Defined Benefit Plans (Pensions)

Pension funds are still using 8% annualized returns as their internal rate of return.  In a zero-interest rate environment, you cannot even come close to approaching that return of 8%, which, of course, forces these funds into risky asset classes, such as stocks and investment grade bonds (BBB).  (Defined benefit plans are underfunded to the amount in excess of $1 trillion.)  Anyone receiving a defined benefit payout better start learning to live on half of that amount, which may not be conservative enough.  Why?  Because those plans will take a haircut of at least 50%, given the potential for an economic melt down over the next four years.  In other words, learn to live with less, not more!

Slaughterhouse Approaches

“Bull Tarts” depend on government handouts and bailouts for their success.  These are the only tools they have left.  Real economic growth is not going to happen for years.

But, perhaps the world is beginning to collectively realize that those Wall Street lies have no substance, and that bailouts are not the basis of prosperity after all. Those bailouts are nothing more than popular delusions put forth by Wall Street that will cause bulls to lose everything in the end.

So keep asking for your financial bailouts and kidding yourselves that all really is ok, “Bull Tarts,” because that slaughterhouse is fast approaching.

Federal Reserve System: Destroying the Function of our Capital Markets

The Fed is destroying the capital markets by pegging and manipulating the price of money (interest rates) and debt capital.  Interest rates signal nothing any more as a mechanism of allocating money between lender and borrower, because interest rates are "zero."  Capital markets are at the heart of the free market, and they are not working.  Why?  Because the Fed is manipulating every aspect of our so-called free market.  And, we all know how well that is working!

Disconnect Among and Between SPX, Oil, and 10-Year Note

America's Welfare State: Electronic Benefit Transfer (EBT) Food Stamp Card

I know I am suppose to be on my "Summer Hiatus," however, I just could not pass on this one.  After reading my post, I believe you will understand why I had to do a post on it.  So, without any further ado, the state of New York would prohibit welfare recipients from spending their tax-funded benefits on cigarettes, alcohol, gambling, and strip clubs under a bill passed overwhelmingly by the state Senate on Tuesday.  Wait, you mean you can not spend other people's money to pay for a lap dance?  What crazy form of inhumane austerity is New York trying to pass?  I hope the Department of Justice (Are you listening, Eric Holder?) looks into this inhumane bill.  (LOL)  But perhaps the scariest scenario is that New Yorkers actually do spend their EBT food stamp money, (no, taxpayers money), at strip clubs.  Is any of this registering with you, American taxpayer? To put it mildly, I was outraged that individuals could use these EBT cards, which are designed to purchase food, to buy cigarettes, alcohol, gambling, and of course visit your local strip clubs.  Click here for the article. 

Summer Hiatus

I will be making only selective posts over the next month as market conditions warrant.

How Would Japan's Topix 28-Year Low Equate to the $INDU?

2012 and 2013 Will Usher in the End of Our Known Economic/Financial System: The Scariest Presentation Ever?

You may want to think twice before viewing this presentation.  But, then again, it just may provide you with the impetus you need to make the necessary changes both mentally and financially to survive the upcoming upheaval.  If you really want to proceed, please click on PRESENTATION.

What Now, DJIA?

The following Point & Figure Chart on $INDU (Dow Jones Industrial Averages) demonstrates what I like about these types of charts.  That is, these types of charts are very easy to read.  You get the feeling from the chart that the trend from up to down is now in place.

The End Game

Since 2008, the general belief is that Bernanke and Fed saved America and the world from the abyss through the outpouring of trillions of dollars into the financial system.  Of course, all that liquidity ended up on Wall Street but not Main Street.  Yes, financial assets are up from March 2009; but your purchasing power has eroded big time.  Employment hasn't recovered.  May’s NFP added just 69,000 jobs on expectations of 150,000, which is a major miss.  (Good job pundits.)  See, all that liquidity added to the economy was simply adding more debt to the economy.  Yes, I expect with today’s NFP numbers and with the world markets collapsing (German Dax is now down over 4%.) that the way is now clear for Bernanke to institute another round of QE, which we should all know by now will also fail!

Of course, no one knows exactly what is on the economic/financial horizon; but I still maintain that during the next four to five years we will experience a social/economic meltdown of mega proportions, such as the following:

1. Unemployment rate of 35% to 50%, which if you look at the unemployment rate for teens in some of our states, we are already at those levels.
2. Majority of banks will fail, just not in the United States but worldwide. (Just look at Europe and some of the bank runs already occurring there.)
3. Governments will default on most of its commitments, just not its sovereign debt.  (Just look at Greece, Spain, and Italy.  And, yes, I believe it will happen here.)
4. We will experience major social unrest throughout the world.  (I believe that is already occurring, Europe.)
5. We will experience a radical political change not only in this country but also Europe.  (I don’t believe that it will make any difference what happens in November.  Who ever the President is, will probably end up being the most despised President to ever serve in that office.)

