What's In Store For The New Year?

We have a Congress that can’t seem to get anything done. And the funny thing is if they do nothing, all of the previous laws start to expire. It reminds me of Cinderella at the ball with the prince and the approach of Midnight. In this case, we get the pumpkin.

Remember the Bush tax cut passed in 2001? In the house, 211 Republicans and 28 Democrats voted for it and 153 voted against it. In the Senate, 12 Democrats voted for the bill as did 45 Republicans. Two Republicans McCain and Chaffee voted against it with 31 Democrats. Bush signed it, no big deal. Now, today just trying to extend the tax cut has become a herculean effort. If you examine the Congress of 2001 and today’s Congress, they’re pretty comparable. Rumors have it, that Obama has said “My way or the highway.” It tends to support the idea that the square cog in the gears could be Obama as far as getting a deal in place.

Some mutton head decided that we needed to spread Democracy to the Arab world. I look for Syria’s president to get the Noble Peace prize this coming year. Egypt could have the first Islamic Democracy (that’s where you get to choose which trash can to throw your amputated limb in). Libya could have a new dictator in place with lots of military toys for sale (Got Stingers). Look for a new PBS documentary called “The Mushroom Cloud” shot on location in Iran and Israel, with a cast of millions.

In Europe, look for the Greek government to be overthrown—talk is cheap and the country is tired of the political rhetoric. The financial pain in Spain, Portugal and Ireland might spread to France. The economic problems facing the Euro is kind of like trying mix Ex-lax and Kaopectate ---you have to go when you don’t want to and can’t go when you want to. If the Euro goes kaput, look for unemployment rates to drop drastically in Europe.

In the US we could have one or two states (Illinois comes to mind) become insolvent and figure about 20 cities to file for bankruptcy.

Look for interest rates to keep artificially low. Common senses suggest that some loans are riskier than others (the reverse mortgage is no more). Of course credit card debt interest rates are a different story 20 percent rates for Visa and Master Card. But if you want to buy a home, 3% interest no down moves you in. And a lot of the government programs will give you upfront money for move in repairs (like a motorcycle and/or widescreen TV). Think I'm kidding, read this from 2008 A Dollar Down Moves You In

Consumption should plug along, no incentive to save money at these interest rates. This will be the year that we get used to living with less and spending more for it. The stock market is kind of an unknown item. Nobody can figure out what’s been holding it up for the last 4 years.

Obama care is starting to kick in. I went to a coin dealer the other day and found out that there is a provision in the bill that requires a 1099 on gold sales over $600. What part of health care is involved in gold sales? In an unrelated item that ties into the above, PayPal wants my Social Security number so they can issue me a 1099 for my eBay sales. That’s not my hand I feel reaching for my wallet.


Then if you’re familiar with the school lunch program in California, Obama’s wife has screwed that up royally. Kids aren’t crazy over whole wheat bread or skim milk, and fruit, euck, it goes in the trash, give me some fries and a burger. This smiling wife with great concerns has no idea that the kids think her school lunch menu sucks. The schools have to serve the stated menu to get reimbursed by the government. What do you do with a dozen trash cans of food that the kids won’t eat? My suggestion; the fat kids don’t get the free lunch!

More than one commentator has suggested that Obama take a course or two on Economics. I believe the suggestion comes from puzzling over his current economic policies.

The New Year will ring in with a different tone this year. It’s Republicans against the Democrats. Cash or Credit will be the issue. Congress and the President can pass all sorts of wonderful new laws. Paying for them will be the problem. The battle to raise the national debt limit could be the fight of the century. The country is divided, but it isn’t rich against poor as Obama would suggest, it's about living beyond our means.

Have a Happy New Year everyone.


Copyright 2012 by Jim Brubaker

Is It Really Christmas?

Listening to some of the comments coming out of Washington, you have to wonder about what we are hearing. “The economy is getting better.” “We are trying to avoid a double dip recession.” And then there is the “Fiscal Cliff,” and Congress can’t come to a compromise to solve it. And then everyone packs up and goes home for Christmas.

Obama wants to tax the rich, no big deal, it isn’t going to raise the revenues we need and the amount won’t even cover the interest payment on the national debt. The big sticking point is that Obama wants the ability to raise the national debt limit without having to run it by Congress. I don’t think Congress will grant him that wish.

