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Monday, January 31, 2011

What famous politician wrote the following?

"Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are... a few Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid."

Answer is below the pretty pictures of fractals...

Ans:  Pres. Dwight D. Eisenhower, Republican
     --   from a letter Eisenhower wrote to his brother Edgar on November 8, 1954

How 'Money Junkies' view Egypt

Today is Day 7 of the Egyptian protests.  The death toll is now over 100.  There's been wide reports of looting, over 60 rapes reported and at times, utter anarchy in the country, as politically there's still a lot of uncertainty as to what will happen next and how it will effect the people of Egypt and rest of that region.

The situation in Egypt is complex.  And if one was inclined to think about Egypt currently, there's many angles one could approach to better understand- the social angle, the historical angle, the religious angle,  even the political/geopolitical angle

To sociopath money junkies, only one 'angle' matters...

Egypt Shows that Risk is Alive & Well (CNN/Money) -- "Was Egypt only a one-day story for Wall Street?... so far Monday, it looks like traders are giving a collective sigh and going back to focusing on more mundane things like earnings and economic data."

Egypt Unrest Cast Dark Cloud over Investments (AP) -- "A week of growing upheaval in Egypt with no quick end in sight enflamed investor concerns, as a leading ratings agency cut the country's sovereign rating and warned other downgrades were possible. Some international companies suspended their operations"

Unrest in Egypt Unsettles Global Markets (NY Times) -- "On Wall Street, it is what is known as an exogenous event — a sudden political or economic jolt that cannot be predicted or modeled but sends shockwaves rippling through global markets.  Investors have largely shrugged off several of these unexpected developments recently, including the sovereign debt crisis in Europe, but the situation in Egypt has the potential to cause more widespread uncertainty..."

On & On & On... We could have posted dozens of similar headlines..

But This one was among the worst:

Five Ways Investors Can Play the Turmoil in the Middle East (CNBC)

Think about that..  how to 'play' or financially benefit off the turmoil and suffering of others.  This was written by Jeff Cox (appropriate name) and he basically decides that 7 days of chaos and instability in Egypt and its ripple effects throughout the Middle East and rest of the world, is a great profit making opportunity. So he gives 5 tips for navigating one's precious 'portfolio' to maximize profit during this unrest.

When you look at what has happened in the world over the last 12 months- the European Union's debt crisis, the protests/demonstrations in Greece, Italy, Spain, France, England, Tunisia and now Egypt, etc,  most people only are concerned if it affects the stock market; their investment portfolio.  If a world event doesn't affect their finances, people shrug.  And if it does affect them economically, the goal is to figure how to financially benefit from it.

Wall St. decided today that Egypt was to be ignored- it went up 68 pts...

Some people are good.   Some are evil.

Sunday, January 30, 2011

A satirical look at MSM's Egypt coverage

I turned on one of the mainstream news channels (MSM) this morning to see what was going on with Egypt and the democracy protesters.  After 5 minutes, it became too difficult to watch.   Not because of the information being presented, but the constant interruptions in the form of cutaways and commercials.

So I thought..  What if news blogs were like MSM?

I think it would go something like this

Blogger:  Welcome back to A&G.  Coming up later this hour, Lots and Lots of snow is heading your way- or is it?  Depends where you live.. we'll explain.   Oscar season heating up- who will win, what will they wear & how it affects you.  Also- its the newest trend, cats dressed in clothing. We'll show you the new Spring fashions..  But we continue with the situation in Egypt.  Protests continue- Day 6.  The people want Egyptian President Mubarak to go.  To help us understand all the complexities, I welcome Dr. Smith, Professor of Middle East Affairs for over 25years at XYZ University.    Dr, what is going on in Egypt currently?

Smith:  Well, the people are obviously upset-- they have been denied freedoms for over 30 years and are feeling a sense of frustration and empowerment.   It all stems from...

Blogger:  Hold that thought Dr Smith, the President is speaking...

(cut away to direct feed of President Obama giving speech)

Obama:  ..But umm... We will continue to monitor the situation closely.. I have nothing further at this time...Thankyou"

(cut back to A&G)

Blogger:  Sorry about that Professor.. you were saying...

Smith:  Um.. yes, i was saying this tension stems from 30 years of oppression and loss of liberties at the hands of Mubarak.  And adding fuel to what was a long time simmering situation was..

Blogger:  Um.. Excuse me Professor, I have to pause you there for a moment... we need to take a break. Can you stay with us a little longer?

Smith:  Um.. well I don't know if I...

Blogger:  Great!  We'll be right back

Blogger:  All right, we're back.  Thank you for making A&G the #1 source of news   We blog- you Decide. We have with us Dr Smith, Professor of Middle East Affairs at XYZ University for another segment.  We Appreciate you staying..  please continue what you were saying?

Smith:  Well.. um.. I was saying... The true catalyst for the intensity of the protests and what no one else is even remotely addressing is..

Blogger:  Wait Professor..  Sec. of State Hillary Clinton is speaking..

(cut to direct feed of Clinton's speech)

Clinton:  "And.. um.. We will continue to monitor this situation.. Thankyou"

(cut back to A&G)

Blogger:  Sorry about that..  Professor...  Professor?  I guess we lost his connection due to bad server.   Coming up after the break- the Big questions of the day:  How will the markets be affected? What should investors do? Oil prices rising & how to profit?  And How you can make as much money as possible off the Egypt situation?  We'll answer all that after the break...

Saturday, January 29, 2011

Statistical Play-doh

If you've spent any time over the past 2+ years following this current global recession, then you know it is extremely easy to distort numbers and statistics for one's purposes.World governments, the financial markets and mainstream media have displayed amazing mastery in using stats to justify their assertion of 'recovery'.  Statistics are as easy to mold and shape as Play-Doh to a child.

Of course, manipulations occur in every aspect of life..  Some examples:

-  A baseball player gets a huge contract because he is a consistant .300 hitter.    Now being .300 success means 30% success.. it means 7 out of 10 times you failed.  If a ballplayer had 500 At-bats in a season, and hit .300, he Failed to succeed at the plate 350 times.

- A music artist has the top selling album of the year by selling 10 million copies in the US.  Yet America is a nation of over 300 million people.   So that means 290 million people had no desire or interest in owning the album, and only .03% of the population bought it.

Here's a real-life example of statistical distortion--

From the Wall St. Journal blog,  'Market Talk':

"The number for real final sales, which is sales minus the effect of business inventories, came in at a blistering 7.1% rate and suggested that John Q. was out there buying like crazy in the fourth quarter.  Now, set aside the number for a moment, and just ask yourself: does that sound right? Unemployment is still historically high. Companies, in fact, are still finding jobs to eliminate. Wages aren’t going anywhere appreciably, and with inflation back in our lives, you can bet they’re going to get worse, on a real basis. Housing is still in the pits. Are people really going out there and buying with both fists?

No, they aren’t. Not with their own money, at least.

But there’s that number. 7.1%. Blistering. It didn’t come from wages. Did it come from the stock market? Most people “invested” in the market are so through their 401(k) accounts. So the rising stock market may be helping to restore people’s battered retirement funds, it may be a handy rationalization for QE2, but most people aren’t seeing the benefits directly in their wallets...

