RANT: Gas is going up and staying up?

Monday, December 10, 2012

http://www.theblaze.com/stories/this-chart-implies-something-very-troubling-about-the-price-of-gas/

THIS CHART IMPLIES SOMETHING VERY TROUBLING ABOUT THE PRICE OF GAS

Posted on December 4, 2012 at 12:50pm by Becket Adams

*** begin quote ***

See that? Although the price of crude has fallen in recent months, as the above chart clearly indicates, the price of gasoline remains at a record high.

“Anecdotally, it feels like when oil prices rise, gas prices at the pump rise; but when turmoil pauses in global geo-politics – or some entity decides that high oil prices just will not do for the world’s economy – gas prices at the pump seem not to drop so quickly,” writers are Zero Hedge note.

“Yes there are pipeline, inventory (and even tax) issues but the following chart suggests ‘gouging’ on a national level,” they add.

It’s also worth noting that what we’re seeing today with the price of gasoline and crude is eerily similar to what we saw right before the economic collapse of 2008.

*** end quote ***

I think there maybe a big overhang on the markets due to increased costs (i.e., Obamacare) and increased taxes (i.e., the fiscal cliff).

Given the “gouging rules” passed after Sandy. Or used during Sandy. I wouldn’t lower my price un my competition forces me to.

Hmmm?

–30–


RANT: The election results sadden me

Thursday, November 8, 2012

Huge unemployment, record numbers not working, welfare at an all time high.

Debt soaring, deficits increasing, fiscal irresponsibility.

Foreign policy in shambles. More wars, less peace.

Lying, cover ups, media bias.

Assault on the First, Fourth, Fifth, and Tenth Amendments.

Corruption and fraud in the elections.

Obamacare fundamentally seizes control of healthcare. Death panels start killing us. Cost exponentially increase.

Pro-Life and Catholic values rejected. Marriage redefined. I am taxed to fund activities I deem abhorrent and immoral.

A second term of even more radical action can be expected.

Sorry, but the American Experiment in Liberty is traveling down the road to ruin.

If anything, this election convinces me more that we have to figure out how to secede.

Looks like, things are going to get much much worse. As the takers have outvoted the makers. And, like the nursery story, The Little Red Hen, the producers have no incentive to cooperate in the theft of the fruits of their labors.

I’d predict that the “productive class” will coast and the economic will get even worse.

I just don’t understand the logic.

But, I will not be abused. I will not be robbed, I will not kneel.

I do NOT consent.

–30–


MONEY: Stay at home spouse should think outside the box

Monday, November 5, 2012

http://blogs.smartmoney.com/advice/2012/10/22/should-stay-at-home-spouses-get-their-own-credit-cards/?cid=djem_sm_dailyviews_t

OCT 22, 2012, 2:03 PM

Should Stay-at-Home Spouses Get Their Own Credit Cards?

By AnnaMaria Andriotis

*** begin quote ***

An effort to loosen credit-card standards for stay-at-home spouses would seem to benefit millions of consumers, but critics say the change could actually push some families deeper into debt and derail their finances.

Last week, the Consumer Financial Protection Bureau proposed loosening regulations to make it easier for the nation’s more than 16 million stay-at-home spouses to qualify for credit cards, largely undoing more stringent requirements put into place in October 2011. Prior to then, consumers could sign up for a credit card by stating their household income, even if all of that income came from their spouse. But the Credit Card Accountability Responsibility and Disclosure Act required the Federal Reserve to amend several lending provisions for credit card issuers, including a new rule that issuers had to ask for individual income on a credit card application, and could no longer rely on household income.

If enacted, the CFPB’s proposal would allow credit card issuers to ask card applicants 21 and over for income to which they have a “reasonable expectation of access,” which could include a spouse’s salary. The bureau says it’s aware of several issuers that have denied card applications from otherwise creditworthy individuals based on the applicant’s stated income.

***

Not everyone agrees that this problem would outweigh the benefits. Some say the old rules were more fair for consumers. “Stay-at-home parents shouldn’t be penalized because they don’t personally bring in income,” says Scott Bilker, founder of DebtSmart.com.

*** end quote ***

Having had a spouse pass, maybe I am a little sensitive to this issue.

I see this area fraught with issues over and above the very real and present danger that the couple may get into credit card debt.

The value of a two income family is that, if properly diversified by company (i.e., both spouses don’t work for the same big company) as well as by locale (i.e., dad works on Wall Street and mom works on Broad Street in a different sector), then that provides a lot of safety. As long as they “live” on one income, then they are relatively insulated when one of them loses their employment. (Notice I said “when”; not “if”!)

There is a HUGE danger when the two checks are not “independent”. Or, if they need both to “live”.

(Either of those cases are a much bigger problem than the risk being explored here!)

The stay at home spouse, for whatever reason, was deemed the “lesser of two evils”. Maybe, most likely, they earned less and the loss of income is substantively made up for by the lack of day care costs. Net of taxes, commuting, lunches, and “wear ‘n’ tear”, the couple decides to forgo some income, which when net of costs is considered, isn’t so bad.

From my pov, this has several risks to this approach.

Number One is that the stay at home spouse’s skills will “age” badly. For all intents and purposes, I’d guesstimate the spouse’s renetry rate at just the minimum burger flipper wage. “Everyone” can go to MickeyD’s?

Life insurance is a hidden expense in this equation. Having had a dependent spouse, much of my fiscal planning was around if I got hit with the proverbial Mack Truck, what does she do?

One, that I’ve seen but not experienced, is what happens if the stay at home spouse — male or female — gets divorced. The TV prototypical example is Doc X who gets married in med school; typically to a nurse. Becomes a big doc and has an affair with the sexy secretary. Stay at home spouse is <crude vernacular for the act of procreation>. The stay at home spouse is muchly at the mercy of the working spouse.

I’m not sure how you handle these things.

I’m sure the working spouse would be insulted at any suggestion that the stay at how spouse would be eft high and dry.

BUT!

Sorry, but it has to be considered.

Stay at home spouse BEFORE they agree to become the “wife” (boy or girl):

(1) Need life insurance that names them as the beneficiary and lock it in stone;

(2) Need a legal document that outline any promises or expectations (written by a pre-divorce lawyer); and

(3) Funds on deposit in the “stay at home” person’s name that can’t be touched. (Think Titanic’s lifeboat).

Too many people — gay or straight — married or living together — traditional or non-traditional — don’t think outside the box.

I write this not for the adults, but for the children who always seem to get the short end of the straw.

