Those who know me also know I am a financial news addict. I'm reading the latest international market news while drinking my first cup of coffee. This often means I'm in a foul mood and known to post caustic aka socially incorrect comments in reply to what I deem to be a nonsensical analysis.
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As an example an analyst stated the following this morning:
"We'd prefer to see Gold below $1100 and Silver below $14 before thinking about buying."
Why not prefer gold at $2.17 and silver at $0.05?
Get real.
Both are already in a multi-year low range.
I'm a bit curious about what pricings you preferred over the last 6-12 months.
I'd almost bet they were higher.
They don't ring any bells at the bottom.
I would offer the most logical approach is modest and continuous buying all the way down. Constantly
lowering the average purchase price.
Logic would demand holding rather than booking a loss. Any profit or loss on paper is nonsense. There are
no profits or losses until the money changes hands.
But we are faced with a "I want a staggering amount of wealth now" crowd. Paper profit/loss brings out
emotion driven reactions.
And whenever there is emotional market participation, there are always plenty of folks eagerly selling
them smoke.
I would offer the following:
If you don't know the market, you have no business participating in it.
That includes through all the various proxies.
Because if you don't know the market, how do you know you aren't paying for smoke?
So why would I offer such a caustic retort?
Consider this.
The gold and silver market is dominated by the futures market.
This is where copious amounts of money gets won or lost.
The following is a grossly simplified explanation. Emphasis on grossly simplified.
At the current $1150 USD per ounce of gold and every futures contract is for 100 ounces, this means every contract is for $115,000. This contract can be secured for just $3750 USD. That is roughly 31:1 leverage.
It also means a modest 3.3% drop in price wipes out the margin. Ergo the folk scramble to buy long contracts to counter the loss. A short sale gone south mandates buying a long to cancel the the short. The only other way to hold out is meeting a margin call.
As margins are effectively down payments on borrowed gold. Either pay back the gold, increase the margin money on deposit or buy an off-setting long. Futures contracts are for future delivery and settling up the differences in price.
Shorts are borrow gold and sell the contract today in hopes of buying back the gold in the future at a lower price than you sold the contract for. Any money left after the sale is profit. As an example a $5 drop in price would result in a $5 X 100 X 31 profit before fees. That is a $15,500 USD profit. Note: A naked short has no gold backing it.
Longs are borrowing the gold today and selling in the future in hopes the price goes up.
In both cases, the margin is roughly 3.3%. Price drops, the folks who lent to you will want that 3.3% increased to perhaps 5% or more. Price rises, you must put more money in the pot to maintain the 3.3% or maybe more. The 3.3% is the minimum margin in effect down payment.
So what does this mean in response to my retort?
All pricing is dominated by the futures market where the daily paper exchange might be 5%, 10%, or more of the annual amount of physical gold actually transferred between parties.
So we have the price dropping into the dumpster because of shorts. Recall shorts lower the spot price and longs increase the spot price. As the price drops, there becomes a substantial requirement for the short sellers to purchase longs to cancel out the losses the lower pricing will result in.
Keep in mind, that shorts are purchases. You effectively bought it, you are gonna pay for it. All of it. Losses are not confined to your margin aka down payment. Either put up more money in your margin or buy a long to cancel the short. An example would be you rented my riding lawnmower for a month and then sold it. Before the month is out, you have to buy it back or pay me the price we agreed the lawnmower was worth when you borrowed it. I don't care what the price you have to pay is. YOU WILL REPLACE MY LAWNMOWER.
So the futures market concept requires that a substantial drop in price must result in an increased price. Smart money doesn't sell at a loss. Those who hold the gold make the rules. For those already holding the gold, selling will only occur at a much higher price. Remember, those holding will want a profit as well and the short seller is over a barrel.
Here is the real irony. Most participants have no intention of taking possession of the gold. They lack the money to purchase the 100 ounce ingot otherwise they would. No what they are in hopes of is another big score at 1:31 leverage. It is a zero-sum game. Every sale requires a buyer and seller. And someone is holding physical gold.
Here is where it gets interesting and prompts so many fools into the notion of market manipulation. If you hold enough physical gold, you are bound by putting up margins for selling longs. You don't have to borrow any gold. Advantage goes to those who hold the physical gold. Those who squall about manipulation hate the holders having such an enormous advantage. At a 31:1 advantage, the house will always win in the long term. Every margin call wipes out many participants. Others can pay the heavy toll by buying an offsetting long. And those holding get a nice skim every time.
So is there manipulation? You bet'cha. If you are holding physical, nobody can force you to play in the game. If the market participants are eager to get you into the game, they must give you a real incentive. That incentive is the ability to make the rules. One more time: He who holds the gold, makes the rules.
Recall that the futures market requires borrowing the physical before you can sell it? Who do you suppose they borrow it from? Advantage goes to those who hold physical. The whiners hate this advantage. The call it manipulation.
Every participant in every market attempts to manipulate said market to their advantage. The car buyer tries to get the dealer to drop the price, increase the trade-in value or toss in more dealer options. The home buyer tries to get the price down. Even at the yard sale, the standard is haggling. Your grocer or hardware store will quote you a lower price for buying in bulk. In every case, the seller has an advantage unless they borrowed. If time on the borrowed contract is real short, few options remain.
As an example:
ABC Hardware borrowed to buy 50 units of plywood. They borrowed from the bank or the seller at 30 days same as cash, then 12% on the remaining balance. 22 days have gone by and only 2 units have sold. Options? Reduce profit margin to sell, pay the 12%, borrow to cover or get cut off from the market and still owe the money.
So why do people play this game? Almost everyone wants to get rich on someone else's money. If they already had the money, they would be rich. Oddly enough, the vast majority are never rich enough. Seeking vast amounts of wealth become an obsessive compulsive disorder. It is an emotional response. Fear of loss.
I will l;eave you with this. Most so-called financial gurus are no better than wild guessing. They are selling sacks of air to an eager, but utterly ignorant market participant. And why would they do this? Because selling hot air gained at no cost is far more profitable than their own trading.
A rising market makes everyone a financial genius. Those who gambled big and won the most are deemed the gurus. They then find that capitalizing in the hot air market will sustain their lifestyle until another rising market happens.
