Democratic Wisconsin legislators leave the state so the legislature wouldn’t have a quorum to act on legislation. The reason being, they did not want to see certain legislation passed. If this isn’t an undemocratic act, what is? These representatives need to be relieved of their elected position and replaced. An example needs to be set here. Democracy works because of the vote, not from the lack of it.
The idea that the money is there, if it is spent “our way,” doesn’t float. Pay as you go or forget the trip. And that doesn’t set well with Democrats, social programs are their agenda, the funding is just not there. What is going to be cut? Easy answer, if you don’t pay taxes, whatever you are collecting will be cut. What’s that mean? They are cutting benefits to everyone that pays little or no taxes.
Some Congressman the other day defended not cutting Social Security entitlements. He stated that “Social Security is independently funded with no cost to the taxpayer.” What he said was true and very misleading. Congress uses this fund as a piggy bank. Our government has borrowed and spent the 2.5 trillion dollar Social Security surplus. What we need to look at, is the fact that the government can’t pay back the funds borrowed or meet the obligations of promised Social Security benefits for the future. In FDR’s time, 7/8th of the population was dead before retirement. That alone was enough money for the 1/8th that survived to collect benefits.
So let’s see if I have this right now. You pay in 12 percent of your earnings into Social Security per year and when you retire, you get to collect 10 times what you paid in. If this sounds too good to be true, then it probably is. To top that off, your contributed funds are not invested, they are spent that year on the budget. Of course the Social Security fund gets an IOU from Uncle Sam. The words “Congress” and “Pond Scum” seem to define each other here.
Then we have the word “Bipartisan,” repeated incessantly in every Congressional interview. It’s the panacea for what ails the economy. It translates from the Latin as “two parties together.” Today it is defined as “Complementary rectal loading.”
The States are literally falling apart and are bankrupt. Most have already spent that loan we gave them (over payment of 2010 taxes) (They will probably apply your refund to next year’s taxes). We have 5 months before the new fiscal year begins for most of the States, this is when it will "hit the fan."
It is becoming very apparent that something is wrong with government on the State level that cannot be fixed. Obama pulled a fast one on the Republicans in Congress with health care and now we have a similar situation in Wisconsin where the outcome is a given. In this case it was different. The Democrats got up and left the state; what they did was very un-American. Voters, not protesters make our laws--hmmm, I might be wrong about that.
Tongue in Cheek Solution for California Budget shortfall:
Governor Brown should send several armed ships to Somali to hijack oil tankers and hold them for ransom. The insurance companies would pay the ransom and California could then make its budget; 29 ships and 660 hostages held in that country is a travesty. The only reason they are there, is because piracy has become very profitable.
Tuesday, February 22, 2011
Monday, February 14, 2011
Naivety: A Political Definition of the Hoi Polloi
The Teabag movement is like a wave sweeping the country. Ride the wave, count the votes and get elected. I listened to several Tea Party home town meetings and it was summed up by one moderator, “We will stand behind you [the Congressman having the town meeting] in making those cuts in spending.” What these town hall meetings lacked in youth, they more than made up for with participants my age or older. When it comes time to make cuts; out comes a list of things that can’t be cut. That there, gives you an idea of how serious the concept of cuts are. Of course, the cuts I deem reasonable are not the ones my neighbor agrees on, so how do we cut any program? The solution was simple, until we tried to implement it.
Then we have an 8 trillion dollar commitment guarantee to save the Fanny and Freddie GSE’s (prop up property prices). Add to that, about 4 trillion in insurance guarantees to bail out the banks, some of which are “too big to fail.” Actual out of pocket so far, is a vague amount. It is kind of like throwing a party on a budget. When you see the estimated bill, for 10 cases of vodka, two hookers and 1000 condoms, you know the party isn’t going to be as advertised; expectations for the hookers were set a tad too high.
Let’s move to Egypt. The people there think that they have overthrown a dictator. I can’t quite figure that out. The dude Mubarak was 82 years old. All they had to do was pop a paper bag behind his back to induce heart failure. I think all this guy wanted to do, was die in office and get the tribute of a free State funeral. It’s not like he needed to kill a few more people to keep the regime going. The country has been a dictatorship since 1958. The youth of the country think that things have changed and they are now in control, the naivety of their thinking will be tested very shortly. The Egyptian military still runs the country.
So where are we now? Everyone wants change, but the money needed is not there. We can have less, but not more. The Well is dry. Obama proposes a budget of 3.7 trillion dollars with a savings of over 1.1 trillion over 10 years (I guess the savings are all in the 10th year). Tax collections this year are about 2.1 trillion. Here we have a President standing up and announcing a budget that is underfunded by 1.6 trillion dollars claiming a savings of 1.1 trillion over 10 years. The real implied statement here is that the President thinks the general population is dumber than a sack of rocks. I don’t have any problem with that; I think he’s on to something. I get irate for being grouped with the Hoi Polloi (the sack of rocks).
Our political representatives have promised us that lobster and steak dinner and believe it or not, they are going to serve it to you at McDonald's. It looks like three card Monte and selling well know bridges are passé. I’m getting hungry, let’s go to McDuck's for Surf and Turf!
Then we have an 8 trillion dollar commitment guarantee to save the Fanny and Freddie GSE’s (prop up property prices). Add to that, about 4 trillion in insurance guarantees to bail out the banks, some of which are “too big to fail.” Actual out of pocket so far, is a vague amount. It is kind of like throwing a party on a budget. When you see the estimated bill, for 10 cases of vodka, two hookers and 1000 condoms, you know the party isn’t going to be as advertised; expectations for the hookers were set a tad too high.
Let’s move to Egypt. The people there think that they have overthrown a dictator. I can’t quite figure that out. The dude Mubarak was 82 years old. All they had to do was pop a paper bag behind his back to induce heart failure. I think all this guy wanted to do, was die in office and get the tribute of a free State funeral. It’s not like he needed to kill a few more people to keep the regime going. The country has been a dictatorship since 1958. The youth of the country think that things have changed and they are now in control, the naivety of their thinking will be tested very shortly. The Egyptian military still runs the country.
