We, at Evolution of Democracy have advocated for a third party in American politics for a long time. With that said, a third party has arisen from time-to-time. Generally, they don't answer the needs of the country as we see them. We need an anti-military stance, balance budget and protectionism that would makes us self-sufficient again.
At present, there are 24 democratic candidates seeking their parties nomination for the 2020 election, but not one of them has called out the military. When I say the word, "military" I am referring to the Pentagon and the " Deep State."
The military devourers 50% of our budget and they will be the root cause if our country ever goes bankrupt. Thomas Jefferson and Ben Franklin did not want or could they foresee, US military forces in over 100 countries. We have no self-interest in other nation's affairs. No one calls out the military, but every once-in-awhile a glimmer of hope comes to view. I will get to that in a moment. Now, I will direct my attention to a political train of thought as expressed by Libertarians, a third party alternative.
Libertarians
They want less government and less regulations. These people live in a Ivy Tower. Man is capable of not only stealing from his neighbor, but will kill to leave no evidence of his crime. The idea to have a watchdog on government is very, very old. Charlemagne used it back when he was crowned king in 800. The EPA is a watchdog. The problem with modern watchdogs is twofold. One, the party in power will appoint "his" people to run the agency. In essence, they will do nothing. Secondly, the word agency becomes a lie. The program becomes part of the problem with its own budget and power to continue no matter which party wins the national election. It becomes a bureaucracy.
The only positive in all this is the possibility that a good man will come forth and actually do what the intentions of the thinking in forming the agency. We have found such a person in Connecticut.
Attorney General
of the state of Connecticut investigated the costs of medical drugs, notably the generic brand which is suppose to be a cheaper version of a successful brand drug. It takes a long time and money to do these type of investigations which is another reason why so few are successful. He found out that Big Pharma is gouging the public and in some cases, beyond belief. Libertarians are you still with me? This episode will play out in the courts and Connecticut will win. The verdict will be no different than in the 1950s with the TVA and its price fixing scheme. Man will cheat unless he fears getting caught. I may agree with the idea of less government and less regulations, but reality trumps theory.
However, I will offer this idea. Make all laws sunset in nature. Give them a time period to see if they are doing what they intended to do and if they are still needed. We don't need to have unintended consequences of creating a bureaucracy like the TSA. Can I get an amen?
Now, as promised another crook being exposed. I wager to bet that almost every company doing business with the government has cut a corner in the process. Individuals are guilty too. A recent report showed that Social Security checks were being sent to over 12 million people over the age of 105. A lot of people are going to get themselves into trouble over not reporting a deceased patron. This is why I advocate for more watchdogs and even watchdogs to watch the watchdogs.
Brother, Can you spare $4,361?
Lawmakers discovered a bill from TransDigm. It was for a half-inch pin worth around $46 and they were charging $4,361!
Then, digging deeper the review found 98 out of 100 parts that were overpriced. I want to thank Bloomberg News for their part in getting this out to the public. Dear Reader and Libertarians, this particular company first became news in 2006, but no follow-up was done. Maybe because a new administration came to power? Watchdogs for the watchdogs. Maybe the whole affair could be traced to a law in 1994 designed to streamline policy pricing. What it did was to eliminate competitive pricing. Anyway, do any of the 24 candidates call out the 1994 law? The silence in American politics is deafening.
A recent list of TransDigm pricing.
*A retainer worth $32 and they charged $803.
*A "ring" which is like a gasket. The company charges $4,835 and cost around $71.
*A lug or bolt used in the F-15 jet that should cost $3, was billed at $67.
*A valve assembly to check the oil pump, costing around $369 was charging the gov't $8,819.
What I'd like to see...
The CEO get fired and serve jail time! That lawmakers enact my idea related to the individual. If 3x and you are out as a felon, then the same should be true for companies. If they commit 3x felonies, then they should be banned for life from getting a government contract. By the way, here is the follow-up to TransDigm when they made the news back in 2006. The company said that they made a mistake. The cost should have been $287. They are sorry. Yeah, but for how long?
Why, you ask? Because the same exact item was spotted again in a 2017 bill and the company charged $7,325 for the item.
Forget jail, make the CEO be a test subject for Big Pharma's new death drug!
Wednesday, May 22, 2019
Wednesday, May 15, 2019
It's Barbecue Season!
and it just got more expensive, although the Fed will never mention this food item in its report on inflation in the US.
Last summer I mentioned in an Odds and Ends piece about a swine flu appearance in Shenyang, China. A small farm had some dead pigs. Before the knowledge of the cause, this highly, contagious disease spread throughout the region. It was not contained. It crossed borders into Mongolia, Vietnam and Cambodia, all pork producing and consuming nations. It was found out to be African swine fever. Its first appearance in China has caught the nation by surprise. China produces half the world's supply and the culling has just begun, but the repercussions could extend for some time.
Year of the Pig
is generally seen as a positive sign in the Chinese zodiac, but sadly, ironically, it will mean higher pork prices for everyone.
Did you notice the cost for your Easter ham? Like I said, the Fed will never address real inflationary costs like food or energy, but the price rose from last year's low, $3.8 per pound to $4.3 per pound. People, that does not sound like much, but by the time you pay at the check-out counter, it is serious dough.
It is getting worse...
China has culled what would be an entire year's production in the US. This action will cause China's pig production to fall by 20% which would be a 17-year low. By the way China is the world leader in production with 50% of global sales. So far, there is no danger of an Ebola type transference to humans, but...
No Bacon for You.
This kills Sundays breakfast. Pork prices have risen by 20% in Spain and 17% in Germany. Prices have risen in other EU nations as well as the US.
Bottom line: China will need to import more pork. This will supersede the trade talks. Tyson has benefitted. The price action of the stock hit a low at $50 along with the rest of the stock market in December 2018. Since that point, it has rise like a rocket to $75. It could approach its high of $82. If it retraces, it usually touches $62 which would be a good entry point.
One last tidbit. Pork is the largest component in China's consumer price basket. This disease will push China's inflationary numbers past 5%. To keep Chinese consumers happy, China will have to import more pork even if the trade talks end with no results. The rally in pork has spread to other meat prices and exports. Australian beef exports rose 67% in the first quarter to China. Brazil stated that they are exporting more to China too, but no numbers were released.
