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

Four More Years of This?

Listened to the Presidential debate the other night and did a ho hum. I went to the gas pump the next day and said what the hell—FIVE DOLLAR gas????

Then I started to review the last 4 years from my perspective. The price of gas has more than doubled. My wages have been frozen for the last three years and they are still laying off people at Camp Pendleton. The price of steak and hamburger has doubled. Can goods on the shelf, are smaller 14 oz vs. 16 oz. Laundry soap is now $8 dollars a box, shampoo is $8 a bottle. The price of coffee is out of sight, and they are messing with the container size. We used to get $10,000 in interest on our saving and I think we’ll get about $700 this year (great interest rates).

Then if you want to add up cable, phone, heat, lights, water and sewage, they are all up 30 percent. Our water and sewer bill is 100 dollars a month. We buy drinking water for about another $40 a month only because the tap water isn’t fit to drink.

The Democrats want to make sure everyone has health insurance because many people can’t afford it. This phrase comes to mind; “In order for government to give money to someone who has none, they have to take it from someone who has some.” The food stamp program is another great vote getter, and remember if you want more food stamps, think carefully before you vote. With food stamps, you get the option to keep the cell phone and cable TV.

When we take our evening walk now, my wife and I marvel over the number of cars parked in front of each house. We are talking three car garages with 3 cars in the driveway and 3 on the roadside for many homes (the garages are now used for storage). Four years ago the street sweeper might have had to dodge one or two cars on our street. Now, people kill for a parking spot at night. Listen to the pundits and you hear that real estate is coming back and I don’t see it. The kids are coming back for sure, to live with mom and dad. Our next door neighbor rents out two rooms of his 4 bedroom home. The lack of privacy would drive me insane.

My Sister and her husband in Colorado gave up looking for jobs and both retired at age 62. Kind of makes you wonder about the unemployment stats they just published. There must be an election coming up. They both voted for Obama last time, and I don’t want to raise my blood pressure by asking them who they are going to vote for this year.

Bernanke using his car salesman rhetoric is trying to keep us “from having a double dip recession.” We never got out of the first one (if you ask me), so if you buy his line, things must be getting better. However, this recession is now labeled the “Greatest Recession since the Great Depression.”

Ben is printing too many dollars, and he will print more. It looks like this will stop when these wantobe million dollar homes out here are finally worth a million dollars. When that happens, bread should be $10 a loaf. Of course if you are in a retirement home, a million dollars might only last a year. Kind of a cruel joke for someone who saved all of their life. But if you spent every dime you had, you’re going to fit right in, to this new economy.

30 days until the election. Four more years of what we just had, kind of sucks. The difference I see, is that Romney will pragmatically work with Democrats. Obama left the Republicans out of the legislative process when he passed Obamacare with an “I don’t need you“ attitude. He burned a bridge that has “payback” written all over it.

During his term in office, Obama has vacationed the world, been on TV every day lecturing us like children, and been campaigning incessantly for re election. His executive powers to enforce the laws have entered the realm of legislative powers when he chooses which laws to enforce. If you are leaning on a shovel, talking to me, you aren't working as far as I'm concerned. A new face with different ideas could be the fresh start this country needs.



Copyright 2012 by Jim Brubaker

Oil Prices Set to Collapse

There are a lot of oil producing countries that depend on oil dollars to pay the bills. With oil at 100 dollars a barrel, they have to pump x barrels of oil to be able to pay to run the government. If oil were to drop $11 like it did last week, and an oversupply surplus is announced of 11%, these countries will fall short of meeting their planned budgets. The prime directive of each country is now to pump more oil to make up the shortfall. Short term, this solves the problem. Only now, the oversupply might be 15% and the price could drop another 11 dollars. The oil producers will quickly realize that the increased production is cutting their own throats. The trouble is, the respective governments need the dollars, not the oil. These countries can’t cut their budgets anymore; their only option is to pump more oil.

