Wednesday, December 27, 2017

Fewer Presidential Executive Directives For the New Year

Most people think that the laws of this country are passed by the Congress and State legislatures. That is not the case. In most cases, a Government department is created and funded by Congress. The head of that department is responsible for writing the code of laws. If the traffic department wants to write a law that has a fine of $300 for sneezing at a stop sign, you pay the fine or hire a lawyer for $1,000.

So, what is happening? We have a President that is starting to eliminate a lot of these directives that gave these agencies regulatory authority over us. The EPA has lost about 770 employees and they are not being replaced. It was those people claiming that the car companies were getting better gas mileage due to their regulations. The truth was, the increased mileage was due to the forced production of more fuel-efficient economy cars than high performance models. By averaging the overall mileage as a group, you got the desired result. You could still buy both, but you paid more for the gas guzzler (get rid of ethanol additive to your gas, and you might even see an extra 4 miles a gallon).

Basically, the President enforces the laws. As chief enforcer, he can write Executive Directives to define how a department functions and can issue directives on how to execute the law. Obama did this with the border guards by limiting their authority to arrest and detain people crossing into our country illegally.

Obama’s presidency was fraught with Executive Directives for everything. Bureaucrats were deciding what was right for you to do or not do. If you didn’t march to their drummer, you were fined or jailed. This ranged from whole wheat bread in school lunches to grazing charges for cattle on government lands.

We are slowly emerging from this Obama fiasco of government regulations for everything, to one of less government regulation. The Trump administration brings anticipation of less supervision and more economic freedom.

Let’s ring in the new year and forget that we are Democrats or Republicans. Of course, with Congress it is very hard to forget what Obama did with health care. He taught the Republicans that he didn’t need them for anything. Attitudes matter, and I think the Democratic party is going to get pay-back in the coming new year. Hopefully less government regulation will turn the economy loose.

Here is hoping the new year 2018, brings prosperity and happiness for all.

From our family to yours, Have a Happy New Year Everyone!

Tuesday, November 28, 2017

Misallocation of Resources in California

Figure it out, if you put your money in a savings account, you get a one percent return. Plunk a million dollars into an 8-unit condo, which rent for about $2,000 apiece (two bed, two bath), the mechanics suggest a return of about $16,000 per month or about $192,000 k per year. Plus, you have a depreciation tax deduction and management expenses to write off. With a return that great, why pay cash for the 8-unit condo? Instead, buy four 1 million-dollar condos and only put 20 percent down on each. This is actually happening in California right now. Only instead of 8 units, we are talking about 80 to 200 units in a complex.

Parents have their children living at home. This is a plus if the kids are paying off their student loans, but becomes a real problem when the kids get married. What can your kid rent on an income of 70k combined in LA or San Diego? Chasing your bride around the house nude, in mom and dads’s home has some drawbacks. So, 30K per year for housing, implies taxable earning of about 40k which is about $19 per hour. Put another way, you need a wife or roommate making the same amount to help pay the bills.

The problem that hasn’t been visible yet, is the fact that, building rentals is still in the creation stage. You don’t just go out a build a rental unit. It takes about 3 to 5 years from start to finish to process and complete the building of a structure. We are presently in about the 8th year of building rentals. Right now, there are a lot of rentals, but no renters at the prices asked.

If a land lord has 100 units and only has 50 percent occupied, he has a real problem. If the rented ones are returning, $2,000 a month, the effective rental rate for the whole structure is $1,000 per unit. Lesson one, the land lord doesn’t set rental rates, the market does. If the mortgage payment is higher than the rental returns, the investment is structured to fail.

The real issue here that people have failed to understand is that the Fed interests rate at .05% forces investing to be more creative. Rental housing in the present environment of low interest rates offers a return of about 15%. The real trap here is that building rental housing is forcing a reallocation of resources artificially, into a market that is already beyond full capacity.

So, what is happening in Kalifornia, high rental rates and a very high number of houses for sale. Its okay to put three families in one structure. What has not truly been comprehended is that housing costs for family units is pretty much constant. Raise the prices and you find two families occupying the space that one family utilized before (move in with mom and dad). It is literally absurd in places, 6 to 8 cars per house. The weird thing, is that a lot of these homes have three car garages and a car in front of every garage door. This suggests that the rental market doesn’t offer the rental deal Mom and Dad have in mind. Kids leaving the nest is a dreaded event.

Right now, there are too many high-priced homes for sale and an oversupply of rentals. Present rental rates suggest that things are just great. Units are renting for $2,500 a month with a $500 move in bonus with two months free with a year lease. This financial structure is the first step towards rent reductions.

These rental complexes are gigantic, 100 to 200 units and all wood frame. Welcome to the new ghettos of the future. The future cash flow projections from these investment vehicles will fail, and be refinanced and rented at lower and lower rates. Of course starting a fire in something this big, for insurance purposes, could send the owner to jail for a very long time.

What we are about to witness in Californai is a collapse in rental prices from oversupply. The forward projection of investing in rental real estate has hit a brick wall. The 10 to 15 percent return rate is no longer there with the surge of new rentals hitting the market. Plus, the tenants per unit is not the same anymore. Two people sign the lease and 8 people move in, with dogs and cats and stereo systems that make you want to scream. But I digress.

When you do the math, how many McDonalds employees does it take to pay the rent? More than one, maybe more than two.

Now you begin to follow the dots on retirement from my previous post. A tent and a post office box to receive your Social Security check each month of $1,400---$46 dollars a day. Retirement in the sun, what a life.

We are at a point to where the politicians have fixed all of our problems as tax payers by sheer incompetence and left an opening for the homeless people, who have adjusted the system to accommodate their lifestyle. The homeless will be oblivious to the future rental market collapse.

