Do You Really Know Where Your Tax Dollars Are Going? I Don't Think You Do!

 "A database of 200 million "Electronic Benefit Transfer" records from January 2011 to July 2012, obtained by The New York Post through a Freedom of Information request, showed welfare recipients using their EBT cards to make dozens of cash withdrawals at ATMs inside Hank’s Saloon in Brooklyn; the Blue Door Video porn shop in the East Village; The Anchor, a sleek SoHo lounge; the Patriot Saloon in TriBeCa; and Drinks Galore, a liquor distributor in The Bronx." 

Wait one minute!  I thought that was not permissible under the Federal Temporary Assistance for Needy Families Program.  Well, you would be partially correct.  Welfare recipients receive food stamps and cash assistance under the Temporary Assistance for Needy Families program.  Both benefits handouts are accessed through an EBT card, but only cash assistance, which is meant for housing, utilities and household necessities, can be accessed through ATMs.  For instance, a single-person household could receive a maximum $200 in monthly food stamps plus $158 in cash assistance. A family of four could get as much as $668 in food stamps and $433 in cash.  Of course, the food-stamp program prohibits the purchase of booze, tobacco and lottery tickets with an EBT card.  But with the cash-assistance program, users can blow money on strippers or a six-pack and to tap welfare dollars from liquor stores, casinos and adult-oriented establishments where ever an ATM is located. 

The problem is that currently EBT cards operate like debit cards.  That is, recipients swipe them at a participating ATM or grocery checkout and enter their PIN, and the amount is deducted from their balance.  Grocery-card transactions can be traced, but cash transactions can’t really be traced.  For instance, if that ATM machine is located in strip clubs and liquor stores, do you really believe that the cash transaction is going to be used to pay the rent rather than for a lap dance?  And there you have it.  Therefore, the next time you see an ATM machine, remember where some of those EBT cash withdrawals just might be going. 

What is our government doing about this problem?  Good question.  I will have to get back to you on that one.  Better yet, why doesn't the government simply insert a magnetic device or some device that does not allow an EBT card to be used at an ATM machine? 

Price Honesty at One Hospital in the Medical Field

The following video will illustrate how one hospital has dealt with the ever increasing cost of medical care in the United States.  Last year, we spent $850 billion at the federal level on medical care, which amounted to 24% of total federal government spending.  In 1980, $53 billion was spent on medical care at the federal level.  From 1980 to 2012, that spending on medical amounts to a compounded growth rate of 9%.  Therefore, if one simply extrapolates that growth rate into the future, the government will spend $1.7 trillion on medical care by 2020, or close to 49% of today's total government spending, which definitely can not be sustained.  Keep-in-mind that the $3.5 trillion of government spending is in relation to the $2.3 trillion that the government receives in the form of all taxes.  Therefore, if we are going to cut government spending in a meaningful way, we must look at the medical profession.  That is, we must look at how the current medical profession is pricing its care in relation to how the Surgery Center of Oklahoma prices its care.

Once you have reviewed the video, go to the Surgery Center of Oklahoma's site and see for yourself its pricing model.  If you have recently had surgery at a hospital, you may want to look at your bill and then compare it to the cost of the same procedure at the Surgery Center of Oklahoma. 

Are the Lows for Rates in for the Long Treasury Bond?

Feds Real Monetary Objective

Charles Hugh-Smith over at “Of Two Minds” succinctly stated what the Feds real objective is with the following statement: “One explicit goal in the Fed's “Zero-interest Rate Policy” (ZIRP) is to drive financial capital into risk assets such as stocks.  As a matter of fact, that is the Fed’s first-order of business, creating an illusion of prosperity via an elevated stock market and the resultant "wealth effect" for the 10% who own enough stocks to matter.  Indirect manipulation is hidden from public view lest the rigging of the market taint the perception that a rising market is "proof" that Federal Reserve and Administration policies are "succeeding."  Indirect manipulation is achieved via Federal Reserve quantitative easing operations, unlimited liquidity, and lines of credit to fund bank speculations and masked buying of market futures.”

