“NOBODY ASKED ME, BUT...” ARCHIVES

February 29th, 2016

Can you believe that the election season is upon us? It really is so unbelievable how the years pass. Hopefully you have good health, make money and enjoy yourself. There has got to be a lesson about life here somewhere. One thing I do know, is that youth is truly wasted on the young. And I am guilty of that!

The big story of this year has to be the tremendous fall in the price of oil. Besides we as consumers saving money at the pump, there are a myriad of other consequences. Certainly this will have a large influence on money flows. How this all plays out and effects us is quite unknown. I'm just happy that I wake up each morning and can feed and cloth myself.

Gasoline prices are certainly falling fast, and that is an immediate savings to anyone that buys gasoline. I myself drive about 1500 miles a month and this translates to savings of more than $80.00 a month! And if gasoline continues to fall I can easily save $1,200.00 a year. And the savings will increase as the price of oil falls. Recently the OPEC oil minister said that production will continue unabated. If anyone out there took Economics 101, they would remember that if supply increases faster than demand, the price will fall. By the way, this basic economic fact proves that our illustrious president knows nothing of economics. Unfortunately for all of us, we an incompetent President. Luckily, we have him for less than a year!

I think that money for households is very tight. It just costs such much money to pay bills and make ends meet. I believe that average household income in the USA is actually contracting. Our wonderful standard of living is in decline, unless you are living on government handouts. Virtually free housing (section 8), food stamps, free medical care (Medicaid), and probably some other government programs to give you a little extra! This is national suicide! And the government is paying for all this with borrowed money. How totally irresponsible and idiotic! The USA has become the land of handouts instead of the land of opportunity. There are so many lazy freeloaders in this country. There really has to be a time limit on these handouts. You work for thirty years, lose your job and get six months of unemployment benefits. You go on the government dole and get a lifetime of free benefits. Why the hell are taxpayers paying someone else's bills for life? This can not go on forever. This country is not on the right track.

Did anyone notice that interest rates for some country's sovereign bonds are clearly in the negative? Negative interest rates would be devastating. With negative interest rates, a normal saver would be better served taking their money out of the bank and keeping it as cash. The implications are scary. On top of all that, if the stock market continues to fall, many pension funds, both municipal and private, would be highly under funded. The debt can be overwhelming. Hold on to your hat!

Unfortunately for us, there is no good ending!

But then again, nobody asked me.

~ Malcolm

December 19th, 2014

Can you believe that Christmas is just around the corner? It really is so unbelievable how the year pass. Hopefully you have good health and make money and enjoy yourself. There has got to be a lesson about life here somewhere. One thing I do know, is that youth is truly wasted on the young. And I am guilty of that.

The big story of this year has the be the tremendous fall in the price of oil. Besides we as consumers saving money at the pump, there are a myriad of other consequences. Certainly this will have a large influence on money flows. How this all plays out and affects us is quite unknown. I'm just kind of happy that I wake up each morning and can feed and cloth myself.

Gasoline prices are certainly falling fast, and that is an immediate savings to anyone that buys gasoline. I myself drive about 1500 miles a month and this translates to a savings of more than $60.00 a month! And if gasoline continues to fall I can easily save $1,000.00 a year. And the savings will increase as the price of oil falls. Recently the OPEC oil Minister said that production will continue unabated. If anyone out there took Economics 101, they would remember that if supply increases faster than demand, the price will fall. By the way, this basic economic fact proves that our illustrious president knows nothing of economics. Unfortunately for all of us, we have an incompetent president. And we have two more years!

I think that money for many households is tight. It just costs so much money to pay bills and make ends meet. I believe the average household income in the USA is actually contracting. Our wonderful standard of living is in decline, unless if you are living on government handouts. Virtually free housing (section 8,) food stamps, free medical care (Medicaid) and probably some other programs to give you a little extra! This is national suicide! And the government is paying for all this with borrowed money. How totally irresponsible and idiotic! The USA has become the land of handouts instead of opportunity. There are so many lazy freeloaders in this country. There really has to be a time limit to these handouts. You work for thirty years, lose your job and you et six months of unemployment. Go on the dole and it is a lifetime of free benefits.

Why the hell are we taxpayers paying someone else's bills for life. Eventually this cannot go on forever. And the Democrats want to solve everything by increasing taxes and expanding these programs.

Unfortunately for us, there is no good ending!

But then again, nobody asked me.