Monday, October 16, 2017

The Legislative Thinking Mentality

The other day, on the news, San Diego is contemplating the idea of affordable housing for the homeless. Two problems here, the climate is so mild and it never rains so you don’t need a home, just a tent for privacy and a shopping cart for your belongings. Second, homes cost about $400,000. All a tent cost is about $100 and shopping carts are free. Figure $10 dollars a day for food and booze, no cigarettes, (they’re $10 a pack) you can be a beach bum for less than $3,650 a year. The problem with the tents intensifies when the owner picks up discarded items to more properly furnish his or her domicile. And the issue of trash removal and sanitation is nonexistent. At this point it becomes a health issue.

Then after the tragic Las Vegas shootings, Congress is contemplating tougher gun control laws. Criminals don’t shop at gun stores to purchase a weapon; honest law-abiding people do. There is no law we can pass that will stop someone from repeating what just happened. Almost everyone is entitled to buy a gun, if they do it before they break any laws. People are not born killers, but a law will not stop someone from killing if he is willing to die in the act. All gun laws do is process people into the jail system after they have fired their weapon (if they do not take their own life). Laws do not prevent bad behavior, they only punish it.

With these two examples, you might arrive at the conclusion; Congress believes that there is an obvious legislative solution to all of our problems. Of course, some problems solve themselves. 20 trillion dollars of national debt kind of explains why cigarettes went from 25 cents a pack to $10 dollars.

“Give the rich a tax break,” sets the Democrats ballistic. The bleeding hearts think the rich are obligated to foot the bill. At the same time, I haven’t picked up a newspaper reporting that someone in this country starved to death for any reason. I would bet that more than half of the people in this country on food stamps are severely overweight. Food stamps offer people the cell phone and cable tv option. But I digress.

Congress-i-anal stupidly assumes that low income people will spend their food stamp allotment and other monies on their kids. Not quite. But when anyone wants to change a program, it is pointed out that it is the kids that will lose out. The kids are used to earn more government handouts and believe me, the kids are the last ones to receive any of the trickle down from this. A 12 pack and a pack of cigarettes is $28.00 and the kids don’t get to drink the beer or smoke the cigarettes. They grow up eating macaroni and cheese with an occasional hot dog and some Kool aid. As a kid, I knew some of these kids, they would marvel at our refrigerator when they came over, it had food in it!

Reality is out there, it just depends on how your mind colors the pictures. Government should not be there to fix our problems, but rather to pay the bills.

California is the land of half million-dollar homes, and a climate that lends itself to the homeless on a $3,600 a year budget. Food stamps, a cell phone and a surf board, what a life!

Governor Jerry “Moon Beam” Brown will probably even get them registered to vote to boot. And then there is marijuana legalization. That old biblical story of Sodom and Gomorrah comes to mind. The Democrats have started a party that even Harvey Weinstein might want to attend/fund.

Monday, October 02, 2017

Restaurant Menu Prices 1938

Here is a reprint from four years ago for some of you that might have missed it. This was during the Great Depression that was already into its 10th year.

I was searching through some picture albums of my parents from way back and ran into some restaurant menus  from the depression era of late 1930's.. The first 3 pictures are from the Manhattan  Restaurant


The Second menu (three pictures) is on the Union Pacific Railroad from 1937 somewhere in Wyoming.

This last menu is from the Hotel Windermere in Chicago 1937.

Double click on the images to see what the prices were back then.   Did you notice that the Manhattan offered a broiled (Whole) lobster for 65 cents?  In today's world, you'd be lucky to get half a lobster for $30.  Bear in mind, the people that read these menus in real time are probably dead by now.

The pay raise that everyone gets each year because of inflation is just an allusion. Look around, the new hires are starting out a few pennies less than what the seasoned workers are making.  The neat thing about inflation is that Congress doesn't have to raise the tax rates, you earn more, you pay more.  That's the real difference between the Democrats and Republicans; print as you go verses pay as you go.

The real odd thing is that the average person does not connect the dots. The relationship between government spending and inflation does not exist. Rumor has it, we've always had inflation-- I guess we're supposed to get used to it.  My wife bought a new battery and asked me to guess how much she paid for it, and I said $40.  Her answer; "That's the price you would have paid 20 years ago, the battery was $100."

Let's see,(from top menu third pic red part) I'll have the broiled lobster with coffee and a slice of cake--that's about 85 cents total, plus 15 cents for a tip.  The trouble is, 76 years of inflation have raised the prices a tad.

Saturday, September 30, 2017

Taxing the Rich

The Democrats always cry tax the rich. Think about it for a minute. Say you have 20 million in the bank. That qualifies you as rich. Assume you have already paid tax on the accumulated 20 million, you leave it in a shoebox, it cannot be taxed again. However, at the current interest rates, 1.5%, you will get about 300,000 in interest over a year. This is taxable. At 33% tax rate, the person owes 100K in taxes if he isn’t in a rest home.

From a realistic point of view, the rich are not stupid enough to sit idly by while their bank accounts are milked, they are the ones already paying about 80 percent of the taxes. Irritatingly enough is the fact that 50 percent of the population pays no income taxes at all--- because “they don’t make enough money.”

The misleading statement that gets me from politicians is: “We do not need to give the rich a tax cut.” Where is the logic in this? Non-productivity is rewarded with no taxes and excess productivity is rewarded with more taxes. Kind of smacks of socialism. The guy who holds two jobs and works 16 hours a day is taxed at a higher rate than the guy who works the same job eight hours a day.

Poor people are entitled to more benefit than the middle class because they are poor. And if you are a minority, these benefits are god given rights. And guess what, if you are here illegally, you and your kids are entitled to benefits that I as a taxpayer have to pay for.

The voter cannot distinguish between the rich and the high-income earner. They think they are one and the same. These high-income wage earners are sports players, owners, doctors, Singers, various stage artists. So, tax the rich? What does that mean? If you earn a million dollars or more and get a W-2 form, they are going to tax the hell out of you. Of course, if you are a small business, you write your own W-2. Neat huh?