Student Debt Bubble

In its latest Quarterly Report on Household Debt and Credit, the Federal Reserve Bank of New York today announced that student loan debt continues to grow even as consumers reduce mortgage debt and credit card balances.  And, what is very alarming from the report is that delinquency rates for student loans steadily increased from 6.13% in the first quarter of 2003 to its current level of 8.69%.  The student loan delinquency rate is higher than that of mortgages, auto loans, and home equity lines of credit, which is indeed very alarming! 

Critical Price Support for $INDU

Facebook: Under $30

Facebook (FB) continues to struggle, currently at $29.46.  However, its chart still shows distinct support level at zero.

Let's Remember

We have thrown over $1.3 trillion down Middle East rat holes over the last 11 years with no discernible benefit to the citizens of the United States.  Our foreign policy during the last eleven years has been a dismal failure.  Our polices are designed not to win but lose.  (By the way, when was the last time our country had a military victory?)  How many of our brave men have been lost over those 11 years?  For what?  (Do a Google search to find out.  You will be shocked, especially when you count the number of innocent, civilian lives in that total.)

These endless foreign interventions under the guise of a War on Terror are a smoke screen for what is really going on in this country. When a government has unsolvable domestic problems, they try to distract the willfully ignorant masses by proactively creating foreign conflicts based upon false pretenses.  General Douglas MacArthur understood this danger to our liberty when he stated, “I am concerned for the security of our great Nation; not so much because of any threat from without, but because of the insidious forces working from within.” [Quote from the Burning Platform]

Therefore, as we celebrate another Memorial Day with cookouts and burgers, let's us be truly mindful of those that have lost their lives for our freedom, not for those that have put our nation in harm's way.  For those individuals, I want to hold them accountable.

The Main Factor Why President Obama Will Be Re-elected in November

Nearly 50% of the U.S. population do live in households receiving government benefits.  The following chart needs no further explanation as for the reason why President Obama will have another four years in office -- Hail to the Chief!

Bank Holiday, Are You Ready?

"Another FDR-style 'bank holiday' of indefinite length, perhaps soon, to let the insiders sort out the bank mess, which despite their rosy propaganda campaign, is getting more out of their control every day.  Insiders want to impose new bank rules.  Widespread nationalization could result, already underway. It could also lead to a formal U.S. dollar devaluation, as FDR did by revaluing gold and then confiscating gold from the American people."  It happened before, it can happen again, and it will.  However, 98.875% of the American public are totally oblivious to the truth.  Will it occur over this weekend?  Probably not here in America, but it would not surprise me if it occurs in Greece.  

Budget Deficits as a % of GDP by Administation

The following graph is fully self-explanatory and needs no comments. 

Police Urging Greeks To Stop Stuffing Mattresses

Police are urging Greeks to keep their money in bank accounts.  The withdrawals from Greek banks, which is close to 25% of all deposits, have occurred over the past two years

Greece's national police spokesman, Thanassis Kokkalakis, told Reuters: "Many people have withdrawn their money from the banks fearing a financial crash, and they either carry it on them, find a hideout at home or in storage rooms. We urge people to trust the banking system, leave their money there, or at least in a safe place, not hide it at home."

Uhm, does anyone remember Ben Bernanke when he told us in 2008 that the Fed has the "Sub-prime Mortgage" debacle well under control?  Trust the central banks?  I don't think so!  When in fact, these central bankers are the "root" cause of the world's financial problems. 

Airline Greed

What do American, Delta, Frontier and United Airlines have in common?  Charging couples and families $25 to guarantee seats next to each other.  It means children and parents who don't pay the $25 supplement are often forced to sit separately.  Just what you want is your child to be sitting next to that pedophile.  Right?  So, shut-up and pay your extortion to the airlines!

Oversold, More Oversold, and Extremely Oversold

The market, as depicted by DJIA (See the following chart.), continues to be "oversold."  I still expect a so-called relief rally from these levels. From a technical perspective, the price has penetrated the 200-day EMA, which is very bearish over the intermediate term. (Just look at how both moving averages, 50-day and 200-day EMAs, are rolling over, not conducive for the bull camp.  Therefore, as indicated, I expect a bounce from these levels before the downward trend can continue.

Bear Alert!