~ Malcolm

March 18, 2014

Spring is just around the corner and the sequestration has just begun. Here's the way I see things. The return of Social Security rates to prior mandated levels combined with rising gasoline prices is an effective policy to slow the economy. Blah, blah, blah, take home pay for those that pay taxes has been reduced. Consumers (and we are all consumers,) discretionary income clearly has declined. If you don't believe me just look at your paycheck. One does not need an economics degree to figure this out. Thirdly, take a look at the prices in the supermarket and the size of the products you buy. I remember when a pound of coffee was actually sixteen ounces. Now I think it is about 11.5 ounces. In a nutshell, we have less money in our pockets and have to pay higher prices. And for good measure, add the Obama tax increases and you have a textbook example of how to slow the economy.

Now let's look at what I call the Great Conundrum. Low interest rates are fantastic for anyone financing a major purchase like a house or a vehicle. But, if you are older and looking towards retirement or are already retired, CD rates at the bank are ridiculously low. The rate of return is lower than inflation. Living solely on Social Security is impossible even if your house is paid for in full. Property taxes and household expenses will eat that Social Security check up even before you get to the supermarket.

On top of all this gloomy microeconomic stuff that effects us all as individuals, we have all the bullshit coming out of Washington. Now before I begin my normal rant, let me state quite clearly that I am registered to vote as "unaffiliated." I am neither a Democrat nor a Republican. But let me first have another drink of my favorite beverage, Crown Royal Black. In the situation today we have a government that is addicted to spending. Thus , John Boehner, Republican leader of the House of Representatives, has it correct when he stated that this is a spending problem not a tax problem. GOVERNMENT SPENDING IS OUT OF CONTROL!!!! They are spendaholics and their recklessness and total irresponsibility will have the result of a collapse of our economy and a lower standard of living. The skyrocketing government debt eventually will wreak havoc on our nation. The scary part is that there is no good outcome. We are surely screwed. It is only a matter of time. Just like the sands of an hourglass.

And whom do we have leading us down the path to disaster? A lawyer with absolutely no business experience whatsoever and no knowledge of economics. Obama never ran a business, never had to make payroll or comply with government regulations. Unfortunately he is an economic disaster for America. He has increased the national debt more than any other President in history. Compounding this nightmare is the former incompetent president Bush. He and his gang should have been jailed for starting the Iraq War. That son of a bitch lied about the supposed nuclear weapons during his State of the Union speech. And let's not forget the mental genius who first initiated these huge deficits, Ronald Reagan. The creator of Voodoo economics.

Ok, enough ranting and raving. Time for another drink. Now we come to everyone's favorite topic: predicting the future. As I have always stated, it is easy for me to predict the future, being accurate is the hard part. So here goes. The economy, with all the aforementioned headwinds will surely decline into a recession. This is I believe presently occurring. In fact, on a per capita basis we are already in a recession. When the population growth exceeds the growth rate, we then have a recession. The government definition is worthless. As the recession worsens, this will reduce government revenue and produce greater outlays for give away programs. Thus, the National Debt will increase. And this is after a tax increase and sequestration. With our bloated budget and huge debt, this will set the stage for a destructive inflation.

Prediction: Gold will be at least $1,500.00 by the end of the year or sooner.

At this point, an inflation rate of 8 to 10% would be devastating. Just think what that would do to mortgages. A $250,000.00 mortgage would cost $2,000 a month just in interest. Add ever-increasing property taxes and principle payments, and that would propel the cost of housing out of reach for a great majority of people. Government interest payments on 14 trillion dollars of debt at 8% would translate to annual interest payments of over one trillion dollars.

Unfortunately for us, there is no good ending!

But the again, nobody asked me!

~ Malcolm

---

December 20, 2013

The Federal Reserve has just announced they will begin their long anticipated tapering of bond purchasing. Specifically, they will reduce their monthly purchases from $85,000,000,000.00 to $75,000.000.000.00. Thus the annual amount will be at the rate of $900,000,000,000.00 instead of the previous $1,020,000,000,000.00. You may at this point wonder why I am writing out the numbers, instead of spelling the amounts. I believe when you see the huge amount of zeros, the magnitude of the amount becomes more apparent. So far the immediate result of the announcement of tapering has been a higher stock market along with a fall in gold and a rise in the interest rate of the ten year bond to approximately 2.93%. It would be wise to keep an eye on the ten year bond rate as that is the key to whether the Fed can indeed proceed with the planned tapering in January.

