Wednesday, January 17, 2018

Into The Poor House

What do the following municipalities have in common?
* Stockton, Ca.
* San Bernardino, Ca.
* Mammoth Lakes, Ca.
* Jefferson County, Alabama
* Central Falls, R. I.
* Harrisburg, Pa.
They all filed for bankruptcy and Stockton had the infamous title of the most indebted until...
The poor "Motor City" can't catch a break and their basketball team can't make a shot. At one time Detroit was the fastest growing city, but it got dethroned. At one time it made the most cars in the world, but it got dethroned. At one time the "Pistons" won the NBA title back-to-back and now, they suck. At one time it filed the highest bankruptcy case, but it got dethroned. So, who is the new infamous king or does it matter?
Puerto Rico
and it does matter and in more ways than meets the eye. The media doesn't even cover it. The government just wants to sweep it under the rug and that is exactly what the leaders of the island want. Al Davis use to say this concept: "I don't care how you do it, 'just win, baby!'" However, a hurricane can overcome any psych job. Even with aid, the debt is off the charts the island's corruption will reveal it is worse because of hidden charges.
The island leaders just want to rollover the debt and continue the game like nothing happened (no harm, no foul). Dear reader, there is serious harm, and technical fouls could be called on the island's government, our government and the cause for these fouls, the Federal Reserve.
Ever since the Fed gave us "funny money" the game stakes keep getting higher and higher. At one time we talked in terms of millions, then billions and now, trillions. This is like the Amtrak train running at full speed into a tight curve. Boom! Don't believe that? Just ask Zimbabwe who actually printed in their currency, a trillion note. Want a second chance? Today, in Venezuela, the president wants a new higher trading note, but the printer won't accept the Venezuelan currency for payment. Our nation will have a debt bill this week. It always passes with a lot of grandstanding. If our leaders really had conviction to keep our nation safe and secure, they should follow through and default. At least this would force a reality check, come up with a plan and activate the plan.
 (See above the spiraling cost with no end in sight.)
Getting back to a truth that cannot be denied.
There is another problem in deficit laden districts, tax flight! That's right. People can move to which only makes the problem almost impossible to correct. Detroit has lost over half of their population. It's spreading! Consider Connecticut. It's top 100 tax paying residents left! It has lost 50% of its taxpayers in 2016. As a result, tax revenue is down $200 million to which gets added to the already projected deficits. It is like a limbo bar, "How low can you go?" Hartford will answer that question as it seeks help in bankruptcy law.
As for the kids in San Juan, they studied LBJ. They have billions off the book, and the gravity of that corruption adds to the Fed's corruption of our gold standard and our currency. The constant printing of money and deficits is setting up dominoes. Just a slight breeze at the end of every month could cause a cascade of collapsing municipalities. As the court files stand, Puerto Rico owes $74b in debt and another $45b off the books in things like underfunded pension liabilities. Sorry, I can't include the hurricane disaster because with no power no one can add up the costs.
Dear reader, it is the last section of that sentence which could become the recurring theme in America during the Trump tenure. We recently heard about the police and fire departments in Dallas. We also know the situation in Chicago to which I predict will soon wear the bankruptcy crown. We will have so many more as the Boomer generation continues to gray. There is no solution that will permanently work except stops on printing money which the gold standard did, accountability in spending which neither party observes and watchdogs for fraud which is running wild. Just like when the stock market goes into a decline, all the fraud cases come to light like Madoff and The Mormon Madoff and many others. Our financial state will be exposed when the next crisis appears.
The situation on the island is no different than Detroit or Chicago. All have excessive government employees and all have underfunded their pensions. In each, there is high taxes, high crime and a lack of jobs. The only solution the present leaders are seeking is to borrow even MORE.
The Puerto Rican contagion will spread due to printing and the consequences of devaluing our dollar. Check this out. The court says the island can only spend $800 million on debt and this year the island has $3.5b due on debt. Can't be done! By the way, if the Fed bails them out, not only will they be setting a bad precedent, but each dollar that is printed, lowers all of our standard of living. This is one crucial aspect in why and how our standard of living keeps falling; Technical, on the Fed! Better yet, EJECTION!