The economy seems to be picking up steam; most of it is tied to consumption. The main reason for this appears to be the low interest rates. Why save it? With the miracle of compound interest, it only takes about 144 years to double your dollar deposited today. The really laughable thing is the spread between high risk bonds and Treasuries is about 3 percent.

Interest rates in the bond market can’t go much lower but they have the built in ability to go higher. Examine the two graphs below. Graph one shows the value of a 1000 dollar 30 year bond issued at 3 percent interest. Notice what happens to it as interest rates jump up. Whoever holds these 30 year bonds will take a bath (you will get your principle back--if you can wait 30 years).Just a doubling of interest rates would be a 42 percent loss. Of course if rates went to 15%, you might want to buy these bonds, it would be a once in a lifetime opportunity.

Using a 5 year bond in the second example below, the damage isn’t as great if you need cash right away. The shorter the bond term, the less you get burned. With the eventual rise in interest rates look for home prices to drop and the interest on the national debt to increase.

Sooner or later, all of this quantitative easing is going to work itself into the stock market. There are still some companies out there paying a decent dividend. This is the last game in town, I look for the market in the New Year, to take off and go higher—for a while.

With high unemployment and a lot of seniors opting for early retirement, look for decreased tax revenues next year. That may be why there is no compromise over the fiscal cliff debate in Congress. We need the tax revenue, don't pass the tax cut, and the Republicans will be blamed for it. Of course the voter has a poor memory, the Bush tax cuts were a Republican thing, and come next election, the Democrats will get burned for not passing it.

Congress IMHO is a shambles. Everyone wants to talk and no one is listening. The key to the whole debate revolves around the national debt. Will the debt ceiling be raised? The Democrats can spend all they want, but if the debt ceiling isn’t raised, they’ll run out of money some time before inauguration.

The election was pretty well split even, half Republican and half Democrats. I would imagine that rich people populate both parties evenly. So the real issue seems to be where our tax money will be spent and can we keep spending at the current rate?

Christmas is coming next week, and it doesn’t look like Obama will get what he wanted from Santa. Putting coal in his stocking wouldn’t be politically correct. Congress is a little like Santa. We get something real from these Congressional elves that nobody had to pay for. --Inflation.

Merry Christmas everyone.


Copyright 2012 by Jim Brubaker

Government "Enhanced" Spending (reprinted)

Here is a reprint from March of 2009, some of you may have missed.

Some people have caught on to the new government approach to economic stimulation. If you have a credit card, you can still borrow, courtesy of the banks and the Federal Reserve. This is spending to stimulate the economy. I know people who have over 100K in credit card debt.

If you can’t pay off the principal on your credit card and it is way beyond being absurd; why not add more on to it, until they cut you off? It’s not like you have to work for what you’re buying. Be happy and consume. If you are broke, max out the card. Get what you can while you can. Plus if you are over 65 you get a bonus, you don’t need to file for bankruptcy. What wages can they garnish if you don’t work? Give your kids everything they’ve always wanted.

Somehow I don’t think that this concept of maxing out credit cards, has been appreciated for what it is, by the credit card companies. Unsecured debt is free money. Tarp funds are letting a very large credit card bubble grow even bigger. If the banks all got together and sorted accounts by address. They would realize that 15 different cards at one location, doesn’t indicate the residence is an apartment complex. It might indicate things are a not quite as they appear.

Unemployed? Start your own business. Buy a color Xerox laser printer and some linen paper and print up a couple of thousand 20 dollar bills. Let’s lend a hand, and help our government get this money printed. If we could get the unemployed set up to print dollars, we could be out of this mess by Christmas(Employment suggestions are for entertainment purposes only, talk to your probation officer for employment advice).

Poor old Barney Madoff has been put in jail for using creative Congressional financing practices. Congress is mad as hell. He spent a lot of that “rich people” money that they were going to tax. They are going to put him away for 150 years. That seems a little steep for impersonating a Congressman. There is a difference though, when Barney ran out of money, he went to jail. In our case Congress still has a check book, so we can’t be broke.

Below is 4 years of pictures from the past.











