Wednesday, July 31, 2019

Odds and Ends: July 2019

I begin by retelling a few points made by JFL and Sebastian after hearing news that our government reached a deal to end the debt ceiling issue. Sebastian reminds us that the government uses the law to make laws that lie and deceive. For example, the Social Security Fund, along with a few other obligations are not counted in the national debt in calculating the interest due on these unfunded promises. JFL reminds us that the Federal Reserve is a private institution that was created by the lobby's for the banking industry to which its real loyalties lie. Our history shows this to be true. The public mandate from Congress is a feel good, fake cover put out by politicians. Now, the Congressional Budget Office (CBO) estimates that the deficit in the 2020 budget will add another $480 billion in interest payments. Dear Reader, this is not true. Since the government does not count certain future obligations, the interest number appears manageable when compared to the GDP of the economy. The GDP according to the government is $22 trillion. However, if true accounting methods were used, the interest payments by our government should be $1.4 trillion for 2020. People, I only used .02% in this estimate. That is a more real figure and it gets worse by the minute. I pose one question? When do we as a nation begin to pay back not just the interest, but the principal?

More Cheap Money Blues

It is not only the US government that uses cheap money to make things appear manageable, but some of the biggest corporations are hitting some dangerous debt levels. The following companies all have over $100 billion in debt obligations: Ab-InBev, AT&T, Comcast, Apple and Verizon. Do you recall in another piece where I reminded you of a study by the Bank of International Settlements (BIS) that stated one in six US corporations do not make enough money to service their operation? They keep rolling over debt with more debt to stay in business. This is for them and our government: You cannot solve a debt problem with more debt.

Race to the Bottom

This is where fiat money is directing the world. The worthless paper that is used by government machinations is finally showing its true colors. There is $13 trillion out there in negative yield bonds. Whatever the purchase amount, at the end, it will be less than the original price. We all know that there is planned obsolescence in things, now, we have it in money. End the Fed!

Gilder prediction

The futurist says without using exact words, that the entire internet has been compromised. It needs a reboot. There is no real security in its present state. There are too many hacks and malwares in the system to trust it. I think that he is right. Yesterday it was Capital One. Last year it was Marriott. The year before it was Equifax and ATMs everywhere. Bottom line: we all need cybersecurity. He does not point fingers, but since Huawei is in the news, they are one of the culprits. They are not alone and our government is at fault. Did you know that a Chinese company makes and installs every camera on US military bases? This is unbelievably stupid! Check the Clarence level of the idiots who approved this application.

To the moon, Alice

It is good to remind ourselves and the world that we can achieve almost anything, if we put our best foot forward. So, yes, Ralph, someone is on the moon even if it ain't Alice. Congratulations to us and JFK for putting it out there. By the way there are now 476 private companies in providing help in  space exploration. Sadly, I must add this prediction by JFL. He said, "If there ever is another major war, the military will take control of all space activity."

Taxing Idea

This is so sad, but true. CEOs make 100x or more to the lowest employee in firms that they manage. A new tax will soon be on the ballot in San Francisco and Portland. The city will tax CEOS that fall into this wealth gap. Keep this in mind and Ray Dalio shares this view. In tumultuous times like a severe recession, civil unrest can happen. In this age of the internet this uneven wage scale could easily become a mantra to attack and loot wealthy residences. At the moment consumer confidence is high according to a study by Duke University. However, the same survey stated that among CEOs, two-thirds see a recession on the horizon. Mark Zandi reminds us that business confidence overrides consumer confidence. In a related aspect...

Chicago Fed National Activity Index

is conducted by this regional federal reserve governor. It is very thorough. It uses two binary numbers. It starts at zero and goes either up or down as pertaining to the economy. In June it came in at negative .02. They said this was positive since they expected -.03. I say this fact: this is the seventh straight month of negative results. It is not only this regional location. Nissan is cutting 12,000 jobs due to slow auto sales. They are not alone. Hewlett Packard is laying off 5,000. Tesla is dropping 3,600 and Citigroup is giving pink slips to a whopping 20,000. Ford offered weak earnings and weaker outlook. GM just closed a plant. The CEO of CXS railroad says, "He sees a freight recession." Sebastian called it. The auto industry is at decision time. Do they expand electric cars and suffer sales with old gasoline engines? They also face tariffs, new technology like AI and pricing customers out of the market. By the way, Canadian auto sales fell by 5.4% in May. This is the 15 straight month of sale declines. Now, consider that the stock market is up 20% this year and earnings are flat. Makes you wonder? In still another related aspect...

Trump and Trade= setting the stage

The president says he thinks China will stall in the latest round of trade talks because they really want to wait until after the 2020 elections and maybe get a weaker democratic president.

No Tipping

UPS just received a license to use drones for package delivery. Will they cover job losses by telling customers, "No tipping needed." And how does one refuse a package that appears damage, especially if the drone dropped it from 400 feet?

New Drug Company

Just what the US needs. Pfizer is spinning off a new drug company to issue generic drugs that they lost due to patent protection. This way when the negative results come forward, the parent company won't be liable. Freaking lawyers!

Bigger than Super Bowl

sad to write this, but gamers are growing stronger every day. There were 454 million who viewed the first video / gaming championship online. The e-sport had sold out seating to watch the live event. I know this, I won't offer my tax money to build a stadium for grown kids to do battle with video games. Peace.