Tuesday, February 14, 2017

Famine the Unanticipated Catastrophe

People assume that famines are caused by a poor growing season. This is true in agrarian societies where everyone farms. However, a financial world banking catastrophe could lead to the same result; where starvation occurs from lack of funds to purchase food. Also, we may be fast approaching a limit where food production can’t keep up with the increased population. War in the Middle East, is curbing a lot of farm production, which is leading to starvation for many.

And then there is global warming. Once the North polar ice cap melts, the Gulf Stream ocean current could change its direction a tad, making Eastern Europe too cold for food cultivation.

A famine could affect a large part of the world’s population. We are at a point now, where bad weather, financial instability or political instability, could determine who will live or die. A nuclear skirmish in a quest to grab resources, could make food very scarce in some areas.

The next famine will not be anticipated. It may be an economic or financial disaster that triggers it. When it happens, the logistics of transporting food to those that need it could be very hard to accomplish. Imagine a high-density population area like India, where many are already at starvation levels and barely surviving. This could be the end of the road for them.

Without the means to purchase food, life is a real struggle. Most of us are not in a position to grow and produce the food we need; we pay others to provide it to us. Those in the third world who are starving to death slowly, could be the medium for new super diseases that the rest of the world will have to deal with in the future. It is this group, with very weakened immune systems, that could be the incubator for a future plague far worse than any war imaginable.

The funny thing is, the third world was our source of cheap labor. As our economy slows down, the funds that made life possible for them will disappear. That thought worries me. A hungry mountain lion is not going to knock on your door and bargain with you over the price of its next meal -- your pet dog in the back yard.

Thursday, February 09, 2017

The Peanut Butter and Jelly Sandwich Mindset

Making a peanut butter and jelly sandwich isn’t hard, I don’t think that an instruction manual was ever requested by someone desiring to put one together. One day at work, I thought aloud and mused as to how much jelly would be considered too much when making a sandwich. No one really commented, but I got the feeling that many of my associates, thought I was not playing with a full deck.

You make the sandwich put it in your lunchbox and eat it at work without a second thought. If someone asked me how I rated the sandwich, I’d probably look at them sideways and think they were being funny. PB&J is not an exotic expensive lunch.

Let’s do the impossible, add politics to a peanut butter and jelly sandwich. Nancy Pelosi and Donald Trump both make a PB&J. We know from the start, that both will complain that the other sandwich has too much or too little of one or both ingredients. Neither one will like how the other’s sandwich was constructed. One will want to create a bureaucracy to regulate how the sandwich is made. The other will be against government controls on sandwiches.

So, when you turn on the news, and they have a Republican and a Democrat discussing the issues, you already know each side’s argument. It’s all about that peanut butter and jelly sandwich. There is no real skill in making a peanut butter and jelly sandwich. The real skill, is to not run out of peanut butter, jelly or the bread to put it on.

Wednesday, February 01, 2017

Our Political System is in Shambles

When Obama won the election in 2008, I felt a loss, my party had not won. I lived with it for 4 years never protesting, and I noticed that most Republicans did the same. Obama came up for re election and won again and I lived with the loss even though I severely disagreed with everything he was doing.

In the last election, my candidate won over all odds. It hasn’t even been two weeks since Trump has been in office, and there are protests over every little thing he does.

Everyone that is a Democrat has an opinion that they believe that they have to enlighten the listening public with. They can’t sit still for this injustice and have to protest. The trouble is it is getting just as bad on the Republican side. They also have an opinion that they want to broadcast to the listener. I can point out the obvious. Everyone is talking, but nobody is listening to them, they don’t understand that.

The Republicans gave the Democrats 8 years of no protesting. The Democrats have given the President his first two weeks of nothing but protesting.