I've said it before and I'll say it again; the health of the American economy depends on three main pillars; the first is housing, the second is housing, and the third
is housing. Mortgage rates have been at historically low rates for years, and in addition house prices nationally have declined. The actual monthly outlay to own a house has certainly declined. So the big question is why hasn't housing boomed when the cost to own a house
has declined? And therein lies the problem. For the last five years medium household income has declined about 8%. In plain English, good paying jobs are slowing disappearing. A $200,000 house at a 6% mortgage equates to $12,000.00 a year in interest expense. When that same house declines to $160,000.00 with a 4.5% mortgage, the annual interest is $7,200.00. A $400.00 a month reduction to own that house. But if you lost your good paying job and are now earning much lower wages, the house is unaffordable. I remember my father telling me that during the Depression, the Chinese Buffet was only twenty five cents, but he never ate there. I asked him why and his reply was, "I didn't have the money".

On the other side of the coin, more people than ever before are on some kind of Government Handout Money For Free Program. Food Stamps, Section Eight Housing, WIC, EBT Medicaid, and so forth. But rest assured about these programs that there is no waste or fraud or abuse.
It is a well run government program, just like Obama care! Bear in mind that I'm not talking about Social Security as this is a government sponsored Ponzi scheme that we have paid into our entire working lives, and we do get some of it back.

So now, before I leave on my two week vacation to sunny and warm Florida, let's see if we can try to figure out the markets for the new year. In that regard, the markets, whether stock, commodity, bond, real estate, or otherwise are just like women. There is no figuring them out. And it doesn't make a difference how much research you've done, how many books you've read, an so forth. I recently spoke with an old timer who has been involved with the gold market since the 1960's, and asked him if he had any insight to the direction of gold. His answer, "no". I also spoke to a customer who has been married for over forty years and asked him what he knew about women. After a ten second pause he answered, "nothing". So there you have it in a nutshell.

So if seek my advice as to insight to the precious metals, or women, the answer is that I don't have a clue!

But the again, nobody asked me!

~ Malcolm

March 11, 2013

Spring is just around the corner and the sequestration has just begun. Here's the way I see things. The return of Social Security tax rates to prior mandated levels, combined with rising gasoline prices is an effective policy to slow the economy. Blah, blah, blah, take home pay for those that pay taxes has been reduced. Consumers (and we are all consumers) discretionary income clearly has declined. If you don't believe me, just look at your paycheck. One does not need a degree in economics to figure this out. Thirdly, take a look at the prices in the supermarket, and the size of the products you buy. I remember when a pound of coffee was actually sixteen ounces. Now I think it is about 11.5 ounces. In a nutshell, we have less money in our pockets and have to pay higher prices. And for good measure add the Obama tax increases and you have a textbook example of how to slow the economy.

Now let's look at what I call the Great Conundrum. Low interest rates are fantastic for anyone financing a major purchase like a house or a vehicle. But, if you are older and looking towards retirement or are already retired, CD rates at the bank are ridiculously low. The rate of return is lower than inflation. Living solely on Social Security is impossible even if your house if paid for in full. Property taxes and household expenses will eat that Social Security check up even before you get to the supermarket.

On top of all this gloomy microeconomic stuff that affects us all as individuals, we have all the bullshit coming out of Washington. Now before I begin my normal rant, let me state quite clearly that I am registered to vote as "unaffiliated". I am neither a Democrat or Republican. But let me have another drink of my favorite beverage, Crown Royal Black. In the situation today we have a government that is addicted to spending. Thus, John Boehner, Republican speaker of the house of representatives, has it correct when he stated that this is a spending problem and not a tax problem. Government spending is out of control!!! They are spendaholics and their recklessness and total irresponsibility will have the result of a collapse of our economy and a lower standard of living. The skyrocketing government debt will eventually wreck havoc on our nation. The scary part is that there is no good outcome. We are surely screwed. It is only a matter of time. Just like the sands of an hourglass.

And whom do we have leading us down this path of disaster? A lawyer with absolutely no business experience whatsoever, and no knowledge of economics. Obama never ran a business, never had to make payroll, or comply with government regulations. Unfortunately he is an economic disaster for America. He has increased the national debt more than any other President in history. Compounding this nightmare is the incompetent former President Bush. He and his gang should be jailed for starting the Iraq War. That son of a bitch lied about the supposed nuclear weapons during his State of the Union speech. And let's not forget the mental genius who first initiated these huge deficits, Ronald Reagan. The creator of Voodoo economics.