Wednesday, January 10, 2018

What Happened to the Labor Wall?

During his presidential campaign, Trump consistently cried for a Mexican Wall to slow illegal immigration and NAFTA. The other things he said that he would do was end Obamacare and tax relief.
He achieved a tax bill, but it mainly helps the rich. Consider: his idea to lower taxes on our international companies which would spur jobs at home and make our companies more competitive and financially stronger. This is good, however, once this was done, there was no need to help the same wealthy people with individual tax breaks. He should have raised their tax brackets and lowered the rates for the poor and middle class. His plan only makes our national deficit worse. That said, a recent report shows where our jobs, especially in manufacturing, have gone. NAFTA stole them! Anyone who says different is a shill. They should be ignored.
Mexican Auto Report
Keep in mind this report only covers automobile producers. However, it shows the need to end trade deals and remember, all those deals are done behind closed doors because they know that what they are doing is stealing our standard of living.
Mexican officials confirmed in their report the on-going assault on US auto manufacturing. Mexico exported 2.33 million vehicles to the US in 2017. This is up 9.4% in an on-going uptrend.
During his campaign Trump threatened to end or renegotiate the NAFTA trade deal. His attacks were mainly addressed at Ford because Ford had planned to build a new factory in Mexico. Ford scrapped their plan. In fact, only Nissan and Ford were the only producers to export less in 2017 out of Mexico.
By comparison Fiat Chrysler and GM accelerated their production in Mexico. GMs exports surged 26.3% and by the way, this report end in November of 2017. Of course, this means the data will be worse. Fiat Chrysler jumped exports by 35.5% for the same period of January to November.
The loss of jobs in this industry is central why our middle class is disappearing. So, Donald when are you going to do what you said and build a labor wall by taxing imports and protecting jobs that offer a living wage, to which promotes our standard of living. The big corporations got their tax break and now, they need to show some home cooking or get off the pot and out of the kitchen!