Fiscal Cliff is Dead, Sort of ...

America has replaced one fiscal crisis, or cliff, for "four separate cliffs:" the debt ceiling cliff in February/March 2013, the sequester cliff in March 2013, the farm bill cliff in September 2013, and the expiration of jobless benefits on December 2013.  But, all those cliffs are in the future.  Today, there is absolutely nothing to worry about at all.  Our elected Senators and Representatives have everything under control, NOT!

Millions of Dollars for Hollywood, Railroads, Rum Producers, and NASCAR

The "Fiscal Cliff" bill includes the following pork:

•   $430 million for Hollywood through “special expensing rules” to encourage TV and film production in the United States.  Producers can expense up to $15 million of costs for their projects.

•   $331 million for railroads by allowing short-line and regional operators to claim a tax credit up to 50 percent of the cost to maintain tracks that they own or lease.

•   $222 million for Puerto Rico and the Virgin Islands through returned excise taxes collected by the federal government on rum produced in the islands and imported to the mainland.

•   $70 million for NASCAR by extending a “7-year cost recovery period for certain motorsports racing track facilities.”

•   $59 million for algae growers through tax credits to encourage production of “cellulosic biofuel” at up to $1.01 per gallon.

•   $4 million for electric motorcycle makers by expanding an existing green-energy tax credit for buyers of plug-in vehicles to include electric motorbikes.

Idiots, All of Them

According to the "Joint Committee on Taxation," the Senate's Bill would reduce federal revenue by $3.93 trillion over the next decade compared to current law.  You have to be kidding, right?  No, you read that correctly.  Over the next ten years, Treasury revenues will actually go down by approximately $4 trillion.  But, but, I thought the Senators said that revenues would go up.  You must be a "dreamer!"  But, look at all those "spending cuts" they have promised you claim.  What spending cuts and do you really expect government spending to go down?  Dream on!

Perspective of Senate's Tax Bill Increase to Budget Deficit

$1 in Cuts (Maybe) for Every $41 in Taxes (Certainty)

The Senate bill doesn't mention or deal with the debt ceiling, and temporarily puts off for two months the so-called sequester that series of automatic cuts in federal spending that would have taken effect tomorrow, January 2.  However, what will the House do?  It will take up the Senate bill at noon today, January 1.  My guess is that the House will pass it with some slight modifications, nothing material.  So, in two months, these clowns will go at it again with the same results, which is nothing accomplished to control the unabated government spending. 

The best hope for America is for sequestration to actually occur!  Why?  May, just maybe we would then have an actual and honest debate about the real problem facing America, which is uncontrollable government spending that exceeds government revenues by over $1 trillion a year.  However, since I am a realist, I know that this type of honest debate will not happen within our entitlement society.

America Just Breached its Debt Ceiling

Forget the "Fiscal Cliff" mess.  We have just breached the national debt ceiling of $16.394 trillion.  However, no need to worry, unless you are a Federal employee or have been one, because now Treasury Secretary Tim Geithner will pillage the various government retirement accounts to fund the government until those accounts are bleed dry. 

Bernanke Was Wrong Then and Dead Wrong Now

He has no creditability at all, but he still has a job as the Chairperson of the Federal Reserve System.  Unbelievable! 

$INDU Poised to Drop Over 10,000 Points in the Next Three to Four Years

According to "The Elliott Wave Theorist," a 10,000 point decline maybe the minimum after everything is said and done by 2016.  And, it is just not the stock market.  Commodities, precious metals, especially gold and silver, real estate, and the bond market.  The bond market will collapse, because investors fear major defaults, especially in the junk bond area.  In other words, it is not the fear of inflation but deflation that will dominate investment landscape over the next four years in spite of the Federal Reserve System pumping more that $1 trillion into the banking system each year through 2015. 

In regard to gold and silver, my critical support levels for gold and silver remain at $1,500 and $26, respectively.  Currently, both gold and silver are deeply oversold.  I would anticipate some kind of relief rally, which should not go above the December 12, 2012 highs of $1,716 for gold and $33.75 for silver.