Will it stick this time?  That is, does the bear have any claws?  Yes, according to Doug Short, who follows the OEXA200R. (More on this indicator in another post later this week.)  It closed out the day at the critical 65% level.  This is the point at which Doug Short advises one to sell all long positions in anticipation of a major market decline.  What is particularly disturbing, according to Short, is the velocity with which the indicator has crashed - from 89% to 65% in just the past 14 days.  At this point, one can probably expect a rebound from these very oversold levels before the down trend completely takes hold once Operation Twist (Fed's quantitative easing) ends on June 30. 

Industrial and Commercial Bank of China (ICBC)

I would say that you have probably never heard of this bank in your life.  Well, that is about to change very quickly; because, today, the Federal Reserve opened its banking market to ICBC, which is China's largest bank.  This is the first time the United States cleared a takeover of a U.S. bank by a Chinese state-controlled financial entity.  (According to the Fed, ICBC has total assets of roughly $2.5 trillion.)  In other words, the Chinese have arrived on our doorsteps. I guess it was to be expected, since they manufacture just about everything that we import.  The only viable export that we had to the world was our financial service industry.  Well, we probably can "kick that goodbye."

Finally, I would highly recommend that you start learning Mandarin, because all your bank statements will soon be in that dialect.  A great resource to start this language training is over at Fluenz, which is suppose to be better than Rosetta Stone. 

I leave you with the following statement: 这个问题没有向任何人，直到它的事项给大家。

Good News on Paying Off Your Student Loans

Aren't You Tired of the BLS Lies?

The BLS reported this past Friday that the economy created 115,000 new jobs in April. Wow!  However, this number deeply disappointed the markets. DJIA was off something 168 points.  Why?  The job creation number of 115,000 failed to cover the breakeven number of 150,000 jobs needed to simply cover legal population growth, let alone eat into the ranks of the unemployed.  As a matter of fact, the 115,000 is vastly overstated.  It was really one, big continuous lie by the BLS.  The infamous "Birth/Death" adjustment for April was a whopper 206,000. In other words, the BLS created 206,000 jobs out of thin air.  The real number was actually a net lost 91,000 jobs in April.  Stop listening to the lies and become economic literate!

What's Awaiting the College Graduating Class of 2012?

The answer is a high probability of no jobs but lots of debt! The following chart says it all. Read the full Wall Street Journal article here.

More Americans are Stashing Cash in Home Safes

Have Americans lost trust in banks? No, they are just being smart.  According to an article in Smart Money, more people, today, are keeping valuables at home, whether in room-size vaults or under-bed safes.  Why?  Because Americans are finally realizing that when we have a so-called "bank holiday" (And, we will! I believe that the majority of banks will close by the end of 2017.) all those safe deposit boxes will be of no avail to you.  The reason being is that if your bank is closed, you can not access your safe deposit box! 

Federal Government Backs Off New Limits on Child Labor on Farms

Under heavy pressure from farm groups, the Obama administration said it would drop an unpopular plan to prevent children from doing work on farms owned by anyone other than their parents.  The Labor Department said it is withdrawing proposed rules that would ban children younger than 16 from using most power-driven farm equipment, including tractors. The rules also would have prevented those younger than 18 from working in feed lots, grain bins and stockyards. 

Repatriated Dollars Without Tax Consequences

Thirty-five big U.S. multi-national companies added jobs much faster than other U.S. employers in the past two years, but nearly three-fourths of those jobs were overseas, according to a Wall Street Journal analysis.  Those companies, which include Wal-Mart, International Paper, Honeywell International, and United Parcel Service, boosted their employment at home by 3.1%, or 113,000 jobs, between 2009 and 2011, the same rate of increase as the nation's other employers.  However, these companies, also, added more than 333,000 jobs in their foreign operations.

U.S. corporations have $800 billion in cash outside the confines of America.  So, what is happening?  All this cash that lies overseas is creating jobs outside the US.  This is very apparent when one looks at those aforementioned companies, whereby the job creation overseas is 3:1 of what it is here.  Why is this happening?  Well, if that $800 billion is brought back home, it will be taxed at 35%.  Therefore, these corporation have reinvested those dollars in jobs overseas.   I firmly believe that we should allow those companies to repatriate those dollars without any tax considerations.  If so, those dollars would hopefully be invested in job creation opportunities for Americans.  Why not?  We are not collecting those tax dollars now. 

The Hallow Voice of the FED

The Federal Reserve has boosted its outlook for U.S. economic growth this year and is slightly more optimistic about the unemployment rate, reflecting improvements in recent months.  Its prediction for inflation is slightly higher but remains below its 2 percent target. (That is "core inflation," which excludes food and energy.)  And Fed officials will keep interest rates at zero through 2014. (Now, isn't that a ringing endorsement.  If the economy was vibrate, one would expect interest rates to be moving higher.  However, the Fed expects the economy to be "WEAK" through 2014!  The Fed can not have it both ways.  However, it is definitely trying to put a good spin on this economic weakness.)