I would suggest that the people in the street protesting Trumps election, are the Fascists. If you are against immigration, you are perceived as unamerican. Of course, if we go back to pre-world war Germany, if you weren’t against the Jews, you were NOT considered a German patriot by the protesting masses. It was the people NOT in power, that wanted to dictate, the values the Democracy was to hold sacred. And we know how that turned out.

We have a new President that has been in office two weeks. My question, what has happened to the Democrats in Congress? They think that the end of the world is near with the election of Donald Trump?

I took a double blast of Obama for 8 years and the world was on a normal turn of events every day of his Presidency. Now we have President Trump and a bunch of Democratic Congressmen and news commentators that think the United States is in a horrible mess because of this transition of power. I question their judgement, only because, I accepted the last 8 years of a Democrat that I considered a complete idiot.

Where we go from here, is an open question, but I think we need to give President Trump more than two weeks to arrive at a conclusion.

Congressman Schumer is the sort of idiot that need to understand that they don’t give Congresswusses an Emmy for crying on TV. Forgive me, I have digressed.

Let’s give our new President one year, and then voice an opinion. Why do I think that this will not happen? Ans: Democrats want it their way or the highway. A fine way to define Democracy!

Sunday, January 22, 2017

Sore Losers

The peculiar reception by the Democrats of Donald Trump becoming President (the out of whack protests) gives me pause to think that the transition of power is one that will shift accountability into a new peridium. The Democrats (Socialist) are pissed, the free lunch is over. It’s no longer food stamps and health care; now you make a choice, food or the cell phone.

Smart government can get to those gaming the system. Many have been taking advantage of government programs too dumb to manage themselves. You can’t blame the people that take advantage of the free handouts.

The real issue here, is that the “Old Democrats” who lost are Socialists and the “New Republicans” are Democrats with more of a bias towards big business. In this morass, the Democratic party has no idea of why they lost, and in reality, they didn’t. I’m not going to enlighten them, that Trump is a Democrat.

A nest of hornets has been stirred up,the Socialists (AKA Democrats)and it will take time for them to calm down. My only worry, I think I can safely confirm that half of the voters in this country are too incompetent to have the right to vote. The good thing is that most of them didn't vote, they just protest after the fact. Real freedom to them, is the ability to wet their pants when they feel like it and I can't argue with that logic.

Sunday, January 08, 2017

Back Soon

Happy New Year Everyone.

I haven't given up posting, we bought a home in December and have been moving into it, the last 3 weeks.

Right now, I have a tendency to fall asleep if I sit down. I should be back to par next week.

Sunday, December 04, 2016

“Dumpster Journalism”

50 years ago, when you picked up a newspaper, you got a report of tragedy’s, deaths, assassinations, wars and weather reports along with the sports and business pages.

In today’s world, we have people writing the news before it happens. The US Presidential election comes to mind. The problem is, it didn’t happen as written.

What is not appreciated here, is that the manipulation did not go as planned. Journalism failed the common reader by interpreting too many facts and arriving at a conclusion that the reader was expected to reach after reading the article.

The Great Depression of 2006 is now being referred to as the Great Recession of 2006. My point that I made in the past, was that the people of the 1929 Great Depression had no idea that they were in great depression. Something was drastically wrong and they had no idea what it was. It was only when you picked up a history book in the 1950’s that you discovered the Great Depression. It was only when things started to get very noticeably better did people look back and see what they had been in.

I used the newspaper example of how Hillary had the election won to show how the truth about the economy has been stretched a tad. We are being told the economy is just great. 95 million people no longer looking for work and 45 million on food stamps. The fact you can earn more money from an interest perspective, spending money, rather than saving money turns every rule about financing upside down.

The stock market hits new highs. Most all stocks are divorced from the company they represent, the only thing that connects the buyer to the stock value is the dividend. Every stock has an owner and it is not the company (from a technical aspect). The price is determined by what another person is willing to pay for it. So a drop in the price of IBM of say $100 would revalue the net worth of shares issued, but not reflect in one bit the real assets of the actual company.

