Royal Kiss

Just call me a sentimental fool. (LOL)

Geithner Vows to Defend Strong U.S. Dollar Policy

What is this guy smoking, or does he just like to lie?  Today, Timmy made the following statement at a New York conference organized by the Council of Foreign Relations: "United States would never follow a strategy to weaken the US dollar.  Our policy has been and will always be, as long as I will be in office, that a strong dollar is in the interest of the country.  We will never embrace a strategy to weaken the dollar."

I find his statement completely detestable.  In the year to date, the dollar has lost 6.5% of its value compared with a basket of currencies held by our major trade partners.

When Will the Riots Start? Inquiring Minds Would Like to Know!

Shell Oil Company has announced it must scrap efforts to drill for oil this summer in the Arctic Ocean off the northern coast of Alaska. The decision comes following a ruling by the EPA's Environmental Appeals Board, which is under Executive Control of the President Obama, to withhold critical air permits that Shell needs.  Shell has spend five years and nearly $4 billion dollars on plans to explore for oil there.  The leases alone costs $2.2 billion.  In other words, our government has just stolen $2.2 billion from Shell.  This is how we will eventually pay at least $5/gallon for gasoline. 

The Real Common Sense Understanding of "Price Inflation"

First, food, fuels used at home and gasoline are  20% of the "average" consumer's household budget.  However, the government does not believe that those items are relevant.  Why?  Because its focus is on "core inflation," which eliminates food and energy.  From that perspective, price inflation is not a problem. I don't know about you, but I do use gasoline and eat food.  Now, let's look at what is happening to energy and food prices.   Three-month average change on Food is .87%, which is an 11% annualized price inflation rate.  Fuel oil and other fuels (household energy) have a three-month run rate of 4.7%, which is an annualized seventy-four percent (74%).  Gasoline has a three month run rate of 4.6%, which is an annualized seventy-two percent (72%) price inflation rate. 


How dumb does the government believe Americans are?  I guess pretty dumb because it seems to get away with it.

Why did the Federal Reserve Fork over $220 Million in Bailout Money to the Wives of Two Morgan Stanley (Wall Street) Bigwigs?

"It's hard to imagine a pair of people you would less want to hand a giant welfare check to — yet that's exactly what the Fed did. Just two months before the Macks bought their fancy carriage house in Manhattan, Christy and her pal Susan launched their investment initiative called Waterfall TALF. Neither seems to have any experience whatsoever in finance, beyond Susan's penchant for dabbling in thoroughbred racehorses. But with an upfront investment of $15 million, they quickly received $220 million in cash from the Fed, most of which they used to purchase student loans and commercial mortgages. The loans were set up so that Christy and Susan would keep 100 percent of any gains on the deals, while the Fed and the Treasury (read: the taxpayer) would eat 90 percent of the losses. Given out as part of a bailout program ostensibly designed to help ordinary people by kick-starting consumer lending, the deals were a classic heads-I-win, tails-you-lose investment."


Are you mad, yet?  I hope you are, because these types of transactions must stop.


Source: Matt Taibb

A look at the UK’s REAL GDP or Simply Substitute USA for UK

"The following chart is pretty simple to follow. First up the black line is the UK’s GDP going back all the way to 1970. The green line is the amount the government has borrowed as a percent of GDP and the red line is a simple subtraction of the government spending through borrowed money from GDP. So what does this tell us?

The government has no money, it only has what it can tax the people. When it wants to spend more than the revenue it generates it borrows this money. However, that borrowed money has to be repaid and the only way it can do this is by taxing in the future.

So when the government borrows money and pumps it into the economy, it can make the GDP numbers go up and make the economy appear stronger than it actually is. In essence the government is borrowing GDP from future years to make GDP in the here-and-now go up. However, this is all false because eventually that borrowed money has to be repaid through higher taxes (with interest) and all that ‘gained’ GDP will have to be given back."

You can read the full article at Gold News.

Government Motors' Crowning Achievement: Falling Steering Wheels

Who can forget the frenzied all out bashing of Toyota on all government propaganda stations after the brake pedal got stuck just at a time when Government Motors was emerging from bankruptcy, and before it was forced to engage in stuffing dealers with its bloated inventory.  Yet, very little if anything has been said about the curious case of the Chevy Cruze and the falling steering wheel.  (Curious minds would like to know!  Oh, it is Government Motors.  Now, I know why we have not heard about it.)

The WSJ writes: "Imagine turning your car’s steering wheel, or giving it a gentle tug, and having it break away from the steering column.  Now you’re speeding along holding the suddenly useless wheel.  It sounds like a vision from a cartoon, or every driver’s nightmare. And it happened to at least one driver of a 2011 Chevrolet Cruze compact car last month, and General Motors Corp. is recalling 2,100 of the cars as a result."

The $38 Billion Budget Cut FARCE!!!!!!

Folks, we are dealing with close to a $1.6 trillion federal deficit for fiscal 2011.  But, Congress did cut a whopping $38 billion from the budget, which amounts to $3.6 trillion, or slightly more than a 1% cut.  They just don't get it.  Shame on you Democrats and Republicans.  And, where is the outcry from the Tea Party?  Where is the outcry from anyone?