So where are people finding all this money? Where else? Uncle Sam. East Shore’s Joan McCullough pointed us to this note from the BEA. Read it for yourself:

    'During the fourth quarter of 2010, ARRA provisions lowered personal taxes about $120 billion (annual rate) and raised government social benefits to persons about $60 billion, thus raising disposable personal income (income after taxes) about $180 billion.'

Catch that? ARRA, if you forgot, is the American Recovery and Reinvestment Act, the big $800 billion stimulus program from 2009, the one that everybody complains didn’t do anything. Well, in the fourth quarter of 2010, it added about $180 billion to John Q.’s wallet...

What this means is that still, today, a year and a half after the recession “ended,” three years after the recession began, more than two years after the Panic of 2008, we do not have an organic, natural economic recovery. Whatever recovery we have is still being funded by Uncle Sam, which means you..."

~ An 'organic, natural recovery' means you can find good paying work.  It means you can pay your bills without need of credit to make up the difference.  It means being able to make your mortgage payments so you don't have your home taken from you.  It means generating enough income after bills, you can put away something and start building a nest egg for something you may want to buy or do in the future.  It means the beginnings of economic autonomy where you are not dependent on anyone for your financial survival but yourself.

January 29, 1931- News of the Day

History can be interesting and it can be very dull-- well, actually that determination of 'dullness' is usually dependent on how open or limited a person's mind is to learning of the past.   Of course, today's present is tomorrow's history and anything we care about to read in the news occurring now, will become distant memory soon after.  Back on January 29, 1931, to a couple billion people living then, that specific day was their "present"- and here was a slice of life back then- the news of that day...

All articles from New York Times front page- January 29, 1931

$25,000,000 Drought Fund Declined by Red Cross

"Controversy over the appropriation by the government of $25,000,000 to be administered by the Red Cross in providing food for sufferers in the drought and other distressed areas burst out with new vigor today in both Senate and House, after Chairman Payne of the Red Cross declared before a House committee that his organization would refuse to handle such a fund. Democratic Senators promptly asserted that Congress, in that event, would set up its own relief agency...

Senator (Joseph) Robinson was on the Senate floor when word of Chairman Payne's testimony reached him. He was on his feet instantly:

"If the Red Cross refuses to respond to the ordinary impulses which move the human heart, if it refuses for any reason to carry on, the Congress will find Its own agencies for distribution of such funds as the Congress finds should be appropriated...  Do you know what the policy of the Red Cross and President Hoover implies? It implies that there shall be no general measure of relief for the unemployed in the great centers of this country, no matter how long the present' condition continues or how great the distress may become... the Red Cross for refusing to respond to the requirements of the situation... has done more to discredit that great organization than anything that has happened or can happen" "

Finland Moves for Revision of Dry Law After Giving It Trial of 12 Years

"The prohibition situation in Finland is rapidly approaching a crisis which will probably lead to thorough revision or abolition of the 12-year-old prohibition law. The government has appointed a committee of experts to investigate thoroughly the social conditions created by prohibition and suggest necessary amendments... the government, which all along has taken a critical view of prohibition, has now decided to challenge the drys' opposition.  The time for the decisive move is well chosen, as the economic depression
demands increased State revenues and popular opinion is growing more hostile to prohibition, which, many hold, has by no means decreased drinking, as the law is Impossible to enforce."

~ This article is interesting because the US was still in the midst of Prohibition and it shows via the editorializing at the end, that Americans were getting fed up with the law too.

21 Italian Soldiers Killed by Avalanches; Starving Survivors Reach Base In Blizzard

"Three officers, two non-commissioned officers and sixteen soldiers were killed yesterday and Monday under avalanches in the mountains above Bardoneeehia during Winter manoeuvres in the worst Alpine tragedy in recent years... They were caught by a blizzard on their return from a difficult ascent to the summit of Galambra... The weather was so bad they decided to take shelter. On Monday the blizzard showed no signs of abating and the officers decided to reach their base at all costs, because they were without food or wood for making fires.

They had not gone many miles when an avalanche buried several of their number. The survivors saved most of those buried by the snow, only one man being killed and one injured. The march proceeded, but soon another avalanche of greater proportions fell upon them. It was then decided to return to the hut from which they had started and spend another night there. Yesterday hunger again drove them out and they made a desperate attempt to reach their base. Another avalanche fell upon them, killing all but nine"

~  Very sad story.. notice the Italian soldiers survived two avalanches before eventually succumbing to the third one

Lowman Opposes Soviet Goods Ban

"The State Department has advised the Treasury Department against sending investigators to Russia, as they might be lined against a wall and shot, thus causing an international crisis, Seymour Lowman, Assistant Secretary of State, told the House Way and Means Committee today in its hearing on the Kendall bill which would exclude convict-made goods.

"The government of the United States would not allow pirates to bring goods into this country," Representative (George) Brumm said in urging protection for the anthracite industry, "but it will allow an outlaw nation, outlawed by the government itself, to ship commodities in competition with that made by honest labor in this nation."

Secretary Lowman said that exports to Russia from this country for the calendar year 1930 were valued at $150,000,000 and the imports from Russia at $30,000,000."

~ What makes this article interesting is back then people in Congress actually Fought to preserve US jobs. The issue is whether convict made goods i.e. cheap labor was going to replace US labor.  Also interesting that unlike presently, three years into the Great Depression, we had trade surpluses.  We exported 5x more to the Soviet Union than we imported.

The Tiny Planet Eros Will Visit Us Tonight; Sky Vagabond Only 16,000,000 Miles Away

"There will be much excitement in many astronomical observatories throughout the world tonight, for the earth will be able to view an unusual traveler of the skies. The eagerly awaited minor planet Eros will come within about 16,000,000 miles of our globe, closer than at any period since its discovery in 1898 and nearer than any other heavenly body has ever come to us with the exception of the earth's satellite, the moon.  After saying its brief "Hello" the diminutive fragment of a lost world, which is about seventeen miles in diameter, will speed away on its erratic path through the heavens, not to appear so close to earth again until 1975."

Super Bowl & Prostitution- like Cookies & Milk

The Super Bowl generates a lot of interest around the world, even though 90% of the global TV audience doesn't really follow the sport or watch any other NFL game during a season but the Super Bowl.   And for whatever city hosts the big game each season, it draws a lot of people, and where there's a Super Bowl to be played, there's prostitutes...


"Super Bowl XLV will bring money, athletes and fans to North Texas, but that's not all, a sex trade expert warns pimps and prostitutes will also come to Dallas-Fort Worth.

"We will have an influx of pimps and traffickers bringing women and children into North Texas," said Katie Pedigo director of New Friends, New Life which is dedicated to helping young, often abused women escape the sex trade.

Pedigo estimates 15,000 prostitutes will be brought to North Texas for the Super Bowl, many against their will and that many of the women selling their bodies are underage and on the verge of homelessness."

Using basic math, if all 15,000 prostitutes ply their trade for a 7 day period, and each earned on average $500/day (which is a modest estimate), that means in one week, a total amount of $52.5 Million dollars was earned.

~ So what does Charlie Sheen think about that?

Super Bowl & Gouging- like bread & butter

~ What an interesting phallic symbol..

Last week I mentioned that for $200 you could have the opportunity to stand outside Cowboys Stadium, and watch Super Bowl XLV on a big-screen TV.