So where are we now? Everyone wants change, but the money needed is not there. We can have less, but not more. The Well is dry. Obama proposes a budget of 3.7 trillion dollars with a savings of over 1.1 trillion over 10 years (I guess the savings are all in the 10th year). Tax collections this year are about 2.1 trillion. Here we have a President standing up and announcing a budget that is underfunded by 1.6 trillion dollars claiming a savings of 1.1 trillion over 10 years. The real implied statement here is that the President thinks the general population is dumber than a sack of rocks. I don’t have any problem with that; I think he’s on to something. I get irate for being grouped with the Hoi Polloi (the sack of rocks).
Our political representatives have promised us that lobster and steak dinner and believe it or not, they are going to serve it to you at McDonald's. It looks like three card Monte and selling well know bridges are passé. I’m getting hungry, let’s go to McDuck's for Surf and Turf!
Saturday, February 05, 2011
Things Change Over Time
In the 1930’s, Social Security was for those over the age of 65. Very few people lived to be 65. Smoking wasn’t going to kill you, old age was. Penicillin and new medical treatments later on in the century extended our lifetimes tremendously.
Back in Abe Lincoln’s time, health care wasn’t a big expense; you either died or got better. Today you can exist in a coma for years; premature babies can cost 100k apiece. The personal concept of paying for it all doesn’t exist. Just who pays for all that is another story. Now we have government health care for those who can’t afford it. The private insurance companies can see the handwriting on the wall; you can’t compete and undercut the price of government programs, the government doesn’t have to make a profit to survive. Look for private health care to fade out of existence.
Home ownership after WWII was considered a God given right. Private financing with acronyms like GSE kept the game going for 50 years. This financing plan has pretty much collapsed. The Federal Reserve and Congress stepped in to provide the funding to keep the ball rolling. When the game started, you needed a 20 percent down payment. Just before the collapse, the banks were writing loans to anyone that could fog a mirror. Now the government has extended the “fog a mirror” program; of course you have to “buy” one of the zillion homes they now own.
40 years ago, government jobs were very low paying. Most people went to work for private industry. Of course many people started working in government to get some experience and then jumped into the private sector. In today’s world, the government does surveys to figure out what to pay employees so “they won’t lose them to the private sector.” They weren’t really losing anyone at that pay rate; they were inconvenienced with the fact that they had to train a new employee. Yesterday’s low hire government employee is today’s retiree with the Rolls Royce health and pension plan.
When I went to school, it wasn’t hard to flunk a grade and get set back a year. I remember a guy graduating in my senior class, was 21, real nice guy, he was more into cars, girls, cigarettes and beer. He had a great time in High School. There were probably 4 straight A students in my high school with 800 students. My son who graduated from high school last year was a straight A student, as were many of his class mates. There are so many straight A students in today’s world, that it is meaningless. No kid left behind has pretty much trashed the educational system. The kid selling drugs on the sidewalk is getting more of a math lesson than the stoned kid in class who bought the weed. Success today, is guaranteed to our children; then they hit the reality of the real world, after graduation.
When the Constitution was written, there was the right to bear arms. If you ever want a fun time, try to load and fire a flint lock pistol from that era. When you pull the trigger, the intended victim has about 1 ½ seconds to dodge the bullet--- the flint hits the steel which lights the gunpowder in the flash pan, which ignites the powder in the barrel, which launches the bullet. It could probably misfire one out of three times. It’s not much like the weapons they sell in the gun stores today.
The invisible issue here is that things change over time very slowly. But our perspective doesn’t. We still see the program in its original design. The change has escaped us, but the penalties haven’t. The bill is coming due and everyone has all these entitlements they have been promised. It’s kind of like enjoying a full meal in a very expensive restaurant and informing the waiter that the next person to sit in your chair will pay your bill. The waiter will have none of that no matter how indignant you get. Reality is right around the corner, let’s see if we can kick the can that far.
Back in Abe Lincoln’s time, health care wasn’t a big expense; you either died or got better. Today you can exist in a coma for years; premature babies can cost 100k apiece. The personal concept of paying for it all doesn’t exist. Just who pays for all that is another story. Now we have government health care for those who can’t afford it. The private insurance companies can see the handwriting on the wall; you can’t compete and undercut the price of government programs, the government doesn’t have to make a profit to survive. Look for private health care to fade out of existence.
Home ownership after WWII was considered a God given right. Private financing with acronyms like GSE kept the game going for 50 years. This financing plan has pretty much collapsed. The Federal Reserve and Congress stepped in to provide the funding to keep the ball rolling. When the game started, you needed a 20 percent down payment. Just before the collapse, the banks were writing loans to anyone that could fog a mirror. Now the government has extended the “fog a mirror” program; of course you have to “buy” one of the zillion homes they now own.
40 years ago, government jobs were very low paying. Most people went to work for private industry. Of course many people started working in government to get some experience and then jumped into the private sector. In today’s world, the government does surveys to figure out what to pay employees so “they won’t lose them to the private sector.” They weren’t really losing anyone at that pay rate; they were inconvenienced with the fact that they had to train a new employee. Yesterday’s low hire government employee is today’s retiree with the Rolls Royce health and pension plan.
When I went to school, it wasn’t hard to flunk a grade and get set back a year. I remember a guy graduating in my senior class, was 21, real nice guy, he was more into cars, girls, cigarettes and beer. He had a great time in High School. There were probably 4 straight A students in my high school with 800 students. My son who graduated from high school last year was a straight A student, as were many of his class mates. There are so many straight A students in today’s world, that it is meaningless. No kid left behind has pretty much trashed the educational system. The kid selling drugs on the sidewalk is getting more of a math lesson than the stoned kid in class who bought the weed. Success today, is guaranteed to our children; then they hit the reality of the real world, after graduation.
When the Constitution was written, there was the right to bear arms. If you ever want a fun time, try to load and fire a flint lock pistol from that era. When you pull the trigger, the intended victim has about 1 ½ seconds to dodge the bullet--- the flint hits the steel which lights the gunpowder in the flash pan, which ignites the powder in the barrel, which launches the bullet. It could probably misfire one out of three times. It’s not much like the weapons they sell in the gun stores today.
