Stuff the news media should tell us

I suspect that a major reason the media doesn’t give oft-times vital information, is because they have such short time frames to write or speak and many lack analytical skills.  Years ago, I cashed in a few frequent flier points to sit 1^st class and I sat down next to Art Linkletter, age 90 at the time.  He told me exactly this. Here’s more stuff…

1.     China was 2% of world's manufacturing in 1991 but is 19% today. 1/5 of US middleclass job loss is due to this. Workers are far less willing to move today (loss of home value) or re-educate (US stresses 4 year degrees which is huge down time to get a bachelors) Therefore, many try to get on disability, now 5% of 25-64 yr. olds. Food stamps has gone from 17M in 2000 to 48M today.

2.     2.6M die each year, most by health conditions. 98K die from medical mistakes, 100K from falls and accidents, 38K drug overdoses, 30K vehicle accidents.  There are only 700 deaths per year from gun accidents, but 13,000 from gun crime.  Cocaine usage fell by half in the last 10 years but heroin has gone up 80%. Marijuana abuse in Colorado has increased by 25% among the elderly since they passed legalization.

3.     It’s the federal gov’t people are fed up with.  47% of voters this fall thought Fed Gov’t is too powerful; 61% think states should be able to opt out of fed mandates and programs if fed doesn’t pay for them. Only 26% want federal funding of elections.

4.     Since 70s, land temperature readings have gone 1.5 degrees higher, but 25degrees higher since 15,000 BC. At 10,800 BC was a -15 degree re-cooling called Younger Dryas that lasted 1300 years, probably due to changed ocean circulation. Then two Sahara warmings @ 4400BC and 2200BC each lasting 150  years. (disputed causes) A  medieval warming 850-1300AD by 5 degrees, then a Little Ice Age (-8 degrees) 1309-1850 AD caused by lower solar output—known from sunspot occurance) Interglacial periods last 12,000-28,000 years. 39% of climatologists recently said they were convinced of manmade warming.

5.     In 1850, 80% of black children slaves lived with BOTH parents and this continued to 1950.  14% out-of-wedlock rate of 1950 has gone to 70% today. 7000 of 13,000 murders are committed by Af-Am who are 13% population. Half of 12^th graders function at 6^th grade. Teen unemployment was LESS than for whites in 1950s but is now 47%.  Black kids need Dads!  Take an unguided one under your wing, guys!

6.     Oklahoma Democrat vs. R’s in 1976 was 78% to 22% (don’t have statistics on Indies). 2016, 40 years later it is 41.5% to 45.5% in favor of R’s.  The use of marketing surveys with smart phone techniques is having a big impact on big elections—people reminding like-minded people to vote—Obama technique pioneered in 2008. Media doesn’t want you to know this. It circumvents them.

7.     Single mom, two kids (SM2K) can get assistance from TANF,WIC, Food stamps, Sect. 8 housing, and Medicaid, plus other state programs. If you make nothing $1500 a month aid is typical even in MS and AR when state is tightfisted. Earned Income Tax Credit declines as you make more than $9600 and you lose TANF.  At about 23K you lose food stamps and housing asst. Bottom line, most, but not all SM2Ks make $1500-$2000 per month no matter how poor they are.

8.     7% of men are molested sexually as kids.  46% of gay males were; 22% of gay women. Prison surveys show 86% of child molesters are gay/bi. 1.6% of population is gay; 0.7% bi—same as it has been for the last century.

9.     Save up.  30% of seniors >55 have no savings and 26% have less than $50K (9 months in nursing home).  ¼ living on retirement SS have only that. (SS retirement avg benefit is $1600/month)

10.  Racism is rare. In 1950 20% thought interracial marriage was okay.  Today it’s 90%.  Of the 10% who don’t, 2/3 cited no personal dislike but hardship on children or the couple.  That fits with 12 studies of Caucasian Americans over the last 20 years thought to be reputable—true racists are <3 3="" nbsp="" o:p="" of="" population.="" total.="">

Well, enough!  Don’t get me going on Obamacare, Islam, Taxation or Energy.  I can’t shut up.