Now you can park your car in some parking spaces for just under $1000:

From Yahoo Sports--  "A parking spot at a private garage a tenth of a mile away from the site of the Super Bowl is selling for nearly $1,000, an online parking broker reported this week.

The spot costs $990 and features access to a restroom, on-site security and the ability to tailgate.

Other spots the same distance from the stadium are selling for $550 (without restroom access). If you're interested in walking a mile to the stadium, a spot can be yours for $55. The NFL will operate a (parking) lot at Six Flags, which is also a mile away. For $71.40 the league provides a shuttle, but no tailgating.

Face-value tickets started at $600, meaning that some people could be paying more for parking than a ticket. Those prices aren't available anymore, though. Stubhub reports that the cheapest tickets to Super Bowl XLV begin at $2,500 and range up to $15,000. Currently, there are over 1,800 tickets available for sale on the website."

Hmm.. and what does singer Lee Greenwood think about all this?
~ sings:  "And I'm Proud to be an American... Where at least I know I'm free.."

Friday, January 28, 2011

Just a thought.. 1/28/11

Trader 1:  "Psst, make a lot of money today?"
Trader 2:  "Oh yes.. made a lot of money"
Trader 1:  Heh Heh.. Me too.. A Lot.."

Just a thought..

I do not know very much about the current situation in Egypt, certainly not knowledgable enough to comment insightfully on it.

But I do find it amazing that in spite of all the negative signs domestically that would normally cause this bloated, corrupt, rigged stock market to drop, its not the depressing US housing market now officially in double dip territory or high unemployment or any other real economic indicator that in any other time in US history, would have been priced into the markets.

No, it seems the only thing that will stop money-junkies from obtaining their 'fix' is near-revolution in another nation or other global calamity the investor class has no immediate ability to directly control and manipulate.

Think of Wall St. as an economic "thermometer". It is supposed to provide an accurate reading of the current state of the economy.  For most of US History, it has done this. Now its being tampered with. The Fed Reserve is pumping hundreds of billions of taxpayer dollars into the market, creating additional Debt to artifically display 'strength' and to entice Mom & Pop investor to come back and risk losing thier life savings.

And the 'thermometer' is telling you it is 72deg outside when its really snowing.

Without tricks or schemes, the Dow would be around 8000.

It should be at around 8000.

Wall St. & banks made a stink about lost profits- they got their bailouts

Other businesses and industries made a stink- they got bailed out too.

Most Americans are still proudly stoic and quiet in their victimization...

Old saying--  "The squeeky wheel gets the grease"

Understanding Economics 101

One should not have to be an expert in economics, finance or markets in order to have a basic understanding in those fields.  Of course the terminology is purposely set up to be confusing and convoluted so that as few people understand it as possible.  So in order to help readers better grasp the current recession-depression, I will take some commonly used terminology and try to define it in a clear and concise way:

National Deficit, National Debt & Debt Ceiling

The two words deficit and debt get interchanged a lot but they mean distinct things.  The best way to explain is by using an example of an individual using a credit card.

You possess a credit card and owe $1450-  this is your 'Debt'.   You get a bill each month which includes the  minimum payment amount after interest is applied- this is your 'Deficit'.   And if your credit card had a maximum of $1500 in total charges you could apply, that is your 'Debt Limit'.

When politicians talk of lowering the deficit, they mean being able to pay enough toward the debt to lower what the monthly payment will be.  The national debt still expands.  And when Congress votes to expand the debt ceiling, it is like your credit card company telling you that you now have $2000 limit instead of the $1500 you were closely reaching.

Quantitative Easing

This is an academic way of saying 'back door bailout'.  The Federal Reserve creates money (which is actually new debt) which it uses to buy government bonds and other financial assets, in order to increase the money supply.

Now those 'other' financial assets which the Fed is buying is the toxic debt that the various banks are holding on their balance sheets.  The total accumulative debt is in the tens of Trillions.  If the government overtly stated they were going to bailout the banking system for that much money, there'd be literal revolt, so instead the bailout is done quietly and gradually

Think of it this way- your basement is flooded but you don't want to alarm the others in your household which you'd do if you used large buckets and pumps to remove it.  So instead you use styrofoam cups-- a cup of water each trip to the basement as to not startle or panic anyone.

Now currently the Fed is giving the banks $75 billion/month in exchange of buying their toxic assets. The Fed doesn't really want the toxic assets but there must be a legal exchange in order for the Fed to legally give the free money.  This is no different than one person wishing to give $1000 to another but is prevented from overtly giving as a gift, so person instead offers to buy a 2cent tissue for $1000.

Debt is created which is added to the National Debt.  The bank holds the money which they would normally be compelled to lend out to people.  But the Fed does Not want that money circulated.  So they pay the banks not to lend the free money which was given to them.  The banks get reimbursed pennies on the dollar for the toxic asset swap, then make an additional profit simply by holding the money and not lending to needing businesses and individuals.


These are tangible goods which are traded on stock exchanges around the world to determine its value in the open market.

Generally, there are two kinds of commodities.. basic resources & agricultural products. These include basic resources and agricultural products such as iron ore, crude oil, coal, salt, sugar, coffee beans, soybeans, aluminium, copper, rice, wheat, gold, silver, palladium, and platinum.  Soft commodities are goods that are grown, while hard commodities are the ones that are extracted through mining.  Electricity is special commodity it itself-- it has the particular characteristic that it is either impossible or uneconomical to store, hence, electricity must be consumed as soon as it is produced.


This is where certain types of contractual debt is grouped together or 'pooled' This includes residential or commercial mortgages, auto loans or credit card debt.  This debt is then sold as bonds, or Collateralized mortgage obligation (CMO), to various investors.

(A CMO is essentially a way to create many different kinds of bonds from the same mortgage loan so as to please many different kinds of investors.)

The principal and interest on the debt, which is underlying the security, is paid back to the various investors regularly. There are two kinds of receivables (amounts owed)- Securities backed by mortgage receivables are called mortgage-backed securities (MBS), while those backed by other types of receivables are asset-backed securities (ABS).

(When you invest in a mortgage-backed security you are essentially lending money to a home buyer or business. An MBS is a way for a smaller regional bank to lend mortgages to its customers without having to worry about whether the customers have the assets to cover the loan. Instead, the bank acts as a middleman between the home buyer and the investment markets.

An ABS is essentially the same thing as a mortgage-backed security, except that the securities backing it are assets such as loans, leases, credit card debt, a company's receivables, royalties and so on, and not mortgage-based securities)

~ In super simple terms, Securitization is a means of lenders ensuring they don't hold any financial risk in case you do not pay your debts, so they sell it off that debt to others or package it in ways that become attractive to investors, and recoup their money that way.

Hope this posting could assist in clarifying some financial terms and concepts, even if gradually, as to make it more understandable to grasp.

Thursday, January 27, 2011

The Bromance continues

Its always nice when a major news source like Time Magazine reaffirms a point we've been making for the past month- that Obama, a supposed fiscal liberal and alleged 'socialist' as silly radical-righties call him, actually deeply admires Ronald Reagan, the ultimate social program-cutting fiscal conservative.