I'll miss my bacon and eggs, however when it is to hot to cook, nothing beats cold cereal and milk.
Last summer I mentioned in an Odds and Ends piece about a swine flu appearance in Shenyang, China. A small farm had some dead pigs. Before the knowledge of the cause, this highly, contagious disease spread throughout the region. It was not contained. It crossed borders into Mongolia, Vietnam and Cambodia, all pork producing and consuming nations. It was found out to be African swine fever. Its first appearance in China has caught the nation by surprise. China produces half the world's supply and the culling has just begun, but the repercussions could extend for some time.
Year of the Pig
is generally seen as a positive sign in the Chinese zodiac, but sadly, ironically, it will mean higher pork prices for everyone.
Did you notice the cost for your Easter ham? Like I said, the Fed will never address real inflationary costs like food or energy, but the price rose from last year's low, $3.8 per pound to $4.3 per pound. People, that does not sound like much, but by the time you pay at the check-out counter, it is serious dough.
It is getting worse...
China has culled what would be an entire year's production in the US. This action will cause China's pig production to fall by 20% which would be a 17-year low. By the way China is the world leader in production with 50% of global sales. So far, there is no danger of an Ebola type transference to humans, but...
No Bacon for You.
This kills Sundays breakfast. Pork prices have risen by 20% in Spain and 17% in Germany. Prices have risen in other EU nations as well as the US.
Bottom line: China will need to import more pork. This will supersede the trade talks. Tyson has benefitted. The price action of the stock hit a low at $50 along with the rest of the stock market in December 2018. Since that point, it has rise like a rocket to $75. It could approach its high of $82. If it retraces, it usually touches $62 which would be a good entry point.
One last tidbit. Pork is the largest component in China's consumer price basket. This disease will push China's inflationary numbers past 5%. To keep Chinese consumers happy, China will have to import more pork even if the trade talks end with no results. The rally in pork has spread to other meat prices and exports. Australian beef exports rose 67% in the first quarter to China. Brazil stated that they are exporting more to China too, but no numbers were released.
I'll miss my bacon and eggs, however when it is to hot to cook, nothing beats cold cereal and milk.
Wednesday, May 8, 2019
OIL: It Gives and It Takes
Greetings and salutations, as I have returned from my journey into my forefathers land. Packed with new insights Dear Reader, I am ready to share with you over the coming months. We begin with the lube of all economies, Texas Tea which can take you from the country hills to Hollywood overnight.
With the Fed on pause and the world trade talks acting like a mini TV series that will never have an ending, it is time to watch the gyrations around oil. When oil is cheap, economies generally expand. When supplies are tight and the prices rise, economies generally contract. We are now in one of those sine waves.
The Fed had the gall to say inflation is below its 2% target rate. We know different. The price of gasoline has risen around .51-cents nationally since the end of February. I could add hosing and food, but why bother since the Fed never considers our daily expenses in their phony matrix inflationary gauge. It is what it is and we have to deal with it. So, at this time I bring to light what Sebastian stated back in January. He said, "Find a good, cheap oil stock and hop on it until the Fourth of July."
I ask, did you?
Oil's Outlook
If you recall, oil bounced around the low $40s until the end of the year 2018. It kept finding resistance at the low $50s. The following chart figures puts the price action in view with a window to where it may return. By the way, the final projection price is what happened during last year's driving season. Oil repeats this price action year-after-year. When oil spikes above $90, a recession soon follows. Something to think about since a red flag in bond rates has appeared.
There are two indexes. One is heavy oil(BRENT) which ironically is priced higher than sweet(WTIC) or American oil. The reason is there is more heavy and factories are set-up for this grade of oil.
* LOW High Projection
$WTIC $42. $66. $75.
$BRENT $44. $74. $86.
The projection is based on past performance. Oil is made into gasoline and it has two blends: winter and summer. We are now in the transition into summer. We are also as a society in transition into summer driving season. This is demand and demand increases the price and thus, oil companies make their profits. This is the thinking behind Sebastian's oil call. I like to trade off the charts, but I also like to blend the fundamentals into the equation. They are shaping up nicely for the sine wave to follow past price actions.
Iran Sanctions
President Trump imposed sanctions again on Iranian oil. This gave oil a price bump due to supply concerns. In addition, civil unrest in Venezuela and Libya offer a positive price fundamentals. Recently, Trump has implored Saudi Arabia to keep the price low and with American production at record levels, oil is retracing in price. This is your opportunity. I like ECA or DVN, but there are many to choose from and all should climb in price going into July. One other point. The trade talks and the prospect of tariffs will have no effect on the present trend. Currently, we have tariffs by every nation in the world, and most, are levied against US products. President Trump is right and someone needs to stand up to China which is the poster child for hypocritical stance on tariffs. However, if the talks escalate into a mean trade war, then the market tanks to which everything goes down.
In a related aspect, the Iranian oil minister recently stated that he feels OPEC could collapse. This announcement is more dissatisfaction by Iran about its fellow club members. In the last period of Iran sanctions OPEC members picked up the slack in oil production and of course, this pissed off Iran. Can it happen again? This is the billion dollar question. Saudi Arabia announced cuts in their last meeting and Russia has agreed to cut production at least until the end of June. Meanwhile, Qatar has quit the cartel. There are other rumblings due to the religious conflict of Sunnies and Shiites. Some people will say that Saudi Arabia is OPEC, but 40% of the world's production can make or break any economy. Keep an eye on OPEC proceedings.
With the Fed on pause and the world trade talks acting like a mini TV series that will never have an ending, it is time to watch the gyrations around oil. When oil is cheap, economies generally expand. When supplies are tight and the prices rise, economies generally contract. We are now in one of those sine waves.
The Fed had the gall to say inflation is below its 2% target rate. We know different. The price of gasoline has risen around .51-cents nationally since the end of February. I could add hosing and food, but why bother since the Fed never considers our daily expenses in their phony matrix inflationary gauge. It is what it is and we have to deal with it. So, at this time I bring to light what Sebastian stated back in January. He said, "Find a good, cheap oil stock and hop on it until the Fourth of July."