WWTD part II

The heck of it is, we’ve seen this experiment in Japan and Europe.  Lowering interest rates to almost zero yielded negative consequences. 

            You think if Trump is elected, he’s going to make the economy roar?  Think again.  For the past 40 years, central banks around the world have been able to print money almost at will and after this last recession it went koo-koo.  The real hockey stick graph isn’t global warming, it’s money printing, better known as Adjusted Monetary Base.  It went from $200B in 1985 gradually to $800B in 2008 but it is $4.5 trillion today.  The Fed, bowing to Obama, has cut interest rates to virtually zero.  That is, the pure political play of Democrats is to blame the other party for recessions while mortally afraid of a recession on their watch. Hoovervilles. Bush’s fault. The Fed kept lowering rates, then QE money printing, stoking stimulus, amassing debt. Of course the old model is to raise interest to fight inflation and lower it to fight recession.  But here we are with 1.8% GDP growth and no way to lower interest if a recession comes along.  Worse, lowering rates no longer stimulates.

            How does this happen?  Well, first think what happens to some of our business models.  Insurance companies use money they get in premiums to invest and make money from which they pay claims.  If interest is zero—no investment gains-- this model fails.  Or pension providers estimate what they can pay in the future based on what they are getting from invested funds today.  No interest, no future pension.  When interest goes to zero, seniors get no gain on their life savings.  Zero interest destroys savers and savers are the bedrock of capitalism.

            But there are more horrors.  What if those individual savers put it under a mattress?  With no deposits, banks can make no loans and the system starts to collapse.  Obama piled up debt, thinking that traditionally governments have escaped the consequences by inflating -- paying off debt  with future dollars worth much less.  But what if you keep lowering interest and it has no effect in restarting the economy, companies and savers see the futility of taking on risk? Basically you get an economy where money returns nothing--Japan ever since 1992, Europe since 2007, USA dangerously close now.

            Yet there is a way out.  It takes a little pain over a long period of time.  Interest rates must be raised gradually until we get our economy back again.  That probably means a 2% Fed Funds rate and 3.5% return on a ten-year bond.

            Well, you raise interest and suddenly far fewer people can qualify for a mortgage on those high-priced houses in urban areas. (Ever ask yourself how those couples on HGTV can afford million dollar homes with median income at $54,000?) Bonds, already trading far too high (people are scared of the politics and the economy and have fled to bonds), will plunge in price.  Effects like this give politicians the heeby-jeebies over backlash.  So the rise in rates must be gradual.  Hence the Trump economy won’t rise fast.  At least his ideas of lowering corporate tax rates are good.  The foolish demand that the federal government get a cut of foreign profits from businesses is one of the great killers of bringing profits home to America. It makes no sense except to covetous Dems who hate businessmen.  A subtext of Hillary and Obama is that they hold that government is the best manager of investment capital. Sure.  Solyndra.  Solar Trust. Postal Service.  But the teeth-gritting Dems persist.  The rules for inversion mergers and capital repatriation are constantly changed by Obama’s executive orders.  Thus US corporations must add the risk of arbitrary tax persecution to the other uncertainties of staying in business.

            Given the debt overhang, the money printed, the states' pension liabilities, the reluctant investors, the rest of the world in secular stagnation (zero interest/low growth), the need for tax reform that depends on reticent politicians, we won’t come out of this thing very fast.

            Imagine the difference if such politicians cared about growth.  Corporate taxes and capital gains rates would be zero—and actual revenue loses wouldn’t be that great.  Foreign profits would be encouraged to come home.  They wouldn’t try to tell the bozo voters that recessions are due to the other party’s leadership but would state the real reason—due to billions of bad decisions made by millions in the marketplace bidding prices too high, i.e., the madness of crowds.  Banks could go back to being community lenders instead of trying to play the government for favors. The pols would be very leery of mortgaging the future with debt.  And jobs would be plentiful again, growth would return, people would save.

