Tuesday, July 17, 2012

Chevy Volt 60-Day Return Policy is Worth a $7,500 Tax Credit

General Motors has announced a "60 day money back guarantee policy for all new Chevy models, including the Chevy Volt." The move sets up a scenario where purchasers can buy a Volt, claim the $7,500 federal tax credit (and most likely state credits) and return the vehicle for a refund within 60 days and still get the tax credit.  Did GM really not consider this glitch, or is this just another way for Government Motors to prop up politically important Volt sales leading up to November elections?  Also, sales tax on a returned item is refundable, so it's even better.  Title and registration fees would not be, but those are relatively minor compared to the $7,500 tax credit. The tax form for the credit is IRS 8936. 

So, if you see me driving around a Chevy Volt, you will know it is for the tax credit; and I am probably on my way back to the dealer to return it. Thank you, American taxpayer.  You are so very generous. 

Monday, July 16, 2012

Taxes Do Matter


The one underlying agreement by both Austrian and Keynesian economists is that you don’t raise taxes in a recession or slow-growth environment.  The United States faces a massive tax increases coming on January 1, 2013 along with continued deficit spending for years on end, which will lead to a massive economic collapse. 

Small businesses have been the catalyst of job growth here in the United States, but that catalyst is now in great jeopardy because of the pending tax increases.  Let me give an illustration that hopefully will drive home my point.  “You have a small business that is incorporated.  Currently, this business pays a corporate rate at the margin of 35%.  You company makes a profit before taxes of $100.  Given the marginal rate of 35%, your company pays Uncle Sam $35.   This leaves the company, you, with an after tax profit of $65.  Since you own the business, you give yourself a dividend of $65.  However, this amount is currently taxed at 15%.  So, at the end of the day, you have $55.75 to keep for yourself after paying out to Uncle Sam $44.75, or an effective tax rate of 44.75%, which does not include any state income taxes by the way.  For 2013, the administration is proposing that the corporate tax be reduced to 28%, which is at least in the right direction, and increase the dividend tax rate to 43.4%, which is definitely not good news to small businesses.  The consequences of these pending rate changes will be for you to keep $40.75 and pay out to Uncle Sam $59.25, or an effective tax rate of 59.25%.”  Ouch, that will definitely hurt!

Bottom line is that for the small business owner his/her tax rate will effectively go from 44.75% to 59.25%.  In other words, you take all the risk as the business owner and get to keep only $40.75 from every $100 that you, not the government, generate.

U.S. Corporate Tax Rate: Highest in the World

Japan, which had the highest corporate tax rate in the world at 39.8% rate on business income between national and local taxes, cut its rate to 36.8% this past April 2012. The U.S. corporate tax now stands at 39.2% when both federal and state rates are included, which puts us with dubious distinction of having the highest tax rate in the world!  (At least we are #1 at something!) Taxes do matter, and they are about to collapse our already fragile economy.  Please refer to the following graph.


Wednesday, July 11, 2012

Silver: Bear Market!


Gold: Trend is Down!


Gold Miners: Back to $22?


The beauty of "Point & Figure Charts" is its ability to identify "Stages."  In this chart of GDX, one can clearly see the "Distribution Phase (Stage 3) and the current Selling Phase." 

Sunday, July 08, 2012

Silver's Downside Projection


A Short History of Congress's Power to Tax

Paul Moreno in this week's Wall Street Journal's Opinion piece provides a very succinct overview of the taxing power of the U.S. Congress. (You may read his complete opinion by clicking here.)  For those of you that do not want to read his entire opinion, the following excerpts are taking directly from Mr. Moreno:

"In 1935, Secretary of Labor Frances Perkins was fretting about finding a constitutional basis for the Social Security Act.  Supreme Court Justice Harlan Fiske Stone advised her, 'The taxing power, my dear, the taxing power. You can do anything under the taxing power.'  Last week, in his ObamaCare opinion, NFIB v. Sebelius, Chief Justice John Roberts gave Congress the same advice—just enact regulatory legislation and tack on a financial penalty, as in failure to comply with the individual insurance mandate.  So how did the power to tax under the Constitution become unbounded?