The Democrats with this "Cliff thing" are clueless. The Republicans know what will happen to our savings if Obama isn't stopped. The billionaire will end up just as broke as the guy sleeping in the park. The middle class will be destroyed. Our retirement savings will be wiped out. It's kind of a Grimm Fairy Tale with a bad ending for everyone. Of course, it couldn't happen here, could it?

Let the Rich Pay Their Fair Share????

When you hear the phrase, “Let the rich pay their fair share,” it is obvious that you are listening to a Democrat. I’m not trying to start a discussion of Republicans verses Democrats. But you do have to wonder what the words ”fair share” are all about. I can agree with the action, of raising taxes on the rich a little more—but it has no justification as being “their fair share.” This is a selling point addressed to the Hoi Polloi to garner votes in Congress; admittedly, it kind of works.

I’ve pointed out in the past, that whatever the tax rates on the rich were, whether 90 percent or 28 percent, government revenues NEVER increased noticeably. The amount of taxes taken in has been pretty constant. See graph below.

The person on the street (and your average Congressional retard) think that a 90 percent tax, generates more taxes than a 28 percent tax. The basic fact to be realized, is that the government can get 10 times more money with just a medium increase in middle income taxes of say $1,000

There are two groups of people who get no W-2 forms from employers, the real rich and those in the underground economy (working for cash). The underground economy is thriving.

If you remember newspaper reports on the Katrina Hurricane and read between the lines, the government was overwhelmed when trying to provide relief. The footprint of people paying taxes was minuscule to the population working for cash only. All Katrina did was ruin a way of life that had been fed by government entitlements and relief programs for 3 decades. I imagine someone will write a book about it, sooner or later.

Workers making over 250K are few and far between. This group includes rock stars, sports players, movie stars, and CEO’s to name a few. The one thing that stands out among rich people paying a lot of taxes, is the notion of "What am I getting for the extra money I pay?"---My answer, not much.

In today’s society, being poor and collecting food stamps entitles you to keep your cable and cell phone. Plus being poor gives you more rights. A single mom with 2 kids making 29K a year is entitled to about an additional 30k in benefits. But the single mom with 2 kids, making 60k a year, pays taxes and doesn’t get those free benefits.

Life is hard, but why take money from someone who works hard and give it to someone who gets rewarded for earning less, with better benefits? Has anyone ever accused poor people, or rich people of being stupid? But we come to Obama's mantra “Poor people deserve help to become part of the middle class.” Gee, maybe that's what Socialism is all about.

"Poor people" (notice the quotes) are gaming the system, it is a way of life. I'm all for taxing the rich, and while we're at it, let's tax everyone including the poor. There is no free ride. If you pay nothing in, you get nothing back.

I heard a Congressman say, "These people that pay no Federal tax, pay other taxes." My rebuttal, "So do I!" In California, we are almost to a 10 percent sales tax, and it has happened so slowly, that the absurdity of the rate has escaped notice. So when you hear them say "Tax the rich," reality is, Congress wants more money to spend.

Maybe it is time to draw the line. We don't have a problem with too little tax money, we have a problem with a Congress too busy buying votes for re-election. Of course, I have often suggested that the lead content of the water in Washington D.C. is a tad on the high side. That might explain the insanity in Congress right now. Of course if you look at John Boehner, leader in the House, he doesn't strike me as a water drinker. Whatever he drinks, let's get him another bottle--he's doing a pretty good job.

Copyright 2012 by Jim Brubaker

Tough Times to Make a Wish

The week started out OK. We bought the turkey Sunday, and invited our in-laws over for Thanksgiving Thursday. The oven stopped working Monday night. Getting a repairman to show up was next Monday at the earliest. So I had to fix it myself. The dinner went off without a hitch. My son, just before flying back to college, brought out the turkey wish-bone and we each made a wish and pulled. The results are in the picture below.

My son and I started a discussion on how we should determine who was going to be granted their wish. About the only thing we could conclude was that either we were each entitled to our wish being granted or neither wish would be granted. We smiled and didn’t reveal what we had wished for (It can’t come true if you do).

This wish-bone represents unexpected results where there are no rules to determine a winner. This is what we are facing in the economy after the election, uncertainty and a lack of rules. Zero interest rates, 8 percent inflation, 18% unemployment and everyone gets the right to own a home. Of course if you are rich, Obama wants half of your earnings, maybe they’ll make an exception for basketball and football players. Then there is the health care tax on poor people, kind of like social security and Medicare, where you can’t opt out.