Take what you will from this. I charged nothing. I have nothing for sale. I don't even offer advise. So why do I offer up my questionable opinion? Self-defense. I am of the opinion that things will get far worse before it gets better. I'm pretty certain I will be feeding the worms long before there is "better". Those who gambled and/or are wastrels pose a real and significant risk to me, mine and those who practiced sound wealth management. I would suggest don't be one of them and guard your and yours well from them. Zombies today, vampires tomorrow.
Bankruptcy begins slow and finalizes at high velocity. It appears that the world has already shifted from low to drive. The engines appear to be re-lining. I have no idea when the drivers will shift from drive to race.
Try to chose your path wisely. Make your own luck. Believe nobody. Not even me. Hindsight is often 20/20 but my foresight was 20/400. I did invest in personal knowledge and what many would call anachronistic skill sets. I contend that those who can do will have value in the future. I will gladly trade you that value on Thursday for a hamburger today.
I never thought the PTB could hold it together this long. But I think I hear the approaching footsteps of inevitability. I leave you with the paraphrased Laws of Thermodynamics which I contend apply to everything.
Everything is connected to everything.
Everything has to go somewhere.
There ain't no such thing as a free lunch. Tanstafl. Forget the double negative. NO FREE LUNCHES.
Friday, July 17, 2015
Thursday, July 16, 2015
Pollsters and me
Once again I was interrupted while doing something I felt was important, i.e. making dinner.
Who would do such a thing? Another supposed pollster wanting my opinion on something or another.
I find this more than a bit irritating at best and an intrusion into my mental process for dubious reasons.
1. Even with caller ID, I have no idea if the person calling is who they say they are.
2. I have no idea who they are contracted with to perform this poll.
3. I have no evidence that it is actually a poll or just a fishing expedition.
4. If it is a fishing expedition, I have no idea what the reason is for it.
5. There is no guarantee that anything I say will be used.
6. I have no idea of what I say will be used for.
7. The polling contractor and the phone operator are getting paid and I get paid nothing.
8. There is a substantial body of persons, agencies and businesses that I have no intention of helping.
9. If the poll is for real, the outcome will be used to manipulate not just myself but countless others as well.
10. Though not the last, I will cut this off with one final beef: The pollster interrupted me while I was cooking dinner.
I have a real problem with people I don't know asking to speak to me and using my first name. Do they really think they can disarm me by using such a tactic? No doubt it is effective otherwise the phone jockey's instructions would be otherwise. This infers intent to disarm me.
Many of the times I get called by the pollsters, right after confirming that they are speaking to me, they will ask how I am doing this evening, morning or afternoon. Do they really care or is this another phrase used to disarm me?
On several occasions I have asked who the pollsters are polling for. EVERYTIME I have been told either they don't know or they can't say. Supposedly ISIS, you know them fellas in the middle east causing all the problems, liberated a substantial amount of money from robbing banks in the region. What if the pollster is working for them to identify people antagonistic to their continued survival? The pollsters have my name and phone number. A simple web-search can get them a physical address. Next thing I know I could be facing a beheading in my own driveway. Ridiculous? Perhaps, but just a few years ago nobody would have dreamed of Arabs turning commercial aircraft into guided missiles either.
No matter what data is collected, nobody is forced to use it. The question everyone should ask, "Does it ever go away?" Remember, they have your name, phone number and opinion on file. Ya s'pose anything like that chunk of data might be marketable? Do you really think it will be kept in the strictest confidence? Yes, I know they assured you and I that it was only meta-data. No laws exist forcing them to delete anything about you.
Now we have another election process beginning. All the queens of the dark triad are seeking campaign contributions and contracting pollsters to determine what key issues the sheep are concerned about. I refuse to help these politicians. They crap on my Constitution daily. They are entitled to nothing of mine including my opinion. Well if they read this blog, they will get this morsel.
Do as you inevitably will. Tell them whatever you want. Obviously there are no end to the number of sheep out there willing to hand the politicians the sheep shears and contribute one or more of their offspring to go to far away lands, meet exciting people and kill or be killed. Everything you say can and will be used against you.
It is said that the former British Prime Minister Margaret Thatcher said, "There is no such thing as society." There are only individual men, women and families. I know the word doesn't exist in the Constitution. Neither does the word Democracy exist in the document. Even the so-called fathers of America were abhorred by democracy. They saw it for what it was; mob rule. The only real difference between democracy and socialism is the spelling. So just go ahead and help those politicians that spout off about democracy by answering a pollster. They have everything too gain and you have everything to lose to them. How do you suppose income tax came to be?
Who would do such a thing? Another supposed pollster wanting my opinion on something or another.
I find this more than a bit irritating at best and an intrusion into my mental process for dubious reasons.
1. Even with caller ID, I have no idea if the person calling is who they say they are.
2. I have no idea who they are contracted with to perform this poll.
3. I have no evidence that it is actually a poll or just a fishing expedition.
4. If it is a fishing expedition, I have no idea what the reason is for it.
5. There is no guarantee that anything I say will be used.
6. I have no idea of what I say will be used for.
7. The polling contractor and the phone operator are getting paid and I get paid nothing.
8. There is a substantial body of persons, agencies and businesses that I have no intention of helping.
9. If the poll is for real, the outcome will be used to manipulate not just myself but countless others as well.
10. Though not the last, I will cut this off with one final beef: The pollster interrupted me while I was cooking dinner.
I have a real problem with people I don't know asking to speak to me and using my first name. Do they really think they can disarm me by using such a tactic? No doubt it is effective otherwise the phone jockey's instructions would be otherwise. This infers intent to disarm me.
Many of the times I get called by the pollsters, right after confirming that they are speaking to me, they will ask how I am doing this evening, morning or afternoon. Do they really care or is this another phrase used to disarm me?
On several occasions I have asked who the pollsters are polling for. EVERYTIME I have been told either they don't know or they can't say. Supposedly ISIS, you know them fellas in the middle east causing all the problems, liberated a substantial amount of money from robbing banks in the region. What if the pollster is working for them to identify people antagonistic to their continued survival? The pollsters have my name and phone number. A simple web-search can get them a physical address. Next thing I know I could be facing a beheading in my own driveway. Ridiculous? Perhaps, but just a few years ago nobody would have dreamed of Arabs turning commercial aircraft into guided missiles either.