 And if you aspired to run a great foundation, you wouldn’t model yourself after a Secretary of State who exchanges policy favors for donations.  If you wanted to be a great real estate developer, you wouldn’t get there by playing footsie with local governments for tax favors and eminent domain. And all of America would want to hear about freedom and liberty, not what they qualify for, or who they could scapegoat.  

WWTD--What Would Trump Do?

Take a breath and think about your life savings.   Long before I was in politics, I was a saver and investor.  Investments rescue your small business when you have a bad year. 4 out of 5 small businesses fail in the first two years and only about 5% make it to the 10 year mark. If you want to start a business from scratch, you have to have some scratch.

            Here comes the Trumpzilla vs. Hildebeast show.  What Will Trump Do?  And what will happen no matter who is elected?  Trump and Hillary believe in trade wars. The Hawley-Smoot Tariff, a protectionist trade war, caused an ordinary recession  to become the Great Depression.  Don’t take my word for it, see latest issue of The Economist concerning Trump.  “Mr. Trump has railed against trade deals for decades. . . viewed America’s trade deficit as evidence of foul play or poor negotiating skills. . . For those who believe in the gains from globalization and the American-led order, this is a truly terrifying world-view.”  Bottom line: USA’s economy under either Prez will be lackluster and US stocks are fairly high priced—be cautious.  Invest in property or precious metals or local businesses that serve necessities. 

Business investment hasn’t grown in 2 years.  Why would it?  To expand a biz and create jobs requires $2000-$11,000 per new employee just to satisfy Obamacare.  No new trucks, no new truck driver jobs.   Interest rates are historically cheap and that allows businesses to do “financial engineering” rather than expansion.  That is, you buy back stocks, using your earnings and cheap interest to finance.  We tax business too much.  Our corporate tax rates are the highest in the world and we double-tax income from abroad.  We have the worst depreciation allowances in the world. Obama raised capital gains, income taxes, and dividend taxes.  Is it any wonder that businesses do inversion—buy a tiny little company in Slobovia and claim it as the new parent company where taxes are1/3 as high.  We are over-regulated by federal agencies that used Obama to dream up draconian rules out of legislation that had been on the books for decades. EPA has a war on fossil fuels.  Hillary wants to kill coal and end fracking.  Can you believe this?  From 2009-2015 two industries kept us from being in perpetual recession—smart phones and fracking.  Dodd-Frank red tape holds back lending so business start-ups haven’t.  For the first time in 400 years, America now has fewer start-ups (in the last 5 years) than closures. Trump might fix some tax problems with our economy, but without a systematic plan to take down the bureaucracy or Fed, look for little to change.  We may slide toward Southern Europe.  (Lawrence Kudlow, recent column)   

Trump wants to repeal Obamacare, but has hinted he’d go for single payer.  Hill wants to ‘fix’ Obamacare, whatever that means.  Hill wants $15 min wage.  Trump is open to it.  Recent research shows that when min wage is kept below ½ of median wage ($21,000 or $10/hr.) it works okay. More, and it leads to resistance to hire. The big problem of Trump is knowing what he would settle for.  Hillary would $15 for sure.

 Trump wants to open federal policy to allow more drilling and reduce air rules to save the coal business.  Good ideas.   Frankendodd needs to be repealed but neither candidate is talking this.  And if interest is basically zero, how does the Fed fight a recession.  Low interest kills income from bank CDs and bonds for seniors, who because they have savings, are the investor class.  Just what the left wants—seniors dependent on government assistance and death to the investor class. In Germany and Netherlands, they now have negative interest.  Put your life savings in the bank and each quarter they charge you a bit for the privilege.  Small savers are putting it under their mattresses, but big companies can’t.  Watch for this “solution” to get mention by Democrats shortly.  They have already suggested zapping your 401K by a one-time (Ha!) 1% tax to help the debt. 