What will happen next to our economy? Probably a lot more of the unexpected, but when you think about it, that’s all we expect lately, just more of it. The one good thing about a depression, when you’re that far down, its all up from there. The trouble is, we are not there yet!

Reality is standing in line to buy a Power Ball ticket--are you feeling lucky? Did I forget to mention, there will only be one or two winners? Maybe that's why I like wish-bones, there are more winners.




Copyright 2012 by Jim Brubaker

Bargaining, How It Really Works

Unions bargain for their workers. One thing not really appreciated is the theory of how this is done. Normally the two sides sit down and reach a compromise. In today’s world it is a little different.

When a union sits down to the bargaining table, it is on this premise, “What’s mine is mine, and what’s yours, is up for negotiation. It’s a little like watching a foreigner haggle over the price for a basket of strawberries. Once they settle on price, the customer proceeds to cherry pick the strawberries that go in the basket they are buying—nothing but the biggest and the most colorful.

Many of the best union deals that could have been made are now coming apart. Retirement benefits seem to be a common denominator. In all of the bargaining in the past, the threat of a strike got concessions from management. Now, it looks like thing have changed somewhat. Hostess Brands decides to go into bankruptcy liquidation rather than deal with unions that had it all their way. It’s kind of humorous to watch unions balk at wage cuts. Their reasoning, “Why should the worker have to pay for the screw-ups of management?” Or, “We need a decent working wage.” The union got deal after deal and management was the frog in the pan of water on the stove, getting hotter and hotter. Management acquiesced too many times and all it took was a bad economy, to see how bad the deal was. Any way you look at it, the union leaders look like Ding Dongs and there will be no Ho Ho’s this Christmas. Of course, the Twinkie murder defense will be a thing of the past.

Illinois and California will be the poster children of the new state governments that claim, “We can have it all.” State governments haven’t figured out one simply principle. Raising tax rates does not in turn increase tax revenues. It only implies more revenue. It does however determine where and when people choose to spend their dollars. Can the consumer justify a new car every 5 years when the sales tax is 10 percent?-- Maybe now it will be every 8 years. A company car instead of a wage increase?-- The list goes on.

During the Great Depression many localities raised taxes and all they got were the taxpayer’s keys to their home. Increased taxes were the last straw. Of course it will be different this time. At times I wonder, are we smarter than those people back in the 1930’s or incredibly more stupid? The jury is still out on this one.

The real drain for the states will be retirement funds for state workers, and of course we aren’t even discussing the Federal programs of Social Security, and Medicare.

The California State retirement fund (CalPER's), among others, can only pay 65 cents on the dollar in benefits to everyone in the plan. The way the legislature looks at it is, everyone gets full benefits for the next 10 years and then we have a problem.

FDR even said that government employees should never be unionized, and they are now. Business profits determine if a pay raise is warranted. In a government job, the guiding hand of profits is not there to determine a realistic wage. What our state governments have contracted us to pay as benefits, border on the absurd in some cases. The unions took advantage of our political system, to get benefits that could never be realistically paid on a long term basis. Where does it go from here?

Hostess Brands had a slow death. They couldn’t make a profit and the company folded. In good times the unions asked for more and always got it. This time they asked for more, thinking it was a poker game they could bluff their way through. How many of those 18,000 employees will even find a job? Of those that do, what will be their starting wage?

It’s time for the taxpayers to realize that they have been ripped by these government unions on a more intense level than private industry. We need state employees that will be underpaid and with training, will find better jobs in the private sector. Government is inherently inefficient, let’s reward this inefficiency with lousy wages and low retirement plans.

Where I grew up as a kid, we had volunteer firemen with no 100k retirement plans at age 50. The argument isn’t over whether or not these firemen or police or teachers are worthy of these wages, the argument is over whether or not we can justifiably pay private sector rates for jobs that could be filled for one third of their present cost. There is no problem filling the jobs, it’s the turnover rate that has to be dealt with, that is the trade-off with higher wages. Government unions always want more, Ronald Regan once said no, and meant it.