Common Sense, Totally Lacking from Big Brother

A proposal from the Obama administration to prevent children from doing farm chores is just about complete.  The Department of Labor is putting its finishing touches on a rule that would apply child-labor laws to children working on family farms, prohibiting them from performing a list of jobs on their own families’ land.  The new regulations would also revoke the government’s approval of safety training and certification taught by independent groups like 4-H and FFA, replacing them instead with a 90-hour federal government training course. 

The “Judge” Speaks in the Affirmative for Your Second Amendment Right

Mr. President, Taxes Do Matter!

President Barack Obama wants us to believe that the U.S. economy can be taxed into prosperity.  This is the same logic that prosperity/wealth can be created by taking on more debt.  (How will has that worked out for Americans?  Our national debt is $15.7 trillion, which is larger than our GDP of $15.1 trillion.)  

Americans need to take a refresher course on the 1920s, 1960s, 1980s and even the 1990s, when government spending and taxes were cut and employment and incomes grew rapidly.  (Take notice of the fact that the 1930s are not part of the refresher course on economic history.  Why?  Because that was the start of the prosperity/wealth by debt paradigm under Roosevelt.  Well, it really started under Hoover, but Roosevelt took it to the next level.  It didn't work in the 1930s, just as it will not work today.  Also, it is just not about cutting taxes; it is also about cutting government spending.  See, this is the the conversation that we must have with the American people in regard to the services that they want with their tax dollars of $2.3 trillion to provide.  That is, the government has extracted $2.3 trillion from us but spend $3.6 trillion.  So, we borrow $1.3 trillion, which is added to the national debt.  No, this is not sustainable.  We only have $2.3 trillion.  However, I don't see any of our leaders willing to have this discussion with the American people.)

Ok, back to my topic of "Taxes Do Matter."  If one wants to see evidence of how taxes do matter, one can look to what's happening in our 50 states.  In a recent study entitled, "Rich States, Poor States," prepared for the American Legislative Exchange Council by Laffer and Moore, it compared the economic performance of states with no income tax to that of states with high tax rates.  Some of the findings are as follows: (1) Every year for the past 40, states without income taxes had faster output growth than states with the highest income taxes, (2) Job growth was also much higher in the zero-tax states, and (3) States with the nine highest income tax rates had no net job growth at all, and seven of those nine managed to lose jobs. (Illinois, which is one of those dubious nine states, has lost one resident every 10 minutes since hiking tax rates in January 2011.)

Holocaust: Would America, as a So-Called Christian Nation, Do Anything Different Today?

Pennies and Nickels

Economics has been referred to as a dismal science.  (Actually, I would debate if it should be a science at all; but, then again, that is a discussion for another day.)  Well, our government has just taken economics to a new level of absurdity.  You ask, how?  The U.S. Mint loses more than $100 million a year minting pennies and nickles.  Now, get this!  It cost our government 2.4 cents to make a penny and 11.2 cents to make a nickel.  However, the metal composition of the penny and nickel has not changed in more than thirty years.  So what has happened to cause this?  The value of our money has simply been debased, or destroyed by the body (Federal Reserve System) that is suppose to protect the overall stability of our money.  For instance, the dollar has lost more than 95% of its purchasing power since the creation of the Federal Reserve System in 1913.

Millions of the so-called "baby boomers" are seeing their life savings debased by the actions of the Federal Reserve System.  Each year their money purchases less and less because of the liquidity induced activities of the Federal Reserve System.  Since 2008, the Federal Reserve System has increased "reserve credit to the banking system" in excess of $2 trillion.  This manipulated action by the Federal Reserve System has kept interest rates "artificially low," which is designed to increase profitability of banks and Wall Street firms and promote consumers to take on more debt!  Also, this monetary policy has driven those most vulnerable investors (baby-boomers/retirees) into riskier financial assets such as stocks and junk bonds in an effort to make their retirement dollars last longer.  In other words, a crisis is just waiting to occur.  As a matter of fact, I believe over the next four years an economic crisis as worse, if not worse, as the Depression of the 1930s will loom before our very eyes.  Maybe then, we will all come to understand why economics is referred to as a dismal science.

Fire Them!

98,000 federal employees owed a combined $1 billion in back taxes.  U.S. Senator Scott Brown is pushing a new bill that he said would make it easier to collect back taxes from federal workers and members of Congress.  No, I would simplify the bill even further with the simple words of "Fire Them."

Geithner: A Very Poor Excuse for a Treasury Secretary

"U.S. Treasury Secretary Timothy Geithner warned Congress against repeating last year’s “very damaging” debate over the debt limit and said the economy is stronger than at any time in the past several years."  He made the above statements today on NBC's Meet the Press as reported by Bloomberg News.