Full article can be found by clicking headline below but here's a couple excerpts--

The Role Model: What Obama Sees in Reagan

"At a glance, it's hard to imagine a President who had less in common with Reagan than the Ivy League lawyer from Hawaii... But under the surface, there is no mistaking Obama's increasing reliance on his predecessor's career as a helpful template for his own. Since the November elections, Obama has brought corporate executives into the White House, reached out to the U.S. Chamber of Commerce and made compromise his new watchword. He signed a surprise $858 billion tax cut that would have made Reagan weep with joy and huddled with Reagan's former White House chief of staff Ken Duberstein for lessons learned when the Gipper governed amid economic troubles. Over the Christmas break, White House press secretary Robert Gibbs tweeted that Obama was reading a Reagan biography, and just to confirm the bond, Obama recently wrote an homage to Reagan for USA Today."

"Obama's affection for Reagan's political style carries with it a clear self-interest. White House aides gaze fondly at the arc of the Reagan presidency in part because they pray Obama's will mirror it. Both men entered office in wave elections in which the political center made a historic shift. Both faced deep economic downturns with spiking unemployment in their first term. Both relied heavily on the power of oratory. "Our hope," admits Gibbs, "is the story ends the same way." "

"In Obama's story line, Reagan has been more than just the antagonist. As the 1980s rolled on and Obama matured, Reagan became a model for leadership. The attraction was less substantive than stylistic and instinctive. Both had strong mothers and dysfunctional fathers. Both prided themselves on bringing people together. Obama even conceded that he sometimes felt the emotional pull of Reagan's vision. "I understood his appeal," Obama recalled in his second book, The Audacity of Hope. "Reagan spoke to America's longing for order, our need to believe that we are not simply subject to blind, impersonal forces but that we can shape our individual and collective destinies." The Great Communicator, it seems, had struck a chord. "

~  To be clear, Obama is not a Reagan clone and does not share 100% of the beliefs and political vision of Reagan's.   But Mr Obama is a politician.  And it is in the DNA of all politicians to get re-elected no matter how bad the state of the nation or how much they are responsible for it being that way.  For a most recent example of this, see: George W Bush.   

After seeing how clear this Obama bromance is toward Reagan, you could actually make an argument that Obama's political hero is really Malcolm X, because when it comes to trying to get reelected, Barack is taking a famous Malcolm X quote to heart: "By any means necessary"

It is not your fault

One of the biggest themes of this current recession-depression which you should have picked up on by now is that to mainstream media and those with money and security, it is your fault.

You are to blame for your financial woes and basically, you caused the recession.

And they try to over-simplify their argument to make their point-  you took on more debt than you could handle..   you should have read the fine print..  you should not have tried to be entrepreneurial by buying homes for the purpose of reselling.. you should have known better..  you.. you.. You!

Funny that the media and well-to-do never talk about how the prices of Everything from strawberries, stamps and soda to vehicles and a place to live have gone up at a far greater percentage (25-40% more) than wages and overall household income.

They never mention that the system as it currently exists forces people to use credit to survive by paying bills, putting food on the table or paying medical bills, while those blood suckers known as credit card companies are able to charge interest up to 30% at a moment's notice, or slice credit limits to provoke 'overlimit' charges any time they feel like it.

The smart-farts, as I sometimes call elitists, always neglect to mention the connection between credit and commerce.  That the availability of individual credit allows businesses to charge far more for goods and services (usually 15-20% more) than they could get away with in a cash-based, pay 100% upfront society. How many people have $1000 at a snap of a finger to buy a refrigerator or stove?   No problem-- just charge it.   And when businesses have promotions, its usually discounted interest rate teasers or 'no interest for 12 months' programs rather the store actually Lowering the cost of the over-priced item.

And the elitists completely gloss over the fact that while an individual may be tens of thousands in debt, US corporations, banks and industries are in debt for hundreds of billions of dollars, if not Trillions.

GM, Chrysler, AIG, Goldman Sachs, Bank America, JP Morgan Chase, Citibank--  All of them are Deadbeat Losers when you apply the same smug standards that well-to-do people and media place on everyday people in a financial jam.  But somehow not only is it ok for them to be deeply in debt,  it is the government's Responsibility to bail all them out while the people can go "F" themselves.

The problem becomes when common people accept this mindset- a form of economic Stockholm Syndrome where you bond with your 'captor' & justify and defend the entities that are economically raping you.

If you are in debt.. if you went bankrupt or had your home foreclosed upon..  it is not your fault.  You are not to blame for your predicament.

For decades you were sold lies and dreams that you could have it all, yet through outsourcing and the disappearance of a manufacturing base, you were prevented from having an income that kept up with the over-inflation. Through college and the dramatic tuition increases of the past 10-15 years, you were guaranteed to be in tens, if not hundreds of thousands of dollars in debt before you turned 24 in the hope you could parlay the education into a good paying job that a company could not find elsewhere at $2/day.

Both parties ignored your needs and sold you out at every turn, including the present leadership. They filled you with 'hope' and '1000 points of light' and 'feeling your pain'.. they told you it was 'morning' again..and then enacted policies that forced you to work longer and harder to earn enough to maintain a basic quality of life that people 40 years ago had.

I just felt it important to let you know.. it is not your fault.

What does a monthly home price drop mean in real terms?

Often financial statistics are thrown at people and they can be so convoluted or confusing (sometimes intentionally so) that its difficult for most to understand its meaning unless they take the time to really study finance. And quite honestly who really wants to do that unless its a passion of some sort.

So one of the goals of A&G is to take intentionally complicated information and express it as clearly as possible for everyday people to understand and apply to their lives, yet never with the goal or desire of talking down to the reader.

You would be surprised how few financial news sites and blogs make this effort

So, that being said, onto the topic- What does it mean when you hear or read that home prices fell 1% in a given month, like it did this past November, 2010?

Let's use simple math- You own a home valued at $300,000.  Its a fair and realistic value based on comparative appraisal pricing of other homes on your street, bedrooms/baths, etc...

So the following month, home prices drop 1%.. what does that mean?

Simply- you just lost $3,000 in value in a span of 30-31 days

This means that unless a prospective buyer is simply in Love with your home and Must have it, you are not getting $300,000 for it.  You now need to drop your asking price to $297,000.

Now, let's say you hear or read a statistic that says that home values will be dropping at an annualized rate of 5%, which is by the way not a number out of thin air, but is predicted for 2011 due to all the foreclosures expected to hit the market.

What does that mean?

Let's use the $300k home again as our example. --  A 5% annualized loss

The simple way to figure the ultimate decline in home price would be to take the $300k and multiply by 95% (100% - 5% loss) and that would be your home value after 12 months -- $285,000.

If your home was worth $100k in 2010, it will be worth $95k by year's end

And if your home was worth $1mill in 2010, its end-year value will be $950k

No matter what nonsense your elected officials tell you about 'recovery' or positive unemployment numbers, there will be no real recovery until home prices stabilize without government interference. Because as expressed often here, for most Americans, their nest egg is their home and most people are losing their greatest financial asset at an alarming rate.

Wednesday, January 26, 2011

Brief history of US Stock Market- 1928-1941

A very brief history lesson of the Stock Market 1928-1941

By the beginning of 1928, the nation was in the midst of an economically vibrant period known as the 'Roaring 20's' and the Dow was at around 200.  By year's end it would go up to around 290 and just before the Crash of '29, it had a High of 381.