Put your money directly into things that government can’t easily tax.  Gold or silver or iridium works.  Rental properties work better, giving an income.  Cash will also be king. Stocks are high, but ownership of American business has always paid.  Europe is awful and Japan and China. Third world is disastrous from debt.  Even Australia, which went 22 years without recession, has overvalued stocks.  Because of the uncertainty, diversify,diversify, diversify.

Shoulda Shorted A&E

I am regretting one of the greatest missed opportunities for a killing on Wall Street since I hesitated to invest in Chrysler, selling at 3 in 1980, sent Lee Iacocca to Congress to plead for government aid.  A year later they were selling at 65.  Oh, if only I had shorted A&E last week!  I tried.  But I kept looking for “Asses and Elitists” in my broker’s list.  How was I to know it stood for Arts and Entertainment?

            Now it turns out that Drudge Report has a link to Mailonline, an entertainment website that religiously follows Miley Cyrus and Paris Hilton as long as they stay naked and don’t pick up a Bible in jail.  Mailonline says that A&E was doing a set-up against Phil Robertson.  They arranged the interview with GQ, had a representative there listening, made no attempt to talk to Phil or coach him, and then ex post facto ran headlines condemning his speech along with a GLAAD spokesman. (Sorry, didn’t mean to imply that A&E used  that Latin term meaning “after the fact”.  Nobody in Hollywood or NY uses Latin terms and they are still ticked that Mel Gibson used it in his Passion movie. They wanted hip hop slang.) And that A&E did this because the network originally had a concept of the Duck Dynasty show as a comedy where you and I would laugh at a bunch of backwards rednecks.  But, like All In The Family years ago when the viewers began to empathize with Archie rather than hate him, viewers began to laugh With the Robertsons, not At them.  This made the New York TV types very nervous and they decided to do a hatchet job on Phil to bring him into line.  But as everyone knows by now, Phil was once an old rocker who got messed up on drugs and everything else, gave his life to Jesus Christ, and now gives numerous Christian convocations and testimonies.  And the family is tight.  They aren’t going to give in to PC bullying.  Probably the show goes off the air after this next season on A&E, because A&E would lose liberal viewers who like to watch crime scene horrors, mental patients, and people bidding on abandoned storage rentals which have been secretly seeded with a few valuables—“reality TV”, as NY TV types say. Do you see why I never dreamed “A&E” was about Arts and Entertainment?

            A&E never dreamed the Duck Guy would get so much support.  Now they are in a fix for if they relent on his dismissal, they look weak to the left.  If they don’t, it’s all over for Duck Dynasty on their channel. Family will probably refuse to renew.  Now there is a contractual period, probably about a year thereafter, where the Robertsons are forbidden to take their show and go to another channel.  But this too shall pass since the family is now estimated to be worth $400 million through duck call manufacturing and a retail contract with Walmart.  Did I mention that Walmarts all over America have sold out of Duck Dynasty products this week?  Wonder why.  Perhaps you can still get a few at Bass Pro Shops.  It is doubtful that Walmart will ditch the Ducks the way they did Paula Dean. Plus the Robertsons have another show on the Outdoor Channel called Buck Commander.

            At any rate, Duck Dynasty is the most popular show on cable television, with 9 million viewers per week.  Compare this to a single episode of Bill O’Reilly at 2.3 million or that idiot thing on History channel about a pawn shop which has 3 million.  (Can anyone explain to me what pawn shops have to do with history?  I mean other than the fact that they still don’t know who has the original print of the Constitution because Continental Congress got so poor during the Revolution that they had to collateralize it and some impatient pawn vulture sold it as outhouse paper.) So then shorting A&E is probably the financial move of the year.

            GLAAD is also not so glad they self-report.  It turns out they feel victimized by the backlash.  Whodda guessed this! They launched full bore into how they were discriminated against by Robertson’s comments.  But if a thoughtful person considers what has happened, it seems that no gay person suffered.  Phil Robertson did.  So here’s the inside scoop from a gay person I watched on MSNBC last year.  He said that practically the entire reason for gay activism is that many gays ultimately feel bad about their life and want it accepted by churches.  But the Bible has some things to say about homosexuality not being according to God’s preference, i.e., it is sin. (God labels a lot of our activities such. Correct response is to be humble and beg forgiveness.)  And so what gay people want is for the rest of the world to stop telling them they aren’t doing things right.  “Stop making us feel guilty.” Okay, but the One who wrote the book wants to talk to you.