Ok, enough ranting and raving. Time for another drink. Now we come to everyone's favorite topic: predicting the future. As I have always stated, it is easy for me to predict the future; being accurate is the hard part. So here goes. The economy, with all the aforementioned headwinds will surely decline into a recession. I believe this presently occurring. In fact, on a per capita basis we are already in recession. When the population growth exceeds the growth rate, we have a recession. The government definition of a recession is worthless. As the recession worsens, this will reduce government revenue and produce greater outlays for "give away" programs. Thus the National debt will increase. And this is after a tax increase and sequestration. With out bloated budget and huge debt, this will set the stage for destructive inflation.
At this point, an inflation rate of 8-10% would be devastating. Just think what that would do to mortgages. A $250,000 mortgage would cost about $2,000 a month just in interest. Add ever increasing property taxes and principle payments , and that would propel the cost of housing out of reach for a great majority of people. Government interest payments on fourteen trillion dollars of debt at 8% would translate to annual interest payments of over one trillion dollars.

Unfortunately for us, this is no good ending!

But then again, nobody asked me.

~ Malcolm

February 29, 2012

I have always tried to be careful in thought, and deliberate in evaluating situations, and not wildly jump to conclusions. Sometimes this is not possible due to the situation. But today the alarm bells must be rung as there is a legitimate emergency. The national debt has now officially exceeded the GDP. Although this has long been anticipated, the wolf is now at the door! Our national debt is growing faster than our economy. It is, in fact, an unsustainable situation for a stable economy. The brutally effective "Invisible Hand" will assure us of an unavoidable disastrous calamity. Unfortunately our elected officials are doing nothing to reverse the tend. In fact their irresponsible actions are adding fuel to the fire. This latest extension of the payroll tax cut, which will be paid for by borrowing more money, is a classic case of kicking the can down the road! I believe we are getting close to the end of the road.

On another note, here is a little something that will make you shake your head. If you apply for a job, there is in general a detailed application, a couple of interviews, and of course a mandatory drug test. If you fail just the drug test than say goodbye to the job. If you pass all the hurdles then you will be working five or six days a week for your paycheck. You will have to get up in the morning, wash and dress and travel back and forth to work. Work will occupy much of your time and energy. At the end of the week the government will then take some of your money away in the form of taxation. BUT, if you want the government to give you money for free, you need not work, and more importantly, you need not pass a drug test. That's right! Just fill out a simple application, go home and wait for the money to arrive. You will not have to get up early and prepare for work, nor must you travel. You can have the whole day to do whatever you like. Section eight housing, food stamps, Medicaid, and other free government benefits are there for the taking.

It's as if the inmates are running the institution!

Is it any wonder why our government is sinking further and further into debt?

But then again, nobody asked me.

~ Malcolm



November 14, 2011

The leaves are changing color, the weather is getting colder, and the clocks have been adjusted. With the exact precision of a Swiss made watch, our nation is everyday sinking deeper into a debilitating quicksand of debt. This is an immense danger to our economy, and thus our well being, and standard of living. In a way, our huge and fast growing national debt is similar to high blood pressure. We can't consciously feel the effects, but eventually it can explode and leave us severely disabled. The sad story is that our inept politicians just fiddle around, like Nero, with Rome burning down around them.

In less than two weeks, the super committee is supposed to have a solution. The present talk is to reduce Social Security and Medicare benefits. Mind you these are government mandated plans, that we as working people must, by law, pay into. And the government has the nerve to call these entitlements! Well pardon me for assuming that I was entitled to get my money back as promised! A better idea is to cut government hand outs, to which some people contribute nothing. For starters, how about eliminated section eight housing and food stamps? As a customer told me, "A hand up, not a hand out!" Can someone please explain to me why my tax dollars should be used to pay the living expenses of someone else? Instead of sending my tax money to Washington, I could save the postage and rent some family an apartment and pay for their food and medical expenses. Totally ridiculous!

This past Halloween, one the neighborhood kids made a real neat homemade costume. While the other kids sat around and did nothing, he was trick or treating for more then five hours and accumulated a full bag of candy for his efforts. So I went over to him and took half of his candy, and gave it to those kids that did not make a costume, or bother to go trick or treating. When he asked why I took half of his candy and distributed to the children that did nothing to deserve it, I told him that is was a lesson as to how our government works! We take from the productive people and give to people who are not.

In this world there area people of various levels of intelligence, education, motivation, etc. Some are exceptionally bright and some stupider then a loaf of bread, with most people somewhere in between. If a person goes to school and then afterwords, works hard, the government punishes them by taxing them and giving their money to people who don't work hard. And if you don't work or study, perhaps drop out of school, or are not very smart or responsible, why should the taxpayer be responsible?

Now get a load of this! A person can come to America from a foreign country, and if over the age of sixty five can receive a monthly payment from the government, equal to the minimum benefit of a social security recipient who worked their whole life, and contributed to the fund. In addition these freeloaders, by law, are eligible for food stamps, rent assistance, and of course Medicare benefits, and who knows what else! And they contributed a dime! It should be no secret as to why the system is going broke!