I love his above statement in which he states, "the economy is stronger than at any time in the past several years."  You have got to be kidding me, Timmy!  This economy is about to drop off the face of the earth, and he continues to try to convince everyone that only good times are directly ahead of us. 

I like the way Karl Denninger, over at the Market Ticket, put it in which he said, "So exactly what is the purpose of Congress, which is supposed to initiate all bills, if the Executive Branch can just borrow as much as it wants without debate or refusal?  At exactly what point does Congress have the right to hold Obama accountable for his lies?  You know, the lie he told about cutting the deficit in half by the end of his first term -- when he instead more than doubled it!"  Do you have a response, Mr. Geithner?

Employment, What Employment?

Nonfarm Payroll Employment (NFP) rose by 120,000 in March, and the unemployment rate was little changed at 8.2 percent, the Bureau of Labor Statistics reported today.  What the BLS forgot to mention was that the unemployment rate of 8.2% was down from February's 8.3%.  Great news, isn't it?  I will respond to my rhetorical question, shortly.  First, the consensus was for NFP to print an increase of 205,000 jobs, which was a major miss!  However, the BLS numbers were even worst than reported because of the infamous "Birth/Death Ratio" added 90,000 statistical, non-real, jobs.  Therefore, the net job creation for March was not 120,000 but a lonely 30,000.  Second, how is it then that the unemployment rate went from 8.3% to 8.2%?  The answer is that the number of people not in the labor force is back to an "all-time high" of 87,879,000.  In other words, we have more people leaving, giving up looking for a job, than entering the labor force.  Therefore, the unemployment rate must go down!  Interesting, isn't it.  Another one of those statistical wonders.  For a longer-term perspective on the trend for "Not in Labor Force," see the following graph.

The "employment to population ratio" for March 2012 stood at 58.3%, which is up slightly from February's ratio of 58%.  Up slightly, but it is barely above its all-time low.  Why is this ratio is important?  Because it simply tells you the number of people employed in relation to the civilian population.  At 58.3%, it tells us that for every person in our civilian population, only .64 individuals have jobs and paying taxes. That will not sustain any effort at reducing our federal deficits.

The last graph illustrates the changes in employment for our current, so-called recovery and the previous ten postwar recessions.  To say the least, we are in really, big trouble!

What Happens When the Manipulation Ends?

What happens when our financial markets are no longer being manipulated?  We have never experienced the unwinding of an entirely manipulated financial system, so we can't predict for sure what will happen.  But at this point, a total collapse of our financial markets seems entirely plausible.  I know what many of you are saying – “Here he goes again.  The same old stuff and the market continues to go higher and higher!”  To a certain extent, you are correct in that this does not matter to anyone until it matters to everyone.  However, by then, it will be too late to take the necessary defensive measures to protect your financial assets. 

But, you ask how is it that our financial markets are being manipulated?  On October of 2011, Mr. Bernanke states that the purpose of QE1 and QE2 is to raise asset prices.  And, if I remember correctly, equities and bonds are financial assets.  Then, on March 1, 2012, Bloomberg reported that the Bank of Israel and Switzerland’s Central Bank began a pilot program to invest a portion of their foreign currency reserves in U.S. equities.  Incidentally, it is illegal for our Federal Reserve to invest in equity markets.  However, I see exactly what has been happening.  Our Fed, which cannot directly purchase equity shares, has created billions of dollar swap lines with foreign central banks.  Then, these central banks take the dollar swap lines and purchase equity shares on the New York Stock Exchange.  Therefore, our Fed has indirectly been manipulating the stock market through equity purchases of these foreign central banks.  (See my blog posting of March 3, 2012 entitled, “Manipulation of Equity Markets by Central Bankers.”)

Is This the "Mega Millions" Market?

DJIA and the S&P 500 recorded their biggest first-quarter point gains ever.  The DJIA rose 994 points, or 8.1%, and the S&P 500 rose 150.87 points, or 12%, during the first three months of 2012.  And, the NASDAQ rose 486.42, or 19%, in the first quarter, just narrowly missing its biggest point gain since 2000.  At this point in 2012, investors are thoroughly convinced that the bull market is back to stay. 

However, if you believe this rally is more like 1937 (See following chart.), you already know what followed.  So, as an investor, you can go along with the current market psychology that this is a once in a lifetime investment (Mega Millions) opportunity, or this is the worst time in generations to be exposed to equities.  In other words, the choice is yours!

Student Loans on Rise for Kindergarten

Unable to afford private school, more and more parents are turning to loans years before their children start college.  And, I thought the trillion dollars for college loans outstanding were bad enough, but these pre-college loans are insane.  Have we as a society completely lost our minds? 