I ask, did you?
Oil's Outlook
If you recall, oil bounced around the low $40s until the end of the year 2018. It kept finding resistance at the low $50s. The following chart figures puts the price action in view with a window to where it may return. By the way, the final projection price is what happened during last year's driving season. Oil repeats this price action year-after-year. When oil spikes above $90, a recession soon follows. Something to think about since a red flag in bond rates has appeared.
There are two indexes. One is heavy oil(BRENT) which ironically is priced higher than sweet(WTIC) or American oil. The reason is there is more heavy and factories are set-up for this grade of oil.
* LOW High Projection
$WTIC $42. $66. $75.
$BRENT $44. $74. $86.
The projection is based on past performance. Oil is made into gasoline and it has two blends: winter and summer. We are now in the transition into summer. We are also as a society in transition into summer driving season. This is demand and demand increases the price and thus, oil companies make their profits. This is the thinking behind Sebastian's oil call. I like to trade off the charts, but I also like to blend the fundamentals into the equation. They are shaping up nicely for the sine wave to follow past price actions.
Iran Sanctions
President Trump imposed sanctions again on Iranian oil. This gave oil a price bump due to supply concerns. In addition, civil unrest in Venezuela and Libya offer a positive price fundamentals. Recently, Trump has implored Saudi Arabia to keep the price low and with American production at record levels, oil is retracing in price. This is your opportunity. I like ECA or DVN, but there are many to choose from and all should climb in price going into July. One other point. The trade talks and the prospect of tariffs will have no effect on the present trend. Currently, we have tariffs by every nation in the world, and most, are levied against US products. President Trump is right and someone needs to stand up to China which is the poster child for hypocritical stance on tariffs. However, if the talks escalate into a mean trade war, then the market tanks to which everything goes down.
In a related aspect, the Iranian oil minister recently stated that he feels OPEC could collapse. This announcement is more dissatisfaction by Iran about its fellow club members. In the last period of Iran sanctions OPEC members picked up the slack in oil production and of course, this pissed off Iran. Can it happen again? This is the billion dollar question. Saudi Arabia announced cuts in their last meeting and Russia has agreed to cut production at least until the end of June. Meanwhile, Qatar has quit the cartel. There are other rumblings due to the religious conflict of Sunnies and Shiites. Some people will say that Saudi Arabia is OPEC, but 40% of the world's production can make or break any economy. Keep an eye on OPEC proceedings.
Wednesday, April 17, 2019
Odds and Ends: April 2019
As I write this piece and you read it, the important aspect to keep in mind is the trade talks between the US and China and the US and EU. As JFL stated many times, Brexit will keep being delayed until the status quo gets what it wants. The people's vote is in name only. With that said, there are still many dots that if connected will result in changes, either good or bad. The earning season will only matter as a trend if the talks cannot reach an outcome.
Oil
OPEC's oil restrictions end in May. Do they continue? Does Russia stay with Saudi Arabia with cuts? Can President Trump influence the Saudi's like he did last year to boost production? Many questions. With the summer driving season beginning at the end of May along with the changing to summer blend of gasoline from winter's grade, will cause rising prices. How high depends on the answers to those questions as well as Iran sanctions and the weather. The world's most important commodity affects bottom lines in almost every business and of course, the consumers pocketbook.
Two truths
Jamie Dimon, CEO of J.P. Morgan Chase spoke one truth. He said, "40% of US workers make less than $15. per hour." This is why we sold more new homes with half the population in 1950 than we do today. People cannot afford housing. The purchasing power of the dollar keeps declining due to the Fed and Treasury printing more and more worthless dollars. NASA didn't need to find a blackhole. The government knows where it is. It is the 86 trash-can for reckless spending, especially the military. The other not spoken truth is gold kept the printing press in check, maintained our standard of living and the purchasing power of the dollar. Which is why I say, "End the Fed!"
By the way, even though gold has retraced and it is testing support, the silver/gold ratio has not changed. This is a contrarian play on silver.
1st Signs
We see the first signs of failure with fiat money with federal and state government. It appears as taxes. Taxes drove many businesses out of the northeast into the mid-west. Taxes pushed industry south and some kept going south into Mexico. The latest example is from New York. The state is proposing a golf tax. The tax will be put on the real value of a property as opposed to income. Dear Reader, it is not only the consumer that cannot afford housing, but state governments cannot find enough revenue to operate. They become desperate. They have unfunded pensions. They suffer with mass migration. When this happens, they cannibalize their constituents with tax after tax like in Europe. We saw the first signs in the tax overhaul in the federal government. They capped the tax deduction on state taxes at $10,000. We will see more and more of this type of thinking and action from our government. The national deficit will reach $25 trillion by the 2020 election. This is deep doo-do territory.
What We Need
Sorry about the open question. First off, we always need peace, but I'm talking about our economy and society. A recent report by the people in engineering points to a top concern on our infrastructure. They reported that there are 47 structually defient bridges in the US. In addition, there are 237,000 that need repairs. Now, get this! Both the bridges and roads are still in use by 178 million drivers every day.This is a tragedy waiting to happen.
Mueller Report
The stupid and petty leadership of the democrats cannot move on to real pressing matters. Instead, they keep clamoring about releasing the full report by Barr. Hey, the report revealed that 34 people did something illegal and they have been arrested. How about working on immigration, infrastructure, our deficit and trade relations?
More Retail Gloom
UBS reports that by 2026, another 75,000 stores will be out of business. Multiply that number by the amount of employees in each store and then, consider the related aspects like pensions, loss of revenue and the trickle effect in each region when there is less money in circulation? Not a good forecast. On the flip-side, Amazon had $10 billion in profits and paid no taxes! When is the inept leadership in Congress going to wake-up and tax internet sales? Make it an even playing field for the brick and mortar.
Finally, Did I hear someone say, yea? Wise-guy.
