Thursday, December 19, 2013

Extremist Economists

The mainstream economists that you see on television or read in the news are basically owned by the business community. In fact, there are very few independent economists unless they work as professors and even in academia you tend to only hear a couple of belief sets. I am not an economist, I am a professional analyst; however, I have been asked to write a book on accounting by a very senior Accountant and I used to manage about $250 million dollars a year for my organization. I am not bragging, I am trying to give some background. My main area of expertise has always been government and law and I also studied and worked with real estate.

One day, a friend of mine who I had mentored in business and real estate asked me to come speak to a group of people involved in real estate by giving a seminar in Las Vegas. At the time I needed a distraction and agreed. I decided to give a two day seminar. This was while the real estate market was booming and I was telling my friend (a mortgage broker) that the market would burst and fail. I will get to the point soon enough. I knew the market was just wrong, housing prices were going up too much at a time when wages were not and people were buying houses that obviously could not afford them. I should also mention that the types of houses people were building and buying were not in line with an honest market, they were overbuying.

Well, I gave my seminar and then everything I said was going to happen, happened and in the time frame I had predicted. While preparing for the seminar I did a lot of research that confirmed my predictions. Simple things like "The Affordability Index" and debt to earnings ratios were being ignored and people who did not qualify were being given enormous loans. Bus drivers were buying 2, 3, 6 and even more houses and everyone was getting a home equity loan or house flipping. What amazed me in my research was that nobody in the mainstream financial media was seeing what was painfully obvious to me. I now believe many saw it; but, neglected to report on it because of their own financial interests.

After the crash of the housing and then stock market, I continued following economics. Eventually I came across some videos of others who had predicted the crash. I was impressed that they had also predicted the crash when everyone else was saying it would never happen. It takes a lot to stand up in public to the rest of the media. Eventually I came discover that most of the few who had predicted the crash always predicted crashes and usually because they sold gold. As my long time readers know, I don't sell anything and don't recommend buying gold. The insincerity of these few accurate commentators was highlighted for me when I noticed none of them bothered telling people that the law requires all sales of golf for over $600 to be reported to the government (with gold at $1,500 an ounce, that is just about every gold coin). That law went into effect around 2008. These same people don't point out to the people they sell gold to that they will be reporting the buyer to the government.

Let me ask you a simple question. Why is gold reporting included in the Affordable Care Act (commonly called Obamacare)? They will tell you it is so that the IRS can track capital gains on the sale of coins; but, during the depression the government confiscated gold from citizens. These little facts made me lose faith in the few economists that had predicted the market crashes. I also found that the few who had predicted the crash tended to be rabid libertarians. People who believe there should no government and no real controls over business.

Economic extremists are all we hear. They are sort of like Fundamentalist Muslim extremists, so full of dogma that reality ceases to matter. Federal Reserve chairman Greenspan was an extremist who didn't believe in regulating the markets he was responsible for regulating. On the other end, the goldbugs are often extremists too. They don't believe in much regulation and believe that no company should have been bailed out and the economy should have been allowed to just disintegrate.

Now lets talk about Ron Paul. Did you know he is a gynecologist? Yep. He does not believe in welfare, government or taxes. I hate to tell you this kids; but, show a country that doesn't have a government and has anything other than civil war. Somethings can only be done cooperatively. Roads don't maintain themselves and we have seen what has happened when we deregulated the financial system, complete corruption and thievery. History loves to repeat itself.

Mr. Paul's financial advisory was one of the economists who had predicted the market busts; but, he did not get the timing right whereas I did. The person who advised Mr. Paul is Peter Schiff. After the crash I discovered Mr. Schiff and kept an eye on him, originally impressed I lost more and more respect for him. It is now abundantly clear that he is nothing more than another salesman. I have also lost a lot of respect for Stansberry and Associates and Gerald Celente. I will watch and read things by all of them; but, always with a tilted head. The person I like most currently is a man named Max Keiser thought I completely disagree with him regarding Bitcoin, he is a big cheerleader and I am not. It is meant to fail (and must) and is nothing more that a test ground for an all electronic currency. The volatility of Bitcoin makes it no good for a true currency. There are other reasons that I don't believe in Bitcoin including the amount of computer usage that it would require if widely accepted.

Back to Mr. Schiff. He has hit a new low.

YouTube - Will Walmart shoppers support "Every Day High Wages?"