Of course in California, who runs the government, the unions or the legislature? Do you get the feeling that the unions can run the state into the ground? Of course, maybe they already have, and are keeping quiet--no need to panic anyone.




Copyright 2012 by Jim Brubaker

The Fiscal Cliff or "Hey Buddy Can You Spare a Dime?"

Mentally picture 4 or 5 dogs all pulling on a towel in different directions, this is Congress in action. The towel represents our budget. So when you come down to it, it’s not a very big towel. The consensus is, Congress needs a bigger towel. How we get there, is more taxes or print more dollars. Both do the job, but when you raise taxes, you can point to who raised them. But when you print dollars, you can’t blame Congress, that’s how the economy is, we live with inflation.

The real problem is that the benefits and entitlements take up almost the entire budget, and we have to borrow to pay the rest of the bills. The President doesn’t have to worry about reelection, but the Congress does; so none of the entitlements and benefits will be cut without a long drawn out fight. Whatever the compromise, it won’t even be close to enough to fix the existing problems of funding.

Figure that total tax collections next year, even with a tax the rich provision, will probably be far below this year’s totals. Remember we are not taxing rich people, only high wage earners. So a doctor making 250k, what does he do to limit tax liability? He forms a Limited Liability Corporation and pays himself about 60K a year and slaps the rest into a retirement fund. If you’re an oil company, forget American investments; drill where you get tax breaks.

State governments’ layoffs will start in the coming week (the election is over), government employees have to be given 90 days’ notice now. If you’re not part of the Police or Fire department, count on layoffs. The teachers will be thrown under the bus. The voting’s over; education is where the first cuts come.

Congress wants to raise taxes on the rich and lower them on the middle class. It sounds great if you’re pandering for votes trying to get reelected. Do we dare assume that rich people are incredibly stupid and will pay more? It’s probably the middle class that is incredibly stupid. They believe Congress has done something constructive by extending the same tax cut another 4 years that will expire time and time again. And of course it will forever be called the Bush tax cut. Realistically, Congress has to drastically reduce entitlements by 50% and/or most probably double everyone’s taxes. That wouldn’t be a bad thing in a robust economy, but in this economy, neither is an option. A legislative solution to our fiscal problems doesn’t exist with the current thinking in place. Entitlements will not be addressed.

As if things couldn’t get worse, Obamacare, will start cutting into many wage earner’s paychecks . The national work week has now been (unofficially) reduced to 32 hours (part time workers don’t qualify for health benefits). And those that paid some federal taxes working 40 hours will now pay none (working less hours). Of course where you once had 4 employees working 40 hours you will pick up one new worker when we go to 32 hours. Your hourly wage stays the same, your paycheck is smaller, your standard of living drops, and more people will be employed--oh goodie!

The real problem just becoming apparent, we are in a depression, greater than the Great Depression. We can’t tax our way out of it, and since we have already borrowed almost every dollar in the banks, it will be impossible to print more money without inflation. Bernie Madoff's problem wasn’t with the money he had in the bank; it was the money he needed to withdraw for redemptions (consumption). As long as everyone keeps their savings in this “FDIC insured piggy bank” there is no problem. The Governments problem starts when everyone wants to spend their saving at the same time. The reward of consumption (instant gratification) is presently a far better value than the saving rates offered by a bank of one percent interest, considering the current 6 percent inflation rate.

The fiscal cliff out there that everyone is referring to is the fact that we are broke. Our government is running out of people to borrow from. A sign from the great depression in a grocery store read, “In God We Trust, all others pay cash.” In 1933 you bought a box of apples and sold them on a street corner to make a living. Now, the government is proposing to buy the box of apples and . . . .—“it’s going to be ‘different’ this time around. “ The trouble is, nobody is sure what that means.



Copyright 2012 by Jim Brubaker

Real Estate is Coming Back??

If you read the papers, it looks like real estate is coming back, prices are rising. The inventory is “drying up.” But look a little deeper. According to Zillow 31 percent of homeowners are underwater. And CNN Money reports, half of mortgage borrowers under 40 are under water. That kind of makes some of this “inventory shortage” a tad bit soggy.