Did I mention that the guy who conceived Duck Dynasty for A&E was a former porn movie star?

The coming disaster for your savings

Obama says he will pursue an agreement with Congress that  is similar to the way he campaigned—tax only the upper 2% who make over $250K.  Yeah, but he also wants to raise the rates on dividends and capital gains from 15% to 39.6 as regular taxes.  Since Most small businesses or farmers sell out only once and often make all those cap gains which are often over $250,000, this will radically curb selling of businesses.  But while everyone concentrates on tax policy and the fiscal cliff, let me point something out.

      It will only raise a small amount of money.  $50-100 billion over against 1.3 Trillion in deficits.  So if the Dems don’t agree to massive spending cuts, we are doomed to many years of extraordinary deficits.  This means inflation to come.  If you have more national debt than nat. income, the international markets soon ask, “Will we get all our money back?” and demand much higher interest for continued borrowing.  The only way a government can honor their debt is to turn on the printing presses and print more money.  The economists I follow predict this occurs 5-15 years out from the spending spree.  That is, the spending during Vietnam War era, 1967-1972 drove inflation from 1973-1982. The debt crisis usually brings on recession/poor growth so we have “stagflation” as a result.

      So you have a little nest egg.  How do you protect it?  During stagflation you need hard assets—gold, real estate, timber, natural resources—and aggressive pro-growth stocks.  The inflation makes debt smaller by the year, so growth-oriented companies can benefit provided they can make enough cash flow during the tough economic times.  Here’s the killer.  This will likely occur sometime after 2015, unless we reach a debt crisis like Greece in the next couple years.  While this could happen, we hope and pray that the Republican House can hold back the dam on Dem deficits enough that it doesn’t develop into Greece and Spain (25% unemployment, riots in streets, 38% interest).

      Your financial planner will likely suggest an aggressive growth stock  strategy attempting to weather inflation.  Trouble is, there will be so many boomers retiring and thinking they need to be conservative in order not to risk what they have.  And then comes the real killer, Frankendodd.

      Dodd-Frank  Financial Reform Act is basically 273 laws put together in an attempt to nationalize the banking and finance system.  Among the provisions are some which demand “fiduciary responsibility”.  That is, your broker is liable for lawsuit if you lose money. He has a fiduciary responsibility to protect your money and it puts him in an impossible position.  Advise you to invest aggressively which risks loses and lawsuits or conservatively and inflation eats your lunch.  Moreover, what does a broker do with some stubborn client who goes online and trades into Facebook or some other loser?  The broker’s fiduciary duty still leaves him responsible for the client’s bad behavior.  The result of all this is that brokers will soon pressure clients to hand over all trading responsibility in a contract to the brokerage firm.  That way the firm can carefully invest.  Bottom line, you lose your control over your assets or you invest on your own.

      And if that weren’t a mess in itself, consider this.  The solution of Mussolini and the fascists was for the government to own/control certain vital industries.  Health care, transportation,education but most of all, finances and banking were at the top of the list.  Hitler was a part-Jewish German who repudiated his Jewishness in attempt to prove himself a “good German”. When he saw Mussolini’s dream of taking over banks, it was a perfect match for Germany’s blame of how they lost the Armistice and were forced into a terrible surrender, Jews were 90% of Germany’s bankers, and Hitler wanted revenge on the Jews.  Mussolini practiced a politics he called fascism based on ‘group’ (Italian,”fasci”) appeal.  That is you line up certain groups, like blacks, unions, Hispanics, etc. to form a majority and seize control of the government.  So what are the Dems doing today?  “Walks like a duck, talks like a duck, must be a ______.”  I leave that to the reader.