Gene's Footnotes

I have never been impressed by the messenger and always inspect the message, which I now understand is not the norm. People prefer to filter out discordant information. As such, I am frequently confronted with, "Where did you hear that...." Well, here you go. If you want an email version, send me an email.

August 23, 2011

Mini lecture: Why I have to buy defective electronics made in China



Greg sent a link to this video. You would think it unnecessary to even consider that jobs are leaving the United States because of the U.S. government, but easily a third of the people I talk to are economically illiterate.  Sometimes, they are just illiterate and proud of it.  

In this lecture, you will hear the argument that our businesses have to leave the nation in order to make a profit and that the prices they require from buyers become too high to compete because of a taxation that is both high and doubled.  As we know, the buyer actually pays the taxes until the price is too high, then the buyer goes to cheaper. Hence, crap from China.

You will also see in that video how it is that it takes three minutes for the stale brain to glaze over - this lack of intellectual discipline is a serious problem.

By stating the obvious in the video, however, one loses an important part of the audience - those taught that anything good for businesses is bad for the worker. They do not know any better, so you need to address their level of understanding. Indeed, you need to learn they have such a view. Long gone are the days of "what is good for General Motors is good for America." 

The way to frame the taxation argument is, first, that companies that stay cannot compete on price because of the high taxation rate and hyper-regulation. This results in higher prices.  The average consumer is becoming unable to pay for American products. (Do not doubt that this is an intended outcome by our happy Marxist leaders.)

This results, in turn, in people buying the cheaper items. This result in Wal Mart, et. al.,  getting all its stuff from China both for reasons of supply and price. This results in me being forced to by inherently defective crap. I cannot even find many qulaity items that are made in this country regardless of price.  The crap squeezes out quality. Even if you want something that will work and endure, often, you cannot find it. The crap will break causing economic loss. ON and on.

The second argument is that jobs are lost when companies move abroad. Unionists need to understand the result of their socialism. Unions are the key operatives for the leftists in power and most of the members have no idea they are key supporters in the loss of their own jobs. 

So, the second argument expanded is Union jobs are lost.  This should resonate with the membership. They must come to understand their leaders are bribing them to promote socialism, a political end contrary to their hopes for a good paying, secure job.  Taking down the evil, big business means eliminating jobs.

As an aside, I noticed as a young adult that unions could care less that younger workers are fired when a "better" contract is secured. That is, the old hands get more money and that is all they care about. This is elitism in its purest form, though the unions and members would denounce any criticism of their undemocratic greed. Unions have become gangs and they operate to promote themselves and friendly leftists. Union members alternate between worker bees and fatted cows.

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There are also, of course, the Eurotrash types who just want hand outs from pushers and will vote for the friendliest pushers. There are too many of these bums, a fostered condition, and they are the key threat to our national traditions and culture, but long term education and a reduction of clown government are necessary here; no logical argument will work with the Eurotrash, only manipulation, which is anathema to the generalized, wilting American morality. 

There is a good argument for some qualifications before one is allowed to vote.  As it is, democratic leaders are promoting the notion that voters include felons and currently illegal aliens as it is thought more addicts will vote for the pushers.  This is strong argument and a pendulum swinging over the body politic in the pit we have built ourselves. If twenty million Mexicans are given the right to vote, look to Costa Rica for a new home.  

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Q:  How is ipod and ipads made in China don't stink? This is an interesting area. Of course, there is the high suicide rate at the Apple factory.  Still, that is OK as we are supposed to love Marxism even when it is in league with evil capitalists and kills its own citizens.


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posted by Gene | 8:14 AM | 0 Comments

August 18, 2011

Cycle of Deflation


A little selection from Seeking Alpha regarding "competitve deflation" which seems the next stop on the cycle.


