Thursday, August 29, 2013

Economic Freedom Declining In US

Economic freedom brings prosperity.  Conversely, loss of economic freedom brings lower prosperity and poverty.  From Investmentu.com
There is a strong correlation between economic freedom and prosperity. Countries with the highest level of economic freedom have the highest level of per capita income. And vice versa. Nations with severe restrictions on investors, businesses and consumers struggle financially.   Note that the more economic freedom a nation enjoys, the higher average per capita income goes up.
What comprises economic freedom and how do you measure it?  Heritage Foundation measures it by quantifying four major categories (and ten subcategories) as follows:
  1. Rule of Law:  Freedom from corruption, property rights
  2. Limited Government: Tax rates on individuals and businesses, government spending as a proportion of GDP, 
  3. Regulatory Efficiency:  Labor freedom, monetary freedom, business freedom
  4. Open Markets: Trade freedom (absence of tariffs or other barriers), investment freedom (ease of capital movements), Financial freedom (financial sector's independence from government control or influence)

Economic Freedom is Highly Correlated to Economic and Income Growth


From an article in National Center for Policy Analysis, they summarize the benefits of high levels of economic freedom.   Here's the advantages of freer economy: 
  1. Freer economies grow faster
  2. In freer economies, people have higher incomes
  3. Freer economies attract more investment
  4. Helps reduce poverty (proving that a rising tide lifts all boats)
  5. Income distribution is better in freer economies
  6. People live longer
  7. Freer countries are more democratic
  8. Higher well-being of it's citizens


 




How is the USA Doing?


The USA has had declining economic freedom since year 2000. From Zero Hedge,
The ranking of the US has fallen precipitously; from second in 2000 to eighth in 2005 and 19th in 2010. By 2009, the United States had fallen behind Switzerland, Canada, Australia, Chile, and Mauritius, countries that chose not to follow the path of massive growth in government financed by borrowing that is now the most prominent characteristic of US fiscal policy. By 2010, the United States had also fallen behind Finland and Denmark, two European welfare states. Moreover, it now trails Bahrain, the United Arab Emirates, Estonia, Taiwan, and Qatar.
The US economic freedom index keeps dropping after year 2000.  The graph below shows 7.70 for 2010 but it has continued it's decline.  On another economic freedom index, the US has gone from 2nd in the world in 2000 to 18th in 2013.  Notice that decline has occurred during both the Bush and Obama years.  As economic freedom fell,  economic and personal income growth has stagnated, and in the case of real personal income, has declined.    It's no coincidence.  We know Bush was a big spender and there was a curtailment of freedoms after the 9/11 attack. 

Here's a graph of US performance in economic freedom rankings:


Do you think Obama really wants more economic freedom?  Not a chance.  He's all about Stat-ism and big government.  He has only tired old ideas that have been trounced by the lessons of history and the  ideas presented in this blog.  His formative years were spent in Indonesia and Kenya, who rank 76th and 78th, respectively, in the freedom index.  So, he never learned the lessons that Eastern European countries learned under communist systems and are now enjoying strong economies after the end of the cold war.  Obama consistently proves resistant to learn anything that conflicts with his world view.

Much of Europe is seeing improving economic freedom, especially in the Baltic states, Eastern Europe and new members of the EU.  They have improved levels of economic freedom and a corresponding increase in growth rates and income growth.  They have thrown out the tired old central planning model that Obama is trying to adopt!

From The Center For Individual Freedom reports in their release of 2013 economic freedom rankings that:  
A majority of European nations, chastened by big-government experience, actually improved to their highest economic freedom scores ever in this year’s Index. Under President Obama, however, we continue down a path that Europe is gradually abandoning. Alongside Ireland, the U.S. is the only industrialized nation to have regressed for five years in a row.

Economic Freedom Map and Rankings of Countries


(Click to enlarge)



Wednesday, August 28, 2013

Financial Crisis 'Skyscraper' Indicator Points to China

In my blogs Worldwide Financial Bubbles Beginning to Burst? and Financial Crisis Coming to China?, I point out the fact that debt in China has rocketed to levels that preceded financial crises in other countries.  It's the rate of debt increase in China that's the truly amazing feat achieved through "central planning."

It's not just the debt level that tends to precede financial crises, but the country with the tallest skyscraper, interestingly, tends to have next financial crisis.  These grand projects are good indicators of easy money and high investor confidence that usually precede a bust. 

Here's a graphic from Forbes summarizing evidence for the skyscraper indicator (click to enlarge),



Right now that indicator is clearly pointing to a financial bust in China.  The article goes on to say:
Skyscrapers are inherently speculative ventures, in that they are rarely, if ever, built by their intended occupants or with committed tenants. “Build it and they will come” captures the prevailing spirit. Thus you can think of the world’s tallest skyscrapers as indicators of lofty overconfidence. Second, because speculators rarely build such structures with their own money, skyscrapers are powerful evidence of “easy money.” Accepting the importance of these two variables in creating a fertile context for bubble formation, skyscrapers are actually a spectacular indicator of bubbly conditions.
According to Skyscraperpage.com, five of the 10 tallest buildings now under construction are in China. By 2015 the website estimates that Chinese skyscrapers will occupy spots Nos. 2, 3, 5, 9 and 10 of the tallest buildings in the world. Might the booming Chinese economy be susceptible to a bust?

Tuesday, August 27, 2013

Trumped-up Trial Leaves Zimmerman Bankrupted

The trial, that was never supposed to happen, has financial fall-out for all participants that most people don't think about.