To put the numbers into perspective since they seem so puny by the standards of the currently over-inflated Dow at 11,985, in a span of 22 months from Jan '28 to Oct '29, the Dow rose 90% which was unheard of then. If today's market spiked 90%, the Dow would be just over 20,000.

When the Market did crash on October 24, 1929, it eventually fell to 198 before it settled just below where it was in early 1928, a total decline of 52%

The investor class, banks and government then conspired to rally the markets by pumping lots and lots of money into it, and eventually by mid 1930, it hit a 'dead cat bounce' peak of 294, quickly pushing up another 90% to get it to early 1929 levels.

But this didn't last.

And in spite of many little rallies, the Dow steadily fell more and more over two years.  And by the middle of 1932, just about 4 years into the Depression, the markets did finally settle--  at 41...  yes I said 41! -- a decline in 2 years of 86% from the mid-1930 rally-point, and an ultimate Dow decline of about 91% from the mid-1929 Highs of 394.

The last time the Dow was at 41 prior to 1932, was in 1904-  28yrs.

Eventually the Dow would rise very incrementally with many fall backs for another nine years, finishing at 138 by the end of December, 1941, a few weeks after Pearl Harbor was attacked by Japan.

From mid 1932 to late 1941, the Dow grew by only 97 points.

World War II got the US out of the Great Depression.

We're currently in a 21st century Depression though no politician will admit it.  This is month 29.  The major market crash of 1932 took place about 45 months into the last Depression.  When the other shoe drops and the market crashes even further than 2008, what will get us out of this current mess?

Tuesday, January 25, 2011

The 'Hope' Missionaries

I thought this headline was um.. cute.. from Yahoo TechTicker:

State of the Union: Obama's Economic Strategy Rests Largely on Hope

There's that Empty, Worthless word again.. 'Hope'

It was a staple of Obama's candidacy; a mantra for true Change from the destructive economic policies of George W, and Wall St. cronyism.. and it has shown itself to be as hollow as a straw.

Referring to A&G's 1/18/11 posting-  "What is 'Hope'?":

Hope--  It is the belief in a positive outcome related to events and circumstances in one's life. It is distinct from positive thinking, which refers to a process used in psychology for reversing pessimism.  In other words, when you believe negatively in something but wish to be positive, you are 'hopeful.'  Doesn't matter if you truly believe it.

What you have currently in government in concert with mainstream media is dogma-  not religious based but dogma rooted in economic perception.  They will not give up until every one of you openly accept and embrace "Recovery", no matter how pretend it is for most of the bottom 98%.

Wanting 'Meat' & getting 'Cotton Candy'

Tonight, you will hear the President talk about optimism and 'hope' and other emotion-based words as he channels his new favorite ex-President, Reagan to give a speech to raise the spirits of millions of suffering Americans.  Then he will say the state of the nation is ______  (add your own pollyanna word here).

Now some reality..

Price Drop Points to Likely Double Dip in Housing Market (Reuters) --  "U.S. single-family home prices fell for a fifth straight month in November and could plumb new lows soon, a closely watched survey showed on Tuesday...  Prices have fallen 1.6 percent in the past year, sharper than the 1.4 percent predicted by economists polled by Reuters.

"Everything in this report is unfortunately still sagging and still pointing downward," David Blitzer, S&P 500 Index Committee chairman, said in a CNBC interview just after the report was released. "The recent news across the board on housing except for existing home sales has been very, very disappointing. We still seem to be at best scraping along the bottom." "

~  Remember, everyday Americans' nest eggs are in their homes

Jobless Rise In 20 States as Workers Still Laid Off (AP) -- "The Labor Department says the unemployment rate rose in 20 states and fell in 15. It was unchanged in another 15 states. That's nearly the same as in November, when the rate rose in 21 states, fell in 15 and was the same in 14. The report is evidence that the job market is barely improving even as the economy grows. "

~ So, in 70% of US States, job losses either increased or stayed the same with no sincere improvement over the past two months.

And Wall St's response--  stocks fell today as of this posting (2:15p) BUT... it was based on disappointing blue-chip earnings, not the housing or unemployment situation.

The State of the Union will be on at 9p.  The American people want a speech with Meat, i.e. real answers.. real solutions- a speech with real substance.

If you choose to watch, I hope you enjoy the 'cotton candy'.

What to Watch instead of State of Union

Many people will tune in to watch President Obama's third State of the Union this evening at 9p eastern/6p pacific.  Some will actually care to hear what the President has to say.  For others, there's little choice since it will be shown on what feels like 100 channels.

Many others would prefer watching something else.

So here's a 20 word 'cliff-notes' summary of what Obama will say:  Nation improving; "Recovery"; optimism;  jobs, jobs; lower taxes; corporations- good; Reagan- wonderful; challenges ahead- we'll meet them; God Bless America!

Now that I saved you, the reader, an hour of boredom, and expressing emotions ranging from frustration to depression, here are some suggestions of other programs you could watch instead that might be a bit more enjoyable and relaxing... These are real shows/episodes...

Animal Planet-  Human Prey" "Killer Cats & Dogs"

"A wolf stalks a family camping in the Canadian wilderness; a coyote assaults a man mowing his lawn in Virginia; and cougar attacks a biker in California"

Food Network-  Cupcake Wars: "LA Auto show"
"Car-theme cupcakes are created by four top bakers, who are competing to have their sweets showcased at the LA Auto Show."

Lifetime Network- WifeSwap

"A woman who spends most of her time helping one of her five children launch his hip-hop career trades places with a woman who is devoted to hunting monsters in Florida and has little time for her stepson."

Turner Classic Movies (TCM) -  "General Spanky"

"During the Civil War, Spanky (Spanky McFarland) and Buckwheat (Billie Thomas) get the bunch to outwit the Yankees"  -  original 30's Little Rascals

Travel Channel - Bizarre Foods with Andrew Zimmern: "Pennsylvania"

"Strange eats in Pennsylvania are sampled. Included: a Japanese chef prepares potentially poisonous sexual organs; a family boils every part of a pig."

~ All TV shows start at 9p eastern/6 pacific      Enjoy~

Monday, January 24, 2011

Obama's Bromance w. Reagan continued

Can you imagine a current Republican politician ever gushing over the Presidencies of LBJ or Jimmy Carter? Or a current Democrat leader lavishing praise on the accomplishments of Nixon or George W. Bush?  Neither can I.

But we have a Democrat President in Obama who is simply head over heals...

For President Reagan.

I was going to reprint what Mr Obama wrote in USA Today this morning, 1/24/11 but it was just a little too nauseating an experience so instead, I will simply provide the link to the Reagan 'love letter'.

I am actually not a Reagan hater. And if my blog was on psychology or public speaking, then I would write many complimentary pieces on how he convinced most of the nation to feel good about themselves

But I write on economics, so I can not ignore the 'How' and 'Why' those people felt so good, nor ignore the fact that many others, especially the lower middle class and working poor, suffered economically due to Reagan's fiscal policies.

The media then as they do today, focused on Wall St and corporate profit growth while completely ignoring the economic bottom third.  And due to the sudden boom in credit cards availability due to changes in law which allowed uniform interest rates for cardholders in all 50 states which took power out of the hands of the individual states to stop credit card gouging, middle class people were able to spend, spend, spend while completely oblivious to the beginnings of their decline which finally is becoming noticeable in 2011.