With world unemployment at around 20 percent, energy consumption has to drop. This is where people will cut. No air conditioning, no heat, no cooking. A heating bill in California is about zip, but in Colorado, it could be about $200 a month in the winter time. I have seen senior citizens cut off the heat and sit in a stack of blankets to keep warm because they couldn’t afford to pay their heating bill. And of course, Obama the white knight will fix that--more blankets please!
Gasoline consumption stateside could drop from 20 to 50 gallons a week for a family of 4, down to possibly 10 to 25 gallons a week. Multiply this drop in consumption by millions of people, and the lack of demand for product becomes very noticeable.

Look for oil production to continue at present production levels, and for world consumption to drop another 10 -15 percent. The price of oil could collapse and drop below $60 per barrel before December. That would be welcomed news here, but for the rest of the world selling oil, it could translate into serious financial problems. At 50 dollars a barrel, countries would have to pump twice as much oil to obtain the same revenue. And that sort of overproduction could send prices even lower. Remember the Arabs are buying food and other consumables with their oil revenues.

This drop in the consumption of energy is a sign of economic hard times worldwide. A drop in oil prices is a drop in taxation for a country like the United States. Call it a tribute tax. It will make life a little more bearable for the near future, for the US and Europe, but sooner or later, bankers and oil sellers are going to demand a currency linked to gold. You can print money, but you can’t print food or the other things that oil can buy.

Look for the price of oil to collapse in the coming months. And after is does, look for it to be pegged to the price of gold and silver. Do you get the feeling that our currencies are floating on a cesspool of debt? Nah, it must be my imagination acting up again.


Copyright 2012 by Jim Brubaker

Low Interest Rates Make No Cents

The economy is doing just great. If you are retired, your savings are generating just gobs of interest--right! Figure a million dollars in the bank is generating about $10,000 a year. Remember when interest rates were about 8% and your return would be more like $80,000 a year?

If you are into buying bonds, there is no reason to buy any further out than 5 years at these interest rates. They can’t go much lower, and if they do, why even buy them? Do you want to hold a 100K 3% 30 year bond if interest rates double. Can you wait 30 years to redeem them? Or take a 50% haircut when you redeem them early?

The interest carry costs for futures are warped out of place. For a futures contract, 100 oz of gold one year out, a majority of the option cost is figured as interest on the actual amount of money tied up in the contract till delivery, plus storage fees and a volatility premium. So the commodities game right now is in play, with very low interest rates. It’s not rocket science to figure out that borrowing the money to buy gold futures is a money making proposition, the interest costs are negligible. Sounds a little like the housing boom doesn’t it?

Your health care and auto insurance companies invest the premiums received, into the financial markets to get an additional return. These returns allow them to reduce premiums charged on policies. This nice little cost cutter has gone to hell.

Retirement plans like CalPERS have assumed that the return on investment would be around 8.5%%. Guess what, it is not even close. Figure 100% of all state government plans are in some form of denial, “This can’t be happening.” If they were marked to market and held to realistic return rates, a lot more money would have to be ponied up by the states. Naturally the legislatures hope that this problem will just go away given enough time—Translation: After they are dead and gone.

Real Estate loans, you want to buy a home? Fannie and Freddie still offer nothing down loans at competitive low interest rates. If your credit rating isn’t up to par, that will not stop you from getting the loan. The aggravating thing, is that if the government got out of real estate financing, the sale prices would be a hell of a lot lower than what Fannie and Freddie are offering with government financing. To compound matters, there is no one out there to buy 30 year paper at these interest rates. By no one, I mean the banks, investment firms, and anything else you can think of. This is why Mr. Bernanke has decided to go with a 40 billion dollar a month re-purchase of mortgage securities.

The question has to be asked, who really benefits? The government can still borrow at ridiculously low rates. The interest on the national debt remains lower than normal, and Congress can spend more than it takes in in taxes and kick this can further down the road.

The big thing to understand here is that the current interest rate keeps the government debt manageable. Plus it facilitates the borrowing of more money. Why not borrow instead of tax the constituents? The concept of borrowing and putting it on the national debt has no real tie to the world most people live in. The national debt is just a place where we park debt we have no plans of ever repaying.