The first enumerated power that the Constitution grants to Congress is the "power to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the United States."

Congress enacted very few taxes up to the end of the Civil War, and none that was a pretext for regulating things that the Constitution gave it no power to regulate. 

The first unabashed use of the taxing power for regulatory purposes came when Congress enacted a tax on "oleomargarine" in 1886. Dairy farmers tried to drive this cheaper butter substitute from the market but could only get Congress to adopt a mild tax, based on the claim that margarine was often artificially colored and fraudulently sold as butter.

Then, in 1914, Congress imposed taxes on druggists' sales of opiates as a way to regulate their use. Five years later, in U.S. v. Doremus , the Supreme Court upheld the levy under Congress's express power to impose excise taxes.

Then, in 1922, the court rejected Congress's attempt to prohibit child labor by imposing a tax on companies that employed children.

Things came to a head in the New Deal, when Congress imposed a tax on food and fiber processors and used those tax dollars to provide benefits to farmers. Though in U.S. v. Butler (1936) the court adopted a more expansive view of the taxing power—allowing Congress to tax and spend for the "general welfare" beyond the powers specifically enumerated in the Constitution—it still held the ends had to be "general" and not transfer payments from one group to another.

And now, in 2012, Justice Roberts has confirmed that there are no limits to regulatory taxation as long as the revenue is deposited in the U.S. Treasury."

Therefore, as long as Congress calls it a tax and the proceeds are deposited in the U.S. Treasury, it is constitutional.  How long do you think that it will take our Congress to abuse this "renewed" power?  That is why we need the Fair Tax, which would abolish the income tax completely, and get rid of the Internal Revenue Service.  In addition it would repeal the 16th Amendment so income cannot be taxed. It would replace the income tax revenue with an equal amount using a national sales tax. Same tax dollars but a different point of collection.  And, it would take away the ability of Congress to pass legislation and fund it with a so-called tax. 

 

 


Friday, July 06, 2012

June's Non-Farm Payrolls: A Big Dud


June's "Non-farm Payroll" number of 80,000 comes below expectations of 100,000.  The infamous "Birth/Death" adjustment added 124,000 jobs.  (Keep-in-mind that the Birth/Death adjustment is a statistical measure and not does not mean REAL job creation.  In other words, it is a statistical adjustment and does not indicate real job creation.)  Therefore, if we subtract off the "Birth/Death" statistical measure of phantom job creation, we actual lost 44,000 jobs in June.  Wow!  With the statistical Birth/Death adjustment taken out, we actually lost jobs in June, not the statistical gain of 80,000, which is abysmal in its own right. 

Wednesday, July 04, 2012

Picture Guide to Financial Markets Since 1800

A collection of almost 100 charts on asset price returns, correlations, volatility, valuations and many other market and macro factors for the US, UK, Europe, Japan, and Emerging Markets.  A must read/view for the technical analyst. Click here to view all the charts.

Sunday, July 01, 2012

Patient Protection and Affordable Care Act (PPACA)


Karl Denninger, Market-Ticker, had a great post today about the infamous "Patient Protection and Affordable Care Act," or simply ObamaCare.  I have re-posted with some minor editing and comments from yours truly.

