Quote of the Week

"Europe was created by history. America was created by philosophy." --Margaret Thatcher


September 10, 2012

An Illustrative Quote

The Quote of the Decade:

"The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government cannot pay its own bills.  It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies.  Increasing America's debt weakens us domestically and internationally.  Leadership means that, 'the buck stops here.' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.  -- Senator Barack H. Obama, March 2006

Keep this quote going. 

August 20, 2012

July 28, 2012

The Burden of Obamacare

The Affordable Care Act (aka Obamacare) was passed based upon the claim that it would increase efficiencies and access to health care while decreasing costs.  In the name of achieving these goals it created 159 new federal bureaucracies that will require increasing amounts of our taxes to staff and operate.  These new boards, programs and agencies will become intimately involved in our health care and have already generated over 12,000 pages of new regulations with no end in sight.  The law also gives the IRS access to a tremendous amount of information about us that it was never entitled to know before.

Along with all the new bureaucracies and loss of privacy, Obamacare increases the burden on taxpayers and our economy, with a slew of new taxes and regulations that will overwhelm the middle class and small business.  Here is list of tax increases and related changes designed to increase the amount of our income subject to taxes and further overwhelm small businesses—

·         Individual mandate excise tax (starts Jan. 2014)

·         Employer mandate tax (starts Jan. 2014)

·         Surtax on investment income (starts Jan. 2013)

·         Excise tax on comprehensive health insurance plans (starts Jan. 2018)

·         Hike in Medicare payroll tax (starts Jan. 2013)

·         Medicine cabinet tax (started Jan. 2011)

·         HSA withdrawal tax hike (started Jan. 2011)

·         Tax on medical device manufactures (starts Jan. 2013)

·         Raised ‘haircut’ for medical itemized deduction (starts Jan. 2013)

·         Tax on indoor tanning services (started Jan. 2010)

·         Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D (starts Jan. 2013)

·         Blue Cross/Blue Shield tax hike (started Jan. 2010)

·         Excise tax on charitable hospitals (started immediately upon passage of Obamacare)

·         Tax on innovator drug companies (started Jan. 2010)

·         Tax on health insurers (starts Jan. 2014)

·         New limit on annual compensation for health insurance executives (starts Jan. 2013)—what competent manager will want to run a health insurance company starting next year?

·         Employer reporting of your insurance on your W-2 (started January 2011) –OK, this isn’t a tax yet, other than more overhead costs small business, but it is an obvious step towards all of us having to pay income tax on the value of our employee benefits

·         “Black liquor” tax hike –tax increase on a type of bio-fuel

·         Codified into law the “economic substance doctrine”—allows the IRS to make a subjective decision that an otherwise legal tax deduction or tax plan is not allowed

Economics 101, if you want to encourage an activity, subsidize it and if you want to discourage it, tax (and regulate) it.  It looks like the Obama administration and Democrats in Congress want to harm our health care system, not help it. This bill is not about making health care more affordable; it's about control; government control over our lives, and lots of it.  We need to fully repeal of Obamacare and then replace it with sensible reforms that will actually lower our health care costs without further burdening the people.  IF our current leaders in the White House and Congress won't do this, then let's throw them out and elect new representatives who will.

March 19, 2012

Oil and Gas: Renewable and Affordable

We live in a world in which 'up' is 'down' and everything is twisted inside out; logic doesn't seem to matter anyone. Nor does keeping life affordable.  We have plenty of oil and gas, affectionately referred to as 'fossil fuel' to imply impending extinction, and it is affordable. While I love my small solar charger for my cell phone and iPod, solar and wind energy have yet to prove their viability (and more importantly, affordability) on a mass scale. 

For now we won't go into the bankruptcies and other financial problems that have occurred with politically connected companies involved in these more politically correct energy sources. That's the subject of another post.

Many people support, or at least tolerate, some funds being pumped into research on  renewable energy sources because they've been led to believe the country's gas and oil supply is limited and they want our country to be energy independent. However, pumping money in failed projects while ignoring real opportunities to increase our independence from foreign oil has the effect of making our country and economy more vulnerable to our enemies, not less.  Many of our elected leaders and their appointees would rather worship at the alter of environmentalism than act in a practical manner and investigate all viable options for energy that is both in ample supply and affordable.

Greg Lewis published an article on AmericanThinker.com on Sunday titled "What If Oil and Natural Gas Are Renewable Resources?"

Mr. Lewis states...
"The evidence is mounting that not only do we have more than a century's worth of recoverable oil in the United States alone (even if there is a limit to the earth's oil supply), but that we also actually have a limitless supply of Texas tea because oil is in fact a renewable resource that is being constantly created deep under the earth's surface and which rises upward, where microscopic organisms that thrive in the intense pressure and heat miles below us interact with and alter it.

In other words, we have an unending supply of oil, some of which is constantly migrating upward from the depths at which it is created to refill existing oil deposits, and much more of which remains far below the surface. This oil can be recovered using existing technology."

Mr. Lewis references Scientist Thomas Gold, who discusses the facts supporting the theory that the earth is constantly producing new oil very deep below its surface, and in some cases the oil flows up to replenish existing oil fields thought to be exhausted. Gold's book is titled The Deep Hot Biosphere.
We need to get this information out to the public. People need to understand that we have real options that our current leaders are not telling us.

Click here to access Greg Lewis' article.

March 12, 2012

Obamacare and the attack on religious hospitals and charities

Consider the facts surrounding the contraception "controversary" --

  • We have the odd question from George Stefanopoulos to Mitt Romney at the NH debates about whether states could outlaw contraception. The question came out of left field (no pun intended), but Mitt was savvy enough to not give the media a convenient sound bite. 

