EMA Algorithms

A very interesting pattern is unfolding between the relationship of the 2007 EMAs and 2011 EMAs.  Take a look at the following chart.  Very interesting, indeed.  Definitely, I will be tracking this relationship.

Apple Now Has More Cash Than The U.S. Government

According to the latest daily statement from the U.S. Treasury, the government had an operating cash balance of $73.8 billion at the end of the day yesterday.  Apple's last earnings report showed that the company had $76.2 billion in cash and marketable securities at the end of June.

Hiatus: Gone Fishing

The Unabated Bull!

Obama's Own Words

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure,” he said. “It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.”  (Source:  Senator Barack Hussein Obama, March 2006)

Egan-Jones Rating Service

Egan-Jones is the one true "independent" rating service that analyzes the credit worthiness of country debts.  Over the weekend, it down-graded the rating of our Treasury securities.  

For those of you who continue to be believe that our country will not only survive but prosper, take a look at the nine-minute video. 

A Short History of U.S. Credit Defaults

Has the U.S. ever defaulted on its obligations?  Yes.  I am always amazed that individuals not only refuse to learn from history but study it.  Today, the so-called pundits out there are using every type of scare tactics imaginable to get a debt ceiling increase.  Let's look at the facts as recorded by history and what will probably happen if the debt ceiling is not raised by reading the "Short History of U.S. Credit Defaults."   

President Obama: 80% of Americans Want Higher Taxes

Now, I am really confused, because according to the most recent Rasmussen Report just 34% think a tax hike should be included in any legislation to raise the debt ceiling and 55% disagree and say it should not be included. 

I would like to know where the President got the 80% figure.  Of course, during his news conference, no reporters (lemmings) asked the question about where he got his 80% figure.   Since I am against higher taxes, my inquiring mind would like to know.

California Pays Doctor With No Patients Big Bucks for Mail Room Duty

A California surgeon at a state prison who has not seen a patient in six years, because the state is concerned about his medical skills, rakes in a salary that is four times that of the state’s governor.  (Once again, I am not that creative to make stuff up like this.)  Dr. Jeffery Rohlfing is on mail room duty and making $770,000 payout.  No, that is not a misprint.  By the way, according to the Los Angeles Times, the newspaper reports that dozens of other doctors have been assigned similar tasks at prisons when the state is concerned about their skills.  What is the moral of this story?  It is California. Enough said!

Elitist Mindset vs American Public Mindset

I, for one, believe that the American public is a whole lot smarter than what the so-called elitist gives us credit for, especially when it comes to the national debt level.  Sometimes the truth, one's true belief, comes forth when one doesn't realize he or she is saying it.

Option ARMs Explained

Let's say that you were one of the unfortunate ones that took out such an financial instrument back in 2006 during the frenzy of the real estate bubble. Today, you are wondering how your P&I monthly payment just went from $833 to $4,027.  Wonder no more, just read on.

When an Option ARM reaches (typically) some term of years, usually five years, or principal balance (125%) it is forcibly recast to a fully amortizing loan on the original terms. 

Let's say the "Option ARM" is to make a 2% interest payment on a $500,000 loan.  The normal interest rate is 6% and the "full term" is 30 years.  A full P&I payment is $2,953.48.   But a 2% Option Arm, interest payment is $833.33; the rest is "capitalized,” or approximately $2,120/month.

When the loan hits the hard recast limit, whether on principal balance or time, you must then make a fully amortizing payment on the balance over the remaining original term. 

So let's assume you have a 125% negative amortization cap.  At roughly $25,000 ($2,120 x 12) in negative amortization per year, you can make minimum payments for about five years.

Now, you have 25 years to amortize $625,000 @ 6%.  Your home is worth half of the original balance, or $250,000.  And you have a big problem, because the fully amortizing payment on that $625,000 is $4,026.88 or 483% - nearly five times - your "option" payment!

The real problem is that many of the people who received these $500,000 loans had gross family incomes under $100,000.  The fully amortizing recast payment is now nearly $50,000 annually!  Now, how many of these individuals, who took out these Option Arms that I just explained and illustrated, do you believe understand the concept and the ramifications that I just went through?  I know the question is rhetorical.  Therefore, I will give you the answer, which is ZERO. 

Birth/Death Adjustment was Responsible for Over 60% of the Payroll Gains in the Past Year!

Quite remarkable, isn't it?  This "Birth Death" adjustment on actual non farm payroll (NFP) numbers confirms that of the 1 million "job gains" in the past year, well over 60% of these have come from a statistical factor.  (These are not real jobs, folks, just a STATISTIC!)  Do you wonder when anyone in this administration or media will mention that of the 1 million jobs "created" in the past year, 606,000 have been purely the product of statistical models?  Well, I already know the answer to that rhetorical question.

Seven Measures for Economic Growth

From the Heritage Foundation: "Congress and the White House must take immediate action to get America's economic house in order and to foster an environment that encourages job creation. Those measures include the following: (1) repealing Obamacare, (2) its employer mandates and tax increases, (3) preventing the Environmental Protection Agency from regulating carbon dioxide, (4) passing tort reform to reduce the cost of meritless lawsuits, (5) expanding trade agreements, (6) permitting more domestic energy production, and (7) cutting spending to avert massive tax increases. "

Unabridged Disaster

The U.S. economy barely added jobs for the second month in a row in June, and the unemployment rate rose to 9.2%, which is the highest level this year, adding to concerns the labor market will take years to recover.  Total jobs added per the NFP survey: +18,000 on expectations of 105,000.  Also, the Labor Force Participation rate of 64.1% just dropped to a fresh 25 year low.  (Only 64% of the those eligible to work are actually working.  Not a good sign for the economy going into the second half of 2011.)

This is the second complete forecasting disaster for Wall Street's economists in the last two months.  And, these pundits are getting paid the mega-bucks to get it right.  The problem is that the majority of these pundits have been schooled in Keynesian economics, which has finally demonstrated that you can not borrow and spend your way out of recession/depression.  Or, government deficit spending does not create lasting economic recovery, instead it creates asset bubbles (stock market) and a false sense of security.   In other words, I am looking for a few good Austrian economists, like Mises and Hayak. 

Obama Administration to Extend Mortgage-Free Living for America's Unemployed to One Year

The Obama Administration today will announce two programs providing unemployed homeowners twelve months' forbearance on their mortgages.  Isn't America a great "socialist" country?  Why would anyone that has a mortgage be foolish enough to make their monthly P&I payments?  When you can receive twelve months free rent.  Just look at all the things you can buy.  Thank you, President Obama.  There truly is a Santa Claus.

Government Spending ≠ Investment

This whole talk of government investment in infrastructure and whatever is not “INVESTMENT” at all.  Our Federal Government would like you to believe that is the case, because it sounds a whole lot better than government spending.  Therefore, government does not invest; it only “SPENDS.”  And what it spends, it must extract from the private sector through taxation, which by the way is that segment of the economy that actually does indeed create jobs and wealth, or rely on the Federal Reserve System to monetarize our federal deficits, which of course it has through the infamous QE 1 & 2.

God Bless the U.S.A.

Get Your Food Stamps Here!

The clearest indication of just how ineffective the recovery and QE2 has been comes courtesy of the USDA.  The latest update for April participation in Supplemental Nutrition Assistance Program (SNAP), better known as "Food Stamps," shows yet another record, 44.647 million people, an increase from May's 44.587 million.  (That is 1 out of every 7 individuals!)