—30—


MONEY: Financial planning with old memes

Sunday, October 21, 2012

http://www.businessinsider.com/the-coming-retiree-crisis-2012-10

Take Action Now To Prepare For The Great Retiree Crisis

Jeff Voudrie, See It Market | Oct. 10, 2012, 8:30 AM

***** begin quote *****

The financial planning community has largely relied on assumptions regarding equity, debt and inflation percentages that have been experienced over the last 30 years.

There are 3 problems with these assumptions:

Equity returns the last 30 years have been extraordinarily high as a result of the longest and greatest Bull market in the history of U.S. stock markets. Accordingly, many financial plans used projections that assumed equity returns of 8-10% a year.

Debt returns over the same period are equally skewed. Remember the double-digit interest rates of the 1980’s? In 1989, as a young broker, I was selling 30-year TVA bonds yielding 10%! Financial plans the last 5-10 years have used interest rate assumptions around 5-6% a year.

The scenarios that led to the historic markets the last 30 years are very unlikely to EVER be repeated in today’s retiree’s lifetime. And those who are taking distributions based on these outdated assumptions may soon run out of money.

For instance, let’s assume that someone retired 5 years ago at age 60 with a $500,000 investment portfolio. Based on financial plans popular at that time, the retiree is taking $2500 a month in distributions—money they need to maintain their current standard of living. Since the plan anticipated the ability to average a 7% return on a portfolio with close to 50% in equities, the retiree expects to be able to take those distributions and never run out of money.

Adjusting those assumptions based on what many believe resembles more reasonable assumptions going forward requires decreasing the rate of return assumption for a similar-risk portfolio to around 4% and increasing the inflation assumption from 1-2% a year to 3-4% a year (which may still be too conservative). Suddenly, the portfolio that should last forever is now projected to be exhausted in only 16.8 years! That means that the entire nest egg and what it earns cannot sustain the current withdrawal rate. Since the retiree started the withdrawals five years ago, now they are down to 11.8 years—running out of money around age 76!

***** end quote *****

Clearly, the political class has screwed up the American economy.

Pity the poor, the elderly, the middle class, those on fixed income.

Inflation is grossly understated by the “official” stats.

Are we headed to be like Europe or pre-WW2 Germany?

Clearly, everyone needs to update their financial plans.

I’ve recommended to my turkeys that they adjust their “money reserve requirements”.

Everyone better plan to work for a longer time.

— 30 —


POLITICAL: Politicians only show the “good”; never the “harm” they do

Sunday, October 14, 2012

http://cafehayek.com/2012/10/threadbare-economics.html

Threadbare Economics

by DON BOUDREAUX on OCTOBER 11, 2012

in POLITICS, SEEN AND UNSEEN, TRADE

*** begin quote ***

This administration policy will win votes for the President from some textile workers in the Carolinas. And Mr. Sanchez and his big boss can now bask self-righteously in their imagined humanity.

But will Mr. Sanchez pose for pictures with poor families whose living standards fall because clothing is now made more costly? Will the administration stage press events to highlight the jobs lost because American consumers, obliged to spend more on clothing, will have less to spend on restaurant meals, evenings at the movies, and other goods and services? Will the President post photos on his website of Americans whose jobs are destroyed because foreigners will now have fewer dollars to spend and invest in the U.S.? Will Mr. Obama boast that his re-election strategy includes a policy that, by dulling the creative forces of competition, diminishes America’s economic dynamism and, hence, reduces its economic growth?

*** end quote ***

It’s our old friend Bastiat and those unseen unintended consequences!

Nasty old “rule”.  “Every time a politician says or does something, look for what’s behind the curtain.”

It’s like when the increased minimum wage law induced AT&T to automate the elevator operators out of their jobs. Some were capable of other work, but many were just let go. My cousin never worked again in her life. True she wasn’t the sharpest blade in the draw, but she was the unseen side of that increase in the minimum wage law.

So don’t tell me that real people are not hurt when the politicians run amok!

–30–


RANT: “Default”? No way, not needed

Tuesday, July 12, 2011

As a political junkie, I’m enraged when some bozo (i.e., politician and /or bureaucrat) is allowed by some talking head to say “default” without opposition.

IMHO any reasonable person would pay the interest on the debt first, then the social security and other mandatory welfare payments, and come up with a “total must pay”. Subtract that total from the budget to come up with “what’s left to pay”. Subtract “total must pay” from current receipts for “what’s left”.

Divide “what’s left” by “what’s left to pay” and that’s the haircut that the budget must be slashed by.

No one is going to be happy, but no default. It’ll set off a lot of wailing and gnashing but that’s what fiscal discipline is all about.

That’s why I say don’t raise the debt ceiling. And, don’t let politicians and bureaucrats scare old people by saying no soc sec or the markets by saying default.

# # # # #


RANT: Borrow from China to give it to the Muslim Brotherhood?

Monday, June 6, 2011

http://dumpdc.wordpress.com/2011/06/06/humpty-obumpty-and-the-arab-spring/

Humpty Obumpty and the Arab Spring
By Spengler
DC Insanity: Washington Borrows From China and Gives The Money To The Arabs

*** begin quote ***

(Editor’s Note: I keep giving you proof of the myriad ways that the global collapse will occur. It could come from within DC. But is just as likely to come from outside the USA as other nations implode. And don’t forget about the European Union. HALF of its member nations are already bankrupt. And OBama commits $20 Billion to Arabs…money that we are borrowing to “lend” to the Arab nations that are in trouble.)

I’ve been warning for months that Egypt, Syria, Tunisia and other Arab oil-importing countries face a total economic meltdown (see Food and failed Arab states, Feb 2, and The hunger to come in Egypt, May 10). Now the International Monetary Fund (IMF) has confirmed my warnings.

*** and ***

Whatever the Group of Eight actually had in mind, the proposed aid package for the misnomered Arab Spring has already become a punching bag for opposition budget-cutters. “Should we be borrowing money from China to turn around and give it to the Muslim Brotherhood?” Sarah Palin asked on May 27.

*** end quote ***

# – # – #

Maybe I’m being taken in by the “stupidity” of Sarah Palin, but this make as much sense as BHO44 stopping Gulf drilling and giving 2B$ to Brazil to drill in the Gulf.

Time for “We, The Sheeple” to speak up!

# # # # #


RANT: BHO44 and D’s targeting the home mortgage deduction

Friday, June 3, 2011

http://www.youtube.com/watch?v=Ul2C8Gfj3Io

Dick Morris TV in the Morning! Goodbye Mortgage Interest Deductions

*** begin quote ***

Dick Morris explains the reasons behind the double dip in real estate and housing prices. He blames Obama’s plans to raise taxes and his efforts to repeal the mortgage interest deduction.

*** end quote ***

While I don’t care for him based on his personal flaws, when he talks politics, he’s a genius.