No matter what data is collected, nobody is forced to use it. The question everyone should ask, "Does it ever go away?" Remember, they have your name, phone number and opinion on file. Ya s'pose anything like that chunk of data might be marketable? Do you really think it will be kept in the strictest confidence? Yes, I know they assured you and I that it was only meta-data. No laws exist forcing them to delete anything about you.
Now we have another election process beginning. All the queens of the dark triad are seeking campaign contributions and contracting pollsters to determine what key issues the sheep are concerned about. I refuse to help these politicians. They crap on my Constitution daily. They are entitled to nothing of mine including my opinion. Well if they read this blog, they will get this morsel.
Do as you inevitably will. Tell them whatever you want. Obviously there are no end to the number of sheep out there willing to hand the politicians the sheep shears and contribute one or more of their offspring to go to far away lands, meet exciting people and kill or be killed. Everything you say can and will be used against you.
It is said that the former British Prime Minister Margaret Thatcher said, "There is no such thing as society." There are only individual men, women and families. I know the word doesn't exist in the Constitution. Neither does the word Democracy exist in the document. Even the so-called fathers of America were abhorred by democracy. They saw it for what it was; mob rule. The only real difference between democracy and socialism is the spelling. So just go ahead and help those politicians that spout off about democracy by answering a pollster. They have everything too gain and you have everything to lose to them. How do you suppose income tax came to be?
Sunday, July 12, 2015
The Game Has Already Been Played
Gotta hand it to blogger(dot)com for hanging on to my drafts. This dates back to 2010. It is just as valid today as it was then. My only changes were spell checking. No apologies given if this results in the perception of a patella rapidly administered to your scrotal membrane.
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Every season, folks sit down with drinks and snacks to watch another sporting event: baseball, basketball, golf, curling, ... etc. Most have a favorite team, a player or car and driver.
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Every season, folks sit down with drinks and snacks to watch another sporting event: baseball, basketball, golf, curling, ... etc. Most have a favorite team, a player or car and driver.
Few ever notice the underlying reality. Every game, every race and every hole has already been played. Every perfect turn or pass has been made. Every mistake has been made. All that remains is who will make one or more mistakes that makes them the loser. Sports has been perfected. Only the players can make a mistake that allows another team or player to gain an advantage.
The folks continue to participate in the multi-billion dollar entertainment complex as willing contributors to not just their favorite team, but also the losers (real or figuratively) that competed against them.
But I watch on TV. So what! Do you think that the TV station broadcasts the event as a public service.
Major league sports wouldn't exist in its present form without broadcast rights being sold. It is fundamentally impossible for a 1/2 billion dollar sports stadium to be paid for out of gate receipts let alone player and staff salaries.
So the Consolidated Rodeo Arena Partnership (CRAP) sells broadcast rights to Broadcasting United Media Service (BUMS) for $500 million. BUMS then sells advertising minutes to various corporations to recoup the costs. BUMS also charges their network affiliates for rebroadcasting rights. These affiliates have several minutes of airtime to do their own sales of advertising that is sold to local companies and small corporations.
Each time you buy any goods that have been advertised, you are repaying the advertiser for their advertising costs. So as you can see, you are paying the losers indirectly but paying none the less.
Now here comes the real gravel-up-the-rectum kicker. Everyone is making money from you; the players, the sponsors, the camera-man, the advertising executive, everyone. They pay taxes. You are paying their taxes as well as their salaries.
It gets worse so better wrap some duct tape around your ankles otherwise this will blow your socks off.
The corporations make money for their investors who pay taxes. Most folks routinely scream for the corporations to pay more taxes. The corporations make money because they used advertising to get you to buy a new chrome-plated left-hand monkey wrench. Out of the money you paid, part of the price is the cost of advertising. This part is reimbursement to the local retailer and the corporation that brings you these fine crafted doodads.
Is the plot thick enough yet?
Advertising is deductible on taxes. So here we have Joe Public paying for the advertising, the players, ..., and the retailers workforce as well as everyone's tax burden.
The lost revenue from the advertising costs deduction has to be made up. Therefore you pay a higher percentage of the total tax bill.
Every time you scream for taxing the corporations, you are screaming to increase your tax burden.
Grab another beer from the fridge, bust open the chips and turn on the game. Who knows, it might go to triple overtime with the score 0-0. Who will screw-up and lose the game? Like I said, every game has already been played and the real loser is the consumer.
Reality doesn't cease to exist just because you don't believe it.
The Easiest Survival Strategy
Survival in a hostile environment requires the individual to fill an important niche.
Some have the means of producing more than they consume.
Some produce a good that fellow survivors require.
Some produce a good that helps others gain just a small measure of temporary joy.
Yes, sin sells just fine in a hostile environment.
At the top of the list is food and fuel.
No food and within days, survival becomes a crap-shoot.
Within a week, the individual will need outside intervention as they will become too weak to dependably acquire food.
No fuel means no cooking.
In winter, no fuel puts a tremendous pressure on food stores.
There are always certain goods that remain in demand.
Clothing and clothing repairs, shoes and shoe repair, tool repair, the list goes on.
Some goods will come out of trading stock acquired long before the situation goes to hell.
A story I was told several decades ago was about a shapely woman who put her monies into her appearance. Her reason was that she would be the boss's woman.
Yes, woman have certain assets that have value if only for the night.
Then there is beer and wine. Easily made by the industrious and eagerly traded for.
Have you ever seen someone experiencing a nicotine fit?
All of the above involve the simple concept of barter.
Almost everyone can barter their labor for a meal.
The greater the value of the labor, the greater the demand and the more it trades for.
The real irony is that few of these assets have value in the urban or suburban environment.
Why? How much food is produced in the city?
Furniture can be burned, but by who? The starving?
Survival means you must live in a rural environment.
You must live close to the centers of production.
Outsiders are suspect.
I contend there isn't enough time for an outsider to become an insider.
BUT!!!
There is one possibility that has throughout history been welcomed.
The traveling merchant, though suspect, usually finds folks eager to trade.
This merchant has certain critical requirements in order to maintain his/her operation.
Among these are security forces. Valuable goods need guards.
Then there are those required for cartage, the teamsters, etc.