The invisible issue here is that things change over time very slowly. But our perspective doesn’t. We still see the program in its original design. The change has escaped us, but the penalties haven’t. The bill is coming due and everyone has all these entitlements they have been promised. It’s kind of like enjoying a full meal in a very expensive restaurant and informing the waiter that the next person to sit in your chair will pay your bill. The waiter will have none of that no matter how indignant you get. Reality is right around the corner, let’s see if we can kick the can that far.
Wednesday, February 02, 2011
Let's Define "A Depression" (Reprinted)
Here is a reprint from May 13, 2007 that you may enjoy. It is a travel back in time 4 years.
Let's define a Depression:
It’s a drop in economic productivity for a length of time. Speculation comes to a standstill, and bubbles cannot exist. There is a tremendous contraction in the wealth of the whole country. The great money making machines (plural) will collapse.
People are beginning to see the housing bubble. The machine that is cranking out new houses, is still making a profit. Building contractors can easily undercut home sellers, no reason to stop yet. Sticky housing prices are a plus (to the builder).
The stock market has Google at $500 and no dividend. It will probably still go higher. I still laugh about the AOL Time-Warner take over. It was like John Paul Jones with the Bon Homme Richard against the H.M.S. Serapis all over again. Then there are hedge funds who hypothecate the whole mess. They seem to be making big returns. When money enters the market faster than the creation of new issues, then prices rise—-forever???
The IRA’s and Mutual funds are increasing in value because of the increase in share price. What you are looking at is not a return on equity, but an increase in the prices of the equity. For example if Google rises to $600 you have a market perception of its new worth. But if IBM doubles its dividend, this is a real return on an investment. A money manager would probably invest in Google over IBM, because the apparent gains from that investment strategy would bring more investors to his fold. (I could be shot for this oversimplification)
If you look at Detroit, houses are so cheap, that you can't build a new one at those prices. The builders are leaving. The stock market could go to the same extreme. In a crash, Investors would demand a dividend of $4 to warrant a price of $100. Otherwise why not put it in the bank. What we would be looking at, is a return to more realistic values for assets. Some comedian during the Great Depression quipped, "I'm not interested in the return on my money, but rather, the return of my money."
The collapse could result in a massive redistribution of wealth, hitting the rich, not the poor. All of this hypothecated wealth would disappear. The million dollar cats, dogs and tulips would be marked to market. Paper millionaires would go up in a puff of smoke.
Decreased consumption, would lead to layoffs. This would expose the credit card bubble and threaten the banking industry, or who ever holds all of this credit debt. Liquidation would then be the final game.
If that isn’t enough, Congress will rise up and try to save us. That's the scary part! It's kind of like getting on an airplane and having an election, to see who's going to be the pilot.
Copyright 2011 All rights reserved
Let's define a Depression:
It’s a drop in economic productivity for a length of time. Speculation comes to a standstill, and bubbles cannot exist. There is a tremendous contraction in the wealth of the whole country. The great money making machines (plural) will collapse.
People are beginning to see the housing bubble. The machine that is cranking out new houses, is still making a profit. Building contractors can easily undercut home sellers, no reason to stop yet. Sticky housing prices are a plus (to the builder).
The stock market has Google at $500 and no dividend. It will probably still go higher. I still laugh about the AOL Time-Warner take over. It was like John Paul Jones with the Bon Homme Richard against the H.M.S. Serapis all over again. Then there are hedge funds who hypothecate the whole mess. They seem to be making big returns. When money enters the market faster than the creation of new issues, then prices rise—-forever???
The IRA’s and Mutual funds are increasing in value because of the increase in share price. What you are looking at is not a return on equity, but an increase in the prices of the equity. For example if Google rises to $600 you have a market perception of its new worth. But if IBM doubles its dividend, this is a real return on an investment. A money manager would probably invest in Google over IBM, because the apparent gains from that investment strategy would bring more investors to his fold. (I could be shot for this oversimplification)
If you look at Detroit, houses are so cheap, that you can't build a new one at those prices. The builders are leaving. The stock market could go to the same extreme. In a crash, Investors would demand a dividend of $4 to warrant a price of $100. Otherwise why not put it in the bank. What we would be looking at, is a return to more realistic values for assets. Some comedian during the Great Depression quipped, "I'm not interested in the return on my money, but rather, the return of my money."
The collapse could result in a massive redistribution of wealth, hitting the rich, not the poor. All of this hypothecated wealth would disappear. The million dollar cats, dogs and tulips would be marked to market. Paper millionaires would go up in a puff of smoke.
Decreased consumption, would lead to layoffs. This would expose the credit card bubble and threaten the banking industry, or who ever holds all of this credit debt. Liquidation would then be the final game.
If that isn’t enough, Congress will rise up and try to save us. That's the scary part! It's kind of like getting on an airplane and having an election, to see who's going to be the pilot.
Copyright 2011 All rights reserved
Monday, January 24, 2011
Diminishing Returns
When times were good, business’s everywhere realized that doubling in size, doubled profits. Now there is a problem of diminishing returns. The consumer is making choices on what to consume. In my quest to be shot for oversimplification, figure that a business that has 100 customers a day needs the first eighty to pay the bills and the rest is the return on investment or profit. Many businesses are seeing a 10 to 20 percent drop in consumer traffic. A drop in business like that is enough to give a store manager sphincter muscle lockup.
If you’re my age, a dentist chair is more than familiar. Now days, there are no long lines. No three week wait, they are going to do it today. I told my boss that I’d be a half an hour late because of a dental appointment—I spent 4 hours getting an inlay. I kept saying no, they kept saying yes. They wanted $400 to begin with. At $200, I gave in and said yes, kind of hard to believe that I have dental insurance. I don’t know what my HMO paid, but my cost wasn’t even close to what I had anticipated.