The following graph depicts and illustrates the sorry state of affairs:

Source: Market-Ticker

Seven Things That I Know That Really Make Me Upset

1. Five U.S. banks control over 50% of the entire banking industry.
2. The top 1% of U.S. families have a greater share of the nation’s wealth than any time since 1930.
3. Wall Street profits in 2009 and 2010 totaled approximately $80 billion.  Bonuses over this two-year period totaled $43 billion.  (It is amazing that an industry that had a near-death experience in 2008 has made such a spectacular return to profitability.  I guess it is simple when you not only control the organization, Fed, that prints the money but the accounting firms who do your books, FASB.)
4. The Fed’s balance sheet has increased to $2.2 trillion as it purchased $1.3 trillion of toxic assets that it purchased from Wall Street.  The Fed paid 100% on the dollar for assets worth 50%, more likely 30%.  (What a great business model.  Your assets are only worth thirty cents, but your Sugar Daddy gives you $1 for all those worthless assets.)
5. Auditors are not really independent when it comes to Wall Street firms.
6. Fannie and Freddie will end up costing taxpayers at least $400 billion.
7. The biggest borrowers from the Fed were foreign banks during the so-called financial crisis week in October 2008, accounting for at least 70 percent of the $110.7 billion borrowed.  (Where is the outrage?)

Jobs Report Signals Improving Economy

You have to be kidding me, right?  I can not believe that this was the headline in today's Wall Street Journal online edition.  Shame on you, WSJ.  Take a look at the following chart, and you decide if things are really getting better.

Government Motors (GM) Hits Record: 574,000 Cars In Dealer Inventory, Despite No Interest Loans, Highest Car Discounts

Government Motors is offering buyers interest-free financing on some 2011 models after the company increased discounts and incentives to lead all major automakers’ U.S. sales gains last month."  Isn't that great. Now, desperate car buyers who can't rub two dimes together, can drive to the local unemployment office in the luxury of their brand new Chevy, which are now offered at either 72 or 60 months of interest-free loans. And get this: GM raised discounts 12% from a year earlier to an estimated $3,732 per vehicle last month, the most among major automakers and 45% more than the average, according to researcher Autodata Corporation.  


You got to love our federal government for giving all your "hard-earned money" to GM so those that can not afford a car can now drive one to the unemployment office.  Bless you, my brother!

Bureau of Lies and Scams (BLS)

March’s Non-Farm Payroll (NFP at 216,000), which came in above expectations of 190,000.  The main source of the improvement was the infamous “Birth Death” that added 117,000 jobs. (Fiction, Fiction, and more Fiction)  The unemployment rate came in at 8.8%.  Manufacturing payrolls were below expectations at 17,000 on expectations of 30,000.  But the real kicker, as usual, continues to be the Labor Force Participation rate, which continues to be at a 25 year low of 64.2%.  Once again, it is all about job creation, which we do not have.  Without “real job creation,” we do not have revenue to tax.  It is really that simple

When Does This Insanity Stop?

WSJ: "If you want to understand better why so many states—from New York to Wisconsin to California—are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.  It gets worse.  More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees."

Is it any wonder that so many states and cities cannot pay their bills?  We, as a nation, have completely lost our sanity and way. 

Are You the Hostage or Donkey?

Something remarkable happened to property taxes in America while housing lost 31% of its value from 2006 to 2009: they went up by $100 billion (27%).  Equally remarkably, as we can see from this U.S. Census Bureau data on state and local tax revenues, property taxes went up even when housing slumped in the early 1990s.

So though U.S. housing continues losing value, U.S. home prices declined in January, continuing a downward trend that began in August, with average U.S. home prices retreating to summer 2003 levels, according to the S&P Case-Shiller Home-Price Indexes, while property tax revenues continue their inexorable rise. 

See, the ultimate tax hostage is you, the property owner.  You county that you live in know it, probably better than you do.  The business owner can pull up stakes and leave, the wage earner can transfer or get another job elsewhere, and the consumer can restrict his/her consumption (or buy online) to lower the burden of sales taxes.  However, you, the property owner, are the perfect tax donkey, because the transaction costs of selling are so prohibitive.

With approximately 11 million homeowners in America owing more on their mortgage than their house is worth, then selling is no longer an option unless the bank accepts a short-sale, which lenders are not that eager to do.  Now, given that there are about 48 million mortgaged homes in America, then those 11 million represent about 23% of all homeowners, who are probably paying the same property taxes today that they did in 2009.  The difference, of course, is that property is only worth 69% of its 2009 value.  Where is your tax relief?  Imagine, if your income taxes rose by 27% even as your income declined by 30%, what would you do?