This “spending / borrowing / inflating” President is a snake!

How can the housing market recover if they do this?

“We” have to cut — cut spending, cut taxes, cut bureaucrats — but most of all cut the “barbara streisand”!

# # # # #


TECHNOLOGY: Diesel is a better answer than gas – electric hybrids

Wednesday, January 5, 2011

http://www.lewrockwell.com/orig11/peters-e8.1.1.html

New Year’s Wish List
by Eric Peters
EricPetersAutos.com

*** begin quote ***

More diesels

And fewer $40,000 hybrids that barely outdo the mileage of an ’80s-era Plymouth Champ. Diesels, unlike hybrids, work – if “working” means they deliver very high gas mileage without a very high price tag. Gas-electric hybrids and electric cars are impressive as technology but crap as consumer products – if the point of the exercise is to produce economical transportation. If you have to pay $30,000 or $40,000 (or even $25,000) to get 35 or 40 MPGs then MPGs don’t really matter since whatever you “save” in fuel costs is negated by the cost of the car itself. But diesel engines can deliver 60 MPG in a subcompact car that costs less than $15,000. Just not here. They have such cars in Europe. Santa needs to bring a few of them to us. But first, he’ll need to put some coal in the stockings of the government bureaucrats who have made the American car market unfriendly for diesel vehicles by imposing one regulatory obstacle and expense after the next. It’s not that diesels are “dirty” – the Europeans are just as obsessed with saving the planet as we are. It’s simply that our bureaucrats and politicians aren’t as smart as those in Europe.

*** end quote ***

I loved the three diesels I’ve had in my life.

Once upon a time, diesel fuel was cheaper than gasoline.

Don’t understand why that is? It’s easier to refine.

We know that the taxes on petrol of all flavors is a significant cost component. And, a good way for the Gooferment to bury taxes. With the illusion that it’s all going to “roads”, which is “barbara streisand”!

So why don’t we exploit technology that works?

# # # # #


RANT: Why is Yankee Stadium snowless while NYC roads ain’t?

Wednesday, December 29, 2010

FROM A FACEBOOK FRIEND

*** begin quote ***

Ok explain this..there are roads throughout NYC that haven’t yet been plowed BUT they are working overtime to get Yankee Stadium ready for a bowl game tomorrow

*** end quote ***

Greed is good! Seriously, human society advances when each of us cooperates. What better way to get someone to do what you want than to reward them with “certificates of appreciation”?

People will drive themselves harder, mostly without the need for an overseer — boss — taskmaster — slavedriver, when they see their own self-interest being satisfied.

So that’s why the Ghost of George Steinbrenner is well pleased. And, when those industrious Yankee Stadium cleaners get their “certificates of appreciation”, they will be happy too. Those certificates not only get cranky humans to cooperate, but the ENSURE that any effort is the BEST use of resources available at the time. After all you don’t really waste your “certificates of appreciation” on your fellow humans who have not satisfied your needs and wants, do you?

Except for the Gooferment! They steal yours; sometimes without your even knowing it. And, they print up their own certificates, even though they haven’t earned them, whenever.

(For those on Facebook who never had “ekkynonics”, “certificates of appreciation” are a placeholder for the word “money”. For a quick remedial, Google “I, Pencil” and read a short expose of how cooperation by often unwilling humans allows society to thrive.)

So greed will ensure that Yankee Stadium is snowless while the rest of the City chokes on the snow. Gordon Gecko was right. Greed does make the world go round.

# # # # # posted 2010-12-29 10:47


MONEY: We need to return to Constitutional money — gold and silver

Wednesday, November 10, 2010

http://nicholasnigro.blogspot.com/2010/11/quantitative-easing-just-got-easier.html

Sunday, November 7, 2010
Quantitative Easing Just Got Easier
Nicholas Nigro

*** begin quote ***

This roundabout way of printing money will, apparently, guarantee only one sure thing that you can take to the bank: the further weakening of the once Almighty Dollar and a corresponding rise in critical commodity prices because of it. Translation: From the grocery store to the gas pump, those who can least afford it will pay more and more for basic necessities. But I imagine the government measuring sticks will continue to tell us that we are living in a period of very low inflation for the foreseeable future, and that we should be more concerned about the prospects of deflation.

*** end quote ***

What “they” have fooled everyone into thinking is that a “dollar”, a “Federal Reserve Note”, that green piece of linen cotton “paper”, is actually worth something tangible. In elementary economics, we learned that humans transferred from barter to money because money had certain useful characteristics. Most notably it permitted the butcher to trade directly with the candlestick maker without trading with the baker first. From whence all the good things that the division of labor provides — specialization.

Quoting from my favorite novel (Mine!) “Money is a matter of functions four, a medium, a measure, a standard, a store.” He repeated that four times like poetry. “Six Characters in Money: Portable – Durable – Divisible – Uniformity – Limited Supply – Acceptability.” CHURCH 10●19●62 (Vol 1) 978-0-557-08387-9 page 110

“We, The People” have forgotten that. As well as the Dead Old White Guys Constitutional admonition that only gold and silver should be money. Along with a bunch of other stuff, like the Bill of Rights, Declaration of Independence, and a general dislike for oppressive Gooferment.

So, now, the politicians and bureaucrats are riding high on the hog and the taxpayers have been laid low. Like the host of a parasite weakened to near death.

Gooferment is the meme that kills people. It’s time to awaken from our economic nightmare and throw out the FED and return to “Constitutional money” — gold and silver. And watch the global economy rebound when the world isn’t paying the “inflation tax”.

# # # # #


RANT: My market outlook; catch that falling knife?

Sunday, August 29, 2010

http://online.wsj.com/article/SB10001424052748703908704575433670771742884.html?mod=WSJ_hpp_sections_personalfinance

* RUNNING WITH SCISSORS
* AUGUST 21, 2010

Rethinking Gold: What if It Isn’t a Commodity After All?

*** begin quote ***

For investors convinced U.S. lawmakers and central bankers will successfully manage the budgetary woes and the massive unfunded liabilities of Social Security and Medicare, then gold is overvalued in the long term. Righting America’s national balance sheet would explicitly raise the dollar’s value as investors with money abroad move assets into a more-sound American economy. The selling of euro, yen and pounds would push the dollar higher—and gold lower.

If, however, you worry the U.S. balance sheet is irreparably damaged, then gold currently reflects the likelihood that a weak-dollar trend still has years to run as the U.S. struggles with its financial mess. Investors—and consumers—looking to preserve their purchasing power will gravitate toward gold, since its quantity isn’t easily manipulated.

Invest in gold, then, according your beliefs about the future of the greenback. Just don’t invest based on the idea that gold is a proxy for inflation. You are likely to be played for a fool.

