending one half a trillion dollars on servicing the national debt each year, that is about 1/3 of tax receipts. To put it bluntly, we spend more on interest payments than we do on running the government. That’s pretty much why a paltry 80 billion in cuts can literally cripple the government. We are running on vapors. If you read the news, we have “emerged” from the “greatest recession” since The Great Depression. The EBT food stamp massacre at Walmart was just a glitch. But you must admit that food stamps have come a long way now and the name has changed to “Electronic Benefit Transfer.” Maybe it’s just my imagination, but it looks like a lot of the food stamp recipients need to go on a diet. Of course their Galaxy3 cell phone and their eight thousand dollars in tattoos make me wonder why they really need the food stamps, but I digress.

I think that people are fed up with government. Eric Snowden has become a national folk hero with his release of classified documents and revealing what NSA is doing to us. The thing most people don’t realize is that there are tremendous volumes of data collected. The government doesn’t even have the man hours needed to process the data. Of course once this is realized, why spend billions of dollars on this spy system just to get one possible terrorist? Why do I think that question will never be asked?

Health care is an issue that has no answer. Where to from here? I’m not really sure. People don’t need health care for their kids; they need it for their parents. Of course with the new program, your dad can go for the triple by-pass and your kids get to pay the bill. It’s not quite the program everyone had in mind, but it will work no matter how much you dislike it—the kids were only going to spend the premiums on drugs and sex anyways.

So, for the coming year what do we have? Whatever we had before, we still have, and Congress can’t take that away. The New Year brings in a suggestion of new consumption. The words “Fat and Fatter” come to mind. Colorado may add to the frenzy of food consumption with the legalization of marijuana— It will be known as "The munchie State." Even Chris Christie is dieting; I think that he realized that he is too fat to be considered a Republican. Look for the stock market to double, it’s the only game left in town; reality has absolutely nothing to do with price valuations. We have been told that the “Great Recession” is over, implying we are close to getting out of the woods. That's a relief, shopping carts don't push too well in the dirt, especially if everything you own is in one.

Since I am not selling a newsletter, I have very little to predict about the coming year that could make us rich. But here's hoping that the new year brings better times to all of us.

Happy New Year from our family to yours and God Bless everyone.


Sackerson said...

Since sound money was cancelled, there is no completely effective haven, except if you're in something tangible, imperishable and portable at least you won't lose everything.

If the medical and drugs cartel were tackled, eveyone could have affordable healthcare without bankrupting the economy. And if you follow Charles Hugh Smith, ditto higher education.

Don't forget that the US has a very favourable ration of arable land to population, not to mention energy sources to keep the current farming system going for quite a while yet. Given the will, there are the resources for you and yours to survive big crisis - unlike the UK.

Best wishes for happiness and security in the New Year and years to come.

dearieme said...

Happy New Year, Jim.

Dan Mac said...

Jim -

Have a Happy and Healthy 2014. Thank you for the posts/content.


Rob in Nova Scotia said...

Happy New Year Jim I think it's wise not to make predictions as we now live in a world where vast majority of people believe down is up and bad is good.

Jim in San Marcos said...

Hi Everyone

Thank you all for your well wishes and I would like to wish all of you much happiness in the coming year and may you also have a very Merry and Happy New Year