It is a known fact that Americans are very nomadic in nature. We move a lot. The next big nomadic push will come from high tax states to places where there is no state tax like Florida. The first push began because of the loss of work opportunities. We are losing our ability for social mobility. Ray Dalio, CEO of Bridgewater Associates, claims that low wage earners only have a 14% to move up to middle-class. This also reflects that our middle-class is shrinking and from I see with the Mueller Report, the upper class has no morals. Our positive values come from the middle-class. Anyway, people who have lived in the same home for generations are being pushed out by state taxes. In many areas the state tax is more than the original price of the home itself. At present, there are 87 million homeowners in America. Taxes rose on average by 4% in 2018 which is a more realistic inflationary number and higher than wage growth income. Also, taxes increased the average tax burden to $3498. To get a glimpse to this prediction of moving, see how the present fiat money(read worthless) does in taxes over time. We begin our sample with New York and the first county north of the city, Westchester. The average home owner tax is $17,392. OUCH! In Long Island it is $11,708.
Go across the bridge to New Jersey.
*Bergen = $11,771.
*Union = $11,075.
*Morris = $10,507.
*Passaic = $9,988.
Add in this tidbit, it cost $15 to go over the George Washington.
It is not just the northeast to which I did not include Connecticut which is also a tax nightmare. How about the West Coast? Forget housing in San Fran where everything is over a million. Go across the bridge to Marin County. Home taxes average $12,242, OUCH! I don't know the toll price, but I know it is higher than when I lived out there. This is where fiat money is taking us. The road to Zimbabwe. The road to Venezuela. The road to the Weimar Republic. Where's Bob and Bing when you need them?
Note: After this week I will take two weeks off due to Easter. May His Peace Be With You. Maybe make a donation to restore Notre Dame - to master love, you must practice love.
Oil
OPEC's oil restrictions end in May. Do they continue? Does Russia stay with Saudi Arabia with cuts? Can President Trump influence the Saudi's like he did last year to boost production? Many questions. With the summer driving season beginning at the end of May along with the changing to summer blend of gasoline from winter's grade, will cause rising prices. How high depends on the answers to those questions as well as Iran sanctions and the weather. The world's most important commodity affects bottom lines in almost every business and of course, the consumers pocketbook.
Two truths
Jamie Dimon, CEO of J.P. Morgan Chase spoke one truth. He said, "40% of US workers make less than $15. per hour." This is why we sold more new homes with half the population in 1950 than we do today. People cannot afford housing. The purchasing power of the dollar keeps declining due to the Fed and Treasury printing more and more worthless dollars. NASA didn't need to find a blackhole. The government knows where it is. It is the 86 trash-can for reckless spending, especially the military. The other not spoken truth is gold kept the printing press in check, maintained our standard of living and the purchasing power of the dollar. Which is why I say, "End the Fed!"
By the way, even though gold has retraced and it is testing support, the silver/gold ratio has not changed. This is a contrarian play on silver.
1st Signs
We see the first signs of failure with fiat money with federal and state government. It appears as taxes. Taxes drove many businesses out of the northeast into the mid-west. Taxes pushed industry south and some kept going south into Mexico. The latest example is from New York. The state is proposing a golf tax. The tax will be put on the real value of a property as opposed to income. Dear Reader, it is not only the consumer that cannot afford housing, but state governments cannot find enough revenue to operate. They become desperate. They have unfunded pensions. They suffer with mass migration. When this happens, they cannibalize their constituents with tax after tax like in Europe. We saw the first signs in the tax overhaul in the federal government. They capped the tax deduction on state taxes at $10,000. We will see more and more of this type of thinking and action from our government. The national deficit will reach $25 trillion by the 2020 election. This is deep doo-do territory.
What We Need
Sorry about the open question. First off, we always need peace, but I'm talking about our economy and society. A recent report by the people in engineering points to a top concern on our infrastructure. They reported that there are 47 structually defient bridges in the US. In addition, there are 237,000 that need repairs. Now, get this! Both the bridges and roads are still in use by 178 million drivers every day.This is a tragedy waiting to happen.
Mueller Report
The stupid and petty leadership of the democrats cannot move on to real pressing matters. Instead, they keep clamoring about releasing the full report by Barr. Hey, the report revealed that 34 people did something illegal and they have been arrested. How about working on immigration, infrastructure, our deficit and trade relations?
More Retail Gloom
UBS reports that by 2026, another 75,000 stores will be out of business. Multiply that number by the amount of employees in each store and then, consider the related aspects like pensions, loss of revenue and the trickle effect in each region when there is less money in circulation? Not a good forecast. On the flip-side, Amazon had $10 billion in profits and paid no taxes! When is the inept leadership in Congress going to wake-up and tax internet sales? Make it an even playing field for the brick and mortar.
Finally, Did I hear someone say, yea? Wise-guy.
It is a known fact that Americans are very nomadic in nature. We move a lot. The next big nomadic push will come from high tax states to places where there is no state tax like Florida. The first push began because of the loss of work opportunities. We are losing our ability for social mobility. Ray Dalio, CEO of Bridgewater Associates, claims that low wage earners only have a 14% to move up to middle-class. This also reflects that our middle-class is shrinking and from I see with the Mueller Report, the upper class has no morals. Our positive values come from the middle-class. Anyway, people who have lived in the same home for generations are being pushed out by state taxes. In many areas the state tax is more than the original price of the home itself. At present, there are 87 million homeowners in America. Taxes rose on average by 4% in 2018 which is a more realistic inflationary number and higher than wage growth income. Also, taxes increased the average tax burden to $3498. To get a glimpse to this prediction of moving, see how the present fiat money(read worthless) does in taxes over time. We begin our sample with New York and the first county north of the city, Westchester. The average home owner tax is $17,392. OUCH! In Long Island it is $11,708.
Go across the bridge to New Jersey.
*Bergen = $11,771.
*Union = $11,075.
*Morris = $10,507.
*Passaic = $9,988.
Add in this tidbit, it cost $15 to go over the George Washington.
It is not just the northeast to which I did not include Connecticut which is also a tax nightmare. How about the West Coast? Forget housing in San Fran where everything is over a million. Go across the bridge to Marin County. Home taxes average $12,242, OUCH! I don't know the toll price, but I know it is higher than when I lived out there. This is where fiat money is taking us. The road to Zimbabwe. The road to Venezuela. The road to the Weimar Republic. Where's Bob and Bing when you need them?