A doctor might form an LLC (limited liability corporation) and have his earnings dropped into that, and pays him\herself 30k a year. Naturally, the LLC picks up the mortgage payment on their home. So, they pay taxes on 30K. Not bad.

What we really need to look at, is the fact that the government doesn’t get a true estimate of earnings when the employer is the owner of the business. Look to Greece where there was a pool tax and only 5% of the population reported owning a pool, when the correct percentage was 95%.

What’s really happening, Congress is printing billions of dollars to pay for programs that there are no funds to pay for. Taxes collected verse tax money spent has no real correlation to reality.

The real question to ask, if taxing the rich is so successful, how come the national debt is now 20 trillion dollars? At what point does the debt amount become absurd? The answer to consider is that this borrowed money came from real people like you and me. We spent 40-hour work weeks saving for that rainy day and future retirement. And the government borrowed the money. The return of the physical paper money is not in question. What it might buy in the future, is what you need to consider.

Just a reminder, The Great Depression is now in its 11th year.

Monday, August 21, 2017

The Silence before the Collapse

Federal Reserve debt 4.5 trillion, national debt 21 trillion. 2.7 trillion in government bonds to Social Security. Figure about 30 trillion the government has borrowed and issued paper for. Then spent it.

Imagine that you have 10 billion in the bank. What you need to realize is that you have no way of realistically spending it. So, in this case, we have a person well off, that doesn’t need the extra dollars in his account. From an economic perspective, the money does not exist, because there is no opportunity for the owner to spend it, the sum is so large.

This 10 billion cash savings from one person represents a small portion the future buying power of deferred consumption. Count the total amount of funds involved for all the rich, the amount could be quite substantial. Since the inclination to spend it is absent, inflation remains low and plenty of product remains on the market. The extremely rich are holding on to dead money that will never enter the financial system to generate inflation. So, the government is happy with the rich getting richer, no appreciable inflation for just that reason.

Naturally the drive to get richer involves the rich as a group to suck more money into their grasps. The government loves the idea. A real millionaire in 1960 could buy a house and a car every year on the interests of 30,000 generated a year. In today’s market, 10 million dollars in the bank might generate 30,000 a year and might buy half a luxury car. To be wealthy today, you need to be a billionaire. Cigarettes have gone from 22 cents a pack in 1964 to 100 dollars a carton today.

This pretty much explains why schools don’t offer much education that revolves around the concept of inflation. Even if they did, it would do no good. Everything an 18-year-old wants to buy has always been that price. They have no historic memory of price. The funny thing is, for the super-rich, it is the same concept. Even though one zero drops off of their buying power because of inflation, they don’t see it. But in reality, the 10 billion has lost 90 percent of its buying power over the last 20-year period.

The cumulative savings in this country for retirement have increased dramatically over the last 10 years. An awful lot of individuals realize that they didn’t save enough to retire comfortably and are saving a lot more. They are now working longer to make up the difference. This too, decreases consumption and keeps inflation lower that it should be.

Some people argue that this game can go on forever. And I do not think it can. From 1960 to 1990 we lost a zero on buying power vs money in the bank. Then we lost another zero from 1990 to 2010. The thing to notice is that the gaps are getting shorter in time. I think it foolish to say that the next zero drops off in 2020. The progression of 30 years to 20 years to 10 years makes too many assumptions.

Once the rich realize that they are losing a zero (90% of their purchasing power) on their net worth over a 10-year timeline, there will be a very significant switch in asset allocation.

The investment model has to change. Compound interest is no longer the 8th wonder of the world. The rule of 72 where you divide your interest rate at the bank into 72 gives you the time it takes to double your savings. That kind of sucks when one into 72, returns 72 years. Compound interest at that interest rate will not make you rich.

So, with today’s back of the envelope calculation, 100,000 in the bank for 10 years will lose one zero in buying power. 10 years from now, you’ll have the purchasing power of $10,000 to $20,000. You are looking at 9 percent inflation per year. In reality, the bank should be paying the inflation rate plus 2.5 percent on savings.

You might disagree with everything above, but there are two things we can agree on. If there was a shortage of funds to borrow, interest rates would have to rise. And you cannot force people to borrow money. What you can conclude from that is there is a hell of a lot of dollars looking for an investment and surprisingly they are satisfied with the interest rate offered. Economically that puzzles me.

The other factor that bothers me is the spread between junk bonds and Treasury’s. Its 4 percent. It portends that every loan transaction is a viable and fungible event with a very high bond rating. More than likely, an older person is looking for the highest rate of return to keep from exhausting his retirement fund. The poor guy probably thinks triple D is like a bra size, very desirable. The small spread implies that there is very little risk in the market.

We are at a point where we have tremendous wealth and tremendous debt and it is kind of a zero-sum game. People are looking for a stock market crash, but it could be different this time, it could be an electronic credit and debit card crash that the structured internet cannot handle.

This could play out in the coming months. October is the month to watch, that's where the action has been in the past.

Friday, July 07, 2017

More Taxes Create Problems

Tax cuts for the Rich and 20 million people will lose their health care coverage. The headline kind of makes you wonder. If they repeal Obamacare, this is the declared outcome.

For some reason, it doesn’t hold water. A tax cut for the rich means they’re going to be taxed at a lower rate. How can 20 million people lose a benefit if they paid for it? If they didn’t pay for it, now that’s a different story.

When you lose a free government benefit, a taxpayer had to be paying for it. So, giving the rich a tax break limits the amount of largess the government has to spend on those who are broke. I get upset when I realize that food stamps allow a family the ability to have a cell phone and cable TV. Of course, you don’t see it from the kid’s side, “milk toast for breakfast and hot dogs and macaroni and cheese for dinner” every day until you graduate high school or run away from home. Many states have renewed the work mandate for food stamps that Obama ignored, and it looks like there has been a 50 % drop in food stamp applicants.