"Patient Protection and Affordable Care Act (PPACA) sets forth a tax of $2,000 per employee for a business that has 50 or more and does not provide "at least" the minimum "insurance" to all. Ok, there is no health care plan I'm aware of that a business can buy today that costs less than $2,000 per employee per year and which also meets the requirements in the law.  None. Therefore, the incentive is for all businesses to drop health care and pay the tax. Period!
Now, your choices are to either buy health insurance or pay a tax of 1% of income (increasing to 2.5% of Adjusted Gross Income in 2016.)  The minimum "fine" is $95 starting in 2013, rising to $695 in 2016.  The average family income is about $50,000/year, which means that the tax will be $1,250 in 2016. You cannot buy health insurance at their "minimum level" for anything approaching $1,250 a year no matter how healthy you are at any age. Therefore, like businesses, you will pay the tax. Why? The question always comes up that I cannot be without health insurance. Well, that was under the old “normal.” The new “normal is completely different. Why? The law prohibits insurance companies from charging you more if you're sick, or refusing to cover you at all.  They must accept everyone on equal terms.
What are the potential consequences? First, businesses will drop coverage; it's cheaper (by far) for them to pay the fine and, for those under 133% of the federal poverty level, those employees can go onto Medicaid.  This is a "family of four" income of $31,900 (as of today; it will go up of course.)  Second, individuals will drop coverage and pay the fine, since it's far cheaper than to buy the insurance."
Now, what is going to happen to insurance costs when everyone only buys it when they need it, since they cannot be denied?  This question, of course, is rhetorical, which does not need a rhetorical response. Just ponder what health care will be like in five or ten years from now.  Pretty scary, isn't it?

Friday, June 29, 2012

Smallmouth Bass Fishing in the Mink River

No, this is not a post about the "Affordable Health Care Act nor the Financial Markets."  Right now it is about my fishing.  Take a look at this little baby, which came in about 20 to 21 inches.  This is the reason why I enjoy Smallmouth Bass fishing in the Mink River, which is located in Northern Wisconsin on the shores of Lake Michigan, on my kayak.


My bait of choice is "Canadian Crawlers."  I use 6 lb. test with a #6 hook (18" from sinker), #6 split shot, and WD-40. Yes, you read that correctly, WD-40.  It is amazing what you can do with the WD-40; that includes catching fish!

Wednesday, June 27, 2012

What is Your Mink River Estuary?


I have spent the past few weeks on the beautiful Mink River in Northern Wisconsin, specifically Door County, fishing for Smallmouth Bass.  It is a beautify place where one can completely forget the cares of the world.  I hope that you can find and enjoy your own "Mink River Estuary."

Bull-Headed Investors


This is what happens to those investors who refuse to comprehend economic reality of the next four years.  In all honesty, I hope you are not one of them!

Hollande's Prescription for Economic Disaster


Since France's Socialist President François Hollande took office in mid-May, his government has instituted the following economic policies:

  1. Decreased the retirement age from 62 to 60.
  2. Increased the minimum wage rate by more than inflation. 
  3. Created a special 3% tax on dividends.
  4. Instituted a maximum tax rate of 75%.
What has been the economic consequences so far from these actions? First, economic growth has evaporated.  (France's national statistical office "Insee" is forecasting a further rise in the jobless rate, from the current 10%.)  Second, an increase in taxes has already slowed down France's economy.  Good job, Hollande.  He is in office a little over a month, and his policies have doomed France.  Why would anyone vote a Socialist into office?  The answer is that you get to spend other people's money!  


Monday, June 25, 2012

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!


Saturday, June 23, 2012

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.

Friday, June 22, 2012

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!

Tuesday, June 19, 2012

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. 

Tuesday, June 12, 2012

Summer Hiatus


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

Friday, June 01, 2012

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.)

Thursday, May 31, 2012

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! 


Tuesday, May 29, 2012

Facebook: Under $30

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

Monday, May 28, 2012

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.

Saturday, May 26, 2012

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!


Friday, May 25, 2012

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. 

Tuesday, May 22, 2012

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!



Monday, May 21, 2012

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.


Wednesday, May 16, 2012

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. 

Wednesday, May 09, 2012

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。



Monday, May 07, 2012

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.


Thursday, May 03, 2012

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! 

Thursday, April 26, 2012

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.)

Wednesday, April 25, 2012

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. 





Saturday, April 21, 2012

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?

Wednesday, April 18, 2012

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.


Tuesday, April 17, 2012

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."

Sunday, April 15, 2012

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?


Friday, April 06, 2012

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!


Sunday, April 01, 2012

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.”)