With the aforementioned said, it would behoove everyone to get out of debt and remain as liquid as possible.  "Happy New Year."

Fiscal Circus: Clowns Everyone of Them

President Obama Orders Raise for Members of Congress and Federal Workers

President Obama signed another "Executive Order."  This time to give government employees a raise. Now, I know that there has been a pay freeze on federal employees, but look at the pay discrepancy between their counter parts in the private sector.  Thus, given the dire financial condition of our country, I don't believe now was a good time to give such raises. 

I guess I just need to get a one of those lucrative federal jobs.  For those of you that would like to move from the private sector to the federal sector, you may want to start the process by checking the "USA JOBS."

Fiscal Abyss

I am getting real tired of all this "Fiscal Cliff" stuff.  Our leaders refuse to lead.  These same leaders refuse to be completely honest and truthful with the American public.  We, as a Nation, have been running fiscal deficits of at least $1.2 trillion for each of the past four years.  We have a spending problem.  No one is addressing that issue in specific terms of what programs will be cut.  Oh, I know they are saying that we are specific in that we are "cutting the growth rate of spending."  First, if you are cutting the growth rate of spending, you are still spending "MORE!"  The growth rate in spending must "decrease," not simply slow down.  Second, spell out in details the specific cuts in government spending.  In other words, our government brings in approximately $2.5 trillion, but it spends $3.8 trillion.  Therefore, if the rate of growth of spending slows, it will still spend more than $3.8 trillion in 2013.  Oh, but you say that over the next ten years the government will raise an additional $1 trillion in new revenue through higher taxes.  That is true.  Mission accomplish, not!  That $1 trillion in additional revenue over ten years amounts to $100 billion a year.  However, our federal deficit of $1.2 trillion will likely stay the same over this time period.  So, instead of a $1.2 trillion federal deficit, our federal deficit will be "only" $1.1 trillion per year.  Therefore, over the next ten years our national debt will increase by another $11 trillion to $27 trillion. 

Folks, the "Great Recession" that started in 2008 will turn into the "Great Depression" by 2016, because our leaders in Washington, D.C. refuse to do their job.  I am confident in making such a  statement with each passing day that Washington refuses to tell the truth that we, as a Nation, must live within our budget.

$INDU: More Downside!

U.S. Will Hit Debt Limit on December 31, 2012

The U.S. Government will hit the $16.4 trillion federal debt limit on Monday, December 31, 2012.  Wow!  I thought the "Fiscal Cliff" was the only real crisis.  Now, the looming debt ceiling is another crisis.  I wonder how this Administration will use these two pending crises to its advantage of usurping additional power for the Executive Branch. I don't even want to think about it!

Number of School Age Children Shot in Gun Controlled Chicago

 Chicago has long been the poster child for the "Gun Control" advocates of America.  As a matter of fact that prior to 2010, you could not even have a gun in your house to defend yourself and your family.  Now, the Huffington Post, which is definitely not a right-wing news outlet, provides the following statistics: "More than 440 school-age children have been shot in Chicago in 2012.  This is not to say that 440 school-age children died, simply that more than 440 school-age children were at least wounded. However, the number of school-age children killed is reported at approximately 60.   The bottom line: It seems that denying the free exercise of the right to keep and bear arms to law-abiding citizens not only does not curtail the actions of criminals, but actually emboldens them."

Government Motors Employees to Receive Bonuses of $7,000

GM workers can expect bonuses of between $5,500 and $7,000 each, according to a report in The Wall Street Journal.  The payments are based on a formula that gives workers a $1 bonus for every $1 million in North American operating profit.  Wow!  "Channel Stuffing" really does pay off for those UAW workers but not for your local GM dealer.  For those of you that don't know, or remember what is "channel stuffing," let me refresh your memory.  Channel Stuffing occurs when a GM car leaves the production line that car is immediately booked as a sale.  However, that car in all reality has not been sold to anyone.  GM simply records the sale when the car is shipped to the local dealer.  Therefore, those bonuses are being paid not by GM but by all those GM dealers out there.