Note: After this week I will take two weeks off due to Easter. May His Peace Be With You. Maybe make a donation to restore Notre Dame - to master love, you must practice love.
Wednesday, April 10, 2019
Tell Me How?
The latest consumer report confirms what Sebastian has been saying for the last six months, the US consumer no longer has the means to keep buying. So, how is our economy going to grow?
Our consumer economy is slowly becoming a thing of the past. There are many signs. If you connect the various streams of evidence, you can readily understand Sebastian's outlook. Personally, I feel this is for the better, but the cause is not the root that I would like to see.
I Like
the fact that US consumer are finally saving for a rainy day. Maybe their defense mechanism kicked-in when the word got out about the 800,000 furloughed federal workers. These guys generally make middle-class wagers and they were crying the blues by just missing one paycheck. Anyway, consumer saving was up 7.6% since December 2018. This is a turn for the better. Buy real sales, not by impulse.
Same old same old
Lenders keep pushing out credit cards. There are over 430 million cards out there. The average borrower carries a running debt of $5,736. Cards in circulation are up 13% since 2015. Now, consider this survey on Americans using credit cards. Sadly, 40 million say that they expect to miss at least one monthly payment. This translates that 40 m are making the minimum payment. This also means that a $5,000 balance will end up costing the consumer, $6,372. Not good. It gets worse.
Millennials
are not buying starter homes. They are living with their parents longer than any generation. It is not all their fault. The continual depreciation of the purchasing power of the dollar has caused home prices to increase 24% over the last five years while wages are only up 8%. You can put the blame on the government and the military budget which also keeps rising with no comparative increase in wages. In a country of over 300 million, we are barely selling a million new homes a year. How about this mind blowing fact? We sold more home in 1950 with half the population than we sell in the present market. By the way, that figure includes all size homes. Just through natural growth, our population increases 150,000 every month. So, those job growth figures are miss leading also. Anything under 150K is actually revealing a declining economy. Keep in mind, so goes housing, so goes our economy.
Latest Report on Consumer Debt
Here is the most recent breakdown of US consumer debt. It is why I suggest that people are tapped out. Even if we are in transition from a consumer economy and back to a balanced consumer, there is little wiggle room to maintain buying by the consumer.
*Home loans: our mortgage debt is $9.4 trillion.
*Student loans: Kids owe $1.36 billion.
*Auto loans: The average selling vehicle is $33,000 and loans total $1.27 billion.
*Credit Cards: Are you sitting? $834 billion...and rising.
*Personal loans: Using the louse like an ATM. $291 billion.
*Retail Credit: This will eventually go on the personal credit card. More debt of $96 billion.
Out total dent is almost as large as our entire economy.
Total consumer debt= $13.3 trillion
Total GDP = $18 trillion.
Last, but not least - Store Closings
By the last announcement there are 4,810 establishments that are no longer in operation. Multiply that number by the amount of employees and one realizes that the unemployment figures are a sham. Here is a figure that they cannot manipulate. Job layoffs are up 35% in the first quarter. Our consumer can no longer sustain a consumer economy and Congress should wake up and tax the internet to give retail a fighting chance. In addition, our economy can no longer absorb low wage immigration. If this keeps up, sadly we will have civil unrest. This is not anti-immigration. It is reality. At times we can absorb and assimilate and at times we cannot. This is one of those times.
Our consumer economy is slowly becoming a thing of the past. There are many signs. If you connect the various streams of evidence, you can readily understand Sebastian's outlook. Personally, I feel this is for the better, but the cause is not the root that I would like to see.
I Like
the fact that US consumer are finally saving for a rainy day. Maybe their defense mechanism kicked-in when the word got out about the 800,000 furloughed federal workers. These guys generally make middle-class wagers and they were crying the blues by just missing one paycheck. Anyway, consumer saving was up 7.6% since December 2018. This is a turn for the better. Buy real sales, not by impulse.
Same old same old
Lenders keep pushing out credit cards. There are over 430 million cards out there. The average borrower carries a running debt of $5,736. Cards in circulation are up 13% since 2015. Now, consider this survey on Americans using credit cards. Sadly, 40 million say that they expect to miss at least one monthly payment. This translates that 40 m are making the minimum payment. This also means that a $5,000 balance will end up costing the consumer, $6,372. Not good. It gets worse.
Millennials
are not buying starter homes. They are living with their parents longer than any generation. It is not all their fault. The continual depreciation of the purchasing power of the dollar has caused home prices to increase 24% over the last five years while wages are only up 8%. You can put the blame on the government and the military budget which also keeps rising with no comparative increase in wages. In a country of over 300 million, we are barely selling a million new homes a year. How about this mind blowing fact? We sold more home in 1950 with half the population than we sell in the present market. By the way, that figure includes all size homes. Just through natural growth, our population increases 150,000 every month. So, those job growth figures are miss leading also. Anything under 150K is actually revealing a declining economy. Keep in mind, so goes housing, so goes our economy.
Latest Report on Consumer Debt
Here is the most recent breakdown of US consumer debt. It is why I suggest that people are tapped out. Even if we are in transition from a consumer economy and back to a balanced consumer, there is little wiggle room to maintain buying by the consumer.
*Home loans: our mortgage debt is $9.4 trillion.
*Student loans: Kids owe $1.36 billion.
*Auto loans: The average selling vehicle is $33,000 and loans total $1.27 billion.
*Credit Cards: Are you sitting? $834 billion...and rising.
*Personal loans: Using the louse like an ATM. $291 billion.
*Retail Credit: This will eventually go on the personal credit card. More debt of $96 billion.
Out total dent is almost as large as our entire economy.
Total consumer debt= $13.3 trillion
Total GDP = $18 trillion.
Last, but not least - Store Closings
By the last announcement there are 4,810 establishments that are no longer in operation. Multiply that number by the amount of employees and one realizes that the unemployment figures are a sham. Here is a figure that they cannot manipulate. Job layoffs are up 35% in the first quarter. Our consumer can no longer sustain a consumer economy and Congress should wake up and tax the internet to give retail a fighting chance. In addition, our economy can no longer absorb low wage immigration. If this keeps up, sadly we will have civil unrest. This is not anti-immigration. It is reality. At times we can absorb and assimilate and at times we cannot. This is one of those times.