Frankly our once dynamic and wonderful country is not going in the right direction.

But then again, nobody asked me..

~ Malcolm

October 10, 2011

Well its been a while, for sure. Autumn is upon us and as we move to winter, the financial system of the worlds appears to be headed in the wrong direction. Frankly, it is making me uneasy, but here is how I see things.

A default by Greece would trigger a number of unpleasant consequences, to say the least. European banks and institutions are presently in a weakened financial state. Those which hold Greek debt instruments may be threatened by bankruptcy or be pushed past the point of insolvency.

There is a real estate bubble in China that will eventually bust. And that time does appear to be getting closer. There are so many imbalances in their economy, and they will manifest themselves as the global slowdown exacerbates weakening positions.

Japan has serious problems from the nuclear contamination that will not go away!

In all this mess of uncertainty, the USA looks more like a safe harbor in a storm. But that is all relative. Just wait until congress has another tantrum! And inexorably, each and every day, our country sinks more deeply into catastrophic debt levels. We are continuing to bleed, and at an ever increasing rate. The extremely low artificial interest rates mask the problem.

I just have this sense of impending economic danger. The whole world situation has me feeling uneasy. Just recently I heard American Airlines may be in trouble and what about that American icon for over 100 years - KODAK! I used to live in the Rochester area and could not imagine the day would come, when I hear that KODAK my file for bankruptcy!

We have been in an economic morass for years, and we are not headed in the right direction. Our ominous national debt may soon be leaving orbit and going out of control! Banks and financial institutions are threatened with survival in the event of a Greek default, and this will just be the first domino; after that, the Invisible Hand will be ruthless. If we loose control, a panic may ensue.

Unfortunately, this is no good outcome.

But then again, nobody asked me.

~ Malcolm


December 17, 2010

Good grief! I have been so busy with business that I did not have time to get up on my soap box. Now things have slowed down.

The Democrats have told President Obama "NO" on the tentative deal with the Republicans. I think that President Obama should just let the Bush tax cuts expire as scheduled. They were misguided when Bush proposed them anyhow! The budget deficit is out of control and will be a killer to us and out future .. and the future is just around the corner! We must raise taxes and cut spending. There is a proposal to freeze federal employees' wages for two years. Some cynical Congressman says that will only save about $2,000,000,000.00 a year; a mere drop in the bucket! But this elected dummy does not understand that every little bit counts. There is an old saying in business, that if you watch your nickels and dimes, the dollars will take care of themselves.

Gasoline prices are going up on world demand. Yup, there are now other people who can afford cars and gasoline and that increases demand. I reckon that the price will easily surpass $3.50 by early Spring.

Did anyone notice that interest rates have risen on the US government ten year bonds? Can you imagine what the interest expense on the national debt would be if interest rates were a few percentage points higher? It is called an economic disaster, and it is less than two years away.

We have reached a point where it is impossible to theoretically pay off the national debt ... and that is with low interest rates.

If foreign governments and Americans lose faith in the dollar, there will be a rapid and dramatic currency collapse. Gold and silver could soar, along of course with a host of other commodities.

My firm belief is that we are presently in an unfolding economic emergency greater than the magnitude of the worst of the Great Depression.

Unfortunately, there is no good outcome.

...
but then again, nobody asked me.

~ Malcolm


August 14, 2010

Well it sure has been some time since my last rambling, so let me get right into it.

The economy is not on the right track, and the politicians from both parties do not have a clue or the political will for drastic changes. My opinion is that we are in a dire economic emergency and we need swift painful changes to right our country. This and past administrations are spending money they do not have, at unprecedented rates, without any acknowledgement of the economic danger. In short, the federal, state, and municipal governments are going broke! Red ink is hemorrhaging and there is no recognition that this situation is an emergency.

The housing market is key to a strong American economy, and the housing market is in terrible shape. My prediction is that the housing market is in such bad shape that it will stay weak for a generation.
Interest rates are now at historic lows and the housing market is on life support. What would happen if the mortgage interest rates increased two or three percent? It would be a disaster. Without a strong housing market unemployment will stay weak for quite some time.

On top of all this, we appear to be sinking into a dangerous deflationary period. It is all the more dangerous as the government is so deep in debt. Deflation makes it more difficult to pay debts. There is no good ending to this mess. We must depend on our politicians to work together and behave in a responsible manner, This is virtually no chance of that.

And what of us? The so called "normal people."