The Zimmerman trial itself was the result of a phony race-baiting exercise and uproar by discredited black leaders---including Obama----who demanded that the State of Florida prosecute (and persecute) George Zimmerman despite the fact that the local jurisdiction didn't see a case worth prosecuting.  See my blog The Failed Political Prosecution of Zimmerman.  It was a Kangaroo trial set up in an attempt to impose a sort of "mob justice" trumped-up in part by the President himself and backed up, of course, by Eric Holder. 

Mark O'Mara, who was George Zimmerman's lawyer, has filed to recoup some $300,000 of the non-lawyer expenses from the state.  This debt is on the shoulders of George Zimmerman.  From Fox News,
Since he was found not guilty, Zimmerman is entitled under a Florida law to recoup the defense costs, minus private attorney fees, said his lawyer Mark O'Mara. It also says that any costs already paid can be refunded with the approval of a judge
Mark O'Mara will not get paid anything since he took the case pro bono. Had he not donated his time, his bill would have been over $1 million for over 16 months of work. We're not counting any other legal counsel costs that might have been incurred. In short, everyone involved in the trial has been financially busted.

Think about that when Holder called for yet another case against Zimmerman (see my blog here).   It is the height of irresponsibility.  It's entirely unfair that Big Government, with unlimited resources wants to further persecute exonerated individuals---even after a jury has spoken.  And this by the nation's Attorney General!  Nobody can withstand or afford such an onslaught.  Nobody should.  Shame on you Holder.   Shame on you Obama.   Shame on you Al Sharpton.  Shame on all of you and all of your supporters!  All of you have lost my support!  All of you are unworthy of my support.

Obama Boxed-In By Syria Red Line Talk

You would have thought that we learned our lesson in Afghanistan and Iraq about how treacherous is our involvement in middle east regime change.  The devil you know is better than the one you don't know.

I guess there is one case where military intervention was justified and successful: the war between Serbia and Kosovo during the Clinton administration in the late 90's.  Serbia and their genocidal regime was brought down thus saving the lives of countless Muslims.  It involved all the NATO allies and the UN and it did involve troops on the ground.  Muslims really paid us back for helping them in 2001.

Along came the Arab uprisings which revolutionaries termed "Arab spring" but now has predictably morphed into "Arab hell."  The Obama Administration got caught up with the revolutionary fervor in Libya (leading from behind of course) and we turned against the 'reformed' Ghaddafi.  What did we get in return?  We got more chaos and the death of our Ambassador and staff (and the subsequent cover-up scandal).

Obama also got caught up with the protests against Mubarak in Egypt and called for Mubarak to step down (it was lose-lose so there wasn't a good choice).  What has followed is a disaster for the country as one form of tyranny gets replaced by Islamic tyranny then back to miltiary tyranny.  Mubarak, as it turned out, had held the country together (with an iron fist), kept the Muslim brotherhood in check and kept the peace with Israel for decades.  Now Egypt is basically on the verge of collapse except for international 'welfare' from the Gulf States.

In every case of Arab unrest and revolution the subsequent result has been a worse situation.  Arab civilization is indeed collapsing

I'm told that the upcoming missile strikes in Syria are not intended for "regime change" but once you lob missiles, you don't know what will happen.  The fact that we are arming and training the Syrian resistance belies the claim that the punitive missile strikes aren't intended for regime change.

Obama stated that he would not get involved in Syria unless they used chemical weapons.  Now, the administration claims that Assad has used these weapons.  I don't know if it's true.  It's reminiscent of the claims of weapons of mass destruction (WMDs) in Iraq.

Maybe it's more like a case of the President being seen to "act presidential" to help his ailing poll numbers.  After all, his only accomplishments in his presidency are in tatters: ObamaCare and Dodd Frank both aren't being implemented and/or completed. The economy has not recovered even after $6 Trillion in deficit spending and $3 Trillion in money printing. This administration keeps getting slapped down by the courts in a wide variety of cases. Both Obama and Holder keep showing how out of step, out of touch, and how inept they are. You could say that they entire administration is in tatters. It's a miracle that his approval ratings are in the 40s.  Apparently many people are still falling for Obama's (smoothly-delivered) bullshit. 

So, now that the administration is stating that chemical weapons were used, they have no choice but to act.  Such is the consequence of drawing "red lines"in the sand.  Our country's credibility, already low, is even more on the line.  If Obama doesn't act, he'll be perceived as weak (which he is and everyone knows it).

So, expect some kind of attacks on Syria from our "peace" president, which may open Pandora's box of reprisals in the months ahead from Iran, Russia and their proxies.  Get ready for unintended consequences as we intervene in another civil war and roll the dice on what happens next.  Recent history shows that everything gets much worse after our involvement, which in turn requires even more involvement.   All this to save Muslims from other Muslims who all hate us?  I say let them destroy themselves.

I've learned my lessons.  But this administration, full of neophytes and imbeciles, have proven to be immune to any lessons of any kind.  That's what happens when idiots come to power.

Monday, August 26, 2013

Jay Z's Big Pimpin'

To all you whitey's out there who are not in touch with mainstream American black culture, I thought I'd enlighten you a bit.  Here's a piece from mainstream black artist Jay Z 

From Wikipedia,
"Big Pimpin'" was the most commercially successful single from Jay-Z's fourth album, as it reached #18 on The Billboard Hot 100 and #1 on the Rhythmic Top 40 chart.  In Rolling Stone's updated 2010 list of "The 500 Greatest Songs of All Time", the song ranked at #467.
 The video got 5.1 million hits on YouTube.  Enjoy.  Be Enlightened.

  

Here's the lyrics from Metrolyrics so you can fully appreciate this artistic achievement. 