In the video Mr. Schiff goes to people coming out of a Walmart and asks them if they would support the WalMart employees getting $15 an hour rather than the $8 or so an hour they make. People say yes and then he asks them if they would support his program which he calls 15 for 15 and explains that if WalMart charges them an extra 15% they can pay their employees $15 an hour. This is both cynical and misleading.

How about some basic math. Firstly, half of the cost of what you buy at a retail store has nothing to do with the cost of running the store. They had to buy the products. When you start thinking about the cost of utilities and space, it becomes pretty clear that the cost of the labor at the store has nothing to do with the the final cost. Recently, it was determined that if Apple made Iphones in America rather than China, it would only add $4 to the cost. What does an Iphone go for, about $500? Americans making IPhones would be paid about 10 times what the Chinese get (actually more like 20 times what the Chinese get).

In fact, if we had kept our manufacturing base in America, we could have done it and would only have needed to charge less than 1% more than foreign goods to have paid all the workers in America substantially more. Now lets go back to Mr. Schiff again. His 15% increase in prices being needed to pay workers at WalMart $15 is a complete lie. Let me say lie again. And he knows it. It is fear mongering and deceitful propaganda. Go back and watch the video and ask yourself how you would have responded to you if he had told the truth. "Would you be willing to support my 1% (in fact they already pay their employees something a 50% raise for them all would be less than a half a percent, much less than that) for 15 program? The program says that if you paid less than 1% more to buy at WalMart if the employees were to get $15 an hour rather than $8 an hour would you do it?" I bet if he had asked that, he would hated the answer because most of us would and we proved it when we tried to buy American back in the 80s.

People didn't stop buying American cars because they were more expensive than Japanese cars, they stopped buying them because Detroit was building garbage and didn't care about gas mileage when gas prices were going crazy. Also, Mr Schiff chose to talk to people at WalMart. I am not dogging WalMart; but, I don't shop there. They sell cheap products that won't last. Let me explain. I hate shopping and I hate crowds. WalMart is the store of last resort, it is where people go because they don't have much money. Mr. Schiff doesn't shop at WalMart, look at his suit, he didn't buy that at WalMart. He is ridiculing people of modest means and incomes for buying the cheapest goods that they can. I am so angry that I am not writing my best. American people vote for sales tax increases of 1% just to build schools or bridges. We, even the poor, are more than happy to pay more to help other people and improve society. Why isn't Mr. Schiff?

A long time ago, as a young analyst, I used to get put in charge of charity drives for my organization. The first thing I learned was that the people who made the least were the most likely to give to charity and gave more as a percentage of their income, consistently. It is Christmas time, I hope everyone has watched "A Christmas Carol". In it, the wealthy Scrooge is asked to give to charity for the poor and he says that he is taxed to pay for the workhouses and that he considers that enough charity. Workhouses were created because they needed cheap labor in England, the poor were given the choice between starving or working as slaves. At that time they also had debtor's prisons. If you couldn't pay your bills, you went to jail and were forced to work.

Here is the real issue, are we Americans or just people who live near each other and don't care about each other? Pick any tax you want, if it meant that every American could have a job that allowed them to at least have a place to stay and food and that those who were incapable of working could at least have a place to stay and food, would you pay that extra. I am not saying that in reality they would the government would ever spent it properly, I am asking if you would give 1% of your income to others if it meant nobody in this country would go without a place to sleep and enough food to survive? Both Mr. Schiff and Mr Paul would say no.

Let me bring up another way in Mr. Schiff is being dishonest. What if he had asked people if they would buy support WalMart dropping wages for employees to $4 an hour if it meant they would save 1% on their purchase cost? What if he had told people that WalMart could charge them 10% less if they only used free slave labor? Do you think they would have said yes to the plan? I doubt it. People in America complain about how foreign workers are treated in Asia, do you really think they would accept Americans being treated the same way? That is what Mr. Schiff seems to think America should be like.

We are about to enter some very disturbing times. Mr. Schiff is correct about one thing, the economy is going to tank and badly. He is incorrect about the solutions. Turning America into China is not the answer and benefits only a few while turning the country into a third world nation. The essence of a society is not making money, it is making sure that your society flourishes. It is about making sure that your children, the next generation can also do well. The Founding Fathers talked about the "common good". People like Mr. Schiff are political extremists and nothing more than anarchists with suits.

There is a big difference between no community good and being a slave to the community. There is a difference between anarchy and totalitarianism. The answer lies in between and that is why extremism in political philosophy is wrong. Just like a stopped clock, political extremists are write twice a day. That does not mean they have the right answer most of the time. His opinions are bigoted, they are bigoted to what will make him money and a philosophy of selfishness. The problem is that all the economists that you see in the mainstream media are liars and he is just one more, he just has a different lie than most.