Official National Debt figures for each year are usually released at the end of September of each calendar year. In 1980, which was the last year of Carter's Presidency, the Debt was $826.5 Billion.   By Sept of 1988, the last year for Reagan, the National Debt was $2.6 Trillion-  An Increase in US Total Debt by 314% in 8 years.

To give some perspective, it took 35 years (1945-1980) for the National Debt to rise 320%  ($258 billion in '45 to $826 billion in '80).  It took Reagan 8 years.

Reagan also gutted Social Security.  The idea was this-  lower taxes for everyone, especially the wealthy.  This would stimulate economic growth causing a "Trickle Down" effect to the masses.  Meanwhile, he increased Social Security taxes supposedly to strengthen the system so it would never be in risk of insolvency But...  by cutting taxes and increasing spending, Reagan found he was always short in his budgets.  So where to get the money to cover the difference?  Take from the Social Security taxes with the goal of repaying it back later-- nudge nudge...wink wink.

So workers paid more and more into Social Security for their retirements, that money was taken to pay for the arms race and other Reagan policies to cover the tax cuts that made people feel so 'good' about life, and future Presidents copied the concept so perfectly that Social Security today is in terrible shape.

To seek some sort of brevity, so ends the history lesson on Reagan's economic policies for today.  But I  end this post with one reflection.  People do Not write glowing accolades about people they do not admire and seek to emulate.  And Obama's admiration and desire to be Reaganesque does not stop with communication style.

1971 v 2011 - Why Everyday people struggle

~ TV Guide Nov 20-26, 1971- "All In The Family"

If you had $50 back in 1971, that would equal $265 today.

That's an increase of 530% on the original $50 then to make purchases in 2011.

And yet, the cost of food & basics have gone up more than that percentage:

Cereal 12oz box:     1971 - 36 cents;   2011 - $2.99 --  830% Increase

Oreos 16oz box:     1971 - 49 cents;   2011 - $3.59 --  732% Increase

Coke 12 pack:        1971 - 49 cents;   2011 - $3.79 --  773% Increase

Strawberries 1lb:     1971 - 26 cents;   2011 - $2.99 --  1150% Iincrease

Dandruff Shampoo: 1971 - 79 cents;   2011 - $4.79 --  Increase over 606%

1st Class Stamp ea:  1971 - 6 cents;   2011 - 44 cents --  733% Increase

~ TV Guide July 10-16,1971  "Cookie Monster"

-- Now, here's where the Inflation is really felt:

Average home price: 1971 - $28,300;  2011 - $212,400 -- 751% Increase

Average car price:     1971 - $ 3,000;  2011 - $20,000   --  667% Increase

Average gas price:    1971 - 40cents/gal;  2011 - $3.25/gal  -- 813% Increase

Tuition-1 semester* (U Texas): 1971 - $600;  2011 - $4,700 -- 783% Increase
     *  state residents
And Yet...

Median Household Income:  1971 - $9,028;  2011 - $46,326 -- 513% Increase

~ TV Guide March 16-22, 1971  "Carol Burnett Show"

-- So you see-- the money has increased 530% in value and median household income increased 513% YET every essential from food to automobile to home has gone up on average 600 - 900%.

This is the reason why so many people work much harder and longer hours just to keep up with those who lived in 1971.

This is also a major reason why there has been such a surge in the need for credit cards, 2nd mortgages and the crushing mountains of debt slavery which follows-  because everything really Does cost more then it did then, and living wages haven't kept up with that price increase.  And while the higher increases in soda or fruit do not seem that significant, when you definitely notice the dramatic percentage increases in cars, gasoline and homes

Here's how your Tax dollars are being used...

Thought this was amazing..  kinda speaks for itself...

Mortgage Giants Leave Legal Bills to the Taxpayers (New York Times) --  "Since the government took over Fannie Mae and Freddie Mac, taxpayers have spent more than $160 million defending the mortgage finance companies and their former top executives in civil lawsuits accusing them of fraud. The cost was a closely guarded secret until last week, when the companies and their regulator produced an accounting at the request of Congress...  Documents reviewed by The New York Times indicate that taxpayers have paid $24.2 million to law firms defending three of Fannie’s former top executives: Franklin D Raines, its former chief executive; Timothy Howard, its former chief financial officer; and Leanne Spencer, the former controller."

Notice it said, "this cost was a closely guarded secret until last week"..  

The corruption in this nation is So thick, it goes far beyond a specific President or political party or parties.. its just a continual climate of screwing the bottom 98% at every turn..  and somehow we continue to take it

Friday, January 21, 2011

National Debt- a modern history lesson

I recently discovered a website that provided the total US National Debt from 1929 through the present and some interesting stats popped out at me which gives good comparative perspective between past and present ~

-- In 1929. the National Debt was just under $17 billion.  In 1941, it was $48 billion.  In a span of 12 years covering the entirety of the Great Depression, and all the social and work-related programs FDR created, the US Debt went up by only $31 billion.

-- When WWII ended in 1945, the Debt ended up being raised to about $259 billion which meant an increase of $211 billion to fight moral, just wars on three continents (Europe, Asia & {Northern} Africa).

-- Between 1945-60, a 15 year period, the Debt rose by only $27 billion to a total of $286 billion by '60 and that included the fiscal expenditure for fighting the Korean War.

-- The first full year of US involvement in Vietnam (not simply using military 'advisors') was 1964 at which time, the US Debt was just under $312 billion. When Saigon fell in 1975, the US Debt had risen to $533 Billion, meaning that during the 11 years of military conflict in Vietnam, the Debt rose by $221 billion.

--  Between 1975 and 1990 which was when Iraq invaded Kuwait under George Bush Sr's watch, the National debt increased by approximately $2.6 Trillion dollars in 15 years to a total '90 Debt of $3.2 Trillion. This also included the massive arms buildup under Reagan which some credit as causing the Soviet Union's economic downfall during the '80s arms race.

~ "Black Hawk Down, Mogadishu, Somalia

--  Between 1990 and 2001, which was the first year of the Bush Jr. presidency, and bookmarked between eight years of Clinton, the National Debt rose by an additional $2.6 Trillion dollars, (taking only 11 years spend that much), to a 2001 total of $5.8 Trillion. During this period, US forces were involved in the Balkans and Somalia.

-- In 2006, after the beginnings of wars in Iraq and Afghanistan, the Debt rose to $8.5 Trillion, an increase of $2.7 Trillion, and notice this time, it only took 5 years to achieve this feat.

--  In August, 2008, six years into Afghanistan and five in Iraq, the National Debt was $9.6 Trillion, an increase of $1.1 Trillion in 2 years.

-- Today the Debt is just over $14 Trillion, an increase of $4.6 Trillion dollars in 28 months since Sept. 2008 when Lehman Bros. fell & markets dropped. In addition to continuing the two wars, a Vast majority of the money has gone to Banks, Corporations and Wall St.  This averages out to $164 billion in new debt per month ($5.47 billion/day)

How to fix the US Economy...