Uh, uh, uh, uh, it's big pimpin' baby
It's big pimpin', spendin' G's
Feel me, uh huh uh, uh huh
Ge-ge-geyeah, geyeah
Ge-ge-geyeah, geyeah

You know I thug 'em, fuck 'em, love 'em, leave 'em
'Cause I don't fuckin' need 'em
Take 'em out the hood, keep 'em lookin good
But I don't fuckin' feed 'em

First time they fuss I'm breezin'
Talki'n 'bout, what's the reasons?
I'm a pimp in every sense of the word, bitch
Better trust than believe 'em

In the cut where I keep 'em
Till I need a nut, till I need to beat the guts
Then it's, beep beep and I'm pickin' 'em up
Let 'em play with the dick in the truck

Many chicks wanna put Jigga fist in cuffs
Divorce him and split his bucks
Just because you got good head, I'ma break bread
So you can be livin' it up

Shit I parts with nothin', y'all be frontin'
Me give my heart to a woman
Not for nothin', never happen
I'll be forever mackin'

Heart cold as assassins, I got no passion
I got no patience and I hate waitin'
Hoe get yo' ass in and let's R I I I I I I D E
Check 'em out now

Financial Crisis Coming Soon from China?

In my recent blog in June 2013, Worldwide Financial Bubbles Beginning to Burst?,  I mention that Fitch has called China's financial system the "worst financial credit bubble in modern world history."

Debt has soared there in recent years and has found it's way into a "shadow" financial system apart from the government controlled enterprises.  From that blog:
It's likely that bursting bubbles in Asia will be the trigger for a larger world-wide financial bust. Asian bubbles include: China's credit market bubbles (official and shadow markets), dramatic, China and Hong Kong's property/debt bubbles, Thailand's property/debt bubble, Australia's property and debt bubbles, and inflated emerging market equity/bond markets all threaten a similar repeat of the Asia Crisis of 1997. When bubbles burst, banking system crises and currency crises are sure to follow.  Capital flight from emerging markets have already started and will aggravate the problems.  So, get ready for huge financial turmoil in the coming months.
Maybe I'm a little early in my prediction.  You could say that I'm on "debt-crisis watch."  In my opinion, the nexus of the next wave of the financial crisis may very well come from China (or Japan).   

Now, from Guggenheim Partners, comes a brief article and a fascinating chart showing the rise of debt in countries that subsequently had financial crises. You can see from the chart that China may very well be reaching a level that has marked financial crises in other countries.  Some people peg China's debt level at 200% of GDP, not the 170% shown on the graph. The Chinese themselves might not even know! 

Non-Financial Debt to GDP





















 From the Guggenheim article, they go on to explain:
A rapid increase in private sector leverage in a relatively short period of time often presages major financial crises. Historical examples include the collapse of the Japanese property bubble in 1990, the financial crisis in South Korea in 1997, and the most recent crises in the United States, Britain, and the euro zone, which all happened after private sector debt surged to or above 170 percent of GDP. Chinese private sector leverage has reached this significant level. Over the past four years, non-financial private sector debt in China has more than doubled, primarily driven by massive corporate borrowing endorsed by government officials to maintain economic growth rates. Although the recent data show signs of a stabilization in the Chinese economy, the elevated debt burden should continue to cast doubt over its growth sustainability.

Friday, August 23, 2013

My Adjusted ETF Portfolio Mix

In a recent blog called Easy Investment Portfolio Management Using ETFs, I talk about how the advent of ETFs has enabled small investors to participate in domestic and international stocks and bonds at very low costs.

I included my current IRA ETF portfolio mix and made a projection for converting my taxable account.  If you remember, I said that I'm waiting for a market correction, hopefully this fall, before converting the portfolio to an ETF portfolio.  Something's changed.   In a blog called Jeremy Grantham's Expected Asset Returns--Next 7 Years, Jeremy Grantham, a very respected investor, confirms what I suspected; that US stocks are pricey with potential negative 7 year returns.  The other takeaway is that international stocks and bonds look cheaper.

Therefore I've adjusted my projected taxable account ETF portfolio to reflect more international exposure. (I've added int'l stocks but haven't researched emerging market bonds--I'll post another blog with the result of that research).  Remember, I'm waiting for a hefty correction this fall to convert from my cautious mutual fund portfolio in my taxable account.   Here goes:

SPY     Large Cap 2% yield                                                                      12.5%
VIG     Vanguard Large Cap US Dividend Appreciation 2% yield          12.5%
VXF     US Market-Total market excluding S&P500                               15%
VB        US Small Caps                                                                              5%
EEM    Emerg Mkts 2% yield                                                                    5%
VUE     World Markets excluding US stocks                                             5%
AGG    Aggregate Tot Bond 2.85%                                                            0% for now
IEI        3 to 7 year Treasury bond 0.6%                                                     0% for now
BIV      Vanguard Interm Muni 3.2% plus cap gain distributions               0% for now
MUB    Long Munis 3%                                                                              0% for now

Cash                                                                                                          45%

The breakdown is as follows:

Stocks   55%
Bonds   35%
Cash     10%

For stocks, there's 10% emerging markets and a total of 20% international stocks.  Go to Fidelity or your preferred site to research each of these ETFs before investing.  Also, Market Watch has some good articles on Lazy ETF Portfolios that are good "food for thought."  I'll update this information if I make changes.

Jeremy Grantham's Expected Asset Returns--Next 7 Years

Jeremy Grantham,  one of the most respected investors in the world, has come out with a report that ranks various asset classes for their expected inflation-adjusted performance over the next 7 years.   His company, GMO, manages about $100 Billion for investors.