Wednesday, January 3, 2018

Tax Money Down the Drain

With the new tax plan as law it would behoove us to see how our taxes are spent. It is a sad truth that our government is too large and misappropriates our dollars. The military complex takes half and has their flunky's complain about entitlements which is close to the other half. The problem with the tax law is that the legislators are living in a fairy land. I agree with the corporate side tax level being reduced, however there was no need to help lower the rich in the individual bracket. They should have raised that level to 42%. But hey, that's just me and this little blog.
Another sad truth about the tax plan it that it does not reduce our national debt. These legislators do not have their feet on the ground. They probably will be going to California for New Year's to keep their "high." What it all means is our government will resort to borrowing and bloating the national debt to cover their stupidity. In addition to these basic mistakes, our tax dollars get taken for useless projects like a bridge to nowhere. The politicians take our money to use as a campaign to get re-elected in their state. It is no wonder that Congress never does anything because its people have no vision other than self. This is the sad meme of our times. Here are a few examples which does not include expenses in the budget for foreign aid, NSA to spy on us or similar. We get deeper in debt to give corrupt nations military hardware, service and technology to be our friend. This is BS!
The following are examples, although some are for flavor and not associated with our taxes.
According to the Government Accountability Office, our government shows no improvement in the use of our taxes. In a report just released, it highlights Medicaid payments. It found fraudulent billing claims and it estimates that the cost of the various crimes to be 10% or $36 billion in 2016. Here's an idea: Hire some people to crack down on these crooks.
President Trump has big plans with our need to rebuild our infrastructure. Sounds great, but this only opens the door for more corruption. These contracts need to be policed. In addition, if the winning company cannot deliver on budget, they take the loss! Of course, the bidding is another problem. It takes years to catch these crooks and the penalties should be similar to individual sentences like three strikes and you're out! If a company commits three felonies, put them out of business! A recent example in the news is Keppel Offshore and Marine. They had to pay $422 million for bribery concerning contracts for Petroleo Brasileliro. Anyway, our nation has a poor history with infrastructure projects. Project Management Institute says around $100 million or 10% of every billion spent goes down the drain. WASTE! This is due to poor bureaucracy. Some day 60 Minutes will also find corruption and bribery.
* Bank Embezzlers: It is not just Wells Fargo. Halifax Bank of Scotland employees stole from clients and from the bank too.
* Online Crooks: They are everywhere. A marketing company, WPP estimates the amount of global rip-offs in 2017 to be $16.4 billion.
* Sex for Sale: Nothing new, but a new twist. Young virgins are offering the first shot online. I can't wait to hear the honeymoon story on how I lost my virginity?
* Crooked Agencies: We know bureaucracies waste and some are down right corrupt like the Navajo Housing Authority. A recent study reveals the agency spent on average $1.1 million to provide housing for needy Indians. The only problem is these are small homes worth much, much less.
* Military Fashion: It is bad enough to buy friendship, but add this. Foreign troops wanted specially design fatigues which cost us an extra $28 million. Then, they received a special plane( ATR4-500) to spy on narcotic fields which cost another $65 million. Keep in mind that these expenses is borrowed money that we owe. Since we spend foolishly, we have less to invest on something positive with our money because they spent it on this crap.  
* Tom Price: taxpayers funded his flights to the tune of $500,000 to live the lifestyle of the rich and famous.
The list goes on-and-on. The Paradise Papers revealed how the rich and famous use various ways to avoid paying taxes. This is a global problem for every government. They resolve it by penalizing their ordinary citizens to cover the shortfalls of their taxation. In addition, many sport stadiums get tax exempt status and even municipal bonds to back their endeavors. There are subsidies for film companies. Here is an idea! Lower the wages of film stars to cover the cost of production. No one is worth $20 million! Let the team owners pay for their arenas. They charge too much for tickets, parking and concessions. In addition, they show no loyalty to the cities that supported them. Every city that helps a professional team should get a piece of the action to which I mean, a slice in the ownership of the team it supports.
I almost forgot, the infamous War on Drugs: State and federal taxes spent $37 billion last year and this has been going on for 40 years with no results. How about the money we give to the UN? A UN report reveals that one-third of the world's food goes to waste. Think about that the next time you go grocery shopping and see how much things cost? I can assure you of this: the bureaucrats never look at price because they don't have to work for their money.