According to "Smart Money," approximately 20% of families that applied for aid to pay for their children's kindergarten through 12th grade private school education had incomes of $150,000 or more.  Further, according to "Smart Money, these loans can be very expensive.  The interest rates, which can be fixed or variable, range from around 4% to roughly 20%.  (Lower rates are given to parents with higher FICA scores.)  And, the loan sizes can be large.  The average loan size given by Your Tuition Solution is $14,000.  First Marblehead (love that name, which is very appropriate for those insane parents) loans are up to $30,000 a year.  At the Lake Trust Credit Union that's headquartered in Lansing, Mich., borrowers can have up to $40,000 outstanding in so-called K-12 education loans. 

$270 Billion in Student Loans are at Least 30 Days Delinquent

This is not good, folks!  Fitch Rating Service believes several macroeconomic factors are putting pressure on student loan borrowers. The main ones are unemployment and underemployment. However, no need to worry about these student loans if they should default, because the American taxpayers have it all covered, as usual.  Aren't those taxpayers great to have?

Current Business Model of Success

 Sturm, Ruger & Company, Inc. (NYSE-RGR), announced today that for the first quarter 2012, the Company has received orders for more than one million units. Therefore, the Company has temporarily suspended the acceptance of new orders.

The Oil Conundrum Explained

 Alt-Market does a great job in explaining the current run-up in oil prices.  No, it is not lack of supply!  Of course, the proverbial bottom-line in which no one is focusing on for the root cause of the problem is the continued fiat, monetary expansion by the Federal Reserve System that depreciates the dollar.  And, why is this debasement of the dollar significant?  Answer: The world's oil market is denominated in dollars.  Therefore, it takes more dollars to purchase the crude!

Student-Loan Debt Tops $1 Trillion

Total student debt outstanding appears to have surpassed $1 trillion late last year, said officials at the Consumer Financial Protection Bureau, a federal agency created in the wake of the financial crisis. That would be roughly 16% higher than an estimate earlier this year by the Federal Reserve Bank of New York.

Yesterday, Bloomberg reported that almost two-thirds of U.S. student-loan borrowers misunderstood or were surprised by aspects of their loans or the student-loan process.  About 20 percent of the respondents in an online survey said the amount of their monthly payments was unexpected.  These respondents had an average of $76,000 in student debt.

Folks, this is not going to end very good.  I know the pundits say that a "college degree is an increasingly good investment because of the widening pay gap between jobs that require a degree and those that don't. Ultimately, the educational degrees and added skills are meant to help workers earn higher incomes that, in time, will more than offset the student debt."  I don't buy that argument it at all.  Sure, certain degrees will more than offset all that student debt; however, for the majority of students will be in servitude for the rest of their lives.  

Oh, that average of $76,000 in student debt, the monthly payment works out to $693.67 at 5% for 12 years.  In other words, don't go into debt to go to school.  Go to a community college where the tuition is affordable, work and go to school part-time, enter the military and let them pay for your college education, or you may want to really think outside the box and attend a college overseas where the tuition is 1/3 of what it is in the United States, and the curriculum is delivered in English.

Everything is OK! (We Just Have to Keep Telling Ourselves That.)

End of the Road Documentary Trailer from Tim Delmastro on Vimeo.

Energy Production on Federal Land Drops Under the Obama Administration

I love the way that this Administration touts that fossil fuel production is way up under the Obama Presidency.  It really is; however, not on federal land, just private land.  What really irks me is this Administration through its half-truths takes total credit for this increase in production.  Once again, the main-stream media does not call into question the President's Press Secretary or anyone else in Obama's Administration who make such a claim.   Since 2008, according to the U.S. Energy Information Administration, fossil fuel production on federal land has declined by 7%.

Gas Prices Around the World

Gasoline prices in the United States, which have recently hit record highs, are actually much lower than in many countries.  The main factor in price disparities between countries is government policy.  For example, many European nations tax gasoline heavily, with taxes making up as much as 75% of the cost of a gallon of gasoline.  In the United States, taxes are currently 20%.  The following gas prices are taken from "Fuel Prices Europe"  for March 12, 2012.  In converting the prices to gallons and U.S. dollars, I used the current rate of exchange of $1.31 to a Euro along with 3.785 liters to the gallon.

1. France $8.58/gallon
2. Germany $8.22/gallon
3. Switzerland $7.34/gallon
4. United Kingdom $8.61/gallon.

I guess through the eyes of the Obama Administration gas prices here in America are really dirt cheap!  Just last week, Secretary of Energy, Steven Chu, said that the DOE is on track to lower gasoline prices through some indirect methods, including promotion of alternatives such as biofuels and electric vehicles.  (Those indirect methods have worked really well, especially those electric cars!)  In other words, this Administration is not trying to reduce "current" gasoline prices.  If anything, it appears that this Administration wants much higher gasoline prices to not only align this country with European gasoline prices but support its agenda for developing alternative sources of energy.