Americans are led to believe that the Arab crisis is the reason for the doubling of gasoline prices, when in reality; it is due to the massive printing of dollars. The US government is going to tax everyone with a savings account 50%. You have the same amount of dollars in the bank, but it only buys half as much. Bank depositors need to ask one question, why keep your money in the bank at these rates, where is the reward?

Our government has borrowed 17 trillion dollars. As long as interest rates are artificially low Congress will have no problems, but the minute they rise, we as a nation are in serious trouble. The funny thing is, the money they borrowed, was from people preparing for retirement, the silver foxes were going to live off of the interest. It’s a little like having retirees stand on a chair with a rope around their necks. They bought the rope and the chair and now the government wants the chair. Their savings were their lifeline to comfort in retirement. But by God, the government will not fiddle with your Social Security, all $1,200 a month of it. They are going to fiddle with the million you have in the bank. You’ll now get $800 instead of the $6,600 a month in interest; you had counted on for your golden years.

Ben has to buy all paper presented in order to keep interest rates low. If he doesn’t, you'll get more interest on your savings, and we can’t have that, can we? Risk has been taken out of the financial markets. Government guarantees for everyone, drinks on the house. What ever happen to plain old common sense?

Romney says he'll replace Ben if elected, so we do know when the party ends--- November 6th. At that point the movie is over and reality sets in---Got Food Stamps? Looking on the bright side, the Sunday paper is now cheaper than a roll of toilet paper and goes further if cut right.


Copyright 2012 by Jim Brubaker

Idiotic American Foreign Policy (reprinted)

This is a reprint from last October 27. I'm reprinting it to point out how bad our goodie-two-shoes foreign policy is going ("sucks" might be a more apropos verb). I apologize to readers who already read this. Normally I wait a few years to republish previous articles. Next new article should be ready Sunday.

Normally this blog deals with the coming Great Depression so foreign policy is a bit of a stretch. We have just helped kill the leader of Libya. Not much of a big deal, but we did it so these people could have Democracy. That country is totally devoid of any social institutions so there will be no Democracy, the guy with the most bullets will be the new President. Of course if your currency becomes suddenly worthless, you are pretty much in the midst of a depression. Life in Libya looks rather brutal for the foreseeable future.

We are getting out of Iraq. Great idea; Christmas comes early for Iran. There is turmoil in Palestine, Jordan and Egypt; Israel could go bananas and nuke Iran or vice versa.

Oil ties the US to the Middle East; water ties the Middle East people to the land. The real key is not oil, but rather water. Iran and Turkey, China and South East Asia, are building dams that could start a war over water; the hell with the people downstream.

Then in Pakistan, we send a woman (Hillary) (where women are considered property) to tell them how to run their government. Great for women’s lib, but who are we kidding, the Pakistanis would like to chain her up in a basement and teach her what the slang term "airtight" means. These people are not going to listen to a woman, more to the point; they feel insulted having to deal with her.

The US press is selling their readers this "goodie two shoes" idealistic policy of spreading Democracy to the world. The reason we lost in Viet Nam, was because the average farmer could point to his family and land, but he could not point to Democracy. Democracy does not come from the masses who have nothing, but rather from those who have a position of wealth that needs to be preserved. Democracy is not an option for the Middle East; they have always taken what they have wanted. Might is right.

U.S foreign policy towards Libya has been very irresponsible; we can't shoot first and then think about it. Getting rid of Qaddafi accomplished nothing. His supply of stinger missiles is now on the auction block. Leaving Iraq without some advisory troops begs Iran to move in. Obama needs to send Hillary home with a box of cigars for Bill. And while he's at it, he mise well paint a bull's eye on Air Force One. The score is Obama 3 Arabs 0. I feel that the game is only pausing for the half time activities. Got Stingers?

Copyright 2012 by Jim Brubaker

Slow Money Vs Fast Money

Believe it or not, there are two types of money. It sounds implausible, but it’s true. If you live paycheck to paycheck, you have “fast money;” it’s here today and gone tomorrow. “Slow money” is the funds socked away for that rainy day, years in the future.