*** end quote ***

Yeah, trust that politicians and bureaucrats can put us back on the right track? And, the tooth fairy will leave “We, The People” a few trillion dollars under our pillow tonight.

No, this is going to get very ugly.

Just watch the politicians and bureaucrats get gold plated pensions and lifetime healthcare, and see that the serfs get? Obamacare and the proverbial iceberg for old people. Sarah was right about “death panels”. When the livestock is uneconomic what do you do with it? Off to the slaughter hose called healthcare. The State needs the young vigorous workers. The soldiers for its endless wars. Dumbed down by Gooferment education so they won’t object to being led by the elite. (Where do politicians send their children to school?)

At the first hint that the 2010 elections are not going to sweep the D’s out, the market will tank as EVERYONE, including me, tries to hit the exits.

Even if we dodge that bullet, at the first hint that the then Lame Duck is going to do bad things, again the “eject button” gets hit.

And, even if we dodge those two, at the first hint that the New “Tea Party” driven Congress is not going to: defund Obamacare, roll back spending in a big way, and reduce taxation / regulation on small businesses. Again, hit the “eject me from this market” button. Where that wealth goes is problematical: gold, overseas, into real assets like farmland?

And even if we dodge that, at the first hint that BHO44 isn’t a one termer, exit stage left. Wealth will again leave the playing field before it gets stolen. Better to bury your gold coins in your back yard than let your IRA be stolen for an “enhanced Social Security benefit”.

For your own good of course, the stock market is too risky. Never let a good crisis go to waste. The returns on your wealth that was stolen under the guise of Social Security Insurance are so superb; throw your IRA and 401K on the same bonfire.

Argh! Not looking too good for the future generations.

# # # # #


GOLDBUG: Gold price predictions

Tuesday, August 24, 2010

From: reinke
Date: August 20, 2010 11:15:10 PM EDT
To:
Cc:
Subject: Re: CNNMoney – Gold is glittering again. But why?

I can give you my opinion why gold is “glittering”.

  • Tax law will change with respect to gold purchases on 1/1/2011
  • Taxes are going up dramatically in 2011; that will kill the economy. Look for 15-20% unemployment. (P.S., I think they are lying through their teeth about the unemployment rate. If you look at the unemployed, underemployed, discouraged — and even ignore the disgruntled, left the workforce, women becoming pregnant, “frozen in place” workers — I thin the current rate is in the 20’s NOW.)
  • Taxes are going to impact the profitable small businesses and kill the unprofitable or marginal ones in 2011.
  • Obamacare has frozen employers; they don’t know how much benefits are going to cost in 2011. (Insurance companies have jumped the gun and are preemptively raising rates. Small companies are figuring how to slim down under the size bar. Big companies, like ATT and Verizon, have put disclaimers in their financial reports about the benefit costs. Verizon is actually considering DROPPING benefits and pay the fine on the theory that it’s cheaper. I’m hearing rumors that large enterprises are considering how to reorganize their business units so that they would slip in under the bar. Think Comcast of South Brunswick with out sourcing contracts for all sorts of stuff and it’s a wholly owned by the stockholders who also own Comcast of North Brunswick, Comcast of Mt Holly, etc etc. Think Baby Bells and that’s the model. All to get under the size requirements.
  • Inflation is right now being artificially suppressed by the Federal Reserve printing press and they’re buying Treasury long bonds. At some point, this is going through the roof. (I’d suggest that 5-10% of EVERYONE’S portfolio should be in silver bullion coins kept in one’s basement.)

My prediction is: it depends totally on the 2010 election.

  • If it looks like the D’s are swept, things will continue in a Japanese style lost decades.
  • If it looks like the D’s are NOT going to be convincingly swept, this is going to get very ugly very fast.

Remember that the Great Depression was triggered by Smoot Hawley being passed and signed into law, it wasn’t due to go into effect for months. Now, the speed of dikw (i.e., data, information, knowledge, wisdom) flow is such that as soon as the “tipping point” is reached, the blood bath will ensue. It’ll make ’29 look tame.

In the hyperinflation scenario, I’d expect real interest rates to be double the Carter years’ 21%. I’d expect oil to be priced in gold rather quickly (i.e., remember it’s Sadam’s golden dinar exchange for Iraqi oil that got him in the USA dog house.) I’d expect food prices to quickly go up 50%. Business would lock up; Gooferment would be stalled.

The lack of funds to spend would quickly result in:

  • End of the Fed; replaced by some type of commodity money
  • Default on Gooferment debt; States’ debts; Social Security; Medicare; Medicaid
  • End of the drug war and begin to tax it.
  • End of the foreign military adventures and bring the troops home.
  • End of the “public education” of Dewey, Mann, and the teachers’ unions.

Any economic restart would probably be led by the oil producing states: alaska, texas, pennsylvania. And the breadbasket states: Kansas, California, Florida, Nebraska. To restart: Taxes would have to go down. Obamacare nuked. Flat or near flat tariffs and excise taxes. Corporate taxes to zero. Capital gains taxes to zero.

If it has to go worst case (i.e., the Gooferment doesn’t slim down to save itself in time), you might see secession. (Hey, worked for the USSR!) I’d look for Texas, Alaska, and Vermont to be first out. Followed quickly by: Hawaii; Montana / Idaho aka Jeffersonia; New Hampshire / Maine; and South Carolina. It would be politically very ugly. What does the District of Corruption do? Roll tanks into the secession states? Remember the American Revolution was fought by the 10% hot heads, where a third supported them, a third hated them staying loyal to England, and the other third could not have cared less.

Very ugly.

I predict in scenario #1 — D’s swept, gold goes to 2k by June of 2011 and in scenario #2 — D’s not swept, gold goes to 2k before the end of 2010.

Then, a similar “cliff” appears with the 2014 presidential. As long as the markets perceive BHO44 as a one termer, we get the calm lost decade scenario. If a reasonable R takes the lead — Ron Paul like fellow, calm. Even if there was a reasonable D, (although I can’t think of one who fill the bill), calm. HOWEVER, if it looks like BHO44 might be reelected, or Hillary, or any of the wackaloons, it’s “Katie Bar The Door” time again. Look for the markets to crash big time, as folks try and hit the exits at the same time.

In the calm lost decade scenario, I’d predict that gold would be at 3500$ in December of 2014. In the BHO44 reelected or any wackloon election, the “gold bugs” would be right and a 5000$ gold price would be well within reason. If you could buy ANY gold with dollars. (Think German WW1 hyperinflation or Zimbabwe!)

So, now you have my reasoning about gold. IMHO nothing but upside.