Right now, the world of journalism says everything is just great. Kind of reminds me of the many newspapers that flat out stated that “Donald Trump could never be elected President.” A reality check seems to indicate that whose ever opinions are available to us right now, these pundits don’t know any more than we do.

Admitting that we know nothing, gives us the ability to discard common sense if we feel it necessary. We all want to be comforted thinking we made the right decision by looking for company that shares our views, and that leads to problems. The herd is often wrong when it really matters.

The problems that we are about to face have been around 6 to 8 years. My only advice, if you have a job, keep it for the next two years and see how things progress in the immediate future. I get my first Social Security paycheck in two weeks at the age of 70 and I am still working.

We do have to realize that whatever solutions are proposed to fix the current problems will be solved by people who have saved money in the system (you can't tax people that are broke). The most visible taxable assets are wages, real estate and bank savings. What we need to understand is, the whole population is the target for any solution to the problem, not some sort of spend until we drop, financial boondoggle by Congress. We could end up with a Value Added Tax for manufacturing and production. In the future, for Congress, it should be, "Real money in, Real money out."

Remember when you buy a newspaper, they give you what you want to hear, otherwise you select another news source. So, in today’s world you get to pick your own perceived reality. The trouble is, there is no feedback until it is too late, if you are wrong.

Saturday, November 12, 2016

The Democrats Cannot Believe the Results

Mr. Trump won the election and we have Democrats protesting out in the street even before he takes office. I remember when Obama won, and I sucked it in and said he’s our President now. What he did over the next 8 years irritated the hell out of me! To say the least.

I get the feeling from these protestors that Democracy is great, only if your candidate wins. And the sad thing is that most of the losers in this race were one issue voters; global warming or the woman President fulfilment goal. I get the feeling that the protestors are either incredibly stupid or have been brainwashed by all of the nonsensical ads about Trump. Many are students that were confused as to why they can’t get a job after spending big bucks on college.

The issue we have here, is that the present protests are over a candidate that has never held a political office and has not yet taken the oath as the next President. He has no political record to censure but yet these disrupters of our Democracy, do not give a damn. They want him out before he has even been in.

What we really need to look at, is that we have Donald Trump, a dyed in the wool Democrat, elected as a Republican to be President. He did not fit into the liberal establishment of being politically correct. If you say something that the establishment doesn’t want to hear, you are labeled racist, homophobic, sexist, misogynist and so on. Most people in this situation, shut up and keep quiet. Donald in this case, said bring it on, it won’t stick.

We have come to a point now, where this politically correct police force is visible. Tell a black joke and you are a racist. Tell a religious joke and you’re anti-Semitic. You’re not graded on how funny the joke is.

The real joke is on the political system. It was too corrupt to select real people to run for office. The Democrats had morphed into socialists. Trump was considered harmless. He beat all the Republicans in the Republican primary, got on their white horse and then slayed the Hillary dragon.

The one thing that really stands out, is that the news media failed us and showed everyone how manipulative they are as a group. The misinformation they fed us during this election, calling it news, was deplorable. Everyone thought The Donald was exaggerating and bashing the media unfairly.

The Democrats became the party of the rich with socialism for the poor, while the party ignored the middle class. The socialistic Democrats that voted for Hillary, didn’t see Trump as a Democrat. The Republicans were wondering what made Trump a Republican; they were satisfied with the fact that he wasn’t a “damn Socialist” and liked the second amendment. Sooner or later the people of this country will come to realize that the Republicans, without knowing it, put a Democrat into the Oval office.

The good thing is, we have elected a President with a lot of common sense that will speak his mind and is not beholding to the lobbyists in Washington D.C. Obama the politician can probably take credit for the Trump Presidency. He pissed off the wrong person one to many times. Obama, your fired!!

The neat thing is that both parties won. The Republicans got the man they voted for and the Democrats are too stupid to recognize a Democrat, unless he's holding his hand out for a bribe. "Draining the swamp" just might cure that.