Lets look at this another way. How many of the people that Mr. Schiff interviewed paid for their purchase with a credit card. I have not heard him complain about credit cards charging much more than 15% interest. The bible is against charging interest on money that you lend out. A funny story. When I bought my first house, I had to borrow the down payment. It was easy to do and I only had to pay about 12% interest on $5,000. My mother in law offered to lend me the money at prime, which was about 9% at the time. I prepared an amortization schedule which compounded the interest and laid out the monthly payments over a 5 year period. It was always the first bill I paid and I paid her off early without adjusting the total for the early payment. My ex mother in law will not lend money to her own children because they never paid it back properly, she would lend me money today and her daughter divorced. I have lent money to her children and never been paid back, don't even think about interest as I never asked for any. LOL.

Capitalism only works when people exhibit good behavior and people don't always do that. Economic extremists believe that all people will act rationally, they just differ on which forms of organized society will most benefit from rationalism. The truth is, people don't all act the same even given the exact same circumstance. We are not machines and have different points of view. We all have altruism and we all have selfishness, the degrees to which we hold these views is what differentiates us from one another.

I will repeat the title explanation, you matter. Ayn Rand and extremist anarchists and libertarians believe they matter. They wish you well; but, they only worry about themselves and that is the nature of evil. Evil, in it's most simple form, is selfishness, it is being your own God. That is evil and the destroyer of communities and love. When you die, the regrets of this life are not over how you could have more for yourself, they are over how you could have helped more people and helped people more.

In it's simplest terms, you matter, I matter, we all matter, being human matters. The moment you start thinking and acting as if others do not matter, the moment you stop helping others, you condemn yourself. Justifications that taking advantage of others means you deserve more will be paid for in the afterlife. God does not forgive selfishness but he does forgive imperfection and failure. That is called forgiveness.

Would You Like Some Media Lies for Christmas? Here You Go

A few days ago I saw a video by Conan O'Brien. He does this thing where he shows all these different local newscasters across the nation saying word for word the exact same thing. Here is part of the clip, I couldn't find the one I had originally seen which was a little bit longer.

YouTube - Media Reacts: A Christmas Present Or Two Or Ten Edition. A funny bit showing just how single source the mainstream media is seeing as how 5 or 6 companies control 90% of the media. By the way, this is not the first time that he has shown this.

What I found interesting was that they were all pushing people to "self-gift", to use Christmas as an excuse to buy yourself presents. Anyways, I didn't think much more about it. I had considered posting it; but, thought I may have posted one of Conan's examples of this before and I also felt that I had discussed the pitiful nature of the mass media's being nothing more than repeaters (David Icke used that term and I agree).

Today, I was scanning the news to see if there was anything worth writing about for you dear readers and I came across this.

New York Times - Retailers’ Sly Message: Get Yourself a Gift, Too. It points out how retailers are specifically targeting sales at people buying presents for themselves. One of the comments to the article was by someone who pointed out that if they buy things they need while shopping for Christmas it is not "self-gifting" and it isn't. I hate shopping and when I go I try and get it all out of the way. In addition, I have not bought one present for Christmas, someone else did that for me. Yeah, I got it like that. LOL.

If I do go to the store (and it looks like I will have to), it will be to buy something that I need for the house or me. It will not be Christmas shopping, I still need to buy things for the year. For instance, during winter I like to cook stews and soups. I like the warm means and unfortunately, my crock pot is in another state so I will have to buy a new one. This will not be a gift to myself, it is just something I need to do what I want. I don't think of it as a gift to myself, it is a cooking tool for meals I want to make.

I looked up "self-gifting" to see if there was some sort of trend on selling people the idea that they should buy themselves presents and your know what, there is and it is all a lie.

Los Angeles Times - Self-gifting by consumers is on retailers' wish lists. I like the nonsense in this article because it is flat out promoting "self-gifting" as being important to the economy and that if we don't self-gift we are causing the economy to not improve. Even the person they talk about in the first couple of paragraphs that they use as an example of a self-gifter wasn't. She had been out of work for awhile, just got a new job and had some extra cash so she bought things at the sales. It points out that she bought an I-Pad, well lets think about this. I am out of work for a couple of years, technology has advanced. I get a job and can afford to replace my old laptop, should I do it now, while it is on sale? Is that self-gifting?