Notice how there is contempt projected from our Congressmen for giving the rich a tax break and how there is the implied request for sympathy for people who stand to lose their coverage. Your Congressmen mentally weights the issue and comes to the conclusion, “By God I want to get reelected!” and this should do it.

A new mind set is in the mix. The one issue voter. Guns, gay rights, black lives matter, abortion, save the earth, health care, etc. are gone. The Christian religion appears to be the new touchstone of American politics.

In the last election, the tables were turned upside down. The rich were represented by the Democrats as were the poor. Kind of a confusing mix. Big business and socialism don’t mix. On the other hand, the Republicans lost the Rich and gained the middle-class voter who felt that they were being neglected because of all of the special interest groups. I don’t think that it will be politically incorrect to wish someone a “Merry Christmas” this year.

The big thing to notice that just happened is the passage of the Illinois State budget over the governor’s veto. The state will increase the state tax rate about 32%. Another way of stating it, is that the present rate for individuals rises from 3.75% to 4.95% and businesses rise from 5.25% to 7%. The problem here is that you will be paying more and receiving even less in benefits than before. This is what happened during the great depression. States and Municipalities raised taxes expecting to increase their tax revenues. The net result, tax receipts declined, it was the exact opposite of what the legislators had expected. People voted with their feet and moved.
If you go back to President Eisenhower, we had a tax rate on the very rich of about 80% and it generated very little tax revenue. Rich people then were not stupid, they bought stocks and paid 15 percent in capital gain taxes.

In today’s world, governments need to live on more realistic budgets and that is just not happening. Reality is starting to settle in. When your police force or fire department pull up for gas in Illinois, it is cash on the barrel head no state credit cards accepted.

So here is what we can conclude. 20 million people on free health insurance is not even feasible in any government budget. The assumption that raising taxes will increase the amount of tax collected is false. The opposite is more likely.

The neat thing about states that run out of money is that there are no bankruptcy laws to expunge the debt. States can’t file for bankruptcy so you could have a long wait, to get paid. I believe that Missouri just recently paid off a delinquent state bond issued 120 years ago.

Where to from here? It is kind of one of those questions without an answer. We borrowed too much and have no way to pay it back. The 1964 dollar has gone to a dime, inflation wise. I guess the 2017 dollar will also go to a dime and if my math is right, that’s a 1964 penny.

“A penny for your thoughts.”

Saturday, June 17, 2017

Press Politics

I’ve been watching the news since the Trump election and marvel over all the leaks. It looks like anyone in Washington that says something, is taped. Every cell phone is monitored. Every foreign diplomat meeting is recorded. That doesn’t bother me much, but the leaking of what was said, violates all sorts of trusts we build up with other nations.

The only thing I can conclude, is that you say nothing, and use no electronic devices, while in Washington D.C. Under no circumstances, discuss anything in the White House, unless you want it in the paper the next day. That is a pretty sorry state of affairs.

Lately, a lot of the newspapers have been writing news citing anonymous sources. Their sources are rather suspect and or non-existent. Today I was reading the morning paper about the Muller Inquiry. The paper quoted said “Five people briefed on the requests, who spoke on condition of anonymity because they are not authorized to discuss the matter publicly,”—bla bla bla. Five anonymous people makes the newspaper’s story line creditable? Let me guess 6 people in the room and Trump is one of them.

On this investigation of the Russians and Trump by a privately appointed prosecutor, where are the supporting leaked documents? We know when the conversations occurred and with whom. It’s got to be either the CIA, NSA or the FBI that has the document. It has already been released to the press, why can’t it be subpoenaed? Irritatingly, no documents have been produced. I would figure that even if there was nothing indicating a crime, the document should have a physical presence as the newspapers claim.

It’s kind of tragic when the news is reduced to fictional anonymous sources. It kind of remind me of the Orson Wells broadcast of years back. Here is a quote from

On Halloween morning, 1938, Orson Welles awoke to find himself the most talked about man in America. The night before, Welles and his Mercury Theatre on the Air had performed a radio adaptation of H.G. Wells’s The War of the Worlds, converting the 40-year-old novel into fake news bulletins describing a Martian invasion of New Jersey. Some listeners mistook those bulletins for the real thing, and their anxious phone calls to police, newspaper offices, and radio stations convinced many journalists that the show had caused nationwide hysteria. By the next morning, the 23-year-old Welles’s face and name were on the front pages of newspapers coast-to-coast, along with headlines about the mass panic his CBS broadcast had allegedly inspired.
What bothers me, is that an awful lot of people believe whatever they see in print or on TV. I was a long-time subscriber of “The Economist.” During the election, the magazine was a political pulpit for Hillary Clinton. I didn’t agree with their political message, but it was only then, I realized this was not a magazine dealing with economics. They lost a subscriber.

It appears that the news organizations are trying to bend the news with a definite political slant. It makes no sense; the election is over. I can only guess that their subscriber base is mostly Democrats and/or the papers are owned by Democrats. In the past, newspapers were not dumb enough to enter into the political arena for one reason, it would alienate half of their subscriber base. Your subscriber base determines how much you can charge advertisers.

I am not sure where the level-headed people go from here. Can you selectively read or view what you deem non-political in nature, without developing a bias? I was watching FOX news the other night and a 27 story building was on fire. What do they do? They split the screen, the fire on the left, the program on the right and went on with their political discussion.

I guess that no one told the Democrats that they lost the election. When you lose an election, you hand the reigns over to the other party, and it doesn’t look like they are doing that. It kind of looks like the Democrats are searching for that [White/Black/Asian/Hispanic/GLBT] (pic one) knight in shining armor to come and rescue their country from the Evil Republicans. The grim reality, no more free stuff, go out and get a job.