...In the early 1930s, countries around the world engaged in competitive devaluation. The idea is that by devaluing our currency, our exports become more competitive which reduces unemployment. The problem is that currencies are a zero sum game. Our devaluation is another country’s appreciation. This means we’re effectively just shipping our unemployment overseas. Other countries don’t like that, so they devalue their currency in turn. This leads to cycles of competitive devaluation. Competitive devaluation may lead to very severe inflation, or, if the economy is sufficiently weak, it may simply lead to extreme depreciation.
What would extreme depreciation without inflation look like? The prices of everything would go up, but wages would lag. Inflation is a cycle that is led by wage growth. If there is sufficient unemployment, labor has little negotiating power so they can’t get significant wage increases. So for example, prices might rise by 50% while wages only rise 15%. We are all effectively much poorer.
I believe that extreme depreciation (with or without inflation) is a near certainty. The tricky question is when. If we have another deflationary shock to the system, there would likely be another flight to the dollar and another wave of deleveraging which would actually cause prices to drop. In the absence of such a shock, I believe we would get significant depreciation (and price increases) within one year. My best guess is that we will see a shock and therefore the depreciation is a couple of years away, but I have no confidence in the timing.
It is very hard to profit from depreciation. Safe haven assets like gold tend to preserve wealth, but won’t necessarily increase it. Moreoever, if we have a deflationary shock first, gold and other hard assets could plummet like they did at the end of 2008.
I believe the best way to position ourselves is to gradually scale into a long position in hard assets, hedged with short equities. Today, owning some gold is smart diversification. If we get a deflationary shock that sends gold down 25%, hard assets like gold, commodities, and real estate, will be very attractive purchases. So, begin to very slowly scale into owning hard assets, but make sure to leave plenty of cash to buy more on a deflationary shock. To be perfectly clear, my best guess is that hard assets fall over the next year, but I expect them to be a good purchase over the next decade. Given my uncertainty on the timing, it is prudent to begin scaling into a long position very slowly over the next few months....

This was written last year.........  It is hard to guess what to do.  Gold and silver are now on a run, but to a large extent, they merely reflect the drop in the buying power of the dollars.  Metals may decline in a deflation, but that decline is not real because the dollars you would get for it will buy more. The standard of analyzing investment is not fixed. As the article mentions, keep some cash around in case things to crash so you can buy more for the buck.  The crappy dollar could once again have value once the toilet flushes. 
At the bottom of the curve is where you need a gun.

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posted by Gene | 6:35 PM | 0 Comments

August 17, 2011

Warning

Photo: Essentially unrelated, but neat.

Warning email Rod forwarded.  Take heed and be aware that you may get this:


You have just received a Taliban virus. Since we are not so technologically advanced here in Afghanistan, this is a MANUAL virus. 
Please delete all the files on your hard disk yourself and send this email to everyone you know. 



Government workers: call a meeting to discuss whether an email should be published advising people about this dangerous email virus.  I recommend you put in the "re" section of your email:  VIRUS - DO NOT OPEN.  

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posted by Gene | 9:03 AM | 0 Comments

August 15, 2011

Logic and discourse do not help

I am still in Canada and have some serious busy work, so permit me to place here an ad for a book.  Greg recommends this book, so it is mandatory.  You likely have tried to figure out the weird glazing over of liberal friends when a fact is mentioned.  Here is your answer:

Home
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posted by Gene | 8:19 AM | 0 Comments

August 13, 2011

Financial Post on Gold


I am in Toronto, which is why you cannot find me.  

Canadians still read or, at least, many papers seem to think so. You learn much about the U.S. reading local papers.  There are things our government is doing that I have not seen reported in the U.S., all part of building a massive web around the people. 

I located the article below when I searched for today's article (they delay publication online) about the Canadian experience in the 1990s, when I lived here, when a massive new tax system, a national sales tax on goods and services called the GST, was enacted through an hysterical Gilbert and Sullivan maneuver. As it turns out, the new tax did NOT pull Canada back from their budget crisis.

It was "spending cuts" that saved the budget. The article pointed out the idea that the GST saved the day is an illusion not supported by the figures. We know about liberal delusion in the U.S. I will see if I can capture the article and send it to everyone, including Mr. Gibson, who is in need of some financial education. Without survival, all his skills and honor are without use.

The Canada I knew no longer seems to be here, other than the programming of school children to hate the U.S. for, well, you know, "they are bigger than we are and don't pay us any attention." They also have stand-up comics who make a career of attacking the U.S. in a news format. Probably, they had such stuff before the U.S., as they are more inventive in things media. 

When I moved here in the early 1990s there was a horrible mass murder of women in a college library. A prominent sidebar to the accounts concluded that the murders where the fault of Ronald Reagan. I swear this is true. You cannot figure how a very pleasant community of well educated, busy people have a thoroughly irrational streak. You start to understand that there are many types of religious programming, as with Muslim murderers, NAZIs, or soccer fans.  As the song goes: "Teach your children well...."

You can learn about yourself when you assess your enemies. I am happy that we are attacked by stand-up comics. Imagine if there were reasonable arguments presented to rebuff the idea that the United States should remain moral, fiscally sound, and pleasant. 

Newspapers, here, are filled with commentary about the U.S. and how it has to come to grips with the reality of debt.  They had their run with Marxists and seem to prefer economic soundness.  Frankly, I was surprised by the fiscally conservative analysis (agreeing with me.)