Ok, what should one do?  I recommend you visit your local county assessor and ask for the following data:

1. What are the assessed valuations for residential properties since 1997?
2.  What is the real property assessment rate?  (In my county, real property is assessed at 19% of the assessed value in #1.)
3. What are the real property tax rates since 1997?  (In my county, the real property tax rate is 4.03% for 2010.  For example, let’s assume the assessed residential valuation is $56 million.  Take the $56 million and multiplier it by .19, which equals $10.6 million.  Now, take the $10.6 million and multiplier it by the tax rate of 4.03%, which is $427,000.  That is the real property tax amount generated.  The objective is to trend the dollar amount for each year since 1997.)
4. What are the market values of residential properties since 1997?  You assessor may not have this information.  If not, contact a local realtor for assistance these valuations.

The objectives of this exercise are two-fold: (1) to trend the property market value to the actual real property taxes collected, and (2) to imply to the assessor’s office that you, and hopefully your friends in the community, are going to be the "Real Estate Watchdog” overseeing property taxes.

Washington, We Have a Problem!

The Bureau of Economic Analysis (BEA) just reported the following: "The January change in personal contributions for government social insurance reflected the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, which temporarily decreased the social security contribution rate for employees and self-employed workers by 2.0 percentage points for 2011, or $105 billion in January."  In other words, our federal deficit has just increased by $105 billion dollars.  And, Washington can not even come to grips with cutting a lousy $60 billion from a budget that neither Democrats or Republicans can agree upon.  That $60 billion figure is just 4% of what the total federal deficit will be for this fiscal year, which is a complete joke.  If Washington really wants to get serious, both parties must be willing to cut $500 billion this year, $500 billion next year, and cut whatever it takes the following year to balance the budget.  However, what do you thing the chances are that it will happen?  You are correct, ZERO PERCENT! 

The "Answer" to Yesterday's Question

Since 1997, one economic measure has rocketed up an incredible 800%.  It's not home prices. Not government pensions.  No, not medical costs, and not even higher education tuition. It is student loan debt.  (By the way, I did get some very interesting and well thought out answers, but no one came up with my correct answer.)  It's not just the growth rate of student debt that’s breathtaking.  It is also its absolute size, approximately $900 billion. (See the Student Loan Debt Clock.)  For example, would you be startled to learn that total U.S. education loans recently surpassed total U.S. credit card debt?  It did, for the first time in history.

And get this: Total education debt now amounts to 93% of total U.S. defense spending.

Now, why is all this important?  Four years of college can take decades to pay off.  The average student loan takes on average 10 to 25 years to repay.  Ouch!!  This is a bubble just waiting to burst.  

Student loan debt exhibits all the requisite characteristics of a true bubble: one that is credit-fueled, government-supported, and widely popular.  In other words, we have some striking similarities between the housing bubble and the education bubble.  And, we all know what happen to that bubble.  Also, the not-amusing part of this picture is that student loans have been rendered non-dischargeable (except in extraordinary circumstances) in bankruptcy.  What does that mean? Students can not simply walk away from student loans, like those mortgages they may have.  

I firmly believe that all this student debt outstanding will not end very good.  I look for massive defaults just like occurred with the housing bubble.  

Enforcement of Swing Set Building Codes

Rules regarding swing sets and play sets in Westport, CT will go under the microscope tonight at the Planning and Zoning Commission public hearing.  Currently, swing sets and play sets must by placed at least 50 feet from property lines.  These set-back provisions have been strictly enforced.  

Westport, CT leaders have nothing better to do than to harass individuals about what, again?  Crime? Absolutely not....swing sets, of course!

 

Silver above $38 as Gold Hits New All Time Highs

On March 3, 2011, I delineated six immediate action steps that must occur in order for the U.S. to survive.  That blog was entitled, "Economic Prescription for Growth and U.S. Survival."  Today, I reiterate #6 in which I stated, "An immediate dismissal of the Federal Reserve Chairman, Ben Bernanke.  Why?  The Fed is required to promote both price stability and full employment (economic growth).  Enough said, because we have neither.  Therefore, since he is the individual responsible for monetary policy, he must be accountable and take full responsibility for his disastrous monetary polices that he has implemented."  

The dollar is in a free-fall.  Silver and gold are in a parabolic rise.  Why?  Read #6 again.  The Fed's monetary policy is destroying the basic core ad fabric of not only our economy but our currency.  We need fiscal and monetary polices that will strengthen the dollar!  Therefore, Bernanke must go, now! 

Do You Know?

Since 1997, one economic measure has increased an incredible 800%.  It's not home prices.  Not  government pensions. No, not medical costs, and not even higher education tuition.  What is it?  Let me know.  If you get it right, I will identify you as the winner in my post tomorrow. 

Who Owns All That Municipal Debt?

If there is a muni-bond collapse, as some people expect, who gets slammed?  You!  I have been negative on municipal securities along with state bonds for quite some time.  Municipal and states are bankrupt.  End of story.  They can not print money like the Fed. 

Due the "Zero Interest Rate Policy" of the Fed, investors have been reaching for yield (higher rate of return).  However, there is a consequence of reaching for that extra basis point, and that is increased risk.  Today's investors in municipal bonds will lose and lose big.  Just look at the following chart and you decide who is at risk.  Just because we have not had major defaults, yet, does not mean that it will not happen.