$INDU: Further Declines to Come

So Much for That Mayan Calendar

Well, I am still here. So, that Mayan calendar was completely off the mark about the end of the world being December 21, 2012.  Then again, I guess trying to forecast the end of the world is not really an exact science. Maybe the end of the world will be when the U.S. falls off the fiscal cliff, which is December 31, 2012.  No, I don’t believe that is going to happen, because that proverbial can once again will be kicked down the road to March 31, 2013. Why, March 31, 2012?   That is the date when the U.S. will be reaching the upper limits of its debt ceiling.  

What's Up With $SLV?

Taxpayers Book a 50% Loss on its Investment in GM

GM said it will purchase 200 million shares of GM common stock held by the U.S. Department of the Treasury for $5.5 billion, or $27.50 per share. Therefore, this price implies nearly 50% loss on the government's breakeven price of $54.  I hope all those union votes were well worth the now booked $40+ billion cost to the American taxpayers.

So much for the "profit" spin by the Obama Administration and UAW.  I am almost certain that you will not hear the 50% loss on your taxpayer dollars coming from any of the mainstream media today.  But then again, that is why you read my blog.

U.S. Debt Over Time

The above chart has been extracted from ZeroHedge.  The debt trajectory is truly alarming, especially the Federal Deficit to GDP percentages.  Some additional comments from the above chart are as follows:

• Government spending is the true problem of America's deficits, which our politicians will not really deal with because of the entitlement mentality of our society.  That is, take from someone else but not from me! 
• This should not a political issue; however, it is. Politicians on both sides of the aisle are perfectly aware that setting the U.S. on a sustainable fiscal course in the long run would mean massive pain for the economy, and an immediate termination of all existing political careers. 
• There is no question that the current debt situation is unsustainable.  U.S. economy is currently growing at a pace of 1.5%-2%, at best.  Total 2012 U.S. debt will have risen approximately 8%, and will continue rising in the 6%-8% range.   
• More disturbing is the influence of the Fed, whose policy of a zero-interest rate policy (ZIRP), which completely distorts the workings of the money and capital markets, and outright debt monetization has been the only permissive factor that has allowed the U.S. to delay the inevitable moment of reckoning (Remember the end of the upcoming Shemitah is September 13, 2015.) 

So, what will the government eventually do?  Do whatever it takes to perpetuate its own self-interest, not yours, and take total control over your lives by making you totally dependent on it for everything.  In other words, the government wants to be your “god” (Think Executive Order 6102.).

EKG of America's Moral State

Unspeakable evil occurred today (Friday) in Connecticut.  When a madman took the lives of 28 individuals of which 20 were kindergarten children.  My prayers and thoughts go out to those families whose children and love ones were senselessly murdered. 

Montreal Law Requires Dogs to be Bilingual

Brenna, combien de langues parlez-vous? Savez-vous français? Que diriez-vous allemand?

Folks, I can not make this stuff up for the life of me!  Earlier this week, Montreal council member, Benoit LaDouce, proposed a law that would require all dogs in public parks to be bi-lingual.  That is to speak both English and French.  I know that this has nothing to do with "Financial Eschaton;" but, then again, the closer we get to the end times, the crazier things do become. 

The Continued Insanity of Bernanke

Well, the very bad Doctor Bernanke has spoken; and the Fed will continue its $85 billion purchase of securities into perpetuity.  If my math is correct, that $85 billion per month is something like $1.020 trillion over 2013 year.  Now, isn't that interesting?  That $1.020 trillion is approximately what the federal deficit will be for 2013.  In other words, the Fed will completely monetarize the federal deficit for 2013; and I guess all deficits there after.  Bravo, Ben!  You have just utterly destroyed the savings of all the retirees out there who live on a fixed income with your expansionary monetary policy.  But, Ben states that "core inflation" is under control.  Yes, it is true only if one does not buy food, gasoline, or need medical care.  He states that 3% "core inflation is ok.  However, what he does not tell you that at that rate of inflation, the value of your $1 today will be worth $.50 in twenty years.  Folks, I believe that we are still in a deflationary cycle, but the cycle is definitely on borrowed time.