I’d try and be a little like a Mormon or the Amish. Beans, bandaids, and bullets. A year’s worth of food, sufficient medical supplies to minimize the trips to the drug store which won’t be open, and sufficient firepower to keep your beans. I’d put 10% of my capital in silver bullion 1 ounce rounds in a “basement”. And, watch very carefully how the winds blow.

imho,
tin foil hat fjohn

# – # – #

On Aug 20, 2010, at 6:48 PM, XXXXXX wrote:

Sent from XXXXXX’s mobile device from http://money.cnn.com

Gold is glittering again. But why?

Night, night. Sleep tight. Don’t let the gold bugs bite.

# – # – #

Gold prices have come roaring back in the past few weeks and are once again getting close to hitting a new all-time high. Prices were down a bit Friday. But at about $1,230 an ounce, they are still up more than 5% in the past few weeks.

The yellow precious metal rose to an intra-day peak of about $1,265 an ounce back in mid-June — the height of the fears about the sovereign debt crisis facing Europe’s PIIGS.

So why is gold on the rise again? The move is a bit curious since gold is often viewed as a classic hedge against inflation because it’s a tangible asset, unlike a paper currency. But many market experts and economists seem to be more worried about deflation than inflation.

Still, gold prices aren’t always tied to inflation expectations. The price of gold often spikes at times of fear. And with more and more concerns about how the economic recovery in the United States is losing steam, investor nervousness appears to be the most likely reason for gold’s recent move higher.

“It’s the mirror image of what’s going on with stocks. The only thing that we’re certain of is uncertainty and gold benefits from that,” said Richard Ross, global technical strategist with Auerbach Grayson, a broker dealer in New York.

Gold is undoubtedly a momentum play. With compelling reasons to avoid stocks, fears that the Treasury market may be a bubble, and concerns about both the state of the dollar and euro, gold could keep climbing.

Brian Hicks, co-manager of the U.S. Global Investors Global Resources fund in San Antonio, said gold could hit $1,300 by the end of the year and $1,500 sometime in 2011.

Hicks said that even though it may seem counterintuitive for gold to do well when people are worried about deflation, he thinks that some longer-term investors are still concerned about the potential for inflation at some point down the road. And that could push gold higher.

“Gold has been resilient in the face of a lot of discussion about deflation. But people are also discussing what the possible cure for deflation will be,” Hicks said. “That could be an expansion of government deficits and excessive printing of money. That would debase the dollar and fuel eventual fears of inflation.”

Keith Springer, president of Capital Financial Advisory Services, in Sacramento, Calif., agreed. He said gold could spike to between $1,400 and $1,500 next year.

“Gold is acting like a third currency, a crisis currency. Right now, you can buy it for deflation or inflation fears,” he said.

But the recent gold rush may not be all about economic worries.

Ross said the run-up may also have been sparked by the fact that several well-known hedge fund managers, including John Paulson, Eric Mindich of Eton Capital, George Soros and David Einhorn, have disclosed investments in various gold-related assets, such as miners and exchange-traded funds tied to gold bullion.

“There’s a dream team of investors that appear to be backing gold,” Ross said.

But Ross warned that following the lead of the so-called smart money is risky. For one, it’s tough to know for certain how big a hedge fund’s positions are in gold since many funds often make quick moves in and out of investments.

Many hedge funds may also be making bets on both the long and short side of an asset. So it may be a mistake to look at a fund’s holdings and conclude that a manager is 100% bullish on gold.

Sure, gold may have momentum on its side for now.

“Investors are attracted to things that are working. An object in motion tends to stay in motion,” Ross said.

But investors in Internet stocks, real estate and oil have all learned the hard way that this is true for both directions. Springer noted that once the trend reverses, as he believes it inevitably will, gold could crash hard.

“It’s going to take a while but once the financial crisis is over, there will be no reason to own gold,” he said.

Reader comment of the week Merger activity is starting to heat up again, a trend I wrote about on Tuesday. I noted that the increase in deal making could be a bullish sign from corporations about the economy. But not everyone agreed that merger mania is a good thing.

“In my experience, mergers were really bad for jobs, but made the financial reports look great, even if the companies were totally inefficient and wasteful,” wrote Brad Fox. “Many times I have seen corporations brag about huge revenue increases, only to find out the growth was the result of mergers, not true growth. Magic with numbers.”

- The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney.com, La Monica does not own positions in any individual stocks.

# # # # #


TECHNOLOGY: Just had a robocall from a car dealer

Thursday, July 1, 2010

… calling to wish a happy birthday.

Good thing it didn’t wake up the house lady.

Argh!

How stupid are people? Technologists?

And where were they last year?

Argh squared!

# # # # #


MONEY: Wikipedia’s explanation of “malinvestment” is sparse

Wednesday, June 30, 2010

A OPEN EMAIL TO LEW ROCKWELL, A CHAMPION OF AUSTRIAN ECONOMICS

Dear Mister Lew:

Re: http://en.wikipedia.org/wiki/Malinvestment

Perhaps you could (if you are so moved), or one of your bright interns (you exploiter of the youth), could write an appropriate text for Wikipedia that truly reflect such an important word.

I’d do it, but I’m just a fat old white guy injineer. Remember the sources of my education: I’m just a fat old white guy injineer with: Law “degree” from watching Judge Judy, Medical “degree” from watching Doctor Phil, Building “degree” from watching “Holmes on Homes”, and Investing “degree” from reading about Bernie Made-off.

To which I’ll probably add ekenomicks from reading Mises and Rockwell. Yes, in college, (manhattan college manhattan dot edu), in my economics course, “Human Action” was on the supplemental reading list. And I read it then. Didn’t understand most of it. Surprised? Don’t be; in theology, we had to read a translation of Luther’s Ninety-Five Theses, Bhagavad Gita, and “Essays in Zen Budhism”. I hated that class; the Professor had a thing for “God and the Ways of Knowing” by Jean Danielou. Even four decades later, I can remember him babbling on about good old Danny Lou. But, those were the days. When Universities were truly about imparting wisdom regardless of the source. Not like today when it’s ersatz “whizdumb”.

In any event, I commend the link for your attention.

fjohn aka alibertarianin08824
behind enemy lines in Pepuls Republik of Nu Jerzee

# # # # #


HARDWARE: Don’t use your employer’s stuff

Monday, June 21, 2010

http://www.theinternetpatrol.com/employee-has-no-right-of-expectation-of-privacy-for-text-messages-says-us-supreme-court/?awt_l=FYQgu&awt_m=1dTPHoQu5MK295

http://goo.gl/60xL

Employee Has No Right of Expectation of Privacy for Text Messages, Says U.S. Supreme Court   

*** begin quote ***

The bottom line is that, according to the Supreme Court, Quon had no reason to expect that his text messages on his employer-provided pager would be protected by a shield of privacy, and that the Ontario Police Department’s behavior in looking at the text messages was not an impermissible invasion of Quon’s privacy.