Editors note:
I define a true Democrat as representing the middle class

Monday, November 07, 2016

The Election

If you look at the polls, the split is 44 to 45 between Hillary and Trump. Add them together, and what do you get? 89%

The people that will determine this election are the undecided, the invisible 11%. I am not sure how tomorrow turns out. I'm hoping for a Trump victory.

Faites vos jeux

Tuesday, October 25, 2016

The Democrats won’t raise taxes on the middle class—don’t believe it

Just how true is the statement that the taxes for the middle class will not be raised? —They will only tax the rich? Believe that and buy the Brooklyn bridge while your at it.

If we examine your pay check stub, you will see the full amount paid to you with the Federal and state taxes deducted. Notice that there are other deductions, that are called payroll taxes for Social Security and Medicare. Technically you get them back some time way in the future, so they are not really taxes. The employee pays 6.2 percent Social Security tax and also a 1.45 percent Medicare tax which ad up to a total of 7.65 percent. And naturally your employer matches those amounts. In reality, the employee pays the full 14.3 percent, the employer anticipates this as part of your salary before he even hires you.

It sounds great that the employer pays half, but if you think about it, wages are a business expense. When you look at your paystub, you see Social Security and Medicare deductions at 7.65 percent. You’d look at your paystub a little different if it reflected 14.3 percent in payroll deductions.

If the administration decides to raise Social Security and Medicare rates, they can do it and this is not considered raising your taxes. It is only deducted from the first 127K of earnings. I would guess that people earning more than 127K a year have progressed beyond the middle class.

So if you are like me, with all of my 401k deductions to reduce my taxes, I still get hit with 20% income tax. Add on to that the 14.3 percent for SS and Medicare, and we arrive at about 35 percent of my paycheck is eaten up by government deductions and income tax.

Let’s throw in some health insurance, my employer contributes $11,000 a year and I contribute $5,000. I’m not even sick and if I was to get coverage privately, it would be rather pricey. Now if your employer doesn’t offer insurance, guess what? You now have to purchase it on your own by law. Ask yourself one question, are health insurance premiums in the private sector based on how much you earn, or are they the same for everyone? And the government has a plan for you called Obamacare. If you are too poor to afford insurance, you get full coverage. If you make some decent wages, you can only afford the plans with the high deductible that render them worthless.

Now a couple of weeks before the election, the state insurance boards are announcing new increases in rates for insurers in the following states because of Obamacare. Here are a few of them; Tennessee: 44% to 62%, Pennsylvania: 33%, Oklahoma: 76%, Nebraska: 35%, Minnesota: 50% to 67%, Illinois: 44%, Georgia: 32%, Alabama: 36%, Colorado: 20% and Iowa: 43%.

So let me get this straight, employers don’t have to pay health insurance for workers working under 30 hours. And by God they deserve $15 dollars and hour. So, you end up working two jobs to get 40 hours and are forced to purchase government health care insurance at your own expense.

How do you raise taxes on the middle class when you move them to a lower class? Donald Trump can end some of this miss direction on the middle class by getting rid of Obamacare. Raising the minimum wage just insures that corporations move overseas. The minimum wage has never been a wage to elevate people above the poverty level; It has been an entry level wage for employers to train new employees.

Where too from here? I hope we end up with Donald Trump as President. He isn’t a politician, and this is what has Washington DC worried. IMHO he is what the country needs to get back into the groove of being a major power. Obama was nothing more than a tourist with an unlimited expense account for visiting foreign countries. The era of “ Obama the tourist,” needs to be retired.

Editors Note:

Normally this blog doesn't take political positions and I don't apologize for not being politically correct. But I feel it necessary to take a stand. The news organizations of this country have selectively decided to hide "The Great Depression" that we are in, and sugar coat the present economic conditions to sway the election.

Sunday, October 02, 2016

The Rush to Buy Investment Rentals.