Wednesday, April 3, 2019
Housing: Trending to Disaster
I must be an idiot to title a piece like I have, especially since the latest Case-Shiller housing index stated that home prices are up 20% since 2013. And of course, the government is shouting the news too. The Federal Housing Finance Agency's index is up 11% during the same period. However, those uptrends do not reveal the turning points within the market. These are points worth thinking about.
Dear Reader, the numbers are misleading because life is not an equation.
A study by Keith Jurow gives us the insight as to why I see many dark clouds on housing. Keep in mind, so goes the housing industry, so goes the economy.
Keith Uncovers
this fact from Core Logic's report on payment delinquencies. At first glance the report makes me look foolish with the Federal Housing cheering the results. They stated, "...that delinquencies are down from a 2010 high of 8.6% to a present 3.9%." - Guess I don't know what I'm writing about...
But wait! Holy Cow, Batman! Those facts did not include JUMBO loans like the ones needed to buy the bat cave.
Two Types
of loans. The main one, sponsored by Freddie Mac and Fannie Mae are for every day people like you and me. Then, there are the type of loans for the new rich like first round draft picks. These type of loans do not get reported and Keith uncovered why.
The wealthy are all show with no substance. Their delinquency rate is off the charts. Dear Reader, the banks make their real profit from jumbo loans because they can charge higher rates of interest. They sell the every day loans to the GSE, especially if they start to go bad. This is your bailout, however dark clouds are now forming in the well-to-do loan category.
Banks can sell their portfolio of these loans like they did in the past with swaps, but lately, the Ding-Dongs aren't falling for this high yield, future bankruptcy trap. Banks are stuck with these loans on their books. Now, for the shocker. Are you sitting? The delinquency rate for these large loans ranges from 17% to 19% depending on the region of the country. The news gets worse, so grab a glass of water and have a seat. In New York City metro area, the fall down is 39%. In Miami it is 37%. Snake eyes in Vegas with a delinquency rate of 29%. The football attendence will not be kind to Da Bears. In Chicago the bad loans are up to 28%. Now, this shock will shield your ears from the roar of the Federal Housing people. Now, you realize that the report of 3.9% is just another manipulation of the truth. It takes five regular loans to match just one jumbo loan and remember there are 19 million people in the NYC metro area and 40% of the loans are jumbo. Please, Dear Reader maintain your seat. Your captain has turned on the buckle up sign.
Zombie Homes
these are foreclosed homes that sit vacant in your neighborhood since 2008. The banks have not been able to come up with the proper paper documentation to finish the foreclosure process, but the past owners have long left. You suffer with this eyesore which lowers your own home's market value. Then, there other zombie homes where they are occupied by the owner who hasn't made a payment in years. He does little upkeep on the property because deep, down inside, he knows that he will be evicted someday. There are over 15% of homes that are still under water to their mortgage according to Zillow.
Finally, and this earthquake will cause the Tsunami. Back in 2005 the loan sharks came up with this idea to keep the big bucks rolling. They developed the HEL loan. It is basically a loan based on your equity in your home. The selling point was that you, the homeowner would only have to pay interest on the loan for ten years at which time the house would appreciate more than the original loan. Didn't happen. The ten years is up! Now, the full payment must be made. Didn't the lettering H-E-L (home equity loan) clue you. This is a loan from hell! You used your house like an ATM machine and the party is over. These loans were sold to 10 million people. When the news breaks, things will be very similar to 2007 and you know what happened in 2008.
Like I said, the recent news has been very favorable to housing. People are rushing into refinancing their mortgages as they did not think that rates would fall again. This will give housing an uplift and the economy. Don't be fooled! This is a last hurrah! Due to the Fed going on pause, long rates have dropped. The shills are saying the inverted yield no longer applies! Idiots! The real problem is the printing press with currencies. Fiat money has failed, but this will never be mentioned as the real problem. People, the economy cannot get bye on 3.5% interest rates. This is a Las Vegas tell. The inverted yield concept is screaming the truth! This is why the Fed has paused. Like Duke and like Gonzaga, the game is over and only the crying is left.
Dear Reader, the numbers are misleading because life is not an equation.
A study by Keith Jurow gives us the insight as to why I see many dark clouds on housing. Keep in mind, so goes the housing industry, so goes the economy.
Keith Uncovers
this fact from Core Logic's report on payment delinquencies. At first glance the report makes me look foolish with the Federal Housing cheering the results. They stated, "...that delinquencies are down from a 2010 high of 8.6% to a present 3.9%." - Guess I don't know what I'm writing about...
But wait! Holy Cow, Batman! Those facts did not include JUMBO loans like the ones needed to buy the bat cave.
Two Types
of loans. The main one, sponsored by Freddie Mac and Fannie Mae are for every day people like you and me. Then, there are the type of loans for the new rich like first round draft picks. These type of loans do not get reported and Keith uncovered why.
The wealthy are all show with no substance. Their delinquency rate is off the charts. Dear Reader, the banks make their real profit from jumbo loans because they can charge higher rates of interest. They sell the every day loans to the GSE, especially if they start to go bad. This is your bailout, however dark clouds are now forming in the well-to-do loan category.
Banks can sell their portfolio of these loans like they did in the past with swaps, but lately, the Ding-Dongs aren't falling for this high yield, future bankruptcy trap. Banks are stuck with these loans on their books. Now, for the shocker. Are you sitting? The delinquency rate for these large loans ranges from 17% to 19% depending on the region of the country. The news gets worse, so grab a glass of water and have a seat. In New York City metro area, the fall down is 39%. In Miami it is 37%. Snake eyes in Vegas with a delinquency rate of 29%. The football attendence will not be kind to Da Bears. In Chicago the bad loans are up to 28%. Now, this shock will shield your ears from the roar of the Federal Housing people. Now, you realize that the report of 3.9% is just another manipulation of the truth. It takes five regular loans to match just one jumbo loan and remember there are 19 million people in the NYC metro area and 40% of the loans are jumbo. Please, Dear Reader maintain your seat. Your captain has turned on the buckle up sign.