Goods require labor to move them from point "A" to point "B".
I leave you with a thought and a line of inquiry that just might be in your benefit.
Think about and research the Mormon Cart.
Then imagine the requirements of moving goods throughout a farming community when internal combustion engines are lacking a fuel source.
The really intrepid might consider building and operating a gasogen fueled vehicle.
Understand that the firewood cutter isn't producing when he is hauling wood.
The farmer isn't farming when he is delivering a load of potatoes.
Even with a Mormon Cart, a small percentage of the cargo as the fee is expected.
There ain't no such thing as a free lunch.
Commerce is the glue that stitches civilizations together.
The cartsman gets to know everyone and brings the news, views and relays the needs for goods among his/her customer base.
Because I see the possible need, I offer simple solutions.
Large cart wheels can be made from plywood.
Even 4' to 8' is easy with laminating.
Shoe them with old bias ply tire rubber nailed on.
The entire cart can be made from wood.
The government has plans for gasogens. Easily found on the web.
The article was targeting the use on tractors.
Do as you inevitably will.
If a person gets up in the morning and has not one, not two, but three heaping bowls of dumb-ass for breakfast, then they shouldn't complain about a heaping plate of consequences for dinner.
Some have the means of producing more than they consume.
Some produce a good that fellow survivors require.
Some produce a good that helps others gain just a small measure of temporary joy.
Yes, sin sells just fine in a hostile environment.
At the top of the list is food and fuel.
No food and within days, survival becomes a crap-shoot.
Within a week, the individual will need outside intervention as they will become too weak to dependably acquire food.
No fuel means no cooking.
In winter, no fuel puts a tremendous pressure on food stores.
There are always certain goods that remain in demand.
Clothing and clothing repairs, shoes and shoe repair, tool repair, the list goes on.
Some goods will come out of trading stock acquired long before the situation goes to hell.
A story I was told several decades ago was about a shapely woman who put her monies into her appearance. Her reason was that she would be the boss's woman.
Yes, woman have certain assets that have value if only for the night.
Then there is beer and wine. Easily made by the industrious and eagerly traded for.
Have you ever seen someone experiencing a nicotine fit?
All of the above involve the simple concept of barter.
Almost everyone can barter their labor for a meal.
The greater the value of the labor, the greater the demand and the more it trades for.
The real irony is that few of these assets have value in the urban or suburban environment.
Why? How much food is produced in the city?
Furniture can be burned, but by who? The starving?
Survival means you must live in a rural environment.
You must live close to the centers of production.
Outsiders are suspect.
I contend there isn't enough time for an outsider to become an insider.
BUT!!!
There is one possibility that has throughout history been welcomed.
The traveling merchant, though suspect, usually finds folks eager to trade.
This merchant has certain critical requirements in order to maintain his/her operation.
Among these are security forces. Valuable goods need guards.
Then there are those required for cartage, the teamsters, etc.
Goods require labor to move them from point "A" to point "B".
I leave you with a thought and a line of inquiry that just might be in your benefit.
Think about and research the Mormon Cart.
Then imagine the requirements of moving goods throughout a farming community when internal combustion engines are lacking a fuel source.
The really intrepid might consider building and operating a gasogen fueled vehicle.
Understand that the firewood cutter isn't producing when he is hauling wood.
The farmer isn't farming when he is delivering a load of potatoes.
Even with a Mormon Cart, a small percentage of the cargo as the fee is expected.
There ain't no such thing as a free lunch.
Commerce is the glue that stitches civilizations together.
The cartsman gets to know everyone and brings the news, views and relays the needs for goods among his/her customer base.
Because I see the possible need, I offer simple solutions.
Large cart wheels can be made from plywood.
Even 4' to 8' is easy with laminating.
Shoe them with old bias ply tire rubber nailed on.
The entire cart can be made from wood.
The government has plans for gasogens. Easily found on the web.
The article was targeting the use on tractors.
Do as you inevitably will.
If a person gets up in the morning and has not one, not two, but three heaping bowls of dumb-ass for breakfast, then they shouldn't complain about a heaping plate of consequences for dinner.
It's Alive, It's Back and It Can't Keep It's Mouth Shut
Well the loss of an internet connection due to a hacked DSL box along with a new computer and having a life pretty well took me away from the blog-o-sphere. As you can see, that has been resolved.
Life as a stoic existentialist has presented a not for prime time existence. But life must go on. Failure is for those who lay down and refuse to get up. Example? Last fall I took a serious fall and broke a couple ribs. Painful? Until you have experienced it, you can never fully appreciate the level of shear agony. So what does a stoic do about this type of situation? I got up cussing like a soldier and strapped the breaks. Then I carried on. No doctor, no real effective pain meds, and no crying for help.
Stoicism has a few basic tenets. If you can't change the program, accept it and do something else. Never live in the past; occasional reflection is okay, but the past can't be changed. Never avoid hardships at any cost, but no sense in seeking it. Without hardship, you have no metric to compare the good times against. For the stoic, austerity is not a four letter word.
However this installment is not about my aches and pains.
As many can see, the world economic conditions continue to decline. Greece, China, Puerto Rico, Japan and who knows how many other locales are experiencing the effects of unproductive debt. Why is this happening?
Government gets in the habit of bailing out the big boys because failure would expose the Ponzi scheme to even the most ignorant idiots. Any time debt service is based upon growing the debt is bound to end badly. Government bonds are paid off by selling replacement bonds. The need to pay interest on existing bonds requires additional bonds be sold. None of the monies acquired by selling these bonds are used for producing a good that consumers demand and are willing to pay for.
Government figuratively sells bonds to put lipstick on a pig. Why? Because the voters think the pig would be so much more attractive. Of course the pig will die, but a 3-legged goat is an easy substitute. Within a few months, the voter's normalcy bias will reset and they will proclaim it was always a goat.
In the process, banks make a nice profit on the bonds. The voters never realize they are the underwrites of the bond through their tax payments. Few people realize that once all taxes are added up, their tax burden is somewhere in the range of 30-65% of their income. Makes a 10% tithing to the church seem minor.