Consider this, landlords do not set rent rates, renters do. The rent paid is the amount paid per month times the months rented in a year. For example, if you rent out a house for $5,000 a month and only get rent for two months out of that year, the effective rental rate is $10,000/12 or $833 per month.

Right now if you want a decent return on your savings, you have to commit to rental real-estate. It is paying about 6 to 8 percent. Notice the banks are paying .05 percent interest. Real estate prices are determined by what the monthly payment is and supply on the market. So at low interest rates, buyers can afford to pay higher prices.

For example, a 300K nest egg in the bank returns a retirement income is .05 percent which is $1,500 per year, a pretty paltry amount. Take the same money and buy a 3-bedroom home, and rent it out for $1,500 a month. Generated income over a year is $18,000. $18,000/300K equals 6% interest. An investment in rental real estate multiplies your retirement income by 10 times. Historically a 6 percent return on rental property was considered the break-even point on rental returns. Most successful landlord’s years back, were generating about 20 percent return on investment. From this you can deduce that present purchase prices of real estate are double or better of what they should be. In other words, house prices are artificially high because of very low government financing for rental real estate.

Equilibrium in the past, was when house payments per month was lower than the monthly rental rates. Renters paid more for the freedom to pick up and move when they wanted. Today our governmental is forcing a misallocation of resources into rental real estate because of the abnormally low bank interest rates. Notice that the sales price of a home determines the owner’s monthly payment and supply determines monthly rental rates. So in essence, the consumption of real estate for rental use has created a shortage of homes at reasonable prices for future home owners

Presently three things are true. Interest rates do not reflect the rate of risk; they are abnormally low. Second massive amounts of money have been redirected into real estate investment rentals. Third housing prices do not reflect the true utility value of the asset; they are excessively overpriced due to an artificial lack of supply. The economy is adjusting to these new conditions being true. The only thing that has really happened is that there has been a massive misallocation of resources into rental income property. The REITS purchased the real estate bubble of 2007 and saved the banks. Our government is now the new piggy bank writing home loans through Fannie and Freddie. Real banks won’t even touch the very low interest rate loans; you just can’t loan money at 4% for 30 years when your depositors can withdraw their fund in 3 months and move to a better interest rate.

Once people start moving home or doubling up on apartment rentals, this creates an unanticipated surplus of rentals. Most rentals were bought on the projection of real anticipated dollars that other investments couldn’t offer. A surplus of rentals means that the lower priced unit gets rented for 12 months. The trouble is, most of these real estate trusts, bought on the assumption that rents could go no lower than X amount and now their projected cash flow assumptions are beginning to be way off of the mark. The idea that they could set rental rates was wrong. Their rates only determined the number of months the unit would remain vacant.

Another thing that is not in the REITS investment model, is wear and tear. Put 3 families in a two-bedroom rental and it is trashed after a year. From there, it is only downhill. This is far different that the REITS profit projection model suggested. Plus, your investors were happy with 3% returns when the market paid .05% but when rates rise, investors will want to withdraw their funds from the REITS.

What we are looking at here, are home prices that are absurdly out of whack in relation to rental returns. We are also looking at interest rates that are absurdly out of whack in relation to risk

We have gone from a housing bubble that collapsed in 2007. The government assumed all financing after the fiasco. What followed was a misallocation of resources with the low interest rates that sponsored the new rental real estate investment boom.

So if you can find a rental property that will rent for 100 times the sales price, buy it. All you need is 20 percent down. The property will pay for itself in 20 years. From there, your rent checks are your retirement nest egg.

The only other game in play, is the stock market. Faites vos jeux!

Interest rates reflect that there is no risk in the world and everyone is entitled to purchase whatever they want no matter how little cash they have. Do you get the feeling that this is not going to end well?

Of course there are the old standbys; gold, silver and platinum. With .005 percent interest rates, they seem to be very good friends.