Green Cars Just Can Not Catch a Break!

Soon after Consumer Reports bought the Fisker Karma to test, which had a price tag of $107,850, it stopped working. The luxury plug-in hybrid had to be towed off the track.

The "Green Light Bulb:" Government Subsidized, Of Course

The U.S. government last year announced a $10 million award, known as the L Prize, for any manufacturer that could create a “green” but affordable light bulb.  Well, the verdict is in and Phillips has won.  (Oh, as a side-bar point, that corporations is a Dutch company.  So much for keeping those so-called green manufacturing jobs totally here in the US.  But, then again, I guess that is asking too much from our government.)  Now, I do know the definition of "affordability;" however, I don't believe those in Washington do!  But, then again, those are the same folks who brought to the American taxpayer Solyndra and the Chevy Volt.  Ok, what is affordability to our government?  That light bulb can be yours for the affordable price of $50.  Yes, that is correct, and that is for "one" bulb, not a gross.

Nonfarm Payrolls (NFP) for February 2012

I will not bore you with the "spin" that is coming forth from today's "Non-Farm Payroll" numbers by BLS. I will leave that up to the government, Fed, and main stream media, such as CNBC.  However, I will give you the facts and nothing but the facts; because they don't lie.  The Bureau of Labor Statistics (BLS), or more commonly referred to as the Bureau of Lies and Scams, reported that employment rose by 227,000 on expectations of 210,000 by the so-called economic pundits.  The unemployment rate stayed the same at 8.3%.  On the surface, everything seems positive.  That is the problem, on the surface.  But what happens when one goes beneath the surface?  First, 60% of the 227,000 newly created jobs were due to an increase in part-time jobs, which are minimum wage positions, and the infamous "Birth/Death Model of the BLS."  Second, in regard to the "Birth/Death Model," it added 91,000 jobs, or those so-called statistical jobs that are really not real ones.  I like to think of those jobs in this model as being created out of thin air by the BLS.  (Something like the Fed does when it creates money in our economy.)  Therefore, when we subtract off those part-time jobs and statistical, unreal jobs, NFP only increased by 91,000, not 227,000.

Fed Chairman Ben Bernanke Has Confidence in U.S. Economy

I am going to be very direct with what I am going to say.  Some of you may consider that I have gone too far in expressing my opinion.  Then again, it is my blog, isn't it?  This man, Bernanke, must be relieved of his Chairmanship now, not later.  We can not afford his monetary policies going forward.  Period!  I thought the next President of the United States will be the most hated individual in this land; however, I now believe it will be Ben Bernanke.   Just listen to his statement before Congress.  He is encouraging retirees into extremely risky investments, which will not play out very well in a financial sense.  As a matter of fact, these retirees will probably lose everything they have invested in these risky securities!  That includes municipal bonds (Alabama, anyone?) and stocks.  In addition, he admits that his own son is on his way to racking up $400,000 in debt as he makes his way through medical school.  This whole educational thing is a bubble in itself that will burst very shortly.  I don't care if you are in medical school or getting that degree in business, education or what.  You will not be able to pay off those kinds of student loan debts.  Why? Because you will not have the financial wherewithal to make those monthly payments.  But you say, I will file bankruptcy.  Ok, go ahead.  However, those student loans will not be forgiven like all that credit card debt that you have run up.  How do you thing you received those student loans in the first place, on your good looks?  Those financial institutions knew exactly what they were doing.  The trouble is, you did not.  In other word, you will be a slave to that lender of your student loans until you die.  Bottom line, simply enjoy it while you can; because the party is ending very soon.  As a matter of fact, sooner than you think.

Chevy Volt: The Car That Keeps on Giving

I just can not get enough of this Chevy Volt thing!  It is becoming an obsession with me.  Thank you, Government Motors (GM).

Chevy Volt - Building a Better Tomorrow from Ben Howe on Vimeo.

Are Gasoline Prices Really All That High?

Basic economics teach us that a change in price of any good, service, or commodity can be the result of changes in supply and demand factors, taxes, inflation, or any possible combination of the three determinants. 