Half of all wage earners pay no federal taxes. The politicians just gave away another $26,000,000,000.00 to "save teachers, police and firemen." What about saving everyone else? Is it a wonder that the federal government is sinking in debt? Plus give a look at the entitlements such as Section Eight housing and Food Stamps. They have become an ingrained way of life for some. We have had these giveaways for over forty years and it does not fix the problem. It just creates more of the problem. Typical idiotic government program.

Foreign enemies are not our biggest danger. This country is rotting away from the inside. We have become a nation of handouts and bailouts. Whatever happened to self reliance? Last year more Americans gave up their citizenship than at any other time in our history. Most of them are people of means, thats are moving out of the country.

Maybe next time I'll tackle some social issues ... that's a hot button for sure!

But then again, nobody asked me.

~ Malcolm

April 14, 2010

A I have written prior, that an economic calamity will befall the USA at some in the future. It is my opinion that the future is here.

In 1917 the USA received the highest international investment grade of AAA. Previous to this time, we were a debtor nation, with an expanding economy and a voracious appetite for capital. Domestic sources of capital could not supply the fast growing economy. Our industries borrowed heavily from the finance centers of Europe. Interestingly, many of the bonds that were sold to foreigners were denominated in British Pounds Sterling, German Marks, and French Francs.

This all changed with the guns of August 1914, as Europe slid into devastating trench warfare. By the time the killing stopped, on the eleventh hour of the eleventh day of the eleventh month, the USA had accumulated 2/3 of the floating supply of gold. And this at the height of the international monetary agreement known as the Gold Standard. The USA had become the center of world finance. Fast forward to today and our crippled economy; no wonder our AAA credit rating may be lowered.

Anyway you slice it - this country is headed in the wrong direction.

Our debt burden is a rope around our neck. Since and including Reagan, the politicians of both parties have borrowed and spent us into catastrophic debt. Make no mistake, this financial irresponsibility extends to both parties, plus the Greenspan Fed.

Here are my observations:

About 45 of the states are in severe financial stress, and it will get worse. Commercial real estate is experiencing difficulty refinancing, and it will get worse. New home sales keep declining to levels lower than ever recorded, and it will get worse. The employment situation is most difficult, and it will get worse.

Anyway you slice it - this country is headed in the wrong direction.

Also if oil prices should increase, so that the price of gasoline rises above $3.50 per gallon, I believe this will be enough to tip the economy back into recession, and this is an anemic recovery at best. Jobs and money are tight. I have absolutely no doubt that there will not be a truly robust recovery until the three pillars of the American economy are expanding. Those three pillars are housing, housing, housing! And housing is a basket case!

But then again, nobody asked me.

~ Malcolm

January 13, 2010

A new year has just started and I wish most of everyone a nice year ... although there are some who I would hope, would have a somewhat different outcome ... hhhhmmmmmmmm.

Alright now, let's get down to business. This economy is really in a difficult situation. Try and find a decent job and you can experience the job market. I personally know people that have lost their jobs and are on unemployment. In the last two months I have met two dentists that have lost their personal practice. One is just giving up and the other is working for another dental practice. Restaurants are under severe stress as dining out has experienced an 18% decline year over year. The car business is just limping along and the housing market just took a nasty 16% decline in pending sales (signed contracts). Gee whiz, housing and autos are the traditional backbone to our economy.

Most the new jobs created in this country are done so by small businesses. If President Obama wants to help create jobs, and save jobs, then he must concentrate to specifically help small businesses.

As to my outlook for the economy in general I think that we will have another bout with a banking/financial/economic crisis. Anyone who thinks this past crisis is over is only deluding themselves. The economy is on life support from the Fed and the government. We are experiencing the worst recession since the Great Depression. This is a serious situation and I personally do not believe the worst has passed.

The economy continues to loose jobs. Certainly much less than the rate last year, but nevertheless, still on a negative path. Public and private debt is now 360% of GDP. At the onset of the Great Depression it was 160%. Way too much debt is a killer, especially when the economy slows. Wages are stagnant at best.

The nail in the coffin is the disastrous financial condition of the individual states. Most all are facing another year of declining revenues. They will be forced to cut spending, raise taxes and increase fees. This will ripple through the states quite negatively.

Things will not get better very quickly. Fasten your seat belt, it will be rough going.

But then again, nobody asked me.

~ Malcolm

October 28th, 2009

Well gold certainly has had a nice run lately. Hard to believe the precious metal is over $1,000 and hanging steady, with a slight upward basis.

Some people buy gold for investment and others as a financial insurance policy. I think the chances are elevated for another financial crisis, sooner rather than later. We can all have different opinions why the price has risen, but I do believe we can all agree that it is the law of supply and demand that ultimately determines the price.