  • We have incessant media attention and questions by debate moderators on this issue, despite numerous polls showing the public is more interested in hearing about jobs and the economy and energy.

  • Georgetown law student Sandra Fluke, who's apparently paid $3000 during law school for her birth control (had to have been gold plated pills), and is now being 'handled' by former White House Communications Director, Anita Dunn, and making the talk show circuit apparently with Dunn's assistance.

  • We have the edict from the Obama Administration and HHS that Catholic institutions and other religious institutions (which includes churches, hospitals, colleges and universities and charities) will have to provide insurance to its employees etc that covers free contraception (and also cover abortion services).

  • Obamacare will not allow hospitals that are affiliated with the Catholic Church and other Christian religions to be exempt from requirements that violate their faith.

  • We know that a meeting between Catholic leaders and the Obama Administration resulted in the latter arrogantly lecturing the former and no real constructive dialog occurred.

  • There are many Catholic and other Christian charities, hospitals, schools and universities that will be affected by these top down controls.

  • The Catholic Church has already indicated it would shut the hospitals down rather than comply. (I'm assuming the statement might apply to all such affected institutions).

  • There have been many actions by the White House and its representatives over the past three years that are adverse to biblical religions (i.e., Christians and Jews). Click here for the detailed list.

Based on all of the above, consider the following explanations/conclusions:

  • Many of our current elected officials in Washington, including the White House and its various departments, agencies and bureaus are overtly hostile towards those of religious faith and want to remove its participation and influence in our society.

  • The controversy on contraceptives has been manufactured to paint Republicans and conservatives as outside the main stream, and to serve as a smoke screen so the public won't pay attention to the fact that abortion is going to be paid for by taxpayers and forced on religious institutions.

  • The White House  actually wants the Catholic and other religious charities to shut down their hospitals and other institutions, as it would leave a void that the federal government could fill, would cause us to be more dependent upon the government, and would further diminish the influence of the Catholic and Protestant Churches, etc.  (never the bigger expense upon taxpayers that would result)

March 5, 2012

Economic Terrorism: Weak Spots in Our Financial System

I'm halfway through newly a published book by Kevin Freeman called Secret Weapon--How Economic Terrorism Brought Down the U.S. Stock Market And Why It Can Happen Again.  He provides a brief history of economic warfare, and explains in great detail how our enemies have the motive, means and opportunity to inflict grave harm to our financial system and economy.  It's important we understand what has happened and could happen again so we can try to protect ourselves, and communicate with our elected officials about the necessary changes to protect our financial system.

While I do not consider myself to be naive about such things, I was still surprised about some of the vulnerabilities that Freeman discloses in his book. Given my practice in securities and finance, I can fully imagine the risks he describes and they are not overblown. 

Here is a summary of a few of the methods that certain countries, terror groups, and other individuals with nefarious motives can use to harm the US:

Oil manipulation--High oil prices have many causes, one of which is speculative bubbles. Hedge funds and other speculators have gotten quite active in the oil market (60-70% of oil contracts on futures market are held by speculative entities), and their activity drives up the price of a barrel of oil beyond what economic fundamental would justify; e.g., based on supply and demand, a barrel of oil ought to cost $70 but due to speculation on futures markets, the cost is well in excess of $100.  This can trigger a recession as energy costs affects us at the pump, drives up costs of our utilities, food and other goods we buy. It's a ripple effect that squeezes household budgets.

Currency and debt manipulation--Foreign governments, such as the Chinese, hold enormous amounts of U.S. debt, such as treasury bonds, Fannie Mae and Freddie Mac bonds. If they and/or other parties sold their holdings of U.S. debt or refused to buy any more, it would send our economy into a tailspin, possibly leading to a further downgrade of our debt. Rising interest rates and an economic collapse is not out of the realm of possibilities given how tenuous our current economic situation is already.  When you hear and read stories of the Tea Party and others warning about the massive spending by our federal government, this is why. The bigger the deficits we run up, the more we are enslaving ourselves to other countries.

Bear raids--'Bear raids' are when a short seller or a group of short sellers spread rumors or use other methods to drive down the price of a company (or bank's) stock. It's illegal but has not been well policed.  George Soros is an expert at leading bear raids. He destroyed the British pound in 1992 through a bear raid.

Credit default swaps -- Credit default swaps (CDSs) were developed by J.P. Morgan in 1994 as a mechanism for bond investors to insure their loans against default. However, CDSs are unregulated and went viral in a manner of speaking.  Let's say you bought $1 million in bonds but you insured them for $10 million, which is perfectly legal. You are essentially paying a fee to someone else to compensate you in the event of a default by the bond issuer.  You can sell the CDS to someone else. Also, the party that insured you can then buy their own insurance, for $10 million or more. Bottom line, you can hold the CDS without having any underlying interest in what is being insured. It's like one person holding fire insurance on another person's house. The first person only makes money if the second person's house catches on fire. That's perverse incentive. Also, because the amount of the CDS can be significantly greater than the original debt it insured, the fallout from a default gets magnified. Assume the bonds I referenced above defaulted. The holder insured the $1 million in bonds for $10 million. Therefore, not just the $1 million is lost; the insurer would owe the holder(s) of the CDSs $10 million. This is how a manageable amount of defaults turns into an unmanageable mess.  I'm oversimplifying, as it is much more perverse and far reaching than I can describe in a short blog post.  There's a reason, however, that some people, including Soros himself, who have referred to CDSs as weapons of mass destruction.

There are many more methods of manipulating our financial markets and economy, such as naked short selling, double and triple exchange-traded funds (ETFs), dark pools, dark markets, sovereign wealth funds and algorithmic trading, among others.  Want to know more?  BUY THE BOOK! I highly recommend it.