Zombie Homes
these are foreclosed homes that sit vacant in your neighborhood since 2008. The banks have not been able to come up with the proper paper documentation to finish the foreclosure process, but the past owners have long left. You suffer with this eyesore which lowers your own home's market value. Then, there other zombie homes where they are occupied by the owner who hasn't made a payment in years. He does little upkeep on the property because deep, down inside, he knows that he will be evicted someday. There are over 15% of homes that are still under water to their mortgage according to Zillow.
Finally, and this earthquake will cause the Tsunami. Back in 2005 the loan sharks came up with this idea to keep the big bucks rolling. They developed the HEL loan. It is basically a loan based on your equity in your home. The selling point was that you, the homeowner would only have to pay interest on the loan for ten years at which time the house would appreciate more than the original loan. Didn't happen. The ten years is up! Now, the full payment must be made. Didn't the lettering H-E-L (home equity loan) clue you. This is a loan from hell! You used your house like an ATM machine and the party is over. These loans were sold to 10 million people. When the news breaks, things will be very similar to 2007 and you know what happened in 2008.
Like I said, the recent news has been very favorable to housing. People are rushing into refinancing their mortgages as they did not think that rates would fall again. This will give housing an uplift and the economy. Don't be fooled! This is a last hurrah! Due to the Fed going on pause, long rates have dropped. The shills are saying the inverted yield no longer applies! Idiots! The real problem is the printing press with currencies. Fiat money has failed, but this will never be mentioned as the real problem. People, the economy cannot get bye on 3.5% interest rates. This is a Las Vegas tell. The inverted yield concept is screaming the truth! This is why the Fed has paused. Like Duke and like Gonzaga, the game is over and only the crying is left.
Wednesday, March 27, 2019
Odds and Ends: March 2019
I came across this tidbit in the news. It did not make the national media scene, but it is too important for them to broadcast. It is about a state bill in Idaho called, the Initiative Bill. It is sponsored by a republican state senator, Scott Grow. It is an example of anti-democracy if I ever saw something of that nature.
Dear Reader, one of the biggest problems in US democracy is the elected government legislators. They feel that they know best. They do not do the wishes of the people who elected them. So much for the BS about servants of the people. Anyway, this is how populism grew. These officials never reveal their true intentions in their campaign promises. This is such an example.
Senator Grow sees danger when the people use grassroot democracy to get a proposal on the ballot. It could be that the people of the state may want lower taxes, a water project, marijuana legalized, etc. Whatever it is, Senator Grow is going to do his best to stop it before it has a chance to become law. His bill is a reactionary effort due to an initiative on state Medicare that was passed by the people in the last election. The people expressed their desire to increase the medical under the act. Senator Grow not only opposes the people, he wants to make it almost impossible for grassroot action in the future.
Old Law
The present law states that any initiative must collect 2% of registered voters during an 18 month period. These are the people with clipboards in front of supermarkets or libraries seeking your endorsement. The reason that they are given such a long period is due to the fact that these grassroot groups have little leadership, organization and money. It takes time. Hey, we are two years away from election 2020 and yet the field grows everyday.
Grow's Law
He would make an initiative seek 5% of registered voters and reduce the time to six months. His friends think that he is too "liberal" in his bill. This is the state government in Idaho.
Mark Twain quote:
"If voting meant anything, they wouldn't let us do it."
His genius gets more relevant everyday.
Called it!
The quote above could be used in the UK. As Sebastian predicted, their government will do what they want and that is not Brexit. They have voted to extend the Brexit plan until they can get a plan that is around the wishes of the people who voted for it.
Lock and Loaded
Weapons and ammo was stolen again from an ATF facility. Do you remember the last time? The ATF head honchos came up with a plan to give automatic weapons and ammo to the drug cartel. Then, they would follow the gun fire to capture them. Idiots!
Now, gangsters just have to walk-in and walk-out with their weapon of choice.
I can see the local election campaign, "Vote for me and we will have security!"
Auto Warning
Interest rates for autos rose from 5.19% in 2018 to the present, 6.26%. It may not seem much, but there are 7 million auto loans that are 90 days delinquent under the lower payment rates. In addition, a survey on consumer confidence reveals that 40 million Americans already believe that they will miss at least one credit card payment and many are paying just the minimum.
The problem as JFL sees it is more car buyers will lease rather than buy. This too on the surface sounds okay until one looks out three years or the term length of a lease contract. Then, millions of used vehicles will be returned to dealers. They will be in conflict with buyers at that time. Also, consider prices. They keep rising to the present average record of over $33 grand for a new vehicle. A cheaper older model or an expensive new model? Future car sales will be impacted for the worse. Not good.
Tariffs Work!
US Steel grew by 60% in 2018. The high paying industry added 25% more workers.
Aluminum grew by 10%.
Keep those results in mind because the trade deficit with China grew by another $34 billion in 2018. People, those are lost salaries and jobs. It puts us into deficits and that is the real danger to America. We lose our ability to be self-sufficient!
More Retail Gloom
Announced store closings for 2019 grew to 4810 locations. Multiply that figure by employees and one realizes the unemployment rate is a sham.
Fed Interview
The only truth out of Powell, the Fed chairman's mouth is the high unemployment of male workers and the dangerous spread of opioids. This is a repeat of the scenario of the 70s. Then, we had women's lib. Women entered the workforce just like today. This movement although worthwhile, was a mask to hide all our lost manufacturing to NAFTA and elsewhere. Men won't settle for a job that does not pay a living wage. This is the same attraction as to why kids will sell drugs. It pays well.
Boeing is Sick!
From time-to-time capitalism suffers from what is right and greed. Boeing has this disease. It intimidated its employees in Seattle to vote a certain way as opposed to what the union thought best for the workers and company. The workers caved. The union was right. Even thought the workers gave what the corporation wanted, it still moved work South into a non-union state. Now, we learn that their 737 jetliner had two safety options that were sold separately. These petty, crooks are like buying a car and told the emergency brake costs extra. Idiots! You sell an item that costs millions. Sell the best product that you can with NO options for a price. You have lost creditability with me.