5 Realistic but politically unpopular solutions for fixing the US Economy...

1)  Tax breaks go to corporations that hire new workers.  Tax INCREASES go to corporations that refuse to.  And you don't get the tax breaks Until you hire First.   A 'job' would be one that pays minimum $14/hr full time. plus benefits.   'Burger flippers' do not count as employment.

*  It's called carrot/stick.  Give financial incentives to hire BUT make the financial cost of not hiring new workers at fair wages Painful to the company

2)  US corporations must make at least 15% of the totality of their products domestically in the US using US labor.  Those who refuse, are given a duty tariff of 25-50%. on their product.  You want the American consumer, you must want the American worker as well.

* This concept works for all industrialized nations losing their manufacturing base.  British companies that refuse to hire British workers have their goods tariffed; and so on...

3) A sincere Job-Creation stimulus bill where a full 100% of the money goes to the combatting the unemployment situation including very low interest small business loans and investment in start-up companies, education for long-term unemployed to brush up their computer and work-related skills, and extending benefits to 99ers for an additional 52 weeks.

*Not one penny goes to banks, Freddie/Fannie Mae, Wall St. or corporations.

4) Change the US income tax rates-   you make:

$30k or less- No taxes- Zero- Zilch.
$30-100k/yr-pay 10%-30% range
$100k-$1mil/yr- pay 31-43% range
$1mil- $100mil+/yr- pay 44-75% range

* In addition, increase taxes on Wall Street earnings over $25,000 by 15%

5)  A $1 Trillion dollar stimulus for everyday people--debt debit cards to the poorest 50 million Americans in the amount of $20,000 to be used to pay towards mortgages, car loans, student debts, credit cards, etc. This wouldn't be to acquire new debt but to pay down existing debt.  The banks would end up being the recipients of the stimulus but it would also end up eliminating $1 trillion in total US individual debt

* It's called a  "Trickle UP' economic policy.

Thursday, January 20, 2011

The See-Saw State of the Union

There is no more accurate image to convey the state of the American nation and the current recession than a see saw.  But rather than picture two individuals, one on each end, sitting and alternating up and down in turns, the currently economy is exactly like this photo..  one side dramatically Up.. the other side dramatically Down.

Example:  from MarketWatch: "Since Obama took office on Jan. 20, 2009, the Dow Jones Industrial Average is up about 48%, the S&P 500 Index is up 60% and the tech-focused Nasdaq Composite Index is up 90%...  Bank of America Corp. stock has doubled since Jan. 20, 2009, as has Goldman Sachs Group Inc. Wells Fargo & Co. is up even more, 138%, and J.P. Morgan Chase & Co. is up 150%. Citigroup lags these, (at) 83% gains..."

That's the Up part of the see-saw...  Now the Down part...

Official unemployment at 9.4%; unofficially near 18%; One of 6 black Americans, one of seven Hispanics and one of four teenagers- unemployed

Home prices (the piggy banks for most Americans) have fallen for 53 straight months; situation Worse than Great Depression era

Home starts (new homes being built) are down from 2 million in 2005 to half a million today, annualized.  A "normal, healthy" year would see 1 million starts.

2.9 million homes foreclosed upon in 2010.  If you take the 'average family' statistic of 2.5 per home, that would mean 7.25 Million Americans forced onto the street.

More than 7 million Americans have been unemployed more than 99 weeks (99ers) meaning they are not entitled to any more unemployment benefits..

And on and on and on...

If you're sitting in the 'Up' seat on the see-saw then life is good and government is doing exactly what its supposed to..

And if you're not in the 'Up' seat, its going to be a while before you are

Comfort "News"

We know of the phrase 'comfort food'- Twinkies, ice cream, etc

Well there's also something as bad for people called 'comfort news'.

The mainstream media (MSM) are well-trained puppies.  They've been conditioned like good dogs to refer to every economic event or statistic as part of the overall economic 'recovery'.  Sometimes it will be that so-called 'recovery' is speeding up in pace, or slower than expected.  But they always use that bleeping word.

This is not an accident- it is meant to condition the American public to accept 'recovery' as absolute, undeniable Fact... even if it is really Lie. Even if the US economy is actually worse than it was in Sept, 2008.  And its an easy sell because most people Want to believe 'recovery' -- most people have still been untouched by the last 28months and want to focus their attention on fun things like football and American Idol.

MSM is hard selling optimism; the less you really know, the better.

So, let's look at housing as our example.  Most news outlets have finally, stubbornly admitted that housing is in a depression.. here are some headlines from just last week...

Housing Market Slips into Depression Territory -- CNBC

Housing Market Plunge Passes (Great) Depression's -- CBS

Basically, home prices have fallen for the 53rd straight month (4 yrs, 5mths) and prices have dropped 26% since the 2006 peak and with no sign of let-up

And yet... here's some optimistic headlines from today...

Home Sales hit 13-year Low: Slow Recovery Ahead -- AP.

Housing and Jobs Numbers signal Firmer Economy -- Reuters

Both the AP & Reuters stories were written today, 1/20 - both distort reality.  The AP article is written by someone who Refuses to admit the Housing sector is in Depression, so instead its just a "slow recovery"-- and this is important-- notice how the damned word "recovery" Must be injected by the AP writer even when it has no place; he simply Must inject empty 'hope' into a very grim story about the housing crisis .

The Reuters writer decides to use distorted facts provided to him by the extremely subjective National Association of Realtors as the basis to declare optimism in the housing market, then refers to the findings of economists who in an earlier posting were proven to be deeply ignorant people concerning this recession.

It really is a shame these people get to earn a living writing this nonsense.

Here is the truth-  If you are in finance, banking, Wall St or any related field that has been the direct recipient of the Trillions of dollars of government-injected free taxpayer money then Yes, there is recovery.   Your life is much better than 28 mths ago and all is well with the world.

And if you're part of the bottom 98% and have no direct connection or benefit financially in those fields, you are in an economic recession bordering on depression.    Your nest egg- the home, is losing value by the month, real jobs with real pay and benefits are not being offered in any growth-sustainable numbers,  true unemployment is near 18% and to government & media, your plight simply does Not matter.

'A&G' is not comfort news.. we respect the reader too much

Quote of the Day- 1/20/11

"We welcome China's rise.  I absolutely believe that China's peaceful rise is good for the world, and it's good for America."-  President Obama

~  Um..  Um..

Super Bowl XLV: Anything for a buck..

~ Cowboys Stadium, Dallas Texas- site of Super Bowl XLV

I thought this was pretty funny..and sad...

From Yahoo Sports --

"For one-third the price of a regular ticket, NFL fans will be able to stand outside Cowboys Stadium and act like they are attending the Super Bowl XLV. The league announced on Wednesday that tickets to watch the game on large HD video screens on the east side of the stadium will cost $200.

They're calling it the "party plaza,"   Tickets will first be offered to Cowboys season-ticket holders who will have to buy in blocks of four. The $800 will cover four tickets to watch the game, four programs, four scarves and a parking pass.

Besides additional revenue, the biggest upside for the Cowboys is that those buying tickets to the party plaza will count toward the game's official attendance. Jerry Jones has expressed a desire to break the Super Bowl record for biggest crowd, which was set in 1980 when 103,985 attended the game at the Rose Bowl."

~  Ah.. good ole' Jerry Jones..  lol

Fun Fact- the average monthly unemployment check is $263..