Wednesday, December 27, 2017

Tax Benefits: Where's Mine and Got Away With It

The title intro, tax benefits, is a classic example of an oxymoron. I guess it is because down deep, I'm a mournful optimist. Now that you know, let us look at the first part.
Where's Mine?
This refers to the new tax overhaul act, passed and signed by the president. When the bill was still an idea, corporations urged the president and Congress to pass it. They mentioned that it would allow them to both hire new help and pay their current workers a higher wage. Now that they have their wishes fulfilled, will they follow through on their promise?
On the first day, AT&T declared that it will give all its employees a $1,000 bonus. This only caused everyone else to ask, "Where's mine?"
Before we get into the litany of gratified corporations, let us look deeper into Ma Bell's generosity. The company has been trying to acquire Time Warner, however the government does not like the merger. It gives too much media control to one entity, the loss of jobs after the merger and rising prices for consumers. Ma Bell is doing PR-work while making positive headlines. They have a history of lying and cutting jobs.
On the same day a bank, Fifth Third Bank said it will raise wages for its employees. Now, everyone gets at least $15 dollars per hour. Wells Fargo followed suit. Of course, the tax cut will give them millions for their vaults. Banking lobbyists push for higher interest rates which also helps their bottom line.
Boeing said it is working on a plan as well as many other corporations. Sinclair Broadcast Group said a bonus is coming. NBC Universal and Comcast stated that they are reviewing a bonus for their employees. I'm glad for all those workers, but the meme of where's mine will rise with envy across the nation. It will be opposed by investors and shareholders who want higher dividends and share buybacks as they say, "Where's ours?"
The second half of the title is one that is both amazing in individual examples and it is mostly opposed by the IRS due to the unusual deductions.
Barking Dog: A condo owner sued his HOA due to a barking dog in the next unit. The suing owner declared it cost her money in her business. She got away with it because she used her condo for 50% of her business.
Free Beer: A gasoline station owner offered free beer will fill-ups. Got away with it as he said it was a business expense.
Baby Sitter: This deduction was allowed because the person was doing volunteer work and needed the sitter. The IRS said, no, but the Tax Court said, yes.
Landscaping Costs: A homeowner deducted landscaping fees due to he used his home to entertain clients. The Tax Court said it was allowable for the front door and walkway. A partial victory.
Pool Time: With a doctor's note, a homeowner stalled a new pool with all the costs as a medical expense. He won. He uses the pool to get healthy with all costs tax deductible.
Passing the Buck: A father in real estate sponsored his son's motocross racing. Tax Court said it promoted the father's business and it allowed the $160,000 deduction for his son's sport.
Flight Time: A couple received the O.K. from the Tax Court with a new plane. Couple needed it to get to their remote condo to check on tenants and condition. They were allowed to deduct fuel costs and depreciation for a portion of the plane's costs when it related to this business activity.
Cats: A junkyard owner was allowed to deduct cat food and related expenses for having cats patrol his property to eliminate rats and snakes.
Wrong Use: A small house burnt down. The owner declared a casualty loss, The Tax Court allowed the deduction even though the reason for the fire was the owner ran an illegal meth lab that caught fire. This is so wrong!
Concert Tickets: A musician deducted trips and concert tickets because he said it helped make him a better musician. He said he learned from it. Tax Court agreed.
Body Oil: Arnold are you reading this? A body builder claimed that body oil was a business expense. IRS said, no. Tax Court allowed a portion to be deducted.
Who says you can't beat the IRS?