How will this end? I don't know. There are several possible avenues for the end of the world as we know it. Several of them require understandable definitions. The powers that be (PTB) have a set of definitions that are kept secret. Politicians think they understand, but if they did they certainly don't speak econo-speak. Then there are the commentators and analysts eager to sell you newsletters that will say a lot, but never seem to get it right.
I will offer my definitions.
Inflation: An increase in credit.
Deflation: Forced reduction in credit.
Stagflation: Increase in credit without an increase in wages.
Investing: An expenditure in a business venture for the long term based upon market fundamentals.
Speculation: Gambling. Effectively a get rich quick scheme based upon rapidly finding a greater fool.
Greater Fool: A gambler who got in the game too late to win.
That's enough for now. So here is the general plan of operations. Government passes a law making profits possible for some industry who wrote the law. Politicians get a donation to their campaign war-chest and they get the option of buying in. Insider trading? Of course. The need for this law is presented in such a way to the public that all but the most astute believe it is a job's bill, it plugs a gaping hole in our national defense, it counters crime, it makes health treatment affordable, ... , ad nauseum.
But how could the public fall for this crap?
Homo sapiens is a social animal. As individuals, survival is a daily struggle and success is doubtful. A family unit has more than one set of hands for all the labors required for survival. Tribalism and small villages permit a division of labor with the most capable contributing according to their ability. In a perfect environ, each contributes their skills equally. There is no such thing as perfect. Next step up is where things can really begin to go wrong.
Larger city states provide a ready labor source and with it, economy of scale production can occur. This often requires additional capital investment. Effectively, those who were already successful rent out their wealth in return for periodic payments. It is here that the socialist can gain firm footing. Equality, fraternity and a conscience are their watch-words. Everyone deserves a living wage regardless of their capabilities, industriousness and economy. The so-called "deserves" morphs into "entitlements" because we must feel empathy for our less privileged members of society. Nobody brings up the notion that if you want in on the business's decision making process, buy in.
As any dissent is raised, the apologists take over. Those at the bottom of the labor pool were from poor households, had poor education, didn't get a break, lack the work habits needed, are minority groups, on and on and on. The apologists are socialists attempting to put the successful on a guilt trip. Of course they can succeed in rallying the downtrodden into a somewhat cohesive voting bloc. With that, the mice bell the cat by enlisting the dogs of war to hold the cat down.
The reality is that the socialists are thieves who use the government to do their dirty work. Oh they only skim a bit off the top for administrative costs. In the meantime the politicians are eager to scratch the socialist's back in return for the voting bloc. Incumbency is worth 10-20% of the needed votes to stay among the elected royalty.
Elected royalty?
If one were to take the time to read a bit of history, you would find that the so-called founding fathers were royalists. It is clearly evident by reading The Federalist Papers. To this day, we perpetuate the royalty aspect by introducing politicians as "The Honorable ... ". Honorable? Let's see.
As I recall, it was Calvin Coolidge that stated, "The business of America is business."
The Constitution as written stated nothing about the rights of the citizenry and little about state's rights. Recall that mention of insider trading by politicians at the federal level? Effectively, what was good for business was good for America. The USA went from a backwater colony to a world economic power by practicing business friendly politics. It was not a gradual process, but rather fits and spurts.
The greatest change took place during the Lincoln regime. Government forced through an onerous tax and export embargo on the south. You see, southern cotton wasn't being sold at a discount to northern textile mills. That is what started the Civil War. Slavery was a labor issue and nothing more until Northern support started declining. Enter Seward and his Emancipation Proclamation that freed nobody. Northern textile mills got their cotton at deeply discounted prices.
What was accomplished by the Northern win was the supremacy of the federal government.
Then we have all the following ash and trash presidents with business enhancing invasions of countless other countries. To the best of my knowledge, the only country with more business-based invasions was England who was now a valued ally.
As the long arm of the US military supported the entrance of US businesses, wealth increased beyond comprehension. Enter the Women's Suffrage Movement. We had started down the path of Universal Suffrage and the saga continues.
But why would I be opposed to universal suffrage? Universal suffrage grants those with no chips in the game to steal chips from the players that do. The renter votes for municipal upgrades that force the property owner to fund; not just for construction, but for maintenance and operation. The renter decides what businesses can operate within the renter's area. The renter decides school bond sales paid for by property tax revenues. Then when the property owner is forced to increase the rent, the renter moves to a cheaper neighborhood.
The socialists get involved the moment monies are available for redistribution. And that property owner that raised the rent gets blamed for contributing to the gentrification of the area. The cheaper neighborhood now has real social needs and another cycle begins.
So where does it end? The same place all unproductive debts go to die. Bankruptcy.
The people see inflation that drives up prices. The people incur more and more unproductive debt because they are entitled to a reasonable standard of living above and beyond their income. Businesses move the production of their goods to cheaper sources of labor after facing a continuous assault by the socialist for failing to increase wages while maintaining low prices. The continuing fall in retail pricing forces lending institutions to re-evaluate the collateral put up for securing the loans. In doing so, it becomes evident that the collateral value is too low so credit is curtailed. Where general labor lost during the relocation of manufacturing, the reduction in the credit now forces the middle management to be cut back.
More unemployment making more demands on the Unemployment Insurance (UI) scam. UI depends on long-term employment to cover the costs. Escalating costs with reduced employment reinforce the reality of the Ponzi scheme.
Those still working put their spare change into investment scams that are nothing more than gambling dens of iniquity. Those working need more money quick and can't afford to tie up their monies for years or decades in a real investment vehicle. They know their job might be next.
So who wins? Initially it is the captains of industry including the banking establishment. Meantime, the politicians inside trade. As manufacturing moves overseas, the parent corporation gets sold to foreign conglomerates. Soon all that is left is the money changers and the politicians. Everyone else has chosen penury. For most penury is a choice. They chose to incur unproductive debt. They chose to buy cars and houses they couldn't afford. They chose long-term debt without guarantees of long-term employment.
The reality is that the world is bankrupt. There is not enough money to pay for all the bills. The entitlement programs are broke and soon enough they will be forced to shutter the doors and windows. Government will do what little it can. Angry people will do counter-productive things for which no money exists to repair it. The retired, the poor and most everyone will face hardships far surpassing what their grandparents went through during the Depression of '29-'55.