New Years, I bought chips and dip for the Rose Bowl and found out that it was on ESPN, my basic cable wasn’t good enough so I had to watch it on my laptop on ATDHE.NET. Then a week later, the Number 1 and 2 of college football played on ESPN and I had to watch that also on my laptop. I’m tossing the cable company; I can stick an antenna up in the back and get HDTV. Not the greatest solution, but I won’t be paying for all the Spanish channels I never watched.
The 10 to 20 percent drop in consumer spending is a real problem that is invisible to most of us. The good thing, there is no waiting to be seated or long lines at the checkout counter.
The neat thing about consuming less when it comes to public utilities, your rates increase. That might seem like I miss-spoke, but the utilities have fixed costs and if everyone cuts back, your share of the bill goes up,
Then when you get to government, 15 percent unemployment is about a 10% drop in tax collections. Sandwich that with decreasing property tax revenues. You don’t have to worry about a double dip; the politicians in charge haven’t even felt the first dip yet. There is a time lag where it all gets swept under the rug, and there is an awful lot under this rug.
People are getting less, but everyone still demands the plan they had yesterday. It’s time to realize, there are no government lifeboats, only government life vests made out of cinder blocks.
If you and the wife just retired with a half million dollar nest egg, you’re going to have lots of fun. Two percent of 500K is $10,000 per year to live on. Nothing like the 8% interest rates the banks use to pay, before Bernanke decided he needed to save us.
What we have here is diminishing returns; less earnings coming in and more savings going out. This is the new prosperity. Of course, government has been doing this for years; I wonder why it doesn’t work on the individual level?
Obama tomorrow will tell us that we are emerging from this recession. Think about it. We are getting less of everything and it is costing us more. Bernanke has saved us from deflation, and sentenced us “old farts” to financial retirement starvation.
Bernanke and Obama are kind of like hookers that grew old and fat. They were wise enough to know what worked in the past, but lack the insight to see what has changed.
Copyright 2011 All rights reserved
If you’re my age, a dentist chair is more than familiar. Now days, there are no long lines. No three week wait, they are going to do it today. I told my boss that I’d be a half an hour late because of a dental appointment—I spent 4 hours getting an inlay. I kept saying no, they kept saying yes. They wanted $400 to begin with. At $200, I gave in and said yes, kind of hard to believe that I have dental insurance. I don’t know what my HMO paid, but my cost wasn’t even close to what I had anticipated.
New Years, I bought chips and dip for the Rose Bowl and found out that it was on ESPN, my basic cable wasn’t good enough so I had to watch it on my laptop on ATDHE.NET. Then a week later, the Number 1 and 2 of college football played on ESPN and I had to watch that also on my laptop. I’m tossing the cable company; I can stick an antenna up in the back and get HDTV. Not the greatest solution, but I won’t be paying for all the Spanish channels I never watched.
The 10 to 20 percent drop in consumer spending is a real problem that is invisible to most of us. The good thing, there is no waiting to be seated or long lines at the checkout counter.
The neat thing about consuming less when it comes to public utilities, your rates increase. That might seem like I miss-spoke, but the utilities have fixed costs and if everyone cuts back, your share of the bill goes up,
Then when you get to government, 15 percent unemployment is about a 10% drop in tax collections. Sandwich that with decreasing property tax revenues. You don’t have to worry about a double dip; the politicians in charge haven’t even felt the first dip yet. There is a time lag where it all gets swept under the rug, and there is an awful lot under this rug.
People are getting less, but everyone still demands the plan they had yesterday. It’s time to realize, there are no government lifeboats, only government life vests made out of cinder blocks.
If you and the wife just retired with a half million dollar nest egg, you’re going to have lots of fun. Two percent of 500K is $10,000 per year to live on. Nothing like the 8% interest rates the banks use to pay, before Bernanke decided he needed to save us.
What we have here is diminishing returns; less earnings coming in and more savings going out. This is the new prosperity. Of course, government has been doing this for years; I wonder why it doesn’t work on the individual level?
Obama tomorrow will tell us that we are emerging from this recession. Think about it. We are getting less of everything and it is costing us more. Bernanke has saved us from deflation, and sentenced us “old farts” to financial retirement starvation.
Bernanke and Obama are kind of like hookers that grew old and fat. They were wise enough to know what worked in the past, but lack the insight to see what has changed.
Copyright 2011 All rights reserved
Sunday, January 09, 2011
We Can't Get There From Here.
Blue Cross just raised some eyebrows in California with its new proposed rate increases of up to 59%. The newly elected Insurance commissioner called for a delay in the rate hikes saying recent increases by the industry were alarming. Not everyone needs health insurance, but if you are old, you are being singled out. All of that spare retirement money, just laying there. It’s a side effect of “quantitative easing” AKA inflation.
I just switched my company health insurance from Health Net to Anthem Blue Cross. My Anthem rates are about $15 a month higher. Just before the conversion I got a letter from Health Net stating that my present doctor, dentist and pediatrician would no longer honor the plan. By switching, I was able to keep all three of our doctors. It kind of makes you wonder what Health Net did that my doctors, as a whole didn’t like. Notice with the proposed Obamacare, who cares how much the premiums are?
Then we have our new Governor “MoonBeam” Jerry Brown and his new budget proposals set for release tomorrow. Let’s just call it Christmas in reverse. The press prints phrases like “Painful budgetary truth,” “Chronic budget shortfalls.” The new governor wants a pay check, he won’t work for free. The truth is, no one valued Arnold’s free advice, it was deemed "Worth less." Make Californians pay for the "Bad news" advice.
A cure-all statement that is constantly repeated by politicians with little effect is: “We need to create more jobs to stimulate the economy.” If no one is buying, what are you going to produce and hire people to make? Better yet, what products can we make here cheaper than out sourcing to China?
So what is the bottom line? --no new money for government, no new jobs, high health care costs, no money for education, fire or police. If you are on welfare, they are going to pull the rug out from underneath you.
There is a comfort level we all enjoy, and it is starting to look as if, --We can't get there from here.