Wednesday, December 20, 2017

Fed Manipulation: Notes and Bonds

If you recall in last week's piece, I used the words of an old rocker, "Lies" in correlation to what the new chairman of the FCC was going to do to net neutrality. I could play it again and again whenever I discuss the Federal Reserve.
New Boss, Same as the old Boss
Powell is in and Yellen is out, but there will be no noticeable difference at the Fed. In her outlook for 2018 Yellen said that the Fed will continue to raise interest rates at a gradual pace. She called for a replay of 2017 with three expected increases. However, the market does not believe her or the new guy. This is why long term rates have not risen. If you were to use simple math, you can see through the continuing lies by the Federal Reserve who manipulate our economy. A by-product of their effort is to punish savers and give benefits to spenders.
Notes and Bonds
The global market has shifted to negative interest rates and if you compare our Ten-Year Bill to world markets you can see that clearly. It is not my point here to compare the US with various countries in the global community. The point is well know, but what is not considered is the fact that the Federal Reserve is already utilizing negative interest rates here in our country. The following price scheme will point you to this fundamental manipulation by the Federal Reserve.
Term                                                          Yield
1-year                                                          1.69%
5-year                                                          2.15%
10-year                                                        2.35%
30-year                                                        2.68%
The Fed has repeatedly claimed that its inflation goal is 2% and our economy has not achieved that mark on a yearly basis. In fact, at the last meeting, two members voted against the rate increase. Fed member Evans said his conscience would not let him vote for the higher rate due to our low inflation.
If this guy grew up in my neighborhood and stated that BS, he would have two black eyes. This guy and the whole Fed get me so upset that I have to go off mark for a brief reminder.
There are three things that we all need every single day. We need a place to live - shelter. In winter we need heat and in summer we need air-condition. We need to eat every day and if we work, transportation which is energy. In fact, energy is utilized in all aspects of life. We need it at home and work. Guess what? The Fed does not include in its inflation guide those three items. In their LYING EYES they BS about better computers and TVs which lower inflation. Do they realize what rent costs? Do they realize the cost to buy a home? Do they understand how states constantly increase taxes at a much higher rate than 2%? Do they ever go grocery shopping? The price of gasoline went up 7% just last month.
Back to Evans: His conscience? These people have no conscience. They are bureaucrats. The true purpose of the Federal Reserve is to protect the banking system. It is nothing more than socialization for banks.  How about Randy Quarles? He got the job as Vice-chair at the Fed. His role is supervisor of banks. He just stated that he will recluse himself from any decision on Wells Fargo because they hold his home mortgage. He also has stock in the company and his family has a long history tied to Wells Fargo. In fact, his wife's brother, Spencer Eccles, sold a bank he ran to Wells Fargo in 2000. So, Randy sold his stock. Isn't that special? Conscience? Wells Fargo is the company that was caught stealing funds from its clients. This happened over a year ago and Quarles just sold his stock because he has a conscience. Get out of town! This the type of people who work at the Fed.    
Now, with that quick update, let us go back to the notes and bonds.
The yield on one year does not continue at the same rate for five years. If you subtract the two yields, there is only a point .46 difference. How can that be? It gets worse. Now, you add another five years and you only receive a point .20 profit. It gets so bad that I don't have the vocabulary to describe the next level of lies. You go out twenty more years after the 10-Year note to the 30-Year Bond and you receive only a point .33% yield increase???
Do the math! For those old enough subtract today by thirty years. In 1987 how much did a car cost as compared to today? A house? Rent? How much was gas? These people and this institution should be abolished! They are slowly destroying our currency, our economy and our way of life. They only protect the status quo.
News Flash: 
The government said it expects to sell $1.3trillion in notes and bonds in 2018. This will continue for as long as the Fed can continue this game of deception. The government spends money that they don't have and continually provide benefits like tax cuts and deductions to the rich which only adds to the total of money that needs to be raised. However, consider this: our interest rates are among the highest in the world. This should make the dollar strong except it isn't. This is going to end badly which is why I say, End the Fed!                                      

Wednesday, December 13, 2017

FCC and Net-Neutrality

"Lies, lies, you're telling
 Me that you'll be true
 Tears, tears, I she'd
 A million tears for you

 Someday, I'm gonna be happy
 But I don't know when just now
 Lies, lies, breaking my heart"
- Knickerbockers