From The Big Picture, I've included a graph of his projections.  The takeaway is that US stocks are very pricey, with negative expected returns of -2% for large US Stocks and -3.5% for Small US Stocks.  He says that "high quality" US stocks should return about 3% per annum.  I'm not sure what he means, but I'm interpreting "high quality" as large cap stocks with international exposure like those in the S&P 500.  Normal equity returns are above +6% per annum (excluding dividends). 

But, according to his analysis, international and emerging stock markets are cheap(er) with +2% and +6% expected returns, respectively.  Notice that emerging market debt is cheaper too.  He includes timber as an alternative asset class as a sort of 'teaser.'  I guess he's saying that commodities might be a good investment.   All in all, the world's stock markets are too expensive.  If you can wait for a 20% correction, then expected returns would be much better.  If you're patient, you'll get it.  I think that such a correction may very well be underway now and that there may be a selling "climax" in October of this year--not unlike 1987.

Here's the graphic (Click graphic to enlarge).

Projected Annualized Real Returns Of Assets Over 7 Years (from GMO)   
Given this information,  I need to adjust my projected portfolio mix shown in my blog Easy Investment Portfolio Management Using ETFs to a mix more heavily weighted in international and  emerging market stocks and bonds.  Here's the new and adjusted mix:  My Adjusted ETF Portfolio Mix.  Again, I intend to wait for a correction this fall.  

Thursday, August 22, 2013

Black "Thug" Culture Strikes Again

From Rush Limbaugh, speaking about the racial assassination of Australian Chris Lane in Oklahoma,
..this is just cold-blooded, first-degree-recreational, for-the-fun-of-it, because-they-were-bored, murder. Two black guys and a white guy in the group. No matter where you look in the media, it's not a racial event. Nothing about is racist. This is the epitome of media irresponsibility. It's a classic illustration of just what role the mainstream media is playing in the destruction of American culture and society.
He's entirely correct. Contrast this case versus the Zimmerman/Martin case where every one of the usual suspects, ie,, media, entertainment, discredited black leaders, discredited politicians got on the race wagon.  Trayvon was very likely a thug plain and simple.  Zimmerman might very well had died if he didn't fight back.  In this case, I had to go to an Australian paper to find coverage of this story that exposes the racial component of this hate crime. From the Herald Sun in Australia, they report that the 15 year old James Edwards (he deeply deserves the epithet "nigger") tweeted hate messages bragging about killing white people after the Trayvon Martin episode.
Edwards posted statements on his Twitter feed including a comment on April 29 where he tweeted "90% of white ppl are nasty. #HATE THEM".
Edwards also weighed when George Zimmerman was acquitted over the death of Trayvon Martin.
"Ayeee I knocced out 5 woods since Zimmerman court!:) lol sh*t ima keep sleepin sh*t! #ayeeee."
"Woods" is derogatory slang for white people. The feed also contains tweets glorifying violence, guns and gangs.
Hmm..you could say that Obama and all the other race-baiters encouraged him (and then).

Black Thug Culture


This country has an epidemic of crime by black men that is mostly ignored by dunghead media.  From my blog Ultimate Political Correctness: Blacks Commit the Majority of Gun Murders:
Blacks make up 13% of the population (both sexes) but commit 57% of gun homicides. It's even worse since it's more like 6.5% of the population (males) committing 57% of the gun homicides. Where is this discussion in the media?  Where is the program or plan to alleviate this problem?
Further, there is a large portion of the black population that is so stupid that their brains don't even work correctly--leading to criminality.  On top of that stupidity, black "culture"is incredibly decrepit, hate-filled and decayed.  Their "crap" culture is worsening too while white apologists and bullshit black leaders continue to blame anyone but themselves for their sorry state.  Heck, young people even "glorify" the criminal rap "culture." 

Along Comes Black Pastor James Manning


"80% of black kids are born to a family without a father and are raised by Hoochie-Mamas on food stamps."  Those aren't my words, they are from James Manning, a black pastor from Harlem.  Check out his "refreshing" message that stands out in such stark contrast to our politically correct, bullshit media world/culture.  Have a listen.  He might go a little too far, but I'd rather hear his version rather than our bullshit, namby-pamby, politically correct national media charade.


video

Gallup Data Shows Sharp Rise in Unemployment in August 2013

Uh oh, we have a problem.  The latest data from Gallup shows that unemployment has risen to 8.9% from 7.9% in just one month.

Check out this chart that I made from Gallup data showing unemployment trends for the latest month (July 20,2013 to August 20, 2013).   It's not seasonally adjusted like BLS numbers, but a trend is a trend.  In this case, the trend is not your friend.   With all of the manipulation of data at the BLS, I like the raw data from Gallup.  Yep, I trust the Gallup organization more than the Government.

The last data from Gallup is that "Underemployment" is at 17.9%.  Some "recovery." There's a chance that we've entered a recession.

Tuesday, August 20, 2013

ObamaCare's Bureaucratic and Administrative Nightmare

Below is an administrative flow diagram of ObamaCare. (click to enlarge).  An amazing thing is that it only shows 1/3rd of the new administrative requirements.

  

I guess when you substitute this version of "Central Planning" from our 'Politburo' for 1/6th of the economy, it's going to get mighty bureaucratic and expensive.   The new law creates 68 grant programs, 47 bureaucratic entities, 29 demonstration or pilot programs, 6 regulatory systems, 6 compliance standards and 2 entitlements.

Is it any wonder that no one can figure out how to implement it?  Has this administration met any deadlines in it's implementation?