The good thing is, with all of this "political news," no one has to lie about how great the economy is doing.

Wednesday, May 31, 2017

The Budget

Trump put out his proposed budget and Bernie Sanders had this to say about it:

President Trump's budget is morally obscene and bad economic policy. It will cause devastating pain to the very people Trump promised to help during the campaign. At a time of massive income and wealth inequality, when 43 million Americans are living in poverty and half of older Americans have no retirement savings, we should not slash programs that senior citizens, children and working people rely on in order to provide a massive increase in spending to the military industrial complex. Trump's priorities are exactly opposite of where we should be heading as a nation.
The words “morally obscene” is a very peculiar in its descriptiveness. His choice of words, demonstrates his political adeptness at sodomizing the voter’s mind with an intangible abstraction.

43 million people are living in poverty. That’s about 13 percent of the population. You will not starve to death, on food stamps, but you could die of type two diabetes from being severely overweight. For what it’s worth, a lot of people work in the underground economy pay no income taxes, so they automatically fit the government’s profile for poverty. The neat thing about food stamps, is that it frees up money for cell phones and cable TV.

Half of older Americans have no retirement savings. The sad fact is that most people don’t feel old, so they put off saving for retirement. Reality clicks in about age 55 to 65 and then you realize that age snuck up on you. You were young and vibrant even in your 50’s and proud that you didn’t show your age. Reality and your age meld, and you realize that you haven’t saved a dime. Social Security isn’t going to provide the lifestyle you had in your dreams for retirement. Your new retirement reality, is sitting in a rocking chair watching TV reruns until you die.

The Federal government’s job is Defense of the country, protection of its citizens, and regulation of trade and commerce. The fact needs to be realized, we can’t have everything we want from government. When a lawmaker attempts to cut a program, some bleeding heart brings out a pregnant woman or a couple of very young kids.

There is a general disconnect between the taxpayer and what the government spends the tax dollars on. You have paid what you were assessed in taxes and assume that all of the bills will be paid. The bills will get paid, but with borrowed money. The taxpayer wasn’t given a true bill for services to be rendered. This concept eludes 95 percent of the voters. So, getting reelected is no real problem. You just have to prove to your constituents that you voted for "Save the whales" and Bill Gore’s "Green earth programs."

This uncontrolled spending by the government, is increasing the rate of inflation and ruining the savings of our nation. It is a tax on your savings for retirement. California Democrats looked at the idea of a single payer health insurance and came up with sticker shock. The cost of the program would run about 400 billion a year for the state. The current budget is only 175 billion. Common sense suggests that estimated cost doesn’t attempt to cover those here illegally.

When you examine the Congressional problem of financing the budget, the real question isn’t "where do we cut?" Rather your Congressman is mentally thinking “What benefits can I give away to get reelected?” It’s a little like sitting on the limb your sawing off of a tree. It works until it doesn’t.

Saturday, May 13, 2017

Obama Care Vs Insurance

Universal free health care, what makes it free? If you can afford to pay health insurance now, you know the free market cost of it. Imagine if you also had to cover the premiums of someone else who could not afford to pay for it? Add the fact that a government plan doesn’t have to be concerned with making a profit. This would destroy the free market concept of health insurance. You only need insurance to protect you and your family from an unexpected event.

People need to know the terms of what is being tossed around.

Insurance is a form of family financial protection, planning for the anticipation of a future event. The cost is determined by the likely hood of the event occurring among insured participants. You have many options that allow you to select a price you can live with.

Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).

Medicaid provides health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults and people with disabilities. Medicaid is administered by states, according to federal requirements. The program is funded jointly by states and the federal government. If you are bed ridden, very old, broke and need a rest home, this is where the money comes from

Obamacare is a health care plan that does not deal with insurance. It is a group plan that pays the cost of treatment for a group of people that may be very sick who have very little money to pay for health care maintenance that they need. The Government draws its finances from the group of people between the age of 18 and 65. Most people between the ages of 18 and 45 are never sick so, the premiums are nothing more than a tax. The group between the age of 45 and 65 are those that didn’t think they would ever need coverage, that is until something serious happed to them.

Notice one thing, without Obamacare, Insurance, Medicare and Medicaid covered all health care. There was one problem, the government ended up paying for those who couldn’t pay for their treatment. And who’s the government?--- you and me, we pick up the tab--our tax dollars.

With Obamacare, the net desire of the Congress was to double their tax base. A $4,500 health care charge for every working person in the US would not be considered an income tax, but rather an employee benefit surcharge like social security. You get to pay for your benefits in advance of using them. This could have raised between ½ trillion to about a trillion a year. This is what the Democrats are so mad about, the loss of a new tax source that never got fully operational.

You’ll notice that the Democrats blend Insurance, Medicare, Medicaid and Obamcare all in to one package when they talk about it. This is kind of like inserting an egg beater inside the average voter’s brain. A scrambled egg doesn’t have the symmetry of a poached egg plus the process is irreversible, the voter at that point cannot separate out the blended parts. Obamacare will destroy the insurance industry, because it eliminates the sharing of the risk, there is none. The government has no profit motive, and doesn't even have to worry about costs. An insurance company cannot compete against that sort of financial organization.

President Trump is not trying to get rid of Medicare, Medicaid or insurance. He wants to kill the government tax plan built around health care. Government has no business being in health care, they don’t have a bottom line to meet. Competency is not a job qualification. What we have to realize is that government is grossly inefficient. The private sector can always do a better job. The maddening thing is that Congress will take the money collected for health care and spend it on something else. Just like they did for Social Security.