Our media outlets and government want us to believe that the greedy oil companies are responsible for the rise in gasoline prices.  Ok, let’s see how greedy these major, integrated oil and gas companies really are.  According to Yahoo Finance, the net profit margin of these greedy oil and gas companies is 7.9%.  What does that percentage mean?  Well, for each dollar of sales generated by these companies, only 7.9 cents goes to the company.  Wow!  You mean with all the risk that these companies take, they get to only keep something like eight cents on the dollar.  Yes, that is exactly what is occurring.  Let’s put this into perspective.  Federal, state, and local taxes account for approximately 20% of gasoline’s price.  Now, with this fact in mind, for every $1 of gasoline sold at the pump, governments take 20 cents.  But wait, oil companies take all the risk and get to keep only 7.9 cents but governments get 20 cents.  That is exactly correct, which is why the government does not want you to know this fact.  By the way, back in 1950, governments took only 1.5 cents on every dollar sold at the pump.

Ok, what about the inflationary impact on gasoline prices?  In 1950, a gallon of gasoline went for $.30.  Today, adjusted for inflation and government taxes, a gallon of gasoline should be $3.48, which is what I can purchase it in my area of the country.  So, when one adjusts for inflation (thank you Fed) and taxes (thank you government) but excluding supply and demand influences from China and India, the price of gasoline at the pump is definitely not out of line.  I guess the questions should be, why are gasoline prices not higher, due to demand pressures for oil coming from China and India?

So, the next time, when the media and government sources take political aim at the oil companies, remember the above exercise; and, of course, remember that the root cause of higher oil prices are indeed caused by our government increasing its take from 1.5% to 20%, monetary inflationary policies of the Federal Reserve System, and demand pressures from China and India.

The Primary Reason to Abolish the Federal Reserve System

The Federal Reserve System’s mandate is as follows: “The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.”  Now, according to my Webster’s New World College Dictionary, 4^th Edition, stable is defined as “not likely to change or be affected adversely.”  Now, the Federal Reserve System was founded in 1913.  Since that time the value of a dollar has declined 95.75%.  Or, put another way, that dollar in 1913 is worth approximately four cents today!  (So much for price stability.)  In my opinion, this price stability failure alone is sufficient evidence to abolish the Fed.  Then again, let’s us not forget the Coinage Act of 1792, which called for the death penalty for anyone who debases the value of the currency.  Are you listening Mr. Bernanke and the other six Board of Governors of the Federal Reserve System? 

Manipulation of Equity Markets By Central Bankers

Well, you want to know what has been driving our equity markets higher in the face of individual investors leaving it in droves?  The answer, of course, lies with all those "Central Bankers."  Bloomberg reports that he Bank of Israel will begin a pilot program to invest a portion of its foreign currency reserves in U.S. equities.  The investment will amount to 2 percent of the $77 billion reserves, or about $1.5 billion.  At a later stage, the investment is expected to increase to 10 percent of the reserves.  In addition to the Bank of Israel, a small number of central banks have started investing part of their reserves in equities.  About 9% of the foreign exchange reserves of Switzerland’s Central Bank were invested in equity shares at the end of the third quarter.

Incidentally, it is illegal for our Federal Reserve to invest in equity markets.  Now, I see exactly what has been happening.  Our Fed, which can not directly purchase equity shares, has created billions of dollar swap lines with foreign central banks.  Then, these central banks take the dollar swap lines and purchase equity shares on the New York Stock Exchange.  Therefore, our Fed has indirectly been manipulating the stock market through equity purchases of these foreign central banks.  Subterfuge, anyone?  So much for financial integrity.

GM Halts Production of Volt

Well, what do we have here?  I thought everything was going so well for the Chevy Volt.  At least, that message was conveyed in its most recent television advertisement.  In that commercial, the narrator says, "This isn’t just the car we wanted to build.  This is the car America had to build.”  The only problem is that the demand was so weak, in spite of GE buying 12,000 of them in January, that GM has decided to cease production for five weeks and 1,300 employees were given the "pink slips."  We may have seen the end of this so-called infamous green car.  This is the car that GM's CEO Daniel Akerson testified before Congress in January in which he said, "We engineered the Volt to be a technological wonder."

Impact on GDP for Every $10 Price Hike in Oil

Folks, the following graph illustrates that for every $10 increase in crude prices, cuts U.S. GDP by approximately 1%, which is worst than anyone else.  Since October of 2011, crude oil as increased by $32/barrel, or 42%.  On an annualized basis, that equates out to 100%.  To say the least, this is not good for the economy going forward into 2012, which correspondence to my bearish forecast for this year.

How Does GM Create Sales?

The following chart shows how a government led recovery looks like though its subsidiary Government Motors, which is better known as GM.  A complete and utter failure.  Why a failure?  As soon as those wonder cars are shipped to the dealers, they are recorded as "SALES" to Government Motors.  Who cares about the dealers if they can not sell them.  That is their problem, but GM has recorded sales and profits.

Note: To enlarge the graph, click anywhere within the graph.