If you really want to get upset, you can read in more detail how it's supposed to work here.  The truth is that it's already not working and will never work.  It's already falling apart, see my blog:  ObamaCare Zombie Staggers Forward.

The other sad truth is that it probably would be cheaper to send vouchers for insurance policies to our uninsured, with reasonably high deductibles, to expand healthcare coverage and avoid all of the extra overhead.  Let's say that you want to cover 33 million uninsured people which is more than ObamaCare will cover.  The cost of such a policy for each individual should be about $250 per month or about $3,000 per year.  It wouldn't pay everything, (but Medicaid doesn't either) but shields people from financial ruin.  Take 33 million times $3,000/year = $100 billion per year.  That's right, it would be cost only $100 billion per year or $1 Trillion over 10 years.  Right now the ObamaCare nightmare is going to cost at least $2.7 Trillion over 10 years (always a rising target) and cover less than 33 million.

Profiling is Practical Not Racist

 Mayor Bloomberg Explains That 'Stop and Frisk' is Not Profiling


Mayor Bloomberg took to the Washington Post to explain that he doesn't tolerate racial profiling but then explains that that's exactly their approach.  He explains that he puts police in the neighborhoods where most of the crimes are committed.  Here's Mayor Bloomberg from the Washington Post:
The NYPD targets its manpower to the areas that suffer the highest crime levels. Ninety percent of all people killed in our city — and 90 percent of all those who commit the murders and other violent crimes — are black and Hispanic. It is shameful that so many elected officials and editorial writers have been largely silent on these facts.
Yes, it's a shame that elected officials and editorial writers are largely silent on these facts.  It's called political correctness.  Political correctness is essentially a muzzle on free speech.  In our politically correct culture, it's difficult to speak the truth.  It's sort of a culturally and Leftist imposed totalitarianism.   I say bullshit to that.

Nevertheless, some liberal judge has imposed a "monitor" at the NYPD to check for unjustified "stops" even though only 9 "stops" out of millions done in the past decade were deemed unjustified.

Profiling In Trayvon Martin Case Was Not Racism


In my blog Blaming Race is Just An Excuse Now, I state that the FBI interviewed dozens of people regarding racism in the Zimmerman trial and didn't find any.

Black people complain about 'profiling' as racist, but it's not.  The truth is that this country has a huge problem with criminality in young black men and black men in general.  Black men are prone to be criminals at rate at least 6 to 7 times more often than whites.  For example, some 11.4% of the entire black male youth population (aged 20 to 34) is in prison vs. 1.8% for whites. Furthermore, 37% of young black men (aged 20 to 34) without a high school diploma, are in prison.  One in nine black men is in prison at this very moment.  This isn't racist, it's just the facts.

Monday, August 19, 2013

Congress Exempts Staffers from ObamaCare

When ObamaCare was passed into law, Chuck Grassley managed to get an amendment passed which required Congressmen and their staffers to be covered under the ObamaCare law. The amendment passed and therefore became law.  From SFGate, Grassley said at the time that:
"It's only fair and logical that administration leaders and congressional staff, who fought so hard to overhaul America's health care system, experience it for themselves. If the reforms are as good as promised, then they'll know it firsthand. If there are problems, public officials will be in a position to really understand the problems, as they should."
Commonsense right? But we increasingly don't live with a lawful government. What laws say apparently doesn't mean much anymore.

Kathleen Sebelius and Obama, immediately after the law was passed, have unlawfully issued some 1470 waivers to various corporations to exempt them from the requirements of the law.  Obama recently, and unlawfully, waived income-verification for purposes of determining government (taxpayer) subsidies--meaning the government will give away "free money" to anyone and everyone to get them into the program!  (How can you refuse?) Then, despite what the law says, Obama has delayed the unpopular requirement that businesses provide healthcare to their employees. (Never mind that this is the key feature of the law)

Now, Congress has also skirted the law by exempting their 11,000 staffers from ObamaCare coverage by using an administrative "trick."  Everyone in Congress has had "Cadillac" coverage that is already subsidized by taxpayers.  Thanks to the Obama administration, Congress itself will now also continue to get a significant subsidy from the taxpayers to pay for their ObamaCare premiums even though they make $174,000 per year (in order to avoid a pay cut).  It must be nice, huh?  I don't recall $174K per year as being anywhere near the poverty levels that trigger ObamaCare subsidies?  The required income levels have been unilaterally waived by Emporer Obama.  Apparently it doesn't matter what the law says.

Apparently what's good for goose is not good for the gander.  Congress can wiggle away from their own handiwork but the American people can't.

Tuesday, August 13, 2013

Easy Investment Portfolio Management Using ETFs

The advent of stock market ETFs (exchange traded funds) has changed the investment environment for individual investors in recent years.  No longer do you need professional investor advice to to have a diversified portfolio of both stocks and bonds and you don't need expensive mutual funds either.  Previously investors were forced to use mutual funds (with substantial "loads" and expense ratios of 1 % or more) or buy a selection of individual shares (or bonds) to participate in the stock (or bond) market(s).

ETFs allow individual investors to buy securities that match the various stock and bond market indices at very low expense ratios.  Not only do they have very low expense ratios compared to mutual funds but ETFs trade like stocks for less than $10 for a single trade.  This general approach of creating portfolios using ETFs is also known as Lazy Portfolios as discussed in Market Watch. There's much food for thought at that link.   There's nothing lazy about them however.  They are buy and hold portfolios that only require re-balancing from time to time.