Anyway, here is an interesting article. Frankly, I liked it because of the the headline.  This says it all.  You can click on the blog title to go to the Financial Post's website.  I would recommend this site unlike the Bloomberg site I had been using as a home page.  I don't have time to figure out what is spin and what is news.

Scott:  How about Frack Tyranny!  We can get that published. Or, should we be true revolutionaries and go for it?  Yeah.  Frack em. More on the idea of buzz words, later. It is a serious consideration.

-----


‘Not to own gold is to trust governments’

REUTERS
REUTERS
  Aug 12, 2011 – 2:48 PM ET
Gold’s panic-driven breakneck ascent to US$1,800 per ounce may signal that the metal is a bubble, but it might not matter. The precious metal may be vulnerable to a pullback or even a correction, but the longer-term case for bullion is hard to argue against. So if you think it’s too late to buy gold, think again.
While the ongoing eurozone debt crisis, recent U.S. debt downgrade, and fears of another recession contributed to the massive equity sell-off and record move in gold, low interest rates, slow economic growth and central bank currency diversification should keep gold at elevated levels in the years to come.
“From a trading point of view, it almost looks like time to sell some gold,” said Greg Taylor, portfolio manager at Aurion Capital Management. “But over the next few years while we’re going through this financial crisis, it is something that everyone should definitely have in their portfolio.”
Aside from the United States’ US$14.3-trillion in debt, the U.S. Federal Reserve’s conditional commitment to keep interest rates low for the next two years provides another reason to limit gains in the U.S. dollar. At the same time, many other countries are trying to keep their currencies lower.
“There is a devaluation of currencies going on to try and stimulate economic activity,” Mr. Taylor said. “The only quasi-currency that can’t happen to is gold.”
Ed Sollbach, market strategist at Desjardins Securities, agreed that currencies are having a major impact on gold prices.
“Whenever there is worry about currencies, gold could have a big spike,” he said, adding that he considers gold itself a currency. “Gold is always going to be a store of value, whereas over time the dollar or any currency loses it value to inflation.”
Desjardins recently raised its gold price target for 2011 to US$1,820, but Mr. Sollbach is still cautious. He pointed to the fact that gold has moved higher even on some days when stocks rebounded.
“To be honest, we’re a little uncomfortable when you see gold gain $30, $40 or $50 every day,” the strategist said. “That kind of big move ultimately doesn’t end well. The metal can go a lot higher, but it’s kind of in the bubble phase and it’s going to be very volatile, so people should be careful.”
Fenton and Jonah Waxman noted that the metal’s price has been building in a rising probability of a reflaring financial crisis, as well as U.S. dollar weakness and climbing inflation expectations.
Deutsche Bank recently maintained its US$2,000 gold forecast for 2012, noting that prices would need to reach US$2,178 to be considered extreme across seven indicators, including relative to both the producer and consumer price index, as share of global GDP, versus base metals and crude oil prices, and compared to the S&P 500.
“We believe the main beneficiary of super low interest rates in the United States, a weak U.S. dollar, a view that central bank holdings in the U.S. dollar are still excessive and ongoing questions over the stability of the financial system, will be gold,” Michael Lewis, global head of commodities research at Deutsche Bank, said in an Aug. 10 report. “In our view, events over the past week have raised the probability of a price spike in gold.”
Mr. Lewis believes financial markets will be vulnerable to recurring bouts of risk aversion for the next few years as governments in the United States and Europe struggle to bring down debt to more sustainable levels.
One long-term concern would be if the United States is not able to regain its AAA sovereign credit rating as this would reduce the appeal of U.S. treasuries as a diversification asset. This could also help fuel a steady decline in U.S. dollar holdings among foreign exchange reserves, which has been underway in both advanced and emerging economies since the end of the 1990s, Mr. Lewis noted.
China and other central banks have been increasing their gold holdings, and are expected to be net buyers of bullion for the third consecutive year, making it the first time this has happened since the 1980s.
Yet another factor that would sustain investor appetite for gold is what Mr. Lewis considers the “non-negligible” risk of a collapse in the U.S. dollar.
“We believe the greenback’s only saving grace is the sovereign risk problems facing the eurozone, which is helping to prevent a more meaningful appreciation in the euro,” he said.
Record-low yields suggest investors are still comfortable holding U.S. government bonds that pay very little and aren’t worried about inflation. However, if a small group of them decide to exit the US$14.3-trillion U.S. debt market and avoid the euro, some expect to see a big move in gold as it is a much thinner market.
Marc Faber, editor