What troubles me most is the outlook for the general future of America. The politicians from both sides of the aisle are to be blamed for screwing up the general tranquility of our wonderful country, for political gain. They have been reckless in spending more money than our government has or can reasonably borrow. The politicians have made financial commitments to many Americans that can bankrupt the country. It is shameful and embarrassing that we must depend on foreign countries to finance our obese deficit.

The result is an economic and financial future filled with uncertainty.

I don't profess to have all the answers, in fact, I don't know if I have any! But I believe that it is better to live below your means, than the alternative of going into debt. I live that way and truly believe it is good advice for people and governments.

but then again, nobody asked me.

~ Malcolm

August 6, 2009

It's been some time since my last comments and so much has occurred, so let's get right to the point.

This recession is the first ever in the USA in which collapsing house prices was the catalyst that caused the economy to contract. Usually the economy shrinks, unemployment rises and house prices eventually dip. Clearly, the swift decline of the housing market bubble and all the associated financial derivative securities, was the cause of what has now become the longest post World War recession. Unemployment looks as if it is headed to over 10% even with all the government finagling to the contrary to lower the rate. Plainly, it is difficult to find work. The recent college graduates are facing one of the most difficult job markets in recent memory.

But what does the future hold? After consulting my crystal ball I have all the answers ... the only problem is that they may not be accurate!

Most troubling is the contraction in the amount of credit. Banks are returning to more sane lending criteria, and the public is gun shy to borrow with such reckless abandon. All recessions / depressions are characterized by credit contractions.

Bank failures are accelerating in both number of banks and values of deposits.

Citibank, in my opinion, is insolvent. They were also illiquid until the government injected huge amounts of money into the bank. And there must be others.

Bernanke says he did what he did, so as not to preside over the Fed during a second Great Depression. But it is possible that he just might.

But here now is the most worrisome situation ... this is the first recession since the USA recently became a debtor nation. We were a debtor nation before World War I. After the war Europe was in disarray, and we ended up with half of the world's gold reserves and became a creditor nation. Presently we have an acute and dangerous debt bubble, with no relief in sight. Fasten your seat belts. Pay off your debt and live more simply.

but then again, no one asked me.

~ Malcolm

June 9, 2009

Well, well, well, General Motors has entered bankruptcy. The government pumped in another 30 billion dollars and now owns a majority stake. The Obama administration hails this as the only credible solution. They claim this will now enable a "New General Motors" to operate profitably. Has everyone in Washington gone nuts?!

In my humble opinion, their plan is doomed to failure. This will be a colossal water of our (taxpayer) money. The reason being that the main causes of the accumulated difficulties have not been addressed. Plainly stated, these are, an incompetent management, and ridiculously overpaid union workers. If the new company were to not deal with the union and instead put a notice that they will by $25 per hour, 40 hours a week, there would be a line stretching for miles around every factory. The obvious economic reality is that the union workers are paid much more than a free market would dictate.

For any chance for the reconstituted company to become profitable, it is absolutely necessary to get rid of the present management and the entire union. In this regard the Obama administration will ultimately fail. They just don't understand that the marketplace is the best judge. Government support and subsidies are not the answer.

In the short term a new company will emerge and Obama will hail this as a new era of cooperation, blah, blah, blah. I give it another two years for the final collapse.

But then again, who am I?

And then again, nobody asked me...

~ Malcolm


May 4, 2009

So now the government is running the show at GM. I am so relieved. The government is a model of precision and efficiency and with their control there will be no waste, fraud or abuse! You can be sure of that. But all the government is really doing is only prolonging the inevitable demise of General Motors. I do not see any alternative to a company that can not compete. Their problem has been developing for quite a number or years. A combination of mismanagement and misguided unions. Besides a change in executive leadership, the unions heads should also be replaced. But that is impossible. A General Motors bankruptcy will have far reaching repercussions, and some will be unintended and unanticipated. Just remember, what is good for GM is good the country.

The unemployment number just came in at 8.5%. Some economists are calling for the rate to peak at 10%. If GM goes bankrupt, and I believe they will, say goodbye to 10% unemployment and be ready for real difficult economic times. The recession will worsen, certainly gather momentum, and can turn into a depression! Can you imagine? Already six or seven states have double digit unemployment. The biggest state, California, is at a whopping 11.2%. And the state is broke, big time. They are issuing vouchers instead of checks. If the economy continues to worsen, California by next year will be in a depression, and as goes California, so goes the country.

But don't worry, the government knows best what to do about this situation.

But then again, nobody asked me.