*** end quote ***

When hardware and service was expensive, then using your employer’s stuff MIGHT have made sense. Now with most everything dirt cheap, makes no sense at all.

As a matter of fact, it may even make sense to decline their hardware.

# # # # #


RANT: Obama wants 7$ a gallon gas?

Saturday, June 19, 2010

http://www.nypost.com/p/news/opinion/opedcolumnists/gallon_gas_9GlF3o1xIcIBelOV3k0RsK#ixzz0rHq4mUET

$7-a-gallon gas?
The folly of O’s oil-spill ‘fix’
By BEN LIEBERMAN
Last Updated: 2:49 PM, June 18, 2010
Posted: 12:02 AM, June 18, 2010

*** begin quote ***

So what does global-warming legislation have to do with the oil spill?

Good question, because such measures wouldn’t do a thing to clean up the oil or fix the problems that led to the leak.

The answer can be found in Obama Chief of Staff Rahm Emanuel’s now-famous words, “You never want a serious crisis to go to waste — and what I mean by that is it’s an opportunity to do things that you think you could not do before.”

*** and ***

The logic linking cap-and-trade to the spill in the Gulf should frighten anyone who owns a car or truck. Such measures force up the price at the pump — Harvard Kennedy School’s Belfer Center for Science and International Affairs thinks it “may require gas prices greater than $7 a gallon by 2020″ to meet Obama’s stated goal of reducing emissions 14 percent from the transportation sector.

*** and ***

Emanuel was wrong. The administration shouldn’t view each crisis — including the oil spill — as an opportunity to be exploited, but as a problem to be addressed. And America can’t afford $7-a-gallon gas.

*** end quote ***

I think the should pass the cap ‘n’ tax bill.

ASAP!

And, when the economy tanks, and And, folks pay a Cnote for a fill up. And, they can’t afford to go to work.

There will be the revolution that these bozos want. And, like some French aristocrats found out the hard way, they may be the ones removed from the gene pool.

At least their crazy Socialist ideas will get a proper send off.

American will collapse under 7$ per gallon gas. The economy is build on cheap energy.

Will this be the event that collapses us, like the Roman Empire, and all the empires of human civilization?

Argh!

# # # # #


POLITICAL: I’d prefer USP, UL, Consumers Reports, doctors, and WalMart over the FDA

Friday, June 18, 2010

http://www.catholicnewsagency.com/news/catholic-businessman-battles-als-prepares-for-eternity/

Catholic businessman battles ALS, prepares for eternity

By Spencer S. Busby

*** begin quote ***

San Diego, Calif., Jun 6, 2010 / 01:19 pm (CNA).- Three years ago, Shane FitzMaurice was diagnosed with amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease. The rare neurological disorder is typically fatal within five years of diagnosis.

*** and ***

Initially, the diagnosis felt like a death sentence. “At first, I was in denial,” FitzMaurice said, “feeling all doom and gloom and ‘why me’?”

But then he decided to fight back. Last August, he traveled with his wife to Monterrey, Mexico, to undergo an experimental procedure that implanted his own body’s stem cells into his brain. While FitzMaurice was pleased that he took action by undergoing the procedure, he admits that it has resulted in only limited improvement.

Still, FitzMaurice believes such therapies should be more freely available in the United States. “People with a terminal diagnosis should be able to sign a waiver with FDA to be guinea pigs, because we do not have the time to wait.”

*** end quote ***

We know so little about our own bodies.

And it’s a terrible disease.

That being said, the man has a great point. Why should the FDA keep interfering? Are they protecting him from something worse? What could that be?

TIme to nuke the FDA!

They are just a bunch of bureaucrats captured by Big Pharma.

What’s the worst that could happen?

Thalidomide? That happened with the FDA. And they used it to slow the process and make it more expensive. It’s not like we don’t have drug disasters anyway. And, what good drugs have they prevented by making it too slow and too costly.

I’ll take faster and cheaper. USP, UL, Consumers Reports, doctors, and WalMart will do a much better job of keeping us safe.

Argh!

# # # # #


GOVEROTRAGEOUS: Fannie-Freddie Fix — nuke them!

Wednesday, June 16, 2010

http://www.bloomberg.com/apps/news?pid=20601109&sid=an_hcY9YaJas&pos=10

Fannie-Freddie Fix at $160 Billion With $1 Trillion Worst Case
By Lorraine Woellert and John Gittelsohn

*** begin quote ***

Fannie and Freddie, now 80 percent owned by U.S. taxpayers, already have drawn $145 billion from an unlimited line of government credit granted to ensure that home buyers can get loans while the private housing-finance industry is moribund. That surpasses the amount spent on rescues of American International Group Inc., General Motors Co. or Citigroup Inc., which have begun repaying their debts.

*** end quote ***

You have to be kidding me. When will we cut our losses on this disaster?

Surly even the politicians can see what a disaster this is. And, who are the other 20%? Politically connected friends? Argh!

Repaying. Yeah, this article repeats the “big lie” about repayment.

Got to buy some more gold and silver. It the shumer hits the fan, we’re screwed.

We’ll be the golden horde in the camps.

What will it take to bring on the revolution?

Can it be avoided?

# # # # #


MONEY: Keep rotating incumbents OUT!

Sunday, June 13, 2010

http://biggovernment.com/jboehner/2010/06/12/washington-democrats-out-of-control-spending-spree-needs-to-stop-now/

Washington Democrats’ Out-of-Control Spending Spree Needs to Stop. Now
by Rep. John Boehner (R-OH)

*** begin quote ***

“Waiting and hoping for the best is no longer an option, not when 43 cents of every dollar we spend this year is borrowed from our kids and grandkids. Our posterity shouldn’t have to foot the bill because Washington Democrats can’t do what they were elected to do or summon the courage to say no to special interests with their hands out.”

Rep. John Boehner (R-OH) R response 6/11/10

*** end quote ***

Not that the R’s are any better than the D’s.

Our only defense is to start the carousel. Keep rotating incumbents OUT!

A marginal nutcase is better than these corrupt politicians.

Sorry, but, if we cant have NO government, then we have to have a lot less of it.

1. End the personal and corporate dole;

2. Dismiss gooferment public education;

3. Stop the various wars — foreign and domestic;

4. Repatriate the troops home;

5. Downsize ALL gooferments;

6. Eliminate all taxes but tariffs and excise.

and

7. Prosecute the “retired” and current politicians for “treason and sedition” against the Constitution. Make them pay off the debt that they ran up on our “credit card”.