Enter someone like Bernie Madoff. His investment program was a Ponzi scheme. The money he was using was "slow money,” investors didn't need for several years out. Rich people are rich as long as they don’t spend the money, which goes without saying. Notice though, Bernie’s rich investors were rich up and to the day the scheme was uncovered, they didn’t get poor slowly over time--it happened immediately. What did him in was a bad economy. His investors needed funds to cover losses. As a group, their increased withdrawals, was the monkey wrench that fell into the gears. Bernie’s “slow money” accounts were turning to “fast money” obligations before his eyes.

Our government “borrowed” the 2.6 trillion in the Social Security trust fund and spent it. Then Congress purloined 4 trillion to cover the housing mess and it's gone. Then there is that 8-10 trillion in IRA savings that we have loaned indirectly to the government, spent also. So long as everyone doesn’t decide to retire at the same time, there isn’t much of a problem. The trouble is, that is just what is happening. People unemployed and 62 years old, are not going to wait until age 65 to 70 to retire and they are cashing in their IRAs. These people are no longer paying taxes; they are now receiving tax money (i.e. Social Security benefits). The government’s financial pain is further exacerbated by high unemployment, low tax collections and legislative fiscal irresponsibility.

It's becoming more obvious that the present system cannot last without reducing the massive government spending. “Kicking the can down the road” or “Rearranging deck chairs,” both point to that moment in time where things get real. It’s a little like promising to quit smoking. Everyone quits eventually--- For most, it’s not a planned event.

Our national debt is comprised mostly of “slow money” borrowed from financial institutions worldwide. With the deteriorating economy and the higher than normal redemption of funds, the government needs to borrow more, or an option not available to Bernie, print more dollars.

People are beginning to dip into their “slow money” accounts. As long as the money wasn’t needed, the government had no problem. Everyone assumes that FDIC insurance is to protect the depositor. It isn’t, it’s there to keep depositors from withdrawing their funds from the banking system in times of financial stress. Our government has already borrowed and spent a great deal of this bank money and needs access to the banks in order to borrow more.

Lack of "slow money" was the problem that Bernie Madoff faced. The system works perfectly as long as more is being deposited than is being withdrawn. All of this “slow money” that the government borrowed and spent will suddenly turn to fast money obligations. How do you pay back 17 trillion when you are borrowing an extra trillion a year to add on to it? Just like Bernie Madoff’s clients, you have a piece of paper stating how much you have in your accounts. It isn't a cash balance, its an IOU. The money was spent.

Reality is when your wife puts 170k on the family credit card. There is a complete disconnect when the Federal Government puts 17 trillion on plastic. We don’t have to pay that one—do we??? Bottom line, your retirement funds paid for the party that is still in progress. Learn the full particulars sometime after the next election.


Copyright 2012 by Jim Brubaker

Fixed Costs the Giant Killer

A while back in San Marcos, California, we had a drought and our public water utility requested that everyone reduce water consumption. The plan worked great, with an unexpected consequence. We got a notice from the water utility that rates had to go up because we were consuming less. The water company had fixed costs that weren’t being met because of the drop in consumption.

These fixed costs could lead to cash flow problems in a business that expands too much during good times. They might not be able to meet their fixed costs when times get tough. For example, General Motors doesn’t make a profit on every vehicle. Everything they make up to September or October covers fixed costs. The rest of the year is their profit. Have a bad sales year or pay too much in retirement benefits, you don’t meet fixed costs.

Stores that may be in a trouble are chains like Staples, Home Depot, Lowe's and Wal-Mart. Fixed costs for each store are real, and when times were good, the money rolled in. A drop in consumption of about 15% really hits the bottom line hard. The real pain is felt one tier up in the organization, upper management, the bigger the organization, the more corporate infrastructure that demands fiscal support (i.e. fixed costs).

Internet competition is exacerbating the chain store problem. A brick and mortar store has obvious fixed costs in inventory, that a web based store doesn’t have to contend with. Display a photo and sell. Do it right and you bypass the sales tax.