Mortgage Relief
Housing is getting a break from the Fed's pause on rates. Mortgage rates are the lowest in a year. Right on cue, housing sales burst in February.
Inverted Yield
The dreaded inversion curve in bonds happened last Friday. The rate on a three month note was higher than the 10-year bill. It also showed its ugly face as the 1-year note was higher than the 2-year note. Whenever bonds suffer an inverted yield, a recession soon follows. When it rains, it pours. Germany slipped back into negative rate bonds.
Prediction!
By the next national election our deficit will reach $25 trillion. It got a good start in February as the monthly deficit swelled to a record $234 billion in the shortest month of the year. This kind of reckless spending and allowing outsourcing of labor without taxation will doom our ability to keep the dollar as the world's reserve currency. When, and if this happens, gasoline will cost $7. per gallon. A quart of milk will bust your wallet to the tune of $3 bucks and everything that we buy will double in price. You can thank both the republicans and democrats, the Federal Reserve and greedy capitalist who have the Boeing Disease.
Dear Reader, one of the biggest problems in US democracy is the elected government legislators. They feel that they know best. They do not do the wishes of the people who elected them. So much for the BS about servants of the people. Anyway, this is how populism grew. These officials never reveal their true intentions in their campaign promises. This is such an example.
Senator Grow sees danger when the people use grassroot democracy to get a proposal on the ballot. It could be that the people of the state may want lower taxes, a water project, marijuana legalized, etc. Whatever it is, Senator Grow is going to do his best to stop it before it has a chance to become law. His bill is a reactionary effort due to an initiative on state Medicare that was passed by the people in the last election. The people expressed their desire to increase the medical under the act. Senator Grow not only opposes the people, he wants to make it almost impossible for grassroot action in the future.
Old Law
The present law states that any initiative must collect 2% of registered voters during an 18 month period. These are the people with clipboards in front of supermarkets or libraries seeking your endorsement. The reason that they are given such a long period is due to the fact that these grassroot groups have little leadership, organization and money. It takes time. Hey, we are two years away from election 2020 and yet the field grows everyday.
Grow's Law
He would make an initiative seek 5% of registered voters and reduce the time to six months. His friends think that he is too "liberal" in his bill. This is the state government in Idaho.
Mark Twain quote:
"If voting meant anything, they wouldn't let us do it."
His genius gets more relevant everyday.
Called it!
The quote above could be used in the UK. As Sebastian predicted, their government will do what they want and that is not Brexit. They have voted to extend the Brexit plan until they can get a plan that is around the wishes of the people who voted for it.
Lock and Loaded
Weapons and ammo was stolen again from an ATF facility. Do you remember the last time? The ATF head honchos came up with a plan to give automatic weapons and ammo to the drug cartel. Then, they would follow the gun fire to capture them. Idiots!
Now, gangsters just have to walk-in and walk-out with their weapon of choice.
I can see the local election campaign, "Vote for me and we will have security!"
Auto Warning
Interest rates for autos rose from 5.19% in 2018 to the present, 6.26%. It may not seem much, but there are 7 million auto loans that are 90 days delinquent under the lower payment rates. In addition, a survey on consumer confidence reveals that 40 million Americans already believe that they will miss at least one credit card payment and many are paying just the minimum.
The problem as JFL sees it is more car buyers will lease rather than buy. This too on the surface sounds okay until one looks out three years or the term length of a lease contract. Then, millions of used vehicles will be returned to dealers. They will be in conflict with buyers at that time. Also, consider prices. They keep rising to the present average record of over $33 grand for a new vehicle. A cheaper older model or an expensive new model? Future car sales will be impacted for the worse. Not good.
Tariffs Work!
US Steel grew by 60% in 2018. The high paying industry added 25% more workers.
Aluminum grew by 10%.
Keep those results in mind because the trade deficit with China grew by another $34 billion in 2018. People, those are lost salaries and jobs. It puts us into deficits and that is the real danger to America. We lose our ability to be self-sufficient!
More Retail Gloom
Announced store closings for 2019 grew to 4810 locations. Multiply that figure by employees and one realizes the unemployment rate is a sham.
Fed Interview
The only truth out of Powell, the Fed chairman's mouth is the high unemployment of male workers and the dangerous spread of opioids. This is a repeat of the scenario of the 70s. Then, we had women's lib. Women entered the workforce just like today. This movement although worthwhile, was a mask to hide all our lost manufacturing to NAFTA and elsewhere. Men won't settle for a job that does not pay a living wage. This is the same attraction as to why kids will sell drugs. It pays well.
Boeing is Sick!
From time-to-time capitalism suffers from what is right and greed. Boeing has this disease. It intimidated its employees in Seattle to vote a certain way as opposed to what the union thought best for the workers and company. The workers caved. The union was right. Even thought the workers gave what the corporation wanted, it still moved work South into a non-union state. Now, we learn that their 737 jetliner had two safety options that were sold separately. These petty, crooks are like buying a car and told the emergency brake costs extra. Idiots! You sell an item that costs millions. Sell the best product that you can with NO options for a price. You have lost creditability with me.
Mortgage Relief
Housing is getting a break from the Fed's pause on rates. Mortgage rates are the lowest in a year. Right on cue, housing sales burst in February.
Inverted Yield
The dreaded inversion curve in bonds happened last Friday. The rate on a three month note was higher than the 10-year bill. It also showed its ugly face as the 1-year note was higher than the 2-year note. Whenever bonds suffer an inverted yield, a recession soon follows. When it rains, it pours. Germany slipped back into negative rate bonds.
Prediction!
By the next national election our deficit will reach $25 trillion. It got a good start in February as the monthly deficit swelled to a record $234 billion in the shortest month of the year. This kind of reckless spending and allowing outsourcing of labor without taxation will doom our ability to keep the dollar as the world's reserve currency. When, and if this happens, gasoline will cost $7. per gallon. A quart of milk will bust your wallet to the tune of $3 bucks and everything that we buy will double in price. You can thank both the republicans and democrats, the Federal Reserve and greedy capitalist who have the Boeing Disease.
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