Copyright 2011 All rights reserved
I just switched my company health insurance from Health Net to Anthem Blue Cross. My Anthem rates are about $15 a month higher. Just before the conversion I got a letter from Health Net stating that my present doctor, dentist and pediatrician would no longer honor the plan. By switching, I was able to keep all three of our doctors. It kind of makes you wonder what Health Net did that my doctors, as a whole didn’t like. Notice with the proposed Obamacare, who cares how much the premiums are?
Then we have our new Governor “MoonBeam” Jerry Brown and his new budget proposals set for release tomorrow. Let’s just call it Christmas in reverse. The press prints phrases like “Painful budgetary truth,” “Chronic budget shortfalls.” The new governor wants a pay check, he won’t work for free. The truth is, no one valued Arnold’s free advice, it was deemed "Worth less." Make Californians pay for the "Bad news" advice.
A cure-all statement that is constantly repeated by politicians with little effect is: “We need to create more jobs to stimulate the economy.” If no one is buying, what are you going to produce and hire people to make? Better yet, what products can we make here cheaper than out sourcing to China?
So what is the bottom line? --no new money for government, no new jobs, high health care costs, no money for education, fire or police. If you are on welfare, they are going to pull the rug out from underneath you.
There is a comfort level we all enjoy, and it is starting to look as if, --We can't get there from here.
Copyright 2011 All rights reserved
Friday, December 31, 2010
Musings for the New Year
Another year has come and gone. We have gone from the year that was called the “Worst recession since the Great Depression,” To “The Great Recession.” The price of oil is up to 90 dollars a barrel and silver just hit 30 dollars an ounce (Ben denied printing any money on 60 Minutes).
The debate in Congress for the coming year will revolve around jobs. Of course the new hires will be off shore where there are no mandatory health care insurance premiums to pay.
Look for a Congressional investigation of the retirement funds, CalPERS will be center stage. A lot of life insurance companies could also be in very bad shape; not many annuity models were built on a 2 percent return on equity.
Several States will run out of funds for operation. Technically they can’t file for bankruptcy but they will be insolvent just the same (a vendor or a citizen can’t sue a state for non-payment). You might have to wait 100 years to get paid. Of course that won’t stop several hundred cities from declaring bankruptcy and adding to the frenzy. This could lead to local governments outsourcing emergency 911 calls to India.
Nationwide, expect the median price of homes to increase -- why buy a starter home when you can purchase a McMansion for 20K more ---with low interest and nothing down government financing.
Several European governments could collapse or repudiate their debts; Greece and Ireland come to mind. The problem not fully understood here, is that the real wealth of these countries is their educated youth. These people will vote with their feet if things don’t change and emigrate to other lands.
Iceland’s repudiation of its debt is kind of like a cat walking in front of a chained dog (i.e. the Euro Union). Will the Germans pay to keep the toilets clean in the rest of Europe? This could become another tea party movement, a goose-stepping one on steroids.
The idea that big is better in business, kind of falls apart during bad times. Fixed costs and tight profit margins can kill you. The A & P Tea Company, one of the nation’s largest grocery stores just filed for bankruptcy. Look for several more big names to file for BK this year.
The commercial loan sector is exhibiting severe signs of stress. A lot of non renewable 2 to 5 year loans are coming due. Bernanke is going to have a rough time trying to wall paper over this mess. More debt to add to the residential real estate bank losses.
Congress will have to deal with Social Security and Medicare. The new medical plan will be called Shaft-care---the Democrats and Republicans will unite together and shaft the silver foxes.
Look for oil to go higher and silver and gold to drop in price. It’s a normal reaction when you need to raise cash. Sell the good stuff and hold on to the dogs hoping they will come back. In reality people should be selling the dogs for what they can get, while they are still worth something. Retirement funds will save the garbage because it stays on the books at cost. Of course Ben and the Banks do the same thing.
Tomorrow brings in the New Year. It will be time to figure out how much we owe in taxes for last year. Thank God that we don’t have to pay for everything that Congress bought, where would we get the money?
Have a Happy New Year everyone, and God Bless.
Copyright 2010 All rights reserved
The debate in Congress for the coming year will revolve around jobs. Of course the new hires will be off shore where there are no mandatory health care insurance premiums to pay.
Look for a Congressional investigation of the retirement funds, CalPERS will be center stage. A lot of life insurance companies could also be in very bad shape; not many annuity models were built on a 2 percent return on equity.
Several States will run out of funds for operation. Technically they can’t file for bankruptcy but they will be insolvent just the same (a vendor or a citizen can’t sue a state for non-payment). You might have to wait 100 years to get paid. Of course that won’t stop several hundred cities from declaring bankruptcy and adding to the frenzy. This could lead to local governments outsourcing emergency 911 calls to India.
Nationwide, expect the median price of homes to increase -- why buy a starter home when you can purchase a McMansion for 20K more ---with low interest and nothing down government financing.
Several European governments could collapse or repudiate their debts; Greece and Ireland come to mind. The problem not fully understood here, is that the real wealth of these countries is their educated youth. These people will vote with their feet if things don’t change and emigrate to other lands.
Iceland’s repudiation of its debt is kind of like a cat walking in front of a chained dog (i.e. the Euro Union). Will the Germans pay to keep the toilets clean in the rest of Europe? This could become another tea party movement, a goose-stepping one on steroids.
The idea that big is better in business, kind of falls apart during bad times. Fixed costs and tight profit margins can kill you. The A & P Tea Company, one of the nation’s largest grocery stores just filed for bankruptcy. Look for several more big names to file for BK this year.
The commercial loan sector is exhibiting severe signs of stress. A lot of non renewable 2 to 5 year loans are coming due. Bernanke is going to have a rough time trying to wall paper over this mess. More debt to add to the residential real estate bank losses.
Congress will have to deal with Social Security and Medicare. The new medical plan will be called Shaft-care---the Democrats and Republicans will unite together and shaft the silver foxes.
Look for oil to go higher and silver and gold to drop in price. It’s a normal reaction when you need to raise cash. Sell the good stuff and hold on to the dogs hoping they will come back. In reality people should be selling the dogs for what they can get, while they are still worth something. Retirement funds will save the garbage because it stays on the books at cost. Of course Ben and the Banks do the same thing.