Argh!

Lest you think I don’t have a solution, I do.

Get off fiat money. Go back to the Constitutional gold / silver standard. Payoff the debt by a federal “yard sale” of assets. Issue 30, 40, 50, and 100 year bonds to “paper the debt”.

No more “unfunded liabilities”.

A moral promise was made in Social Security and to a certain extent it has to be fulfilled. BUTT (there’s always a big but) it may not be paid off at 100¢ on the dollar. Especially if your name is Donald Trump. We may have to do a means test on those who have been unjustly enriched by the prior political class decisions.

Unwinding this mess is going to be ugly, but we don’t have a lot of choice.

If they can do it in Chile, we can do it here!

# # # # #


MONEY: The Lost Decade may be the Lost Epoch unless we act

Wednesday, May 26, 2010

http://www.ricedelman.com/cs/pressroom/pressroom_detail?pressrelease.id=1161

The Lost Decade – The decade has been awarded a cute name, but it’s not very accurate

For Immediate Release

May 07, 2010

*** begin quote ***

As of December 31, 2009, the Dow Jones Industrial Average, the S&P 500 Stock Index, the NASDAQ and the EAFE were all lower than they were on December 31, 1999 — a lot lower. The NASDAQ itself is 44% lower than it was 10 years ago — you know, when you were worried about Y2K.

*** and ***

Such diversification proved its worth, as gains in some asset classes were able to offset losses in others.

Surely some might have exited the last decade with a lower net worth than when they started. They are likely lamenting the fact that they’ve “lost” 10 years of wealth creation opportunity.

But the bulk of our clients, by contrast, have more money today than they did 10 years ago, thanks to the smart dual strategies of continuing to invest and diversifying.

Who says you need a rising stock market to make money?

*** end quote ***

Unfortunately, the collapse in the market is going to cost the nation greatly in it’s mind. It has demonstrated several things that, like the Great Depression scared generation of people, (1) the total failure of Wall Street; (2) the corruption of politicians; (3) the ineptitude of bureaucrats.

That will hang like a millstone around our necks forever.

We have to address the National Debt, the Federal Deficits, the unfunded liabilities of Social Security, and the out-of-control Federal Gooferment, the fiscal crisis of the States, inflation, and the rape of the public treasuries.

We have several fundamental issues to “fix”: (a) welfare; (b) warfare; and (c) confidence.

We’re not going to have a “rising stock market” until we do. So we better figure out how to make money in a down market.

# # # # #


MONEY: What is it?

Sunday, May 23, 2010

Roy talked about money. “Money is a matter of functions four, a medium, a measure, a standard, a store.” He repeated that four times like poetry. “Six Characters in Money: Portable – Durable – Divisible – Uniformity – Limited Supply – Acceptability.” With a sentence about each, his passion came through. He ended with “The first golden coins in history were coined by Lydian king Croesus, around 560 BC.’Rich as Croesus’ survives to this day. It’s been all downhill since then.”

— CHURCH 10●19●62 Chaper 22 page 110 “Roy’s entertainment”

# – # – #

You asked me “What happened to the money?”

The answer is that “It’s complicated”.

Without being obnoxious, pedantic, or obtuse.

We have to establish a common vocabulary.

What is money?

Economists use “Robinson Crusoe Island” (There is a real island by that name.) as an imaginary place to perform mental experiments. It’s an isolated lab where we can set up and idealized society with limited players to illustrate a principle.

Populate the island with two castaways Tom and Dick. Tom fishes and Dick collects coconuts. Tom wants coconuts and Dick wants fish. Rather than kill each other, they barter directly. Eventually they decide that X fish is equivalent to Y coconuts. No need for money. And, all sorts of things happen. That we don’t need to study about savings and investing, Nets and climbing mechanisms.

Now introduce Harry. Harry collects potatos on the island. And, lets assume that there is a very strong union that prevents anybody but Tom from fishing and so on. How many fish are equal to how many potatos. Eventually that sorts out.

Now a raft drifts in and twenty people land. How are we going to do exchanges? Tom may want only one potato which is half a fish. So clearly we need a marketplace where everyone buys and sells. Eventually everyone finds bartering troublesome. Typically, the problem is Tom wants what Dick has, but Dick doesn’t want Tom’s fish. So Tom must find some one that has what Dick wants, trade for it, and return a trade with Dick. Very inefficient, time consuming, and ineffective.

Someone decides that seashells will be the medium of exchange. It’s beyond the scop of this how that decision happens. But eventually everything gets priced in seashells and you have money. Seashells are a problem because you can go to the beach and find them. An infinite supply. Sooner or later, there is genral agreement on somehting that is: Portable; Durable; Divisible; Uniform; Limited in Supply; and generally Acceptable. Let’s say it’s gold and silver coins. (Wampum, Cowery shells, the Great Stone Wheels, and the large totems have been money in strange places.) But eventually everyone used to settle on it.

So our market prices everything in gold and silver.

It’s: Portable – Durable – Divisible – Uniformity – Limited Supply – Acceptability. And it serves as: a medium of exchange, a measure of value, a standard of value, and a store of value.

OK so far. That goes from pre-history until the humans find paper or it’s equivalent.

Then gold smiths start acting like banks and issue receipts. Those receipts eventually turn into paper money.

Kings steal for the marketplace by adulterating the coins. Inflation!

(Go to the Smithsonian. See the Smithsonian exhibit of French Franc throughout history. From the hockey puck of gold from Louis 1 to the paper thin collar button of Louis XVII! It’s a visual of what every gooferment does with its power to define money for us.)

Fast forward to FDR in 1930 something. He takes the US off the gold standard for money. And, gives us Treasury Greenbacks, the eventually become Federal Reserve Banknotes. Redeemable in nothing.

Nixon in the Seventies completes the theft by closing the international gold window.

So now we have money that is NOT a standard of value, and a store of value. Ask anyone what is a dollar and you’ll get a blank stare.

So now you’re an expert in “money”. When the federal gooferment prints money, they can spend however they want.

The rub becomes return to Robinson Crusoe Island.

We have those people using seashells as money. And, Tom when fishing finds a lot more shells. He “spends” them in the market. Gets stuff for them. eventually prices rise to recognize the new amount of money in circulation. (Inflation!)

Producing more money doesn’t produce more goods. Wealth! The number of coconuts that Dick gathers is relatively fixed. Printing more money doesn’t produce more coconuts. It just makes them more expensive.

Now, you have to figure in savings and investment. Tom could stop fishing for a week and make a net. There has to be fish and coconuts for him to live on until the net allows him to catch more fish. There MUST be savings (delayed consumption) before there can be investment (Tom’s ability to make a new net.)