Chains are starting to downsize. They are closing marginal stores and laying off personnel. The competition in our area is intense. We have 4 Home Depots, 2 Lowe's, 2 Staples and 3 Office Depots within 12 miles of each other. The Office Depot by our place is now closed and I had no idea when I drove over the other day. The Ace hardware I use to go to every Saturday for free popcorn with my son is gone.

We need to step back and realize that things are getting progressively worse only because people are not consuming as they were before. Once we realize that, we can understand why this mess is not going away any time soon. Consumption is what drives our economy. The super stores that displaced all of the mom and pop stores 20 years back now have a problem of being too big. Size does matter in a declining economy. These businesses are asking the question “Do we have the funds to continue operating?”

If we examine government, there is a different view to downsizing. Why bother. And the aggravating thing, any money left over at the end of the year has to be spent or turned back into someone higher up who will figure out how to spend it. So if there was a couple of million left that wasn’t spent, you kind of see how every department got the wide screen TV and the exotic exercise machine. What would happen, I wonder, if the department head got a 10% commission added to his paycheck, for funds not spent and returned to the General Fund? Of course, the taxpayers would never tolerate a State employee receiving a 10 million dollar bonus for cutting welfare by 100 million, or would they? (Can't happen but it sounded funny)

What we can deduce, is that private enterprises that expand, increase their fixed costs. And as these fixed costs increase, they tend to become unmanageable in a recession/depression when they try to downsize. Government on the other hand, has budgets that have been preapproved for spending. Government doesn’t have to make a profit in order to survive.

Both Private and Government entities can file for bankruptcy. This only happens after they have tried everything else. Private businesses fail for lack of consumption on the part of the consumer. Whereas, the problem for most of the city government failures to date, is too much consumption, sandwiched with declining tax revenues.

I was just listening to the nightly news and someone stated that Medicare had until 2023 until it went broke. That put my mind at ease, it’s kind of like the Captain of the Titanic advising the passengers that they get to keep the deck chairs when they leave the ship. The bankruptcies now happening, started 3 to 6 years ago. The business model for government and private enterprise has changed somewhat. Private enterprise will pay for failure by going out of business. Not so with government. They are the only abstract body that can perform a sexual act upon all of its constituents that doesn’t result in a single pregnancy. And if they can do it twice, they’ll probably get a pay raise. You can be rewarded for gross incompetence in the government sector, go figure!


Copyright 2012 by Jim Brubaker

The Depression Has Been Called Off Due To A Lack Of Interest

When our government collects 2.5 trillion and spends 3.5 trillion who gets hurt the most? The poor, they have the least to spend. Look at it this way, If government taxes were to cover expenditures, a dollar would be worth a dollar. But if the government spends 1/3 more than it collects, they have to print dollars. So now each dollar will only buy what 66 cents used to buy. You have just been taxed 33 cents on every dollar you earn after taxes by inflation. Notice, you didn’t have to fill out any forms or mail in a check to the government. Your dollars don’t go as far as they did yesterday.

These trillion dollar a year deficits will bankrupt the government. If you are on the receiving end of entitlements, who cares? They owe it to me, pay up. The concept of a train wreck is not there. Give me my benefits until you can’t and then we will sue for back payments. It’s kind of like adding more vehicles to the freeway until it clogs up and stops moving.

Here is what happens in a financial collapse. Nobody gets paid. Nothing gets delivered. You want to buy something, currency and credit cards would be worthless. A driver in Colorado with a full truck load of potatoes is not going to transport them to Pennsylvania without clear cut payment for fuel. Food distribution on the retail level would stop, if looting hadn’t already solved the distribution problem for what was already on the shelf.

At some point, the trillions of printed money will leave little to consume. The farmers this year have a very bad corn crop. But with insurance, the losses will be minimal. But notice one thing, the farmers get their dollars for a failed crop, but half of the corn is not available for consumption, it doesn’t exist. This is what happens when you print money, you’re not producing anything for consumption, you are only enabling consumption.