Let's try this. I have been out of work for two years and finally get a job. I hadn't eaten out while unemployed because I couldn't afford it. If I decide to treat myself to a meal at a nice restaurant is it a Christmas gift to myself. This "trend" is being reported across the nation as if it were real and there is absolutely no proof that it is. Surveys done by public relations firms for retail organizations. I can even guess how they did the surveys. You stop shoppers as they are leaving a store and ask them if they did any Christmas shopping. They person says yes because they picked up some presents. The next question is "Did you buy anything for yourself today?" The person says yes, they bought a toaster oven because theirs had broken and they found a good sale. Did they self-gift? Nope but it gets counted that way. One of the articles mentioned how people self gifted wrinkle cream. Is that really a gift?

I beat this issue into the ground for a reason. We have absolutely no reason to believe that "self-gifting" is a trend and every reason to believe it is an idea that retailers are trying to sell us on. Now, remember that Conan O'Brian video, kind of creepy now. He has demonstrated that local newscasters are repeating complete propaganda for the media they work for and doing it identically across the nation. Pretty easy to do that when only 5 or 6 companies own all of the local media. I should also point out that these repeaters (news reporters) are nothing more than actors, they don't write the news or even put their perspective into their reporting.

I don't know why I get as many views as I do on this blog. I am sure that each person has their own reasons; but, I don't repeat what I have read, I give my take on it and allow the reader a link to the same thing I read, clearly identifying it as such. I don't consider myself a reporter, I do not do independent investigations or speak to witnesses. I comment on what I read and see, this is an opinion blog, not a news blog and their is a difference. I would never claim that this blog is objective, it is intended to be subjective, it is my opinion and even the comments are moderated. I am not being quite fair to myself, I censor the blog; but, it is never because someone disagrees with me or even questions me, it is usually for profanity, things I find inappropriate (I hold commentators to the same rules I apply to myself and do not cuss on this blog), when I am asked to or when someone makes statements that could be libelous and I cannot prove one way or the other. I have called out people by name; but, I always include source documents and published articles. I also want to point out that I don't sell anything, I don't promote anything for anything and this site is not monetized, not one penny do I receive for redirecting people to anybody.

I am going to retire in about a year and will possibly spend more time writing. I might decide to write a book, I have written two and never did anything with them. I might just clean them up and try and publish online, if I do I might do it on Lulu (a place that allows you to sell electronic books online). The truth, I probably won't publish. If I decide to write a book I will probably do it right here on this blog and do it for free. I don't write for money, I write because I must. Someone asked Stephen King how to become a writer and he said, "write". He didn't talk about making money or how to become successful, he talked about passion and that is why I write. I cannot draw anymore, my arthritic little hands just don't allow me the control needed. I cannot even write out a legible check; but, I can type and have a computer. Writing is so powerful to my soul, it is how I express myself and force myself to think about things I would prefer to ignore. It is life.

I have no problem with people making a living from writing. In fact, one of my followers is apparently a professional writer. I don't think she comes here because of wonderful prose, I think she is probably interested in a particular subject that I have written about. From what I can tell, writing is her career and that is how she feeds herself. I think that is wonderful. I think that someone that writes as a career out of their passion, whether it be in their beliefs or artistry, should be commended. It is a risky career as are all artistic endeavors. I do however have a problem with people that write whatever will make them money. I mean if you totally prostitute yourself and don't care.

What am I talking about? Lets go back again to that video at the beginning where they all say the exact same thing to convince you that everyone is self gifting and it is okay. What they are telling you is to go beyond buying what you need and specifically creating in your mind the idea that Christmas is a time to buy yourself gifts, bobble that you do not need and to do it on credit. Don't turn this season into Debtmas, keep it Christmas.

Here is the reality. This is the last Christmas before the economy is going to tank. I am pretty sure of this now. I have fudged on the when because it has been stretched out by games by the Federal Reserve called Quantitative Easing and it is difficult to know when they would stop. It has just been announced that the Fed is going to taper, just as the head of the Federal Reserve is leaving. That is what I have been waiting to see. Christmas accounts for all the big purchases of the year and this is the last chance for retail and manufacturers to clear their inventories before people cannot buy. Next Christmas is going to be horrible for sales, a bloodbath. The stores that survive will be the smart squirrels that save their nuts for the year during winter.

If you understood the last paragraph, you will understand why the media is pushing for self gifting this year. They are not doing that because they have a good story, they are not doing that because they believe in anything, they are doing that for a paycheck, they have sold you out and are willing to lie to you, to tell you whatever will make them money. They are entertainers, not commentators or news people. Peace.