Tomorrow brings in the New Year. It will be time to figure out how much we owe in taxes for last year. Thank God that we don’t have to pay for everything that Congress bought, where would we get the money?
Have a Happy New Year everyone, and God Bless.
Copyright 2010 All rights reserved
Sunday, December 26, 2010
Public Education Doesn't Teach Thinking
Lately everyone is blaming our poor education system for the state of our affairs. We are turning graduates out of high school that can’t read or write. I have no problem with that, we need people to man the hamburger stands. If they can get my order right “Double cheeseburger, no pickle,” they pass my education test.
When I went to school (in an era fondly referred to as the “Stone Age,” by my son) everyone had a pretty good idea where they fit in. There were three people that always got A’s on all of their exams, then a few more were B students and the rest of us were C students. There were a few D and F students that were destined to become auto mechanics. On the whole, everyone accepted the fact that they weren’t genius material, but we all knew where we stood in the group; if you had a B or an A in one course, you could think of yourself as “above average.”
The TV and newspapers back then provided the news with very little political content. Being a Republican or Democrat back then was kind of like being a Protestant or a Catholic, it wasn’t a big thing except at election time. There was an unwritten law that one did not discuss religion or politics. It was a waste of time, you weren’t going to change anyone’s views, just piss them off (notice how this hasn’t changed).
The high school students today are not much different than 40 years ago. Everyone gets an A now, so an employer needs to weed out the “Car Mechanics” before they hire someone. The big thing that has changed over time is the inability of people to think for themselves and challenge what they read or hear from the media or their acquaintances. The point I am trying to stress here is that people don’t question the statements made by the media anymore, they quote them and/or shop for the news they want to hear.
The other day an economist on the news, stated that gas prices were increasing because of Chinese consumption. If you make 20 cents an hour, how much gas are you going to buy? Are gas prices increasing or is the value of our dollar decreasing. Am I the only one rising up out of my chair in disbelief of what I am hearing?
A while back, a friend of mine made the statement that everyone on the Federal Reserve Board was Jewish and he even got on the Internet and pulled up the article to prove it. The word “everyone” made me somewhat suspicious. The Aryan Nation is not what I call a non biased news source. The concept of shopping for "documentation" on the Internet makes me cringe.
There is no questioning of the “facts” anymore. The more a “fact” is repeated the more valid it becomes. The idea that one can question these jewels of refined thought and laugh at them, as being absurd, is heresy. Using common sense to disagree with what is accepted by our peers isn’t acceptable behavior. Keep your mouth shut or the others will laugh at you. Our schools don’t teach thinking skills, where you question the material presented. You’re asked only for the right answer to each question.
It brings to mind the Rest-Home-Senility-Test where the applicant is presented with a bathtub half full of water and given the option of using a bucket, a cup, or a teaspoon to empty it with. The right answer is not the bucket; you would pull the plug to drain it.
At some point more of us will start to question the options government is shoving at us. No police services, no fire, no schools, no military, but don't cut one penny of retirement, Social Security or Health care. And if they refer to something as a “No-Brainer,” it is you they have in mind (with no brains) and your wallet is in the cross-hairs.
It's time to start questioning the answers we are being given. California can cut all services and still not balance its budget. But of course Ben Bernanke, "Keeper of the Federal Purse," still has checks in his check book so I guess we are OK for now—if we don’t think about it too hard. We don't want to upset an upside down apple cart--do we? Give it some thought--there really isn't too much to lose if we did, go figure!
Copyright 2010 All rights reserved
When I went to school (in an era fondly referred to as the “Stone Age,” by my son) everyone had a pretty good idea where they fit in. There were three people that always got A’s on all of their exams, then a few more were B students and the rest of us were C students. There were a few D and F students that were destined to become auto mechanics. On the whole, everyone accepted the fact that they weren’t genius material, but we all knew where we stood in the group; if you had a B or an A in one course, you could think of yourself as “above average.”
The TV and newspapers back then provided the news with very little political content. Being a Republican or Democrat back then was kind of like being a Protestant or a Catholic, it wasn’t a big thing except at election time. There was an unwritten law that one did not discuss religion or politics. It was a waste of time, you weren’t going to change anyone’s views, just piss them off (notice how this hasn’t changed).
The high school students today are not much different than 40 years ago. Everyone gets an A now, so an employer needs to weed out the “Car Mechanics” before they hire someone. The big thing that has changed over time is the inability of people to think for themselves and challenge what they read or hear from the media or their acquaintances. The point I am trying to stress here is that people don’t question the statements made by the media anymore, they quote them and/or shop for the news they want to hear.
The other day an economist on the news, stated that gas prices were increasing because of Chinese consumption. If you make 20 cents an hour, how much gas are you going to buy? Are gas prices increasing or is the value of our dollar decreasing. Am I the only one rising up out of my chair in disbelief of what I am hearing?
A while back, a friend of mine made the statement that everyone on the Federal Reserve Board was Jewish and he even got on the Internet and pulled up the article to prove it. The word “everyone” made me somewhat suspicious. The Aryan Nation is not what I call a non biased news source. The concept of shopping for "documentation" on the Internet makes me cringe.
There is no questioning of the “facts” anymore. The more a “fact” is repeated the more valid it becomes. The idea that one can question these jewels of refined thought and laugh at them, as being absurd, is heresy. Using common sense to disagree with what is accepted by our peers isn’t acceptable behavior. Keep your mouth shut or the others will laugh at you. Our schools don’t teach thinking skills, where you question the material presented. You’re asked only for the right answer to each question.
It brings to mind the Rest-Home-Senility-Test where the applicant is presented with a bathtub half full of water and given the option of using a bucket, a cup, or a teaspoon to empty it with. The right answer is not the bucket; you would pull the plug to drain it.
At some point more of us will start to question the options government is shoving at us. No police services, no fire, no schools, no military, but don't cut one penny of retirement, Social Security or Health care. And if they refer to something as a “No-Brainer,” it is you they have in mind (with no brains) and your wallet is in the cross-hairs.