I don’t see anyone lining up for a “Liar Loan,” anymore. The rush to buy before you are priced out of the market is gone. The median housing price is rising for a very simple reason. There are no low priced homes in the statistics to bring the average down. Do you want the 300k 1500 sq ft starter home? Or for 75k more you can buy a McMansion with 2400 sq ft?

Sources are reporting that a large portions of sales 30% are cash only. Kind of boggles the mind unless you figure when a bank wins the bid on a home in foreclosure (by bidding the amount owed by the borrower), that’s considered a cash sale. As a real estate transaction, you have a new owner, the bank, and it is a cash sale. Of course, throw in the words “foreign buyer” and everyone nods, they must be doing the cash sales. That many foreign sales ought to set of sirens at the office of immigration.

Out here in California, earthquake insurance isn’t really affordable, so you let the bank own most of the house and you make payments --- if a quake wrecks the house, give the bank the keys. Paying off a home in this economy isn’t too smart, especially if you lose your job. Banks won’t do a home loan if you’re unemployed.

The economy is just peachy keen, and no one is worried about losing their job, and real estate is doing just great. “Now is the time to buy a home, ” interest rates will never be this low again. I hear that shouted in my ears all of the time. Do you get the feeling that there is inventory out there that they need someone to sign for on the dotted line? If you buy a 300k home in California, you can’t flip it. It isn’t appreciating and the 18K in Realtor commissions is staring you in the face.

There is the normal crowd of people buying homes as there has always been. But the speculative zip is gone. The demand is only about 1/2 of what it was in bubble times. And getting financing is a real chore. When I read these headlines that the housing market is coming back, I have to wonder, coming back to what? 6 cars in front of every home, doesn’t suggest to me that housing is booming.

The one thing that really bothers me, I can’t see any bank in the country writing 30 year loans at 3 percent -- 5 years maybe. Can we believe what we read in the newspapers? Is real estate back like it was in 2006 with a full punch bowl? Did the recession really end in 2010? The election is over, maybe it’s time to take off the rose colored glasses.

Copyright 2012 by Jim Brubaker

Health Insurance, Who is really “Jerking Us Around?”

If you look at an insurance company, it’s a group of people insuring against a certain risk. It could be your home, your car, your life or your health to cite a few. For these insurance companies, it is quite easy to gage the amount of risk involved and charge accordingly. The insurance company is willing to insure to a limited dollar amount, while the the insured and Congress are expecting unlimited coverage.

When the government steps in to fill the void at age 65, it may seem like the right thing to do, but you have to ask only one question, what does government bring to the table to make it affordable to offer it to everyone? Deep pockets are the answer (AKA the National Debt checkbook).

The real issue isn’t that apparent. Once you limit what health insurance companies can and cannot do, and you limit their profit margins, you eliminate their ability to survive. Obama might accuse the insurance companies of “Jerking people around,” but it is the President who is jerking private for-profit-businesses around. The net result, the private health insurance industry will fade out of existence. Profits are the driving engine of competition. Private health insurance cannot compete with Obamacare; the government doesn’t have to make a profit to survive.

People that never even gave a thought to health insurance, (those from the age of 18 to 45) would suddenly find themselves in a situation where health insurance is now mandatory. The question they may ask is; “Why am I forced to pay for something I don’t feel I need?”

What makes Obamacare so insidious is the fact that they are dictating what sort of profit margins are acceptable for insurance companies to have. Bill Gates at Microsoft probably has a profit margin of about 85 percent. Pill factories probably have a 400 percent profit margin. Blue Cross was having problems justifying a 5% profit margin during a recent Congressional investigation.

Forcing insurance companies to insure people with previous conditions is a death sentence. Rates are determined by the number insured without problems. The government is now saying that preexisting conditions have to be insured. This changes the risk for the underwriters and negates all actuary tables that have been used previously. The new risk cannot be calculated, when people can sign up with preexisting conditions.

What happens in this case? The health insurance investors realize that there is no profit in writing coverage and move their funds elsewhere for a better return.

The end result, the insurance industry will continue to write home, auto and life and let you go to the government for your health care insurance. Think about it for one moment, is anybody accusing the life insurance industry or the auto or home insurance industry of “jerking anyone around?” You aren't being forced to take the government insurance as long as you can find a private provider.