Active Portfolio Management Doesn't Work


There's a saying, "you can't beat the market" by picking stocks on your own.  It's true. Even most hedge fund or mutual fund managers do not consistently beat the S&P 500 index.  Then they charge big fees of 1 to 2% of your portfolio per annum for their under-performance!  On the other hand, the management fees for most ETFs is only about 0.2% per annum---or about 10 times less.

So, if the professionals can't beat the market, then just buy the market!  Now the small investor can "buy the market" easily now using ETFs.  For instance, you can buy the entire S&P 500 index by buying the ETF "stock" with the symbol SPY.  It trades at a price of 169 today.  So, you can buy $100,000 of this security (index) with a single transaction costing less than $10.

Basic Portfolio Management


Most investors know that 60% stocks and 40% bonds is a classic portfolio mix that is widely recommended.  If you're a young man of 28 years old, then you might want more like 70% stocks and 30% bonds.  The beauty of this type of mix is that when stocks go down 'hard', bonds usually go up 'hard' to balance the portfolio.  When stocks soar, bonds usually drop.  Also, in normal times, bonds add 4 or 5% interest income on top of 3 or 4% annual bond price appreciation.   Stocks typically yield 3% in addition to an average of about 6 or 7% price appreciation (per annum).  However, we don't live in typical times----more about that below.

Sunday, August 11, 2013

Government Causes Income Inequality

Whenever there is a really big problem in our country, rest assured that the Government is the cause of that problem.  Only the government is big enough to create the really big problems.  And the idiots in Washington, especially Democrats, never seem to learn their lessons or remember history and continue with more attempts at "central planning."  The ObamaCare debacle is a great example.

Another example,  take one of the problems that "progressives" always talk about:  income inequality.  The problem is that the government itself creates this inequality.  Obama, an economic illiterate,  would love to raise taxes on the so-called "wealthy" to "even things out." The top 10% pay 70% of the income taxes already (or about 23% effective rate). But, if he actually succeeded, the economy would stagnate further and unemployment of poor people would rise even further.  Already black American unemployment is some 15%---twice the average.  It's true that before income taxes were instituted in 1913, that there were fabulously wealthy people, but the economy grew faster before 1913 than after. 

Various government programs (over about 5 administrations and both parties) caused the housing bubble and the resulting bust which left millions of people underwater on their mortgages.  Now the Fed has vowed to create housing inflation again to "rescue" these people.  Except, the Fed can't just inflate housing--it must inflate everything---which hurts the bottom 90%.  Furthermore, we are once again rewarding people who go into debt!  Ugh, people never learn.

More examples:
  • The last mortgage debt crisis, leading to a financial bubble, was promoted and essentially caused by the Fed and Gov't policies (mortgage interest deduction, no capital gains tax on housing).  The subsequent bursting of that bubble and debt hangover has caused an anemic economy for 5 years and counting. That hurts everyone--100% of us. 
  •  The Federal Reserve bond buying program (QE) puts Trillions of dollars into the hands of the top 1% or 0.1%, not the bottom 99.9%. 
  •  The Federal Reserve has vowed to help the stock (and bond) market with their bond buying program. This helps the top 1% and top 10%, not the bottom 90%.

Saturday, August 10, 2013

Totalitarian US Government Shuts Down Secure Email Services

If you ever needed evidence of the totalitarian, thuggish nature of your Federal Government, then look how they strong-armed secure email services to shut-down.  The list of affected services is piling up:  Silent Circle, Lavabit and TorMail (shut down by Irish authorities).   

No one is allowed any email privacy by our US Stasi apparatus. (Stasi is the nickname of the famously thuggish East Germany Ministry for State Security.)  

I've warned you of Government Tyranny before.  Also see my blog: Gestapo Tactics From Obama Administration talking about IRS targeting abuses.  Also relevant is my blog:  Next Will Be Federal Takeover of your Medical Information.

The recent news is that Lavabit, the secure email service used by Edward Snowden, has shut down after harassment by the Gestapo apparatus of the Federal government, probably the secret FISA court.  From the NewYorker,
In a cryptic statement posted on the Web site, the service’s owner and operator, Ladar Levison, wrote, “I cannot share my experiences over the last six weeks, even though I have twice made the appropriate requests.” Those experiences led him to shut down the service rather than, as he put it, “become complicit in crimes against the American people.” Lavabit users reacted with consumer vitriol on the company’s Facebook page (“What about our emails?”), but the tide quickly turned toward government critique. By the end of the night, a similar service, Silent Circle, also shut down its encrypted e-mail product, calling the Lavabit affair the “writing [on] the wall.”
And none of the targeted companies can speak either. They are bound by gag orders.  Wonderful huh? Freedom of speech is another casualty of so-called "national security."  This must end!

The HuffPost also ran an article talking about the shut-down of Silent Circle.  Also see a Washington Post article.   The service shut down to protect it's email customers from the potential intrusion of Federal Government. They could see the writing on the wall from the LavaBit shutdown.  It's a good example of the chilling effect of even a threat of government "involvement."  From the Huff Post article:
Lavabit founder Ladar Levinson also mentioned the U.S. government when noting why he closed his site, though his commentary on the matter was more strident than Janke's. "I have been forced to make a difficult decision: to become complicit in crimes against the American people or walk away from nearly ten years of hard work by shutting down Lavabit,"
All of this happening while Obama speaks out on Friday, August 9, 2013, in a news conference trying to reassure Americans that all is well and that the government is really your friend.  This from a actor man who would dearly love to take your guns and presides is a paid spokesman for a near-totalitarian security apparatus that clearly wants to eliminate privacy in your communications. 

With friends like that, who needs enemies?  I have got to get out of this country!

