Why is This Man Smiling?

The man in the picture is Mike Duke, who just retired as CEO of Wal-Mart.  The reason for his smile is that his retirement package, to which he is now entitled, is a whopping $113 million, or about 6,182 times greater than the average 401(k) balance of a typical Wal-Mart worker.  To say the least, Mike Duke will not be your typical Wal-Mart shopper this holiday season.

No "Bears" to be Found

Executive Order #6102

President Franklin Roosevelt signed Executive Order #6102 requiring all gold to be handed over to the government.  The government gave everyone approximately one month from April 3, 1933 to May 1, 1933 to return all gold coins, gold bullion and gold certificates to the Federal Reserve in exchange for $20.67 per ounce.  Failure to do this was punishable by a $10,000 fine, which is equivalent to over $150,000 in today's dollars and/or up to ten years in prison.  Wow!  Could it happen again?  This, of course, is a rhetorical question, and you already know the answer.

Medicaid Consequences of Obamacare

If you have ever enrolled in Medicaid or are contemplating signing up for it, please read on.  “The current law will result in your house and other financial assets being seized to pay all Medicaid-incurred expenses if and when you die.  Sorry, but that is the current law.  Therefore, make sure you spend and/or give away all equity you have to the limit of your ability if you are currently on Medicaid or have ever used this program.  Now, if you have Medicaid or ever have used it, the reverse mortgage strategy makes perfect financial sense, especially for older Americans.”  Why?  You definitely want to draw down the size of those financial assets to make sure Obamacare (federal government) cannot seize those assets upon your death.  In other words, there really is no such thing as a free lunch.

What Happens When the $INDU Reaches Point E, or 16,000 +/- 200?

It's All About Wall Street, Not Main Street!

 I have been posting for quite sometime about the true intent of quantitative easing (QE) by the FED was to benefit Wall Street and not Main Street.  Well, in today's Wall Street Journal, a former Fed official, Andrew Huszar had this to say: "I can only say: I'm sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time." 

Wow.  What a confession!  But, wait, he goes on to say: "It wasn't long before my old doubts resurfaced. Despite the Fed's rhetoric, my program wasn't helping to make credit any more accessible for the average American. The banks were only issuing fewer and fewer loans. More insidiously, whatever credit they were extending wasn't getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash."

And, the impact to date of all this QE to the tune of the Fed's $4 trillion investment.  Well, the Fed's ROI has been to increase GDP by a mere 0.25%, or $40 billion.  But, the stock prices of those Wall Street banks have seen their stock prices more than "triple" since March 2009.  These institutions are the so-called "Too-Big-Too-Fail" money center banks.  These banks, which are only .2% of all the banks in the U.S., control in excess of 70% of all U.S. Bank assets.  To say the least, the Fed has accomplished its mission of enhancing the wealth of Wall Street Banks at the direct expense of Main Street. 

$INDU Heading Back Down to its 50-Day EMA

Twitter (TWTR)

Twitter just opened-up 75% from its IPO price, which beats Facebook on its opening day.  As of now, Facebook (FB) has a "market cap" of $117 billion; and Twitter (TWTR) has a current "market cap" of around $30 billion.  Can anyone say "irrational exuberance?"  But, then again, with the likes of Bernanke and soon to be Yellen in the "Quantitative Easing" driving seat, the current market believes that it's rational exuberance. 

Gold Continues to Trade Within a Stage 4 Selling Phase

Affordable Care Act (Obamacare) Includes Incentives for Individuals to Work Less and Earn Less Money

Under the Affordable Care Act (ACA), if your 2014 income is between 138% and 400% of the "Federal Poverty Level" for your household size, you can purchase health insurance on a state-run exchange and receive a federal tax subsidy to offset all or part of your premium.  "Because of the manner in which ACA defines who gets subsidies and who doesn’t, there is a huge “cliff effect” at 400% of the federal poverty line (FPL).  If you make a penny more, you won’t receive health care subsidies. If you make a penny less, you could receive thousands in subsidies.  Therefore, what is the result?  Rational people who are right around the 400% FPL threshold will choose to work less in order to increase their income after paying for health insurance."

As an example, in California, a couple earning $64,000 (412% of the FPL) a year would not qualify for health care subsidies.  A bronze plan for them through Kaiser would cost them about $1,300 each month, or $15,600 a year.  But, if that same family earned just $2,000 less, or $62,000 (399% of FPL) it would qualify for over $14,000 in annual health care subsidies, dropping their premiums for that same Kaiser plan to less than $100 per month.  Therefore, the after-insurance income for the couple earning $64,000 is $48,400.  The after-insurance income for the couple making $62,000, which is just under the 400% FPL threshold, is $60,800. I don't know about you, but $60,800 in spendable income is better than $48,400! 