Now, in regard to the Dow Jones Industrial Average, see the following chart with my comments inserted:

GM Bailout on the Brink of Being Reversed

Judge Gerber do the right thing and restore the "rule of law" in this country by reversing GM's bailout and send the company back into bankruptcy.  Folks, this is a story that is not getting a lot of coverage.

We are a "Food Stamp Nation!"

Thanks to Karl Denninger over at the Market-Ticker, the following chart illustrates that the so-called economic recovery from 2009 has been a complete fraud:

The Truth of the Employment Situation in America

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Well, the unemployment rate fell from 7.9% to 7.7% in November.  Great news, isn’t it?  No, because another 350,000 workers disappeared during the month of November.   However, when you read the mainstream media, not once would you find any mention to the fact that 350,000 workers left the labor market.  The entire focus is on the headline that the unemployment fell to 7.7%.  To make matters worse, the employment data by the four age brackets (16-19, 20-24, 25-54, and 55-64) are horrible.  That is, the largest gainer for the month of November was the group between the ages of 55 to 64.  This group added 177,000 jobs.  As for that key segment of the workforce, which would be the 25-54, jobs declined by a whopping 359,000 in November.  And this is construed to be good news?  Yes, if you only focus on the headlines that state the unemployment rate went from 7.9% to 7.7%.

Economist Casey Mulligan of the University of Chicago has documented that the huge increase in government benefits for not working, i.e., food stamps, disability payments, and unemployment insurance, are increasing the incentive not to work.  Welfare payments that redistribute income from workers to mostly non-workers now exceed $1 trillion a year.  In other words, fewer workers mean less tax revenues, more welfare benefits paid out, and, of course, larger budget deficits.  (See the following chart that depicts what has really transpired over the pass three years in regard to the labor participation rate.)  Oh, my the way, get use of these numbers, because the employment situation is going to get any better any time soon.

Happy Chanukah (Hanukkah)!

For the story behind the significance of Chanukah (Hanukkah), please click here.

Chrysler Workers Fired for Drinking on the Job Reinstated

Fox 2 News Headlines

Aren't union jobs great?  MyFoxDetroit reports that following a union-backed arbitration process, the employees were reinstated. This week, they came back to work after being fired two years ago.  Folks, we have a problem here.  First, Chrysler's labor agreement that permits this sort of "process" to take place in the work environment is a major issue.   Second, I don't know about you; but I, for one, will never buy a Chrysler product, because I want to purchase a vehicle assembled by sober employees at a auto company that does not have those types of problems with their union labor agreements. That means, I will only buy vehicles by firms who assemble or build them in right-to-work states with non-union workers or in overseas factories.

The Best Consumer Confidence Indicator: Gun Sales

Probably the best consumer indicator of overall economic confidence going forward is gun sales.  Higher gun sales simply means lower consumer confidence.  Likewise, lower gun sales the higher the consumer confidence in the economy and country.  What you have here is an inverse relationship between gun sales and consumer confidence.  Bottom line is that "gun sales" have never been better.  Smith & Wesson announced today that net sales for the quarter just ended were up 48%, which was a record for the company.  And, the company expects future sales to be even better than this quarter.

Know Your Geography for the Eschaton

What do Egypt, Persian Gulf, Strait of Hormuz, Horn of Africa, Gulf of Aden, Gulf of Aqaba, Red Sea, Suez Canal, Ethiopia, Somalia, Yemen, and Bab el-Mandab all have in common?  Answer: IRAN.  Yes, what is going on in Syria is shocking; however, it is nothing more than a strategic move (smoke screen) by Iran in gaining total control of Bab el-Mandab and the Horn of Africa.  Why is all this so critical?  Well, almost all of the trade between the European Union and China, India, Japan and the rest of Asia passes through Bab el-Mandab.  Approximately 30% of the oil, including all of the oil and natural gas from the Persian Gulf heading West, passes through the Horn of Africa.  Roughly 20,000 ships go through the Suez Canal and Red Sea each year.

$SLV: Reverting to its 200-day EMA

$INDU: Overbought Territory!