It's time to start questioning the answers we are being given. California can cut all services and still not balance its budget. But of course Ben Bernanke, "Keeper of the Federal Purse," still has checks in his check book so I guess we are OK for now—if we don’t think about it too hard. We don't want to upset an upside down apple cart--do we? Give it some thought--there really isn't too much to lose if we did, go figure!
Copyright 2010 All rights reserved
Sunday, December 19, 2010
Congress is not a Christmas Solution
Everywhere we turn, someone in a legislative body is passing a law to solve a problem. We have passed a laws handing out free health care, one for retirement benefits, one for a gay military, one for bank bail outs and there are several against drugs. Did it every occur to these lawmakers that laws just regulate people or their entitlements. They don’t solve problems, they create new ones.
The laws dealing with drugs backfire in an unusual way. You get caught dealing drugs, you go to prison. This is really an “Advanced Educational Training Camp” where you learn how to do it right. Plus you can pick up new skills, like lock picking, and identity theft. Let’s face it our high schools just don’t have the resources to offer these courses.
Then we have these wonderful laws setting up retirement plans. They have been working just great until a few people in government started to wonder aloud, where is the money coming from to pay for all of this? CalPERS states that it is making 7.75 percent interest on their investments; do we dare accuse them of lying or just laugh at their claim.
Congress cannot pass a law that will create jobs to replace the ones that were lost; most of those jobs are gone forever. They passed laws setting the minimum wage and demanded more taxes from these rich employers. The net result, whole industries moved off shore to produce their product and then import it. If you want your bread buttered for free, guess what, the butter isn’t going to be there for long.
Now it’s OK to be gay openly in the military. I can’t figure that one out. The last thing you would ever want to do is walk up to a marine and ask him if he was gay (you body probably wouldn’t be entitled to a military funeral). I guess you don’t have to be “A real man” to join the army now (that ought to be a real boost to enlistments). The only reason I bring this up is because of its insignificance. It’s not like half of the voters are gay, they are a very small part of the population and they get a tremendous amount of attention from Congress. The gay population can’t be more than 3% but it is at the top of the “To do” list for Congress. When you think about it, a bill on cancer research would get a “Ho Hum,” but a bill having to do with gay rights will get that Congressman’s name in the paper with a photograph. This program could work out real well with the Navy; the sailors wouldn’t have to come home every 9 months to be with “loved ones.”
Congress also reduced the Social Security tax by 2%. My only question is why? Isn’t this supposed to be money saved towards our retirement? (of course the Supreme Court said that it was a tax and not a retirement plan) So you get to spend it now instead of later—all $400 of it. It is very hard to raise taxes, and even when it has been done, and then reversed later in time, you feel the burn a second time, for the same thing. We know that Congress needs to raise taxes, but they seem more like clowns running a circus; “Vote for me, and get a free ride.”
The thing we really need to ask ourselves, are all of these new laws constructively solving our problems? The second question we need to ask, can they accomplish the task? The third question you need to ask is where is the money coming from? And the fourth question, does anyone really understand the bogus financing? If you have read this far, you know your up to your neck in quicksand, but hey, this is only a dream---- waking up could be a real nightmare.
Santa is coming to town next week and surprisingly he doesn’t look a bit like a Congressman. Just maybe we need to think about what we need for the coming New Year and sadly it is jobs. All I can suggest is help someone you know in need; God Bless and Merry Christmas to all.
Copyright 2010 All rights reserved
The laws dealing with drugs backfire in an unusual way. You get caught dealing drugs, you go to prison. This is really an “Advanced Educational Training Camp” where you learn how to do it right. Plus you can pick up new skills, like lock picking, and identity theft. Let’s face it our high schools just don’t have the resources to offer these courses.
Then we have these wonderful laws setting up retirement plans. They have been working just great until a few people in government started to wonder aloud, where is the money coming from to pay for all of this? CalPERS states that it is making 7.75 percent interest on their investments; do we dare accuse them of lying or just laugh at their claim.
Congress cannot pass a law that will create jobs to replace the ones that were lost; most of those jobs are gone forever. They passed laws setting the minimum wage and demanded more taxes from these rich employers. The net result, whole industries moved off shore to produce their product and then import it. If you want your bread buttered for free, guess what, the butter isn’t going to be there for long.
Now it’s OK to be gay openly in the military. I can’t figure that one out. The last thing you would ever want to do is walk up to a marine and ask him if he was gay (you body probably wouldn’t be entitled to a military funeral). I guess you don’t have to be “A real man” to join the army now (that ought to be a real boost to enlistments). The only reason I bring this up is because of its insignificance. It’s not like half of the voters are gay, they are a very small part of the population and they get a tremendous amount of attention from Congress. The gay population can’t be more than 3% but it is at the top of the “To do” list for Congress. When you think about it, a bill on cancer research would get a “Ho Hum,” but a bill having to do with gay rights will get that Congressman’s name in the paper with a photograph. This program could work out real well with the Navy; the sailors wouldn’t have to come home every 9 months to be with “loved ones.”
Congress also reduced the Social Security tax by 2%. My only question is why? Isn’t this supposed to be money saved towards our retirement? (of course the Supreme Court said that it was a tax and not a retirement plan) So you get to spend it now instead of later—all $400 of it. It is very hard to raise taxes, and even when it has been done, and then reversed later in time, you feel the burn a second time, for the same thing. We know that Congress needs to raise taxes, but they seem more like clowns running a circus; “Vote for me, and get a free ride.”
The thing we really need to ask ourselves, are all of these new laws constructively solving our problems? The second question we need to ask, can they accomplish the task? The third question you need to ask is where is the money coming from? And the fourth question, does anyone really understand the bogus financing? If you have read this far, you know your up to your neck in quicksand, but hey, this is only a dream---- waking up could be a real nightmare.
Santa is coming to town next week and surprisingly he doesn’t look a bit like a Congressman. Just maybe we need to think about what we need for the coming New Year and sadly it is jobs. All I can suggest is help someone you know in need; God Bless and Merry Christmas to all.