See the problem is that savings must delay consumption. When the gooferment counterfeits the money, some where some how some one must defer consumption to allow investment. All the money tricks in the world over all of man’s history can’t conceal that fact. Some one has to feed Tom while he makes that net.

The gooferment can print all the money it wants, but it can’t create wealth (i.e., food for Tom).

Right now the poor Chinese are “saving” and everyone is consuming.

What happens when the “poor” Chinese want to spend their savings?

When the money was gold, and it was relatively fixed, the gooferment had to tax or borrow, to spend. Now it can “inflate” (i.e., monetize the debt).

But it still can’t produce wealth for Tom to eat while he creates a new net.

It humorous to hear the politicians talk about “investment”! They are spending.

There is no “wealth” to allow them to spend.

The gooferment is bankrupt.

Robbed by the takers of all ilk.

All because we have forgotten what money is!

“The trouble with socialism is that you eventually run out of other people’s money.”
–Margaret Thatcher

# # # # #

We’ve run out.

And it won’t be until the American people wise up that the merry-go-round will stop. But it will stop!

# # # # #


POLITICAL: More bailouts until the pig-gy bank is busted

Wednesday, May 19, 2010

http://www.wnd.com/index.php?fa=PAGE.view&pageId=155205

Will the PIGS blow up Europe?
Posted: May 18, 2010
Pat Buchanan

*** begin quote ***

The ECB seems to be substituting itself for the banks as the chump to be left holding the bag when the defaults begin.

*** end quote ***

Whatever you think of Pat as a Presidential candidate, he has a knack for identifying global trends.

Transnationalism, ethno-nationalism, and economic nationalism I think I understand. What he misses in this short piece are the formation of religious nationalism (i.e., Muslims carve out part of countries and align them…selves with their religion as opposed to the country) AND the liberal politically correct non-nationalism. Maybe he covers these in his book.

In any event, a thought provoking one pager.

Clearly, the US Taxpayer is on the hook for this bailout. All to benefit the banks that are stuck with the deadbeat’s bonds!

When this all fails, what happens?

# # # # #


NEWJERSEY: “Public Education” is immoral

Tuesday, May 11, 2010

http://channel-surfing.blogspot.com/2010/05/voucher-hypocrisy.html

Monday, May 10, 2010

Voucher hypocrisy

*** begin quote ***

Bret Schundler jumps into the voucher hypocrisy pool, dismissing stats that contradict his claims and call into question his proposals.

*** end quote ***

Don’t you think that Gooferment-run schools propagandizing future voters is immoral?

Don’t you think that funding them by stealing wealth from unwilling victims is immoral?

Don’t you think ripping children from their families and imprisoning them for many hours a day for decades being “taught” to be good little robots is immoral?

Don’t you think allowing the Teachers’ Union to become an overpowering force in politics is immoral?

Don’t you think that “public education” in the inner cities (a failure by any measure) is immoral?

Answer those then we can chat about how it’s ineffective and inefficient.

# # # # #


MONEY: Changing my position on “emergency funds”

Friday, May 7, 2010

From time to time, folks ask me for advice and “help”. I try hard to give them the best I can in both areas. Interesting that they don’t follow the advice and ignore the help. Yet, will return for more.

Guess I’m getting cynical.

Part of any financial plan, job search, or almost any kind of advice that I give is about having an “emergency fund”.

A financial plan starts with an emergency fund and then proceeds on to savings and later investments. (For the truly wealthy, after investments come speculation. I only know two people in that category. And they don’t need my advice.)

In the past, I advised an “emergency fund” in a demand deposit account, preferably in a Credit Union, equal to some multiple of the individual’s “burn rate” (i.e., how much you spend every month; what goes out). The multiplier was at least 6 but could be as high as 60 depending upon how secure your employment was, how hot your field was, how hot your industry was, and how old you were. IF you had a large savings and investments portfolio, THEN you could “sanity check” the multiplier.

Now, I’m getting older and wiser. I think that you need an “emergency fund” that’s the equivalent of a 5 year MONTHLY CD ladder. Yes, 60 cds. SIXTY. Each one equal to your burn rate.

It’s a tough world out there.

You could be locked out of your savings and investments. You need more security. You have to build up to this advice and it’s not easy. But we have hard times coming. And, six months of burn rate in nickels stored at home.

# # # # #


MONEY: WW2 Wage and Price control were disasterous and carry through today

Tuesday, May 4, 2010

On Apr 24, 2010, at 5:58 PM, LUDDITE wrote:

http://finance.yahoo.com/focus-retirement/article/107923/8-great-companies-to-retire-from.html?mod=fidelity-changingjobs

At a time when some firms have cut back on benefits, these employers offer notably generous plans. Fortune picks some of the best.

# – # – #

Good for you. But bad for us as a society. Pensions and benefits are a result of the WW2 wage and price controls. Big companies bent the salary cap rules by giving these inducements to get good workers. This was a gooferment distortion of the employment marketplace which as usual has had disastrous side effects. I’m not a economist; nor a social scientist, but let see if I can enumerate the ones I know about.

(1) Medical insurance tied to employment had several bad effects. It locked up workers who couldn’t or wouldn’t change jobs due to losing their benefits or the “pre-existing conditions of going to a different insurer. Lose your job due to poor performance, bad economy (i.e., recession), or structural changes in the economy (i.e., rust belt) lose your benefits. It disconnected the link between the expense and the pain of paying thus inducing folks not shop around, negotiate, or even look at the bills.

(2) Pensions are in effect deferred compensation. It locks up capital in the company pension plan — with its risk in bankruptcy — from the individual. So, for example, an employee, if they had that money, could have used it as they saw fit to provide for their own retirement. In my own case, I could have had an extra X$/month to pay down my mortgage sooner and had that capital asset for my retirement. It’s about Freedom and liberty. I was FORCED to trade X$ per month at that time for a future cash flow at age 65 assuming I lived so long. If I didn’t, it was lost. Like “Social Security”!

(3) Pensions were such an expense that the Aircraft companies were firing “old” injineers just before their pensions vested to hire new graduates cheaper. (The fact that much of their work was for the military and the gooferment made it hurt even more.) Hence, having created the problem, the Gooferment gave us the solution — more gooferment — the ERISA laws. (Argh!)

(4) Pensions and benefits, due to it hidden sunken costs, makes the workforce less flexible and nimble. You had to have a much bigger opportunity in a new job in order to justify leaving the security, pension, and benefits in an old employer.

(5) Increased regulation of the workplace, such as OSHA, FALSA, and NLRB, all sprung out of that New Deal thinking. And, was as taxation and regulation, a drag on our economy.

So that’s why this is bad for us as a nation.

# # # # #


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