Why is this knowledge relevant to your financial well being?  Because it makes no sense for a couple on the FPL bubble to work harder to earn a little extra money.  In other words, the ACA would severely punish them for their desire to increase their income, which translates into less GDP growth.

The Henry J. Kaiser Family Foundation has a great Affordable Care Act subsidy calculator. Click here for a direct link to the site.

Well, You Can't Win Them All!

What Will it Cost You in the Obamacare Exchanges?

Total U.S. Debt Soars Over $17 Trillion

I don't know what all the fuss was about, right?  Hey, another trillion here and there, and soon we will be talking about some real serious debt.  But, in the mean time, our debt level is just barely over $17 trillion.  Enjoy your weekend!  (The above Table III-C was taken from the Daily Treasury Statement.) 

Chinese Agency Downgrades US Credit Rating

Dagong lowered its ratings for U.S. credit from A to A-, maintaining a negative outlook, the agency said in a statement.  Dagong is far less prominent than its Western competitors including Moody's, Fitch, and Standard and Poor's.  On Tuesday, Fitch issued a "warning," not a down grade to the U.S. credit status if the debt crisis was not resolved.  Of course, the debt crisis has not been resolved, simply put off until February.  Those two agencies, Dagong and Fitch, are foreign rating agencies.  Fitch is a French concern.  I find it very interesting that the two rating agencies that have spoken out about the credit worthiness of the U.S. are foreign entities.  I guess Moody's and Standard and Poor's were too afraid of any negative consequences from our government if they came out with a so-called negative warning. 

Does anyone really believe that at a debt level of $17 trillion plus that our country can continue to go down this path of ever expanding levels of debt, or, for that matter, kick the proverbial "debt can" down the road forever without a resolution?  

American Adults are Dumber than Average

The results are from a study called the "Program for the International Assessment of Adult Competencies,"  and it tested 166,000 people aged 16 to 65 in more than 20 countries.  The study found that in math, reading, and problem solving, American adults scored below the international average.  The results should not be a surprise, since America’s school kids have not measured well compared with international peers. Now, we know that adults don’t either. 

Moody's Offers Different View on Debt Limit

In a memo being circulated on Capitol Hill today, Wednesday, October, 9,  Moody’s Investors Service says that the U.S. Treasury Department is likely to continue paying interest on the government’s debt even if Congress fails to lift the limit on borrowing next week, preserving the nation’s sterling AAA credit rating.  At least someone has read the 14th Amendment of the U.S. Constitution.  I would appreciate it if not only the Administration but Congress pick-up a copy of the U.S. Constitution and read it.  I am sure that there is at least one copy someway to found in Washington, D.C.

Social Security Warns Benefits Could Get Cut

The Social Security Administration has begun warning the public it cannot guarantee full benefit payments if the debt ceiling isn’t increased.  (But the government can pay $47,174 for a mechanical bull.)  The agency made the following statement: “Unlike a federal shutdown which has no impact on the payment of Social Security benefits, failure to raise the debt ceiling puts Social Security benefits at risk.”  Bull!  Our government takes in $250 billion a month, or $3 trillion in a year.  In other words, it has sufficient funds to not only pay its social security obligations but the interest on the debt, medicare & medicaid, veteran's benefits, and defense.  Such a statement being made by the Social Security Administration is nothing but a "Scare Tactic," which is shameful. 

No Bull Here!

On Monday, the U.S. Army contracted to buy a mechanical bull.  The $47,174 contract was awarded on October 7 to Mechanical Bull Sales Inc. of State College, PA.  According to the General Services Administration (GSA) listing, the National Guard of Utah made the request for a “bull which needs to be durable and low maintenance” for its recruiting endeavors.  The National Guard of Utah stated that its old mechanical bull is beyond repair.

He Was Right in 2006 but Not in 2013

The U.S. Treasury takes in approximately $250 billion a month, which is 10 times what the monthly Treasury interest payments are on our debt. The United States will not default on its debt. The 14th Amendment (Sections 4 and 5) of the U.S. Constitution spells out that, as a nation, we must pay off our Treasury debts (interest) first, before we pay anything else.  So, we not only have sufficient revenue coming into the Treasury to pay the interest due but the 14th Amendment, which spells out what must be paid first. 

What to Know if You Opt Out of Buying Health Insurance Under Obamacare

 If one opts out of getting health insurance, one will have to pay a penalty, or I like to refer to it as a tax!  The penalties are not very high to start.  In 2014, the fine to remain uninsured is $95 per person (up to a family maximum of $285, or 1 percent of family income, whichever is greater).  However, the penalty will increase significantly in the next two years, with the tax running as much as $695 per person by 2016.  The family maximum would be as high as $2,085, or 2.5 % of family income, whichever is greater.

One can calculate how much your health insurance premium would cost by using the Kaiser Family Foundation Subsidy Calculator, and then you can compare the tax you would be assessed for having no insurance.