Remember how you used to save for a vacation or a new car? Imagine $4,500 coming off the top of your paycheck every year. I remember being young and poor; health insurance wasn’t on the list, ahead of the wheels I could barely afford. It was about the age of 55 that I started seeing a doctor. Half of the people in this country have never been to a dentist; figure that one out. Your teeth will fail you way before age 50 without proper care.

I digress, but think about it. Real health insurance is not a government program. "Free health benefits" is story you tell your kids at night to get them to go to sleep.

Sunday, May 07, 2017

A Modest Proposal

It sounds so lame when Democratic Congressmen whine that the proposed tax cut is a tax cut for the rich. 50 percent of the people in this country pay no Federal income tax. We can be pretty certain that the other 50 percent pays all of the taxes. 10 million cash in a bank, doesn’t raise the sort of tax money this “tax the rich” concept is selling. Figure 200k in interest nets about 40 thousand in taxes. Thousands of immigrants have made their money elsewhere in the world and have moved here to enjoy our freedom and their untaxed wealth, without the burden of paying taxes.

Giving the rich a tax break means less money for the largess of Congress. It is really immaterial if we give a tax break to the rich. We are already spending twice as much as we collect in taxes. The rich pay twice their share because the poor pay nothing. How about a voting law; you get as many votes as dollars paid in taxes. This would give the taxpayers a say in their government. You pay a million in taxes, you get one million votes. You pay nothing, you get one vote.

The rich could buy the election, but at least they would get a say on where their tax dollars are being spent. And it certainly isn’t free drinks for everyone. Our current voting system favors those who want to distribute free government benefits. Bernie had the right name for it, Socialism.

Tuesday, April 18, 2017

Stupidocracy, the evolution of U.S. Democracy

In today’s world, Democracy has as many different meanings as there are people. Many may feel a common bond by sharing the perceived concept of Democracy, but each and every one of them has a different definition of the word.

Democracy’s don’t arise out of the ashes of dictatorship. In Syria, there is the move to remove Assad from power. It’s a little like telling the everyone in the US post office that they are fired. At that point, you have destroyed the infrastructure that delivers the mail. No big deal to appoint a new Post master, but that’s not going to put mail in your mailbox. We have destroyed several leaders in the Middle East, that had no religious agendas: Idi Amine, Saddam Hussain and we expect Democracy to flourish in their absents. Religion is the only remaining social institution in the Middle East, no wonder Islam flourishes.

Our Democracy got started by a group of wealthy people tired of the English rule of our land. They already had money and power. In today’s world, Democracy is not a goal of those seeking power. They want to get rich. Military power leads to wealth. So, when you destroy one dictator, you create several people vying to succeed him as the new boss. Pass out the purple ink bottles and let everyone vote. Ah yes true Democracy.

The liberal citizens of the United States believe every country should have Democracy. Of course, after listening to Congress, I’ve come to the firm conclusion that this country needs a dictatorship to set itself straight. Free speech is drowned out by riots and protests, whenever an event is scheduled to occur that is considered “not worthy.” Just what are these people scared of? When I was in college, I didn’t give a damn about campus speakers, I was too busy having fun with my friends in my spare time. All I can figure is that there are “townies” that want to influence what is done on a college campus. In my college days, most controversial speakers only got about 20 to 30 people to attend their lectures. Why do we have to have masked rioters shutting down a schedule lecture? It makes absolutely no sense.

We have a backlash of neo Nazis that think they can project their views of the world on us by protesting. Notice that they are masked in many cases (reminiscent of the white hoods of the KKK). Their agenda has nothing to do with free speech, but rather the ability to prevent speakers from addressing an audience. I have to question what they consider inappropriate speech. It sounds like in their opinion; the general populace needs to be guided to come to the proper view or perspective.

Democracy has a new meaning “Protest until the majority agrees to meet your demands.” If and when they do, the incentive to protest more vigorously, increases. Buy you bull horn on

Some of us are tired of the protests. Governments can pass a law to raise the minimum wage to $15 per hour. The net result, a robotic system to cook hamburgers. Protestors win their protest, and the government loses their tax base, robots pay no taxes. It’s a little like rent control in New York City; only a nuclear bomb could do more damage.

Two thoughts to muse over; be careful of what you ask for, you just may get it. And the second, the road to hell is paved with very good intentions.

Here is a quote from a Frenchman Alexis de Tocqueville who toured our country in the 1850's.
"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money."
Look him up, he is a good read.

Sunday, March 19, 2017

Political Thoughts to Ponder

Why does taxing the rich seem so righteous while taxing the poor seems unjust? In ancient Rome, every man owed a month of labor to the State each year. There was no discussion of not being able to pay the tax, but there were discussions on how to buy your way out of it, like hiring a laborer to do your month.

The other day on the news I heard one commentator express their dissatisfaction with giving the rich a tax break. Imagine giving a rich person who pays a million dollars in taxes a 100K tax break. What is wrong with that? Give him a 10% break, and make him feel good. There ought to be some point to where there is a maximum tax on earnings. Put it at 5 million dollars limit on taxes over a lifetime for every taxpayer. Congress has the power to tax, so we know that will never become law.

Then the talk about health insurance. I hear claims that 14 million people will lose their coverage right away. My guess is that these are people under the age of 35 for whom the government mandates have insurance. The health insurers may feel that they have lost 14 million meal tickets, but there is no massive loss of coverage by repealing Obamacare. Most were forced to buy it and they didn’t want it to begin with.

The part of Obamacare that is not insurance, is for previous conditions. If you were too cheap to buy health insurance when you didn’t need it, and now you wish you had it. Or if you feel the emergency room is your free health care provider, then we are talking Obamacare. This is not insurance, insurance is bought to protect you or your family from a future unexpected financial loss.