Most of the people will curse the 5%ers. Even they are broke. It is common knowledge that expenditures and debt grows in proportion to income. For most, higher earnings means higher debt load. Asset values are a matter of opinion. Debt is etched in blood, sweat and tears.What will be left? Who will still have productive assets? About 1%. This is the old money crowd, defined as families that kept their assets through the last great depression, and the new wealth generation capable. Who are they?
Every change in the environment stresses the inhabitants. Some are too specialized and can't adapt. A few have developed the capacity to adapt to almost any operative environment. Change brings opportunity. The small shop that made car horns thrived while buggy whip socket manufacturers went into the history books. Adaptability requires broad skill sets. This is an anachronism in this day of specialization. Just as the extended family unit and small tribe insured, as much as possible, long term survival in the past. So shall it in the not so distant future. When it comes to food and fuel production, many hands make light work.
And the socialists? If you won't work, neither should you eat. Administrative skills don't put food on the table. Nobody will bail out the socialists.
Soon enough, indentured servitude will be a blessed choice over death by starvation. I desperately hope I am grossly in error. Maybe the PTB can get deux ex machina. Just because it hasn't happened yet doesn't mean it is impossible. But long-term survival requires positive action every day, all day long until it is time to take the long sleep. Hope is not an effective strategy. It is only a mindset that drives positive action.
An advertisement asks, "What's in your wallet?" I would ask, "What skill sets are in your survival backpack?"
I recommend the acronym RAT. Recognize the change in the operative environment. Adapt to those changes. Thrive in the new environment.
Rats do it. Coyotes do it. Opossum do it. Even insects do it; cockroaches being the classic example. Are those animals superior to you? The stoic in me says,"Probably".
Life as a stoic existentialist has presented a not for prime time existence. But life must go on. Failure is for those who lay down and refuse to get up. Example? Last fall I took a serious fall and broke a couple ribs. Painful? Until you have experienced it, you can never fully appreciate the level of shear agony. So what does a stoic do about this type of situation? I got up cussing like a soldier and strapped the breaks. Then I carried on. No doctor, no real effective pain meds, and no crying for help.
Stoicism has a few basic tenets. If you can't change the program, accept it and do something else. Never live in the past; occasional reflection is okay, but the past can't be changed. Never avoid hardships at any cost, but no sense in seeking it. Without hardship, you have no metric to compare the good times against. For the stoic, austerity is not a four letter word.
However this installment is not about my aches and pains.
As many can see, the world economic conditions continue to decline. Greece, China, Puerto Rico, Japan and who knows how many other locales are experiencing the effects of unproductive debt. Why is this happening?
Government gets in the habit of bailing out the big boys because failure would expose the Ponzi scheme to even the most ignorant idiots. Any time debt service is based upon growing the debt is bound to end badly. Government bonds are paid off by selling replacement bonds. The need to pay interest on existing bonds requires additional bonds be sold. None of the monies acquired by selling these bonds are used for producing a good that consumers demand and are willing to pay for.
Government figuratively sells bonds to put lipstick on a pig. Why? Because the voters think the pig would be so much more attractive. Of course the pig will die, but a 3-legged goat is an easy substitute. Within a few months, the voter's normalcy bias will reset and they will proclaim it was always a goat.
In the process, banks make a nice profit on the bonds. The voters never realize they are the underwrites of the bond through their tax payments. Few people realize that once all taxes are added up, their tax burden is somewhere in the range of 30-65% of their income. Makes a 10% tithing to the church seem minor.
How will this end? I don't know. There are several possible avenues for the end of the world as we know it. Several of them require understandable definitions. The powers that be (PTB) have a set of definitions that are kept secret. Politicians think they understand, but if they did they certainly don't speak econo-speak. Then there are the commentators and analysts eager to sell you newsletters that will say a lot, but never seem to get it right.
I will offer my definitions.
Inflation: An increase in credit.
Deflation: Forced reduction in credit.
Stagflation: Increase in credit without an increase in wages.
Investing: An expenditure in a business venture for the long term based upon market fundamentals.
Speculation: Gambling. Effectively a get rich quick scheme based upon rapidly finding a greater fool.
Greater Fool: A gambler who got in the game too late to win.
That's enough for now. So here is the general plan of operations. Government passes a law making profits possible for some industry who wrote the law. Politicians get a donation to their campaign war-chest and they get the option of buying in. Insider trading? Of course. The need for this law is presented in such a way to the public that all but the most astute believe it is a job's bill, it plugs a gaping hole in our national defense, it counters crime, it makes health treatment affordable, ... , ad nauseum.
But how could the public fall for this crap?
Homo sapiens is a social animal. As individuals, survival is a daily struggle and success is doubtful. A family unit has more than one set of hands for all the labors required for survival. Tribalism and small villages permit a division of labor with the most capable contributing according to their ability. In a perfect environ, each contributes their skills equally. There is no such thing as perfect. Next step up is where things can really begin to go wrong.
Larger city states provide a ready labor source and with it, economy of scale production can occur. This often requires additional capital investment. Effectively, those who were already successful rent out their wealth in return for periodic payments. It is here that the socialist can gain firm footing. Equality, fraternity and a conscience are their watch-words. Everyone deserves a living wage regardless of their capabilities, industriousness and economy. The so-called "deserves" morphs into "entitlements" because we must feel empathy for our less privileged members of society. Nobody brings up the notion that if you want in on the business's decision making process, buy in.
As any dissent is raised, the apologists take over. Those at the bottom of the labor pool were from poor households, had poor education, didn't get a break, lack the work habits needed, are minority groups, on and on and on. The apologists are socialists attempting to put the successful on a guilt trip. Of course they can succeed in rallying the downtrodden into a somewhat cohesive voting bloc. With that, the mice bell the cat by enlisting the dogs of war to hold the cat down.
The reality is that the socialists are thieves who use the government to do their dirty work. Oh they only skim a bit off the top for administrative costs. In the meantime the politicians are eager to scratch the socialist's back in return for the voting bloc. Incumbency is worth 10-20% of the needed votes to stay among the elected royalty.
Elected royalty?
If one were to take the time to read a bit of history, you would find that the so-called founding fathers were royalists. It is clearly evident by reading The Federalist Papers. To this day, we perpetuate the royalty aspect by introducing politicians as "The Honorable ... ". Honorable? Let's see.