Russian comedian Yakov Smirnoff said it best-- "Ahh, What a Country!"

Wednesday, January 19, 2011

Poor Journalism- example #3885

Today, news came out of the housing sector that housing starts (meaning new homes to be built) "fell 4.3% to a 529,000 annual rate, the lowest level since October 2009".   Which by the way is terrible.   Yet I wanted to take a moment to once again demonstrate how the media spin bad news and interject false-optimism and 'hope' when it has no place...  

From Bloomberg:  

"Builders began work on fewer homes than projected in December, a sign the industry that triggered the recession continued to struggle more than a year into the U.S. economic recovery.

Housing starts fell 4.3 percent to a 529,000 annual rate, the lowest level since October 2009, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg News survey called for a 550,000 rate. A jump in building permits, a proxy for future construction, may reflect attempts to get approval before changes in building codes took effect at the beginning of this year. "

~ So in summary, housing starts fell over 4% to its lowest level in 15 months, providing further evidence that the housing market is in official depression, yet Bloomberg tries to nullify the Commerce Dept's statistics as well as its own faulty forecasting and pronouncing that since there was a jump in building permits, things 'may' be much better than they appear, i.e. that little glimmer of 'hope'...

This is mainstream news- and it is pathetic

America gets a bailout-- thanks China

You've probably heard that the President of China has come to the US to meet with Obama to talk economics, repayment of the massive debt that US owes and other less important issues to both leaders like China's human rights violations.  And while together, a lovely feast will be served--  More than 200 guests will dine on a main course of dry-aged rib eye steak with buttermilk crisp onions, double stuffed potatoes and creamed spinach, after a first course of pear salad and a second course of poached Maine lobster with orange-glazed carrots and black trumpet mushrooms.

According to Reuters, "China is officially the United States' biggest foreign creditor, with roughly $900 billion in Treasury holdings ... That means it could do severe damage to U.S. debt markets if it suddenly started selling large amounts."   China also knows the US is in really bad financial shape- more so that it or its mouthpiece, mainstream media is admitting.

Sometimes if you lend someone lots of money over time, and they look like they're collapsing and you may never recoup your loans, rather than pull the plug and take major losses at pennies on the dollar, you actually lend more to keep the 'bum' afloat a little longer in hopes that he/she can get their financial house in order so you can get back more of your bad investment at a later time.

Thus, China is giving the US financial assistance in the form of purchasing more of our exports.  It is called a bailout...

From AP News:  "Seeking to build ties with an economic rival, the White House said Wednesday that China would purchase $45 billion in U.S. exports, including a highly sought-after $19 billion deal for 200 Boeing airplanes.

"Our goal here today was to make sure that we break out of the old stereotypes that somehow China is simply taking manufacturing jobs and taking advantage of low wages, the U.S. is importing cheap goods and thereby having cheaper products, but also putting strains on our employment base,"  President Obama said. "

~  Ok, lets stop here a moment-  that so-called "stereotype" is 100% Absolutely Correct.  US manufacturing jobs Have been and ARE continuing to be shipped to China and third-world nations with Extremely low wages.  This is also true of most European nations' manufacturing capacities as well.  The US Does get cheap goods in return like $3 sandwich makers and toasters which Target hawks every Black Friday and this inequity DOES put incredible strains on our employment base because the only with the exception of government jobs and finance, we are a service and consumption based society.

So Obama's statement was 100% Bull, but he had to say what he did with America's biggest lender standing beside him..

One last point.. that $45 billion seems like a lot, but when you consider that through Quantitative Easing 2, Bernanke is spending $75 billion in taxpayer money every month to go directly to Wall St. and this is overlapping another $50 billion/month from QE1 making a grand total of $125 Billion/month spent to make everyday people think the markets are strong and not spook China from pulling its investments, that $45 billion Chinese investment over a 3yr period doesn't seem so Wow-like, does it?

continuing w/ AP article...

"In addition to the Boeing deal, China will also invest in U.S. exports from agriculture, telecommunications and technology companies, including General Electric, Honeywell and Navistar. The White House said the deals will support up to 235,000 jobs in the U.S. Executives from Boeing and General Electric were among the business leaders who will meet with Obama and Hu at the White House."

~ Notice the deals will "support" 235k jobs.. not Create new jobs..  simply support the ones already there.  Its subtle but there is a difference between job maintenance and job creation.

There is a very specific 'food chain' among nations now, which was assisted by 30years of terrible short-sighted economic policies of Presidents of both parties..  and the chain goes like this:

America bails out the world...  China bails out America.

Tuesday, January 18, 2011

What is "Hope"?

"Hope is the most evil of evils because it prolongs man's torment." -- Friedrich Nietzsche

The past three years, starting with the candidacy of then Senator Barack Obama, using the word as his slogan, the term "Hope" has been thrown around cheaply and embraced by millions upon millions of people wanting things to desperately get better, pinning their hopes on 'change' and yet who do not truly understand what the word actually means.

Hope--  It is the belief in a positive outcome related to events and circumstances in one's life. It is distinct from positive thinking, which refers to a process used in psychology for reversing pessimism.  It can be passive in the sense of a wish, or active as a plan or idea, often against popular belief, with persistent, personal action to execute the plan or prove the idea.

"Hope" is a rather negative word.   Some examples...

1)  Studying to take an exam:

-  I believe if I study hard, I will pass
-  I'm optimistic if I study hard, I will pass
-  I hope that if i study hard, I will pass.

~  The first two statements are positive and confident. They are pro-active.  The third statement says that even by studying hard, the speaker still may not pass and ultimately, their destiny is out of the person's hands.

2)  Family member about to have surgery:

-  I spoke to the surgeon and believe he/she will do a good job
-  I spoke to the surgeon and am optimistic he/she will do a good job
-  I spoke to the surgeon and hope he/she will do a good job

~ In the first two statements, the speaker is saying that by speaking to the surgeon, his/her fears are calmed and feel a level of confidence and positivism in the outcome- the family member's successful surgery.  The use of 'hope' means the speaker spoke to the surgeon and still has doubts and a deep-down belief the surgery will not go well.  It says the speaker has a lack of faith and trust in the surgeon but is putting on a happy face.

3)  A carpet stain

- I believe if i scrub hard enough, I will get rid of the stain
- I am optimistic if i scrub hard enough, I will get rid of the stain
- I hope if i scrub hard enough, I will get rid of the stain

~ In this example, no matter what the speaker thinks, there is a chance the stain will not come out regardless.  However, the belief and optimism expressions convey someone who has experienced this before and has a good indication the result will be positive.  The one who hopes implies that he/she expects the efforts to be fruitless but believes trying is better than doing nothing.

4)  A new President is elected:

-  I believe this person is the right one to turn this nation around
-  I am optimistic this person is the right one to turn this nation around
-  I hope this person is the right one to turn this nation around

Though nothing is assured when dealing with a politician who by nature of the profession is slimy and dishonest, the first two statements declare a calm assuredness that the new President will be the one to put the nation on a better course.  The person who embraces 'hope' is not very confident or assured.  He/she crosses fingers and prays that the new President's rhetoric becomes reality.  But doubt, even a small amount lingers.

Hope is a word of negativity-- of insecurity and doubt; a word meant to convey insincere outward optimism when it is not there on the inside.