For most people, going to the ER, is financially painless; they bill you. Many ER units all over the country are closing, they are financially unprofitable and are operating at a loss. I went to the ER one time and after a 6 hour wait got treated and the bill was humongous. I’ve also gone to an Urgent Care unit, and got immediate treatment (after I gave them a credit card). Cost was reasonable. Quite a difference.

Donald Trump has the votes to repeal Obamacare, but might not have the votes to modify it. Kind of makes you wonder. Do we really need government bureaucracy in health care? Think of one thing that government can do better than private industry? The only answer you’ll get is: “Spend more money and get less value in return.” Our government doesn’t make airplanes or hand grenades for a very good reason, the quality would suck.

I remember sitting in a dental office 40 years ago, for a filling, and the dentist came out into the waiting room and ask this hippie to open his mouth. He told the guy that it would cost $250 to fix his tooth and if he didn’t have the cash, he wanted him out of the office because he was tired of working for free. The guy left. I was his next patient and the VA was paying for my work. I don’t like to go to the dentist anyway, and all I could imagine in my mind was a filling in every tooth whether it needed it or not. It turned out OK, two fillings, my imagination is my worst enemy.

The politicians are pandering to the masses. They point to our kids and tell us that we need to do more for them. Food stamps and school lunches allow family resources to be spent for other items like Beer, Cigarettes, Cell Phones, wide TV’s, Gambling and Cable TV. I went to other kids houses as a kid and was confounded when they opened the refrigerator and you would see: two cans of beer, a package of hot dogs and a half gallon of milk and nothing else—no munchies. My parent’s fridge had so much stuff in it that you might not find what you were looking for without spending a lot of time moving stuff around.

The new mission statement in town (i.e. President Trump) is to spend the “average” taxpayer’s money more responsibly. The key word is “average.” These taxpayers want government without the “free ride crap.” You might call it tough love, but they do not want to pay for Welfare Freddie’s 12 pack of beer and cigarettes. The new focus IMHO is on showing the average tax payer that they can expect a better return of value on the taxes they have paid. Of course, if you are a Democrat or a Socialist, this is utter hypocrisy.

Saturday, March 04, 2017

The Economic Conundrum

If I have it right, government interest rates are around one half of one percent. The banks are paying the same. When you examine it, why in the world would anyone put money in a bank for retirement? The incentive is not there.

Then at the same time a homebuyer can purchase a home with little down and at an interest rate of 4 percent for 30 years. With core inflation at 2 percent (by government accounting calculations), the banks are netting about 2 percent on a home loan. Do you wonder where the banks get the money to loan? Individual deposits are considered by the bank as short term accounts, while home loans are long term commitments. As rates rise money moves to the higher interest rate, like it did in the 1990 and brought about the Saving and Loan collapse.

My experience with age, shows the home I grew up in rising from $27,000K in 1964 to 125,000 in 2004. A brand-new car in 1969 was $3,000 and in the year 2000 about 20k. And I can bore you with cigarettes at 23 cents a pack in 1962 and $4.50 in 2000.

CalPERS the California Public Employees Retirement System has lowered their estimated return to the retirement fund this year from 7.5 percent to a projected 7 percent over the next 3 years. The Mercury News claimed that they are lucky if they are earning six tenths of one percent on their investments. The state of California has to make up the shortfalls for the pension fund which is around 100 million this year. The trouble is, the accountants misplaced a couple of zeros that could bankrupt California’s budget.

Then we have the Fed raising interest rates. With a national debt of 21 trillion dollars, a quarter point increase in the interest rate increase jacks up the governments annual interest payments by about 52 billion dollars. The yearly budget for California is a little more than three rate hikes. We are not talking nickels and dimes here.

What can we discern from all of the information presented? We can probably infer that in 40 years everything will have increase in value or cost by a factor of 10 and maybe higher to even 20 times its cost today. Calculated inflations rates will be hopelessly grossly understated because of Congress linking benefits to the rate of inflation. Our interest rates will be determined by the government’s ability to make the payments on the national debt. Rates higher than 8.5 percent make our government insolvent.

Our retirement income programs are in a horrible state with the very low interest rates that have been experienced over the last 12 years. Their failure was the inability to see the Fed’s pushing interest rates to zero. All sorts of insurance companies are at risk here also. The interest received on premiums held by them, helped them give you a better deal on car, health and life rates. And that’s gone away.

Here is where the conundrum lies. The rule of 72 says that if you divide the interest rate into it, you get the number of years for your dollars to double. Right now, that is 144 years. My rule of inflation, states that the cost of everything will increase by a factor of 10 in 40 years and you can bet your bottom dollar on the certainty of that happening.

It is pretty easy to guess that all sorts of taxes will increase. A majority of if will be in the increased cost of the item. Also, look for a decrease in welfare payments; nothing in, you get nothing out. In turn as wages increase, so does the amount the government collects in taxes.

We cannot wait 144 years for our money to double, so the bank and retirement options are toast. Can we wait 40 years for the cost of everything to rise out of sight? Yes, and we even might be around for another 20 years to really enjoy its effect over our wonderful golden retirement years. Tragically it’s about that time that you will realize that old people are invisible; either that or they have all died off and I wasn’t informed of the fact.

The big picture: our financial system was built and modified enough to fail miserably sometime in the near future. Telling anyone will not stop it from happening, but later on in life when they issue you a tube of Preparation H, a tube of Denture Grip and a rocking chair, you will know I was right. You will be “Rockin 'round the Clock,” having no memory of what was done to you financially.

Tuesday, February 14, 2017

Famine the Unanticipated Catastrophe

People assume that famines are caused by a poor growing season. This is true in agrarian societies where everyone farms. However, a financial world banking catastrophe could lead to the same result; where starvation occurs from lack of funds to purchase food. Also, we may be fast approaching a limit where food production can’t keep up with the increased population. War in the Middle East, is curbing a lot of farm production, which is leading to starvation for many.