Copyright 2010 All rights reserved
Saturday, December 11, 2010
The Gold & Silver Shortage---A Future Brick Wall
Commodities are the only game left in town. This is the one market that Ben can’t effectively control. And this could be his downfall. The real cost of borrowing money is zero if you factor in inflation. This has a win win effect for investors buying futures. In simplified terms, the future price of a commodity future one year out would have a premium. It would be the interest on the money for the term of a year, needed to purchase the commodity on the spot market, plus storage costs over the year before delivery. So a free ride with interest charges, with incidental storage costs and an add in for the volatility cost.
Commodities as a whole are rising in price. A lot of it is inflation related. Since there is no cash return for dollars in the bank; commodity speculation is the new frontier open to abuse. In the futures pit, one trader will sell the future delivery of one million barrels of oil, say for November 2011. At the maturity date for that trade, the seller delivers the oil or buys his contract back. All contracts are matched buyer to seller. If you are speculating, you never want to take delivery. The speculator sells naked contracts for delivery if he believes the price will drop and he buys contracts when he thinks they will increase in value. This person will close out the deal by selling or buying the opposing trade back. Margins are as low as 6 percent. So to control one million in gold, you need 60K in face money.
The commodities market has a valid justification for its existence; it helps take the risk out of business ventures. An airline would buy jet fuel futures a year or two out to limit upside costs. The company is not sure what the future market price will be, but buying a futures contract for later delivery, locks in their costs. If a gold company has production costs of $800 an ounce and plans to produce 1000 ounces of gold, they would sell 10 futures contracts for delivery say 6 months out at $1300 an ounce. This guarantees that they will meet their payroll and keep the bookkeeper happy.
For every 100 futures trades, only 10 are real (a commodity actually changes ownership from one holder to another). All the rest of the transactions are speculation. A problem can arise in the futures market if the prices take off. All of the buyers of gold and silver futures might demand delivery---especially if the price increased dramatically.
The Hunt brothers tried this in the 1980’s and successfully cornered the silver market. They were buying it and taking possession. Needless to say prices took off. The Hunts had a legal corner on the market and it was about to ruin a majority of the Chicago Board of Trade (who were opposite the trade). So the CBOT changed the rules on the Hunt brothers and limited the number of contract that could be held, to 10 million oz and all contracts over that amount, had to be liquidated. Naturally that saved the ass of every scumbag CBOT trader and bankrupted the Hunt brothers.
With a little thought, it doesn’t take much Gray matter to figure out that one can run the futures market with only a small amount of real gold changing hands, and at the same time have several million ounces of contracts being traded daily.
Many people have their gold and silver stored in bullion banks. IMHO, I don’t think even one of those banks could payout on a modest 10% run on the bank. That’s why it takes up to 30 days for delivery when you request it. They have to go out and buy it on the open market.
The question we need to ask is “Have we built a gold and silver bubble, or is this perceived increase in price, a measure of how bad this quantitative easing has gotten?” The futures market could turn into a tar pit if everyone decided to take delivery of their gold and silver.
Bernanke has tinkered with reality. Maybe, its gold and silver’s turn to tinker with Ben’s QE2. Do you know where your gold and silver are? They might not be where you thought they were.
The $20 coin at the left, was in circulation 100 years ago and has kept its value quite well. The old money is no longer in circulation; it's worth quite a lot more than the 20 dollar bill it represents today, go figure.
Copyright 2010 All rights reserved
Commodities as a whole are rising in price. A lot of it is inflation related. Since there is no cash return for dollars in the bank; commodity speculation is the new frontier open to abuse. In the futures pit, one trader will sell the future delivery of one million barrels of oil, say for November 2011. At the maturity date for that trade, the seller delivers the oil or buys his contract back. All contracts are matched buyer to seller. If you are speculating, you never want to take delivery. The speculator sells naked contracts for delivery if he believes the price will drop and he buys contracts when he thinks they will increase in value. This person will close out the deal by selling or buying the opposing trade back. Margins are as low as 6 percent. So to control one million in gold, you need 60K in face money.
The commodities market has a valid justification for its existence; it helps take the risk out of business ventures. An airline would buy jet fuel futures a year or two out to limit upside costs. The company is not sure what the future market price will be, but buying a futures contract for later delivery, locks in their costs. If a gold company has production costs of $800 an ounce and plans to produce 1000 ounces of gold, they would sell 10 futures contracts for delivery say 6 months out at $1300 an ounce. This guarantees that they will meet their payroll and keep the bookkeeper happy.
For every 100 futures trades, only 10 are real (a commodity actually changes ownership from one holder to another). All the rest of the transactions are speculation. A problem can arise in the futures market if the prices take off. All of the buyers of gold and silver futures might demand delivery---especially if the price increased dramatically.
The Hunt brothers tried this in the 1980’s and successfully cornered the silver market. They were buying it and taking possession. Needless to say prices took off. The Hunts had a legal corner on the market and it was about to ruin a majority of the Chicago Board of Trade (who were opposite the trade). So the CBOT changed the rules on the Hunt brothers and limited the number of contract that could be held, to 10 million oz and all contracts over that amount, had to be liquidated. Naturally that saved the ass of every scumbag CBOT trader and bankrupted the Hunt brothers.
With a little thought, it doesn’t take much Gray matter to figure out that one can run the futures market with only a small amount of real gold changing hands, and at the same time have several million ounces of contracts being traded daily.
Many people have their gold and silver stored in bullion banks. IMHO, I don’t think even one of those banks could payout on a modest 10% run on the bank. That’s why it takes up to 30 days for delivery when you request it. They have to go out and buy it on the open market.
The question we need to ask is “Have we built a gold and silver bubble, or is this perceived increase in price, a measure of how bad this quantitative easing has gotten?” The futures market could turn into a tar pit if everyone decided to take delivery of their gold and silver.
Bernanke has tinkered with reality. Maybe, its gold and silver’s turn to tinker with Ben’s QE2. Do you know where your gold and silver are? They might not be where you thought they were.
The $20 coin at the left, was in circulation 100 years ago and has kept its value quite well. The old money is no longer in circulation; it's worth quite a lot more than the 20 dollar bill it represents today, go figure.
Copyright 2010 All rights reserved
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