Wednesday, August 7, 2013

ObamaPhone Fraud Now Costing $2.2 Billion

In my blog of September 2012, 1 Million ObamaPhones in Ohio, I was complaining that the Obama administration was blatantly buying votes in the crucial state of Ohio by using a huge phone giveaway program.

Last night, I saw a reporter on Lou Dobbs named Jillian Kay Melchior who described how, even though she was completely honest about her income and employment status, she was able to get 3 shiny new cell phones.  See her story "Me and My ObamaPhones."

When I wrote my blog in Sept 2012, the program was costing $1.5 Billion and only 8 months later it's reported to be costing $2.2 Billion.  Worse, the monthly phone bill for every phone given away goes to the Federal Government!  Oh God!

Oh course there's not a shred of oversight in Washington DC.  Everyone in Washington has their heads up their you-know-what---from the top on down.  It's time to bring back tar and feathering for all of the criminals up there!

Are you aware that AT&T has a $10 per month basic plan?  You have to specially ask for them, but they have it.  It's designed for poor people to cover their most basic and emergency needs, so the entire ObamaPhone program is not necessary.

In her report, Jillian mentions reporting in the Wall Street Journal that the program
"has become infamous for rampant fraud and abuse. There have been news reports about recipients flaunting dozens of subsidized phones. And in February, the Wall Street Journal reported on an FCC audit of the top five Lifeline providers, which found that “41% of their more than six million subscribers either couldn’t demonstrate their eligibility or didn’t respond to requests for certification.”
Hmm.....sounds familiar.  41% of the subscribers didn't have to meet the programs eligibility requirements!   Well, in my blog  ObamaCare Doubles-Down on a Broken Medical System, I mention the awful thing that Obama has, by himself, unilaterally decided to waive checking of eligibility requirements for the biggest giveaway of them all: ObamaCare!! America, Obama is giving away YOUR money!  Wake up!  You and your kids are on the hook for this fraudulent spending!

Bring back Tar and Feathers!

Tuesday, August 6, 2013

Another Al Sharpton Race Baiting Case

Al Sharpton and his fellow race-baiters have had a long history of inciting race issues even when there aren't any.

In my blog The Corrupt World of African American Politicians, I quote Booker T. Washington who described to a tee our current generation of black race-baiters:
"There is another class of coloured people who make a business of keeping the troubles, the wrongs, and the hardships of the Negro race before the public. Having learned that they are able to make a living out of their troubles, they have grown into the settled habit of advertising their wrongs - partly because they want sympathy and partly because it pays. Some of these people do not want the Negro to lose their grievances, because they do not want to lose their jobs."
Tawana Brawley was a 15 year old black girl who feigned an entire case of rape in 1987 and falsely accused 3 white 'assailants' of rape.  She accused white police officers and a prosecutor named Steven Pagones of the "rape."  The case was investigated and a grand jury found no evidence of any crime having been committed.  In summary, it was shown that the case was a bunch of lies.

Wikipedia has a great summary of the case.  Here's a couple of passages:
Brawley's claims in the case captured headlines across the country. Public rallies were held denouncing the incident. Racial tensions also climbed. When civil rights activist Rev. Al Sharpton, with attorneys Alton H. Maddox and C. Vernon Mason, began handling Brawley's publicity, the case quickly took on an explosive edge. At the height of the controversy in June 1988, a poll showed a gap of 34 percentage points between blacks (51%) and whites (85%) on the question of whether she was lying.[10]
Sharpton, Maddox, and Mason generated a national media sensation. The three claimed officials all the way up to the state government were trying to cover up defendants in the case because they were white. Specifically, they named Steven Pagones, an Assistant District Attorney in Dutchess County, as one of the rapists, and a racist, among other accusations.
The case reminds me of the Trayvon Martin and George Zimmerman case.  There was a rush of black support, accusations of racism all over the place.  Al Sharpton made lots of noise in front of TV cameras to try to incite racist sentiments.  That case wasn't about race despite the entire black community, including the President, trying to make it so.  The whole case showed who the real racists were.

Back to the Tawana Brawley case.  Some of the accused sued back.  Maybe they didn't like to be falsely accused?  (Imagine that?)  In 1998, Pagones won $345,000 for damages from 'defamation of character' suit against Sharpton and the two lawyers that represented Brawley.  Pagones also sued Brawley herself and won a judgement of $185,000.  One of the quack lawyers was also dis-barred.

Fast foward to August, 2013, and Fox News reports that Brawley has only now begun to make payments to Pagones.  Due to back interest charges, she owes him $600,000 now.  That'll teach ya.

Apparently no amount of public embarrassment can stop Sharpton from jumping on the race-baiting bandwagon. Race baiting is his job because he probably can't do anything else.  Al Sharpton and all of the black leadership in this country are discredited beyond belief.   I hope George Zimmerman sues Sharpton and the other black racists.

Monday, August 5, 2013

It's Time to Legalize Marijuana

In my blog, Principled Conservatism Will Save This Country, I mention that The States should be the incubators of public policy.   I specifically mentioned that Colorado has legalized marijuana and California, with their "medical" marijuana law has, in reality, legalized marijuana use (since it's easy to get a "prescription").  I also mention in that blog that principled conservatism should adopt a "live and let live" attitude toward issues that are about an individual choices that do not hurt anyone.

If this country wants to strike a blow against the Mexican drug cartels, then we should rapidly move forward to legalize and regulate marijuana use, production and retail sales.  Regulate it and tax it.  Growing marijuana will become a boom business for a time and would displace imports from Mexico.  It would remove a huge amount of power from the criminal cartels.