And then there is global warming. Once the North polar ice cap melts, the Gulf Stream ocean current could change its direction a tad, making Eastern Europe too cold for food cultivation.

A famine could affect a large part of the world’s population. We are at a point now, where bad weather, financial instability or political instability, could determine who will live or die. A nuclear skirmish in a quest to grab resources, could make food very scarce in some areas.

The next famine will not be anticipated. It may be an economic or financial disaster that triggers it. When it happens, the logistics of transporting food to those that need it could be very hard to accomplish. Imagine a high-density population area like India, where many are already at starvation levels and barely surviving. This could be the end of the road for them.

Without the means to purchase food, life is a real struggle. Most of us are not in a position to grow and produce the food we need; we pay others to provide it to us. Those in the third world who are starving to death slowly, could be the medium for new super diseases that the rest of the world will have to deal with in the future. It is this group, with very weakened immune systems, that could be the incubator for a future plague far worse than any war imaginable.

The funny thing is, the third world was our source of cheap labor. As our economy slows down, the funds that made life possible for them will disappear. That thought worries me. A hungry mountain lion is not going to knock on your door and bargain with you over the price of its next meal -- your pet dog in the back yard.

Thursday, February 09, 2017

The Peanut Butter and Jelly Sandwich Mindset

Making a peanut butter and jelly sandwich isn’t hard, I don’t think that an instruction manual was ever requested by someone desiring to put one together. One day at work, I thought aloud and mused as to how much jelly would be considered too much when making a sandwich. No one really commented, but I got the feeling that many of my associates, thought I was not playing with a full deck.

You make the sandwich put it in your lunchbox and eat it at work without a second thought. If someone asked me how I rated the sandwich, I’d probably look at them sideways and think they were being funny. PB&J is not an exotic expensive lunch.

Let’s do the impossible, add politics to a peanut butter and jelly sandwich. Nancy Pelosi and Donald Trump both make a PB&J. We know from the start, that both will complain that the other sandwich has too much or too little of one or both ingredients. Neither one will like how the other’s sandwich was constructed. One will want to create a bureaucracy to regulate how the sandwich is made. The other will be against government controls on sandwiches.

So, when you turn on the news, and they have a Republican and a Democrat discussing the issues, you already know each side’s argument. It’s all about that peanut butter and jelly sandwich. There is no real skill in making a peanut butter and jelly sandwich. The real skill, is to not run out of peanut butter, jelly or the bread to put it on.

Wednesday, February 01, 2017

Our Political System is in Shambles

When Obama won the election in 2008, I felt a loss, my party had not won. I lived with it for 4 years never protesting, and I noticed that most Republicans did the same. Obama came up for re election and won again and I lived with the loss even though I severely disagreed with everything he was doing.

In the last election, my candidate won over all odds. It hasn’t even been two weeks since Trump has been in office, and there are protests over every little thing he does.

Everyone that is a Democrat has an opinion that they believe that they have to enlighten the listening public with. They can’t sit still for this injustice and have to protest. The trouble is it is getting just as bad on the Republican side. They also have an opinion that they want to broadcast to the listener. I can point out the obvious. Everyone is talking, but nobody is listening to them, they don’t understand that.

The Republicans gave the Democrats 8 years of no protesting. The Democrats have given the President his first two weeks of nothing but protesting.

I would suggest that the people in the street protesting Trumps election, are the Fascists. If you are against immigration, you are perceived as unamerican. Of course, if we go back to pre-world war Germany, if you weren’t against the Jews, you were NOT considered a German patriot by the protesting masses. It was the people NOT in power, that wanted to dictate, the values the Democracy was to hold sacred. And we know how that turned out.

We have a new President that has been in office two weeks. My question, what has happened to the Democrats in Congress? They think that the end of the world is near with the election of Donald Trump?

I took a double blast of Obama for 8 years and the world was on a normal turn of events every day of his Presidency. Now we have President Trump and a bunch of Democratic Congressmen and news commentators that think the United States is in a horrible mess because of this transition of power. I question their judgement, only because, I accepted the last 8 years of a Democrat that I considered a complete idiot.

Where we go from here, is an open question, but I think we need to give President Trump more than two weeks to arrive at a conclusion.

Congressman Schumer is the sort of idiot that need to understand that they don’t give Congresswusses an Emmy for crying on TV. Forgive me, I have digressed.

Let’s give our new President one year, and then voice an opinion. Why do I think that this will not happen? Ans: Democrats want it their way or the highway. A fine way to define Democracy!

Sunday, January 22, 2017

Sore Losers

The peculiar reception by the Democrats of Donald Trump becoming President (the out of whack protests) gives me pause to think that the transition of power is one that will shift accountability into a new peridium. The Democrats (Socialist) are pissed, the free lunch is over. It’s no longer food stamps and health care; now you make a choice, food or the cell phone.

Smart government can get to those gaming the system. Many have been taking advantage of government programs too dumb to manage themselves. You can’t blame the people that take advantage of the free handouts.

The real issue here, is that the “Old Democrats” who lost are Socialists and the “New Republicans” are Democrats with more of a bias towards big business. In this morass, the Democratic party has no idea of why they lost, and in reality, they didn’t. I’m not going to enlighten them, that Trump is a Democrat.

A nest of hornets has been stirred up,the Socialists (AKA Democrats)and it will take time for them to calm down. My only worry, I think I can safely confirm that half of the voters in this country are too incompetent to have the right to vote. The good thing is that most of them didn't vote, they just protest after the fact. Real freedom to them, is the ability to wet their pants when they feel like it and I can't argue with that logic.

Sunday, January 08, 2017

Back Soon

Happy New Year Everyone.

I haven't given up posting, we bought a home in December and have been moving into it, the last 3 weeks.

Right now, I have a tendency to fall asleep if I sit down. I should be back to par next week.