~
Malcolm


March 18, 2009

Today on the radio, I heard that the projected Federal budget deficit for the fiscal year 2010, which begins October of this year, may exceed $1,300,000,000,000.00! One trillion, three hundred billion dollars. However written, that is a lot of money the Federal government must borrow. Of course Congress is doing such a good job they will receive an automatic increase in salary! Some are quite convinced that this will create. But I am not so sure. If the money allocated for the stimulus was instead refunded to every working person, it would work out to approximately $6,500 each. I am convinced that would be inflationary. But, this money will be replacing money which has just been destroyed and will not be excess dollars chasing goods.

As to the TARP money, my understanding is that the funds will be used to replace worthless debt. For instance, let's say the bank has $1,000,000 in assets. Of this amount $200,000 is in the form of worthless paper assets. The government by lending the bank $200,000, in effect, buys this paper at $200,000. The assets of the bank remain unchanged at $1,000,000. Thus, a net change of zero!! Thus, no extra pressure for inflation.

The gold market has been driven by speculation of future inflation and the anxiety surrounding the soundness of the entire financial system. There are monumental problems for sure. In fact, the financial system of the world can be overwhelmed due to the gargantuan amount of leveraging. Usually this will end in depression.

We are truly living in historic times.

~
Malcolm

January 26, 2009

We finally have our new president. Mr. Obama, who is a skilled orator, gave a truly inspirational speech. Perhaps after all this we will all feel good and even more optimistic. But unfortunately the realities our our economic situation will have to be addressed in some way. By all estimates, we are facing unprecedented deficits to both Federal and State government budgets. And unfortunately there is no easy way out of our perilous situation.

The way I see things, the issues are immense and numerous. The automobile companies bailout has not yet played out. That could be a land mine. The commercial real estate collapse has just begun and is exasperated by the credit issues. Unfortunately, much of the real estate financing was with short term loans. Now the banks are reluctant to extend long term loans. Thus some of the real estate owners cannot refinance and are in peril of losing their properties. State governments are in a similar bind where they cannot refinance, or rollover, their municipal bonds. This is a classic credit crisis.

And to add fuel to the fire, the price of gasoline has risen a little in the last week. If there is a rebound in gasoline prices, at a time when the American family is under tight finances, this could be the nail in the coffin. Keep an eye on gasoline prices, and hope that they do not increase.

So what is the strategy to follow? The so called experts are clueless. Last year at this time said to buy stocks ... and the market fell 35% - 50%. Now they offer the same advice. My advice is to pay off any debt, including any mortgage. Then have a cash cushion of about one year and then take it from there.

There is an old Chinese saying that goes "May you live in interesting times." We certainly do today.

~
Malcolm


October 1st, 2008

The last few weeks have been quite tumultuous in the financial markets. Some old venerable firms have ceased to exist. Some have been forced to the precipice. The government has spent and pledged hundreds of billions of dollars and now wants an additional

------------------------------------------$700,000,000,000.00

Of course this is just a fraction of the national debt of

-----------------------------------------$10,000,000,000,000.00

Of course this does not compare to the world derivative market of

----------------------------------------$450,000,000,000,000.00

So if things just slightly double in some time, we could be figuring the amount at the apparently incredulous amount of

---------------------------------------$1,000,000,000,000,000.00

The only problem I wonder about is what do we call what comes after a trillion?

There is an old Chinese proverb that says
“May you live in interesting times”. Ladies and gentlemen, we are most certainly experiencing interesting times. Essentially we are experiencing the manifestation of a credit crunch. The ramifications are nothing short of momentous. And all this is occurring in the midst of an historic, hotly contested presidential contest, in which neither of the candidates is well versed in economics. But no make no mistake, the Invisible Hand has just begun to stir.

~
Malcolm


Sept 6, 2008

The last couple of weeks have seen the price of the precious metals decline rather dramatically. Some now argue that the commodity buble has burst. I'm not altogether convinced of that. Inflation has manifested itself and appears to have no end in sight. At the supermarket I was quite surprized to see the price of apples at $2.49 a pound. I first thought it was a mistake. Not too long ago the price fluctuated between $0.99 and $1.29 a pound. Canned sardines and kippers have also seen large increases in price. These are not 2 or 3% annual increases.

Additionally, inflation is on the rise worldwide. In the backdrop of various central banks raising their rates, it sure does seem to me that the Federal Researve rate of 2% just sounds too low.

One thing I do know, is that if the mortgage interest rate should increase, it would be terrible for the fragile housing market. The three pillars of our economy are, housing, housing, and housing! Get the point? In just about two months we will have an election which can certainly change the direction of government. This most certainly will be an important election.

As they say................. keep your powder dry.

~
Malcolm





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