So the real problem will be that can of beans now selling for 98 cents and that gallon of gas at $4.20. If the can of beans increases in price to $9.98 and a gallon of gas rises to $42 dollars a gallon everyone will be out to crucify the local Arab or farmer with glee. Notice how the government is out of the loop.

Looks like the old farts in Florida will vote for Obama because of the free health care. Look at it from a different perspective. If you worked all your life and saved up one million dollars, an 8% return on you nest egg (80K), would cover most of the bills. With T-bills now paying a half a percent, how do you retire on 5K in interest a year? What caused it? The FHA has financed another 4 million homes with nothing down because the home buyers have no money saved up for a down payment. These loans merit an 8% interest rate just from the risk involve, but alas, they are government insured.

It pays to be a deadbeat. Why not tax everyone one months labor or let them pay someone to work for them? The concept of tax the rich has some merit, but why not tax everyone at least one month of their wages or one month of their life? Rome asked for two months and built a lot of roads. We need everyone contributing to make a better America, not just the rich.

There is a chance of reform with the next election, but will it happen? Its hard to say, If interest rates were to jump to 8%, Federal Income tax collections couldn't pay the interest on the national debt and the "Game Over" light starts flashing. We are almost there, and Congress is still stacking more hay on the camel. What's one more straw?

Copyright 2012 by Jim Brubaker

The Election is getting closer

I can hardly wait for the election to be over. The winner will be the big loser. The economy is tanking at a faster rate as every day ticks by. It’s Democrats against Republicans in the Congress. I would expect the people in Congress to keep their mouths shut and legislate. But oh no, they are too busy trying to get reelected. Naturally it’s all the other party’s fault. Turn on the TV and if you can’t tell the speakers party affiliation after 15 words, you have a problem—not the guy talking.

The biggest mistake of the present administration was trying to bring Democracy to the Middle East. Liberia, Egypt, Syria, Iraq, and Iran are all in a state of flux. Oil revenues were their “food stamp” program for the masses. We have destroyed that system of guaranteed delivery with a promise of Democracy. Hillary Clinton thinks that Democracy will spring up if the despots are disposed of. With dreams like that, even Lewis Carroll would dub her a “Snow Queen.” It’s all about power, the more you have, the more money and sex is yours for the taking.

We have Israel with nukes. We have a President that has wiped out two Arab leaders, Osama Bin Laden and Muammar Gaddafi. Where is the major population of the Middle East looking to for guidance? No food, no political order, they don’t give a damn about Democracy. The funny thing is that these people don’t give a damn about the oil, its water rights that determine whether their family lives or dies. Nobody is paying attention to the dams being built surreptitiously in the region (ok maybe Israel is).

Neither candidate has a real chance of solving “The Greatest Depression to ever be experienced.” The greatest hurdle facing the nation is our declining tax base. The United States is broke and we have Republicans and Democrats fighting over taxing the rich. When they pass this next tax bill, how’s that going to work? Obama’s speeches seem to imply, If you’re a Democrat, you don’t have to pay the tax, but if you are a Republican, you do. Maybe we can deduce from the heated political arguments, that “A Republican is a Democrat with money.”

Hiding money for the rich is very easy. I knew a doctor that formed a corporation and paid himself $600 a month. I asked him how he could live on so little, he said his wife was an RN making good money. These people write their own W-2’s, they are the employer. Show me a worker that would rather spend his paycheck on higher taxes than on his family? How many Congressmen have been caught cheating on their taxes as well as their wives?

The issue for the next election is higher taxes for the rich. The problem is, raising tax rates in this economy does not guarantee more taxes coming in. Common sense suggests that if you double the tax rate, you double revenue. What history teaches us, in a depression, you end up with less.

Obama stuck a broom in a hornets nest when he passed Obamacare. What happens from here is all scripted, Obama will get his comeuppance from Congress. Paybacks are a bitch.

From here, it’s all on TV, Republicans against Democrats. The trouble is, is anybody listening? Let’s face it; the voter is fed up and tuned out. Do we have a President or a jive ass pimp lookin to sell us what we want for our vote?

Copyright 2012 by Jim Brubaker