The one hit wonder from the vaults of rock should get a second release, especially in any reference to our government and in this article, its so-called independent agency, the FCC.
 Net neutrality 
The agency like so many other ideas like the EPA and many others, gets contaminated by our election process. When one party does not like the rules and regulations that are enacted, they put their people on the board to get their views back in favor. This happens when our government goes back-and-forth from one of the two political parties that control our government. In fact, the FCC was a New Deal idea. FDR knew the system turned corrupt from the original Federal Radio Commission. At the time, the FCC also received control over wire communications from the Interstate Commerce Commission. It got its funding from the fees it imposed. This was all good until television appeared.
Back to politics 
New party, new appointments. By the way, I think that they are both corrupt. Basically, this kills the reason for any agency in the first place. These so-called watchdogs should be dominated by independent focused individuals and not party spoils. This is why I'm against the Supreme Court. It is nothing more than a power struggle to control our society by the different views of the two parties. In my unpublished work, I address this issue with a democratic solution. In my view they are both out of touch with our people and their views, to which they label, "Populism."
Anyway, the FCC's new leader is a Republican, Ajit Pai. He doesn't seek or care about public input or the poled data that says 81% of us favor net neutrality. He is planning to dismantle "net-neutrality." The agency is acting just like my complaint. The Republicans are sellouts to big business. They are picking the winners and losers. Among the real losers are us, the consumers.
For those that don't understand the issue, it is allowing all networks in all locations equal access on a local line. The whole concept goes back over 100 years. The first battle was among the many new phone companies after the invention of the telephone. Cities were blighted by numerous phone lines and no company would allow a competitor access to their lines. The compromise ended with AT&T allowing competitors access or sharing of wire lines in exchange for control of long distance communication. This is how AT&T gained a monopoly on long distance calls. This ended with the breakup of Ma Bell. This gave way to our modern cell phone service. However, big business only looks out for itself. It doesn't care about you and me and what is good and fair for America. Comcast became the focal point in internet and cable with the issue of equal access. They placed any competitor using their lines to the rear. As a result customers using service other than Comcast, received very slow and poor service. Comcast was looking for a monopoly on their lines. The battle resulted in a return to equal sharing of lines or net-neutrality. I believe there is some truth to a companies position on their lines. They spent the money to build and service these lines. Now, their competitors gains access with no cost. To me, the fair solution is instead of giving the FCC fees, that money should be returned to the company that built the line. This will give equal money to every company that invested with fees on their local lines. However, nobody seeks or seems to resolve issues fairly.
We look around today and we see less diversity of opinion or no opinion as local newspapers go the way of the Dodo bird. Vidme shut down its video service because it cannot compete with Facebook or Google's of the world. How about DuMont? I bet that you never heard of them? They were one of the first commercial television pioneers. They began in 1946. They were killed by FCC regulations and no equal access of wire lines. AT&T ripped them off and they died. People forget or don't know that in the early days of television, multiple broadcasters used the same television station at different times of the day. It took years to resolve. Net-neutrality allowed television to grow. How soon they forget.
1996 Communication Act
This act loosened restrictions. The FCC said no prices would rise due to it. Companies would play fair even if now, they could own multiple stations in a local market. Guess what? See song, either above or below.
We have seen this time-after-time. Companies will seek for themselves and screw the public. Prepare for higher prices and if you have internet service by a company that is not the local yokel, poor service and higher fees.

"Lies, lies, I can't believe
 A word you say.

 Lies, lies, you're
 Breaking my heart."

Wednesday, December 6, 2017

Latest: Bit Coin and Space X

There are complaints going around that from 30% to 35% of all Bit Coins are lost and could be gone forever. It seems that passwords get lost and owners lose out. In dollars, we are talking about $20 billion. Of course, there are internet services that will attempt to retrieve your coins, but at a price. In other news the largest commodity exchange, the CME will begin trading futures in Bit Coin on December 18th. The margin is expected to be 30% to 35%. You know this will cause a spike, but two obstacles are looming. The IRS says Bit Coin is property and that is taxable. In addition, the government wants info on all accounts of $20K and a record of transactions. Are taxes coming? You betcha!
The other enemy of the coin will be the banks. They will hammer it at some point because it is a threat to them. The price action on the coin set a new record on Monday at over $11,500. Trading will begin next Monday and that means there will be not only buyers, but sellers! Buyer beware!
Space X 
We now have an idea what it is valued. Recently, Musk raised another $100 million which puts the estimate to $21 billion. Musk plans to orbit 4,425 high speed internet satellites which will provide internet access anywhere in the world even on an ocean liner...for a price.
Space X has almost a monopoly on reusable rockets. Musk had the foresight and belief in the concept. He has developed his own engines which are based on Russian technology. They give 20% more thrust. This is valuable since it cost $10,000 a pound to fly. This is a huge saving and Musk believes he can lower the cost to $500 a pound. This gives Space X a big advantage over NASA.
In addition, Musk uses new metals which are stronger and lighter. Again, he borrows from Russian research in metallurgy.
We or our government never acknowledges the valuable contributions to space by the Russians. This is very sad and our post war history with them only has a few bright moments. The best is when JFK got together with them to reduce nuclear weapons. Our military complex hated him for that which shows where their heads are directed. It would be nice to show the Russians some love and respect and then, maybe we could Give Peace A Chance.