So what happens when the health insurance industry drops dead? The government will add it your paycheck deductions and they can adjust your rates for this new “health insurance,” without having to ask Congress. It won’t count as a tax; it’s your health insurance. You might think I am kidding, but it will be about $6,000 to $12,000 a year (Your employer pays half, guffaw, guffaw).

Obama claims that health insurers are "Jerking us around." Let’s rephrase it, health insurers are pointing out the real costs of health insurance, and we have to make decisions on how much of it, we can afford. Life will end for all of us, and for a politician to suggest that government health care insurance will solve our problems is wishful thinking. That is the person “jerking you around.” He wants your vote and that new health care revenue stream. There is no free ride. Of course if you have nothing, the "free ride" is better than nothing.

Obamacare could be the biggest tax increase to ever face our Republic. It is the death knell for private health insurance. I'd rather they force everyone to get car insurance instead. This government is going to harness the working young to pay all of our debts. After you get your first job, here is what the "Company Store" wants from your paycheck: State and Federal taxes, Social Security, Student loan payments and the new one, health insurance. I remember when I was young; I had a hard time trying to afford girls and car insurance. So what Obamacare really boils down to is a tax on being young and dumb.

As a concept, I have no objections to Obamacare. But if you understand how Congress works, this new found money will be spent on anything but health care and will destroy the private health insurance industry by dictating their rates. Show me one thing that the government can do better than private industry for less money. One thing is certain; we are being jerked around, by a bunch of politicians in Congress promising "Surf and Turf" and delivering "biscuits and gravy."

The irony of history (tongue in cheek) it took a Republican to free the slaves, and a Democrat to put the chains back on.


Copyright 2012 by Jim Brubaker

QE3 Makes Gold An Attractive Investment.

Ever wonder why a country buys gold? If you’re a deadbeat country, you might need it for international trade. Of course, if you are printing money like crazy, buy gold now at x dollars and sell it a few years down the pike at 3x dollars. As a Government, you know what you’re doing even if the rest of the world doesn’t. Of course if you’re a country running a tight ship, buying gold could be a way of tightening up the money supply. Not too many countries are in that boat.

Normally holding physical gold for the average investor, was a losing proposition because, gold pays no interest. Well, with 8% inflation and 1% interest rates, gold is a better deal than a printed dollar. Plus if interest rates stay low like this, you’re at least making the difference between the current inflation rate and interest rates.

There is one problem, if everyone starts reaching for gold, the price will climb. The problem is the government needs to stop that from happening. They will again have to outlaw gold possession.

When I was in college in the 1960’s a ten dollar bill bought two full tanks of gas and you had a couple of dollars left over. Today a hundred dollar bill will buy two tanks of gas—maybe. The peculiar thing this time around, is that the hundred dollar bill is our biggest bill in circulation.

To the young people just entering the work force, today’s prices are the only ones they have ever seen. Everything appears normal to them. However if you had put 10 hard dollars earned in 1965 into a savings account, you don’t have the same buying power today that that ten dollars had 60 years ago. Of course the price of gold was 35 dollars in 1964.

With interest rate at 1%, bonds use to be the retirement vehicle for most retirees. Why even bother with them? Convert your savings to gold or put your dollars in a safety deposit box and apply for Supplemental Social Security (if you have no funds in the bank, you qualify).

As long as our government wants to spend a trillion dollars more than they take in in taxes, your savings are being taxed by inflation. Gold and silver have maintained their value over the ages. They are a store of value that pays no interest. If Bernanke thinks that keeping interest rates low is good for the economy, let’s all buy gold and silver. Let him covet his paper dollars, while we laugh at him.

They’ll have to start printing Thousand dollar bills pretty soon,--but doesn’t that pretty much give away what is actually going on? Of course not! If you have been poor all your life and now have a $1,000 dollar bill in your hand, you have made it! You are rich! You’ll earn 5 times more than what your dad did and you’ll be proud. Even though your pay raise each year is just the cost of inflation, it is a pay raise, as far as the average worker is concerned.

Then we have Ben Bernanke saying he will buy all housing paper (40 billion a month) (because the banks aren’t dumb enough to buy it) for two years, kind of blows me away. These people in office are going to save us, but I kind of wonder what they are trying to save us from?

I just wish I had bought gold at $35!

Copyright 2012 by Jim Brubaker