I'm reading this morning that Uruguay is on the verge of passing laws to create a legal, regulated framework for marijuana production, distribution, taxation and sales instead of the old "prohibitionist" approach.

Those that disagree with this are ignoring the fact the people who want to smoke marijuana are already smoking it.  Most would agree that we are giving power and money to the criminal Mexican cartels.  I don't use marijuana but it's not a big deal, it's not addictive and it doesn't lead to stronger drugs unless you have an addictive personality.  If you have an addictive personality, you're already using whatever you want because various drugs are available despite the drug "war."

Prosecutions against marijuana users and growers does feed our legal prosecution "machine" and our lawyer "industry," clogs our prisons, and makes criminals of people who shouldn't be.  The damage to people's lives is extreme when we jail them for minor offenses.  It's time to stop that nonsense. 

Think of all the people in prison for growing, smoking or distributing marijuana.  They will inevitably emerge extremely damaged and have a criminal record that ruins their lives.  For what?  So that other people can "feel" better about something that don't know anything about?   Free the marijuana possession offense prisoners too.  They don't belong in prison!

This country has already lost the extraordinarily expensive "drug war" since people are already smoking and taking whatever drugs they want.  Meanwhile we spend billions upon billions to fight a losing battle.  We also have a bloated and expensive intelligence and law enforcement "jumble" of agencies costing over $100 billion per year.  This has lead to more incarcerated people than any other country in the world.  See my blog, Prison America: US has 50% of the World's Lawyers.  Let people smoke what they want!  Let law enforcement work on something else more serious or trim those budgets (which never happens).

The drug cartels have won with our current approach.  But they will be seriously hurt if we reverse course on marijuana production and use.

Sunday, August 4, 2013

Arab Civilization Collapsing As We Speak

I don't know why the media labeled the unrest in the Middle East in 2011 as the "Arab Spring" because I knew immediately that things would only get worse not better. Now, of course, Arab hell has arrived.

Lt. Colonel James G. Lacey wrote an article entitled "The Impending Collapse of Arab Civilization" in 2005 and made a prescient prediction about the end of Arab Civilization. That was well before the outbreak of turmoil and death that broke lose across North Africa and into the middle east starting some 6 years later. Things have only worsened. Egypt is again tilting toward Civil War as tyranny of one type is replaced with yet more tyranny.  Syria is in a civil war. Turkey recently saw an outbreak of civil unrest due to the increasingly autocratic Islamist Erdogan.

Colonel Lacey said that it's Arab culture, not Islamic culture, that is undergoing collapse. I disagree somewhat with this assertion because it's hard to separate the two.  In a way, Arab culture IS Islamic culture. For instance, the authoritarianism of Islam is mirrored by the autocratic Arab dictators. Also overpopulation is found in every Islamic country.  Arab countries, dominated by Islam, have made the systematic choice to teach religion rather than teach math, science and technology.  Islam's ideas about women has meant the widespread failure to educate women. 10's of millions of women are illiterate. Repression, dictators, and ignorance have led to economic stagnation, falling living standards, few economic opportunities, and repressive and corrupt governments. No wonder democracy has failed to take root there! Democracy depends on an educated electorate.

Colonel Lacey made the point that Arab culture is a very young population due to exploding population growth --also due to "Islamic" culture. But this group finds itself without any economic opportunities. True to his prediction, this group is the very population that exploded into the streets in recent years.

Arab population is young because in "Islamic" culture, it's quite common for families to have 10 to 12 children. Children are the "social security" system for Islamic families. I've seen this for myself in Indonesia. Because there are few job opportunities (for the reasons mentioned above), the overpopulation drives down wages that impoverish everyone. It's not only a social time bomb and an economic disaster but an environmental disaster as well.

Arab youth frustration has upended dictators but other dictators emerge. Fundamental reforms of institutions have proven impossible because of corruption and a serious lack of intellectual capability. The economies of these countries are amazing poor. From Lacey,
In economic terms we have already commented that the combined weight of the Arab states is less than that of Spain. Strip oil out of Mideast exports and the entire region exports less than Finland.....Per capita GDP is $1500 or less than in the 1970s.
For decades, the only way that Palestinians have survived is due to world-wide provided "welfare."  Now, after the Morsi ouster, Egypt collected a cool $12 billion in aid from Saudi Arabia and other countries. So now Egypt is completely dependent on welfare too.  If and when oil prices decline precipitously, the rest of the dominoes may fall.

While Arab Muslims are groveling in a cesspool of hell, the Jews are working on their 159th Nobel Prize.

Thursday, August 1, 2013

US Heart Bypass is 70 Times More Expensive Than in India

ObamaCare is on track to further ruin, not reform, the US medical system. No real effort has been made to reduce costs (See my blog Ideas to Reduce Medical Costs), doctors will flee the industry,  the AMA continues to restrict the number (supply) of medical students/doctors, US drug companies are shielded from competition from low cost world-wide providers, hospitals "make up" pricing based on nothing and the law sanctifies drug and hospital companies "cartel" status. 

In other countries, there are serious efforts to reduce medical costs. From Bloomberg, meet Devi Shetty, a cardiologist and entrepreneur, who has opened some 21 medical clinics in India, has reduced the cost of heart bypass procedures to $1,521 and aims for $800 in the years ahead.  The same procedure in the US costs up to $150,000.

Heart Bypass Operation In India is 70 Times Cheaper


From Zero Hedge is a graph comparing various costs of heart bypass surgery.  They wouldn't dare put the cost of such a procedure in Thailand, because it probably would be much lower still. (click image to enlarge)