As I recall, it was Calvin Coolidge that stated, "The business of America is business."
The Constitution as written stated nothing about the rights of the citizenry and little about state's rights. Recall that mention of insider trading by politicians at the federal level? Effectively, what was good for business was good for America. The USA went from a backwater colony to a world economic power by practicing business friendly politics. It was not a gradual process, but rather fits and spurts.
The greatest change took place during the Lincoln regime. Government forced through an onerous tax and export embargo on the south. You see, southern cotton wasn't being sold at a discount to northern textile mills. That is what started the Civil War. Slavery was a labor issue and nothing more until Northern support started declining. Enter Seward and his Emancipation Proclamation that freed nobody. Northern textile mills got their cotton at deeply discounted prices.
What was accomplished by the Northern win was the supremacy of the federal government.
Then we have all the following ash and trash presidents with business enhancing invasions of countless other countries. To the best of my knowledge, the only country with more business-based invasions was England who was now a valued ally.
As the long arm of the US military supported the entrance of US businesses, wealth increased beyond comprehension. Enter the Women's Suffrage Movement. We had started down the path of Universal Suffrage and the saga continues.
But why would I be opposed to universal suffrage? Universal suffrage grants those with no chips in the game to steal chips from the players that do. The renter votes for municipal upgrades that force the property owner to fund; not just for construction, but for maintenance and operation. The renter decides what businesses can operate within the renter's area. The renter decides school bond sales paid for by property tax revenues. Then when the property owner is forced to increase the rent, the renter moves to a cheaper neighborhood.
The socialists get involved the moment monies are available for redistribution. And that property owner that raised the rent gets blamed for contributing to the gentrification of the area. The cheaper neighborhood now has real social needs and another cycle begins.
So where does it end? The same place all unproductive debts go to die. Bankruptcy.
The people see inflation that drives up prices. The people incur more and more unproductive debt because they are entitled to a reasonable standard of living above and beyond their income. Businesses move the production of their goods to cheaper sources of labor after facing a continuous assault by the socialist for failing to increase wages while maintaining low prices. The continuing fall in retail pricing forces lending institutions to re-evaluate the collateral put up for securing the loans. In doing so, it becomes evident that the collateral value is too low so credit is curtailed. Where general labor lost during the relocation of manufacturing, the reduction in the credit now forces the middle management to be cut back.
More unemployment making more demands on the Unemployment Insurance (UI) scam. UI depends on long-term employment to cover the costs. Escalating costs with reduced employment reinforce the reality of the Ponzi scheme.
Those still working put their spare change into investment scams that are nothing more than gambling dens of iniquity. Those working need more money quick and can't afford to tie up their monies for years or decades in a real investment vehicle. They know their job might be next.
So who wins? Initially it is the captains of industry including the banking establishment. Meantime, the politicians inside trade. As manufacturing moves overseas, the parent corporation gets sold to foreign conglomerates. Soon all that is left is the money changers and the politicians. Everyone else has chosen penury. For most penury is a choice. They chose to incur unproductive debt. They chose to buy cars and houses they couldn't afford. They chose long-term debt without guarantees of long-term employment.
The reality is that the world is bankrupt. There is not enough money to pay for all the bills. The entitlement programs are broke and soon enough they will be forced to shutter the doors and windows. Government will do what little it can. Angry people will do counter-productive things for which no money exists to repair it. The retired, the poor and most everyone will face hardships far surpassing what their grandparents went through during the Depression of '29-'55.
Most of the people will curse the 5%ers. Even they are broke. It is common knowledge that expenditures and debt grows in proportion to income. For most, higher earnings means higher debt load. Asset values are a matter of opinion. Debt is etched in blood, sweat and tears.What will be left? Who will still have productive assets? About 1%. This is the old money crowd, defined as families that kept their assets through the last great depression, and the new wealth generation capable. Who are they?
Every change in the environment stresses the inhabitants. Some are too specialized and can't adapt. A few have developed the capacity to adapt to almost any operative environment. Change brings opportunity. The small shop that made car horns thrived while buggy whip socket manufacturers went into the history books. Adaptability requires broad skill sets. This is an anachronism in this day of specialization. Just as the extended family unit and small tribe insured, as much as possible, long term survival in the past. So shall it in the not so distant future. When it comes to food and fuel production, many hands make light work.
And the socialists? If you won't work, neither should you eat. Administrative skills don't put food on the table. Nobody will bail out the socialists.
Soon enough, indentured servitude will be a blessed choice over death by starvation. I desperately hope I am grossly in error. Maybe the PTB can get deux ex machina. Just because it hasn't happened yet doesn't mean it is impossible. But long-term survival requires positive action every day, all day long until it is time to take the long sleep. Hope is not an effective strategy. It is only a mindset that drives positive action.
An advertisement asks, "What's in your wallet?" I would ask, "What skill sets are in your survival backpack?"
I recommend the acronym RAT. Recognize the change in the operative environment. Adapt to those changes. Thrive in the new environment.
Rats do it. Coyotes do it. Opossum do it. Even insects do it; cockroaches being the classic example. Are those animals superior to you? The stoic in me says,"Probably".
Thursday, May 27, 2010
BP set to make $Trillion$
The blow-out in the Gulf of Mexico is the best thing to happen to BP in years.
Perhaps I'm a bit narrow in my perspective. This BP failure will increase profits for all the well drillers. Just look at the profits of Exxon after the Exxon Valdez fiasco.
Here is how it works. Screw-up and make a mess, all you have to do is raise prices to cover the clean-up costs. Tack a few extra cents on the price and increase the profits. The oil companies know we are addicts. We have to buy the petrolem products. These products include everything from gasoline to road tar to plastics and pharmaceuticals.
Now our most wise Congress is trying to raise the liability cap. Where do you think the oil companies will get the money to cover the increased liabilty? Uh duh, the consumer.
The consumer pays all the bills. We pay for the clean-up costs, we pay for the profits, we pay the shareholders and we pay for all the taxes.
All the oil companies will share in this windfall. We will see increased fuel costs and our Congress will gain substantially increased tax revenues on the profits we pay for. Well at least until the Ponzi scheme runs out.
I don't have any answers. If we cap profits, the oil industry will decline. We are addicts and we will get our fix at any price. If we raise the liability cap, we force the price of petro-chemical to even higher levels. Perhaps it is time to change corporate laws and make the shareholders foot the bill. But this will just transfer the costs to other investors/businesses who will raise their prices. We, as a nation, could seize the corporate assets within our country. But this just transfers the mess to us and puts the operational aspects of the business in the hands of the very same government that has a miserable history of balancing the books and gross mismanagement of almost every program they have ever created.
I don't see an answer. I'll admit I haven't a clue. I just wish Congress would fess-up and admit they haven't a clue either. But its an election year. Every incumbent will do everything they can to blow smoke and move the mirrors. Don'tcha know? Congress has all the answers.
Perhaps I'm a bit narrow in my perspective. This BP failure will increase profits for all the well drillers. Just look at the profits of Exxon after the Exxon Valdez fiasco.
Here is how it works. Screw-up and make a mess, all you have to do is raise prices to cover the clean-up costs. Tack a few extra cents on the price and increase the profits. The oil companies know we are addicts. We have to buy the petrolem products. These products include everything from gasoline to road tar to plastics and pharmaceuticals.
Now our most wise Congress is trying to raise the liability cap. Where do you think the oil companies will get the money to cover the increased liabilty? Uh duh, the consumer.
The consumer pays all the bills. We pay for the clean-up costs, we pay for the profits, we pay the shareholders and we pay for all the taxes.
All the oil companies will share in this windfall. We will see increased fuel costs and our Congress will gain substantially increased tax revenues on the profits we pay for. Well at least until the Ponzi scheme runs out.
I don't have any answers. If we cap profits, the oil industry will decline. We are addicts and we will get our fix at any price. If we raise the liability cap, we force the price of petro-chemical to even higher levels. Perhaps it is time to change corporate laws and make the shareholders foot the bill. But this will just transfer the costs to other investors/businesses who will raise their prices. We, as a nation, could seize the corporate assets within our country. But this just transfers the mess to us and puts the operational aspects of the business in the hands of the very same government that has a miserable history of balancing the books and gross mismanagement of almost every program they have ever created.
I don't see an answer. I'll admit I haven't a clue. I just wish Congress would fess-up and admit they haven't a clue either. But its an election year. Every incumbent will do everything they can to blow smoke and move the mirrors. Don'tcha know? Congress has all the answers.
Friday, May 7, 2010
It's the End of the World as We Know It
It's the End of the World as We Know It
Well, I was almost right. The elections in the UK went to the Tories. However I was wrong about the Liberal Democrats. Rather than picking up a few seats, they lost five.
What is important is the UK now needs a coalition Parliment. Already Cameron has approached Nick Clegg of the LibDems.
Here is where it gets interesting. In the debates, Clegg made it clear that the LibDems were unhappy about military expenditures. A reasoning person might interpret this to mean less involvement in the Middle East. This translates to the UK not being such a loyal participant with the bully on the block.
The US will be forced to either stand alone or back off when it comes to foreign countries. Much of the US corporate income is based upon foreign sources. Without the US military, revenue as well as goods decline to zip.
As I pointed out in a previous post, as goes the UK, so goes the US. Come November, the republicans will regain both houses. The democrats have run their course and won't re-emerge as a viable party unless and until they completely re-invent themselves.
Will it matter? In the long run, yes. The US needs a multi-party system. The dems aren't inherrently evil, just misguided. Are the reps better? On some national problems, yes. Otherwise and on the whole, both parties are composed of a majority of self-serving idiots. I state idiots based upon the definition being incapacity to learn.
No matter, likes like likes. Take this to equate to voters elect "their own kind." It is all about money. Money is interpreted as security. Screw with the electorate's security and suffer the consequences.
The US pursued maximum tax returns with minimum investment. We encouraged the exporting of manufacturing and resourse extraction. We produce almost nothing tangible. The electorate voted themselves money out of the common pot. The problem was we had to finance the pot by borrowing from others and inflating the money supply.
We voted to rape our children and grandchildren's financial future. Go find yourself a copy of the movie, "Wild in the Streets."
Watch it and then look at the use of Mood Altering Drugs (MADs), alcohol and illegal drug usage. The whole country is crying, "Don't bogart that joint."
"It's the end of the world as we know it, but I feel fine." Well not exactly. I'm scared SHITLESS!!!
Well, I was almost right. The elections in the UK went to the Tories. However I was wrong about the Liberal Democrats. Rather than picking up a few seats, they lost five.
What is important is the UK now needs a coalition Parliment. Already Cameron has approached Nick Clegg of the LibDems.
Here is where it gets interesting. In the debates, Clegg made it clear that the LibDems were unhappy about military expenditures. A reasoning person might interpret this to mean less involvement in the Middle East. This translates to the UK not being such a loyal participant with the bully on the block.
The US will be forced to either stand alone or back off when it comes to foreign countries. Much of the US corporate income is based upon foreign sources. Without the US military, revenue as well as goods decline to zip.
As I pointed out in a previous post, as goes the UK, so goes the US. Come November, the republicans will regain both houses. The democrats have run their course and won't re-emerge as a viable party unless and until they completely re-invent themselves.
Will it matter? In the long run, yes. The US needs a multi-party system. The dems aren't inherrently evil, just misguided. Are the reps better? On some national problems, yes. Otherwise and on the whole, both parties are composed of a majority of self-serving idiots. I state idiots based upon the definition being incapacity to learn.
No matter, likes like likes. Take this to equate to voters elect "their own kind." It is all about money. Money is interpreted as security. Screw with the electorate's security and suffer the consequences.
The US pursued maximum tax returns with minimum investment. We encouraged the exporting of manufacturing and resourse extraction. We produce almost nothing tangible. The electorate voted themselves money out of the common pot. The problem was we had to finance the pot by borrowing from others and inflating the money supply.
We voted to rape our children and grandchildren's financial future. Go find yourself a copy of the movie, "Wild in the Streets."
Watch it and then look at the use of Mood Altering Drugs (MADs), alcohol and illegal drug usage. The whole country is crying, "Don't bogart that joint."
"It's the end of the world as we know it, but I feel fine." Well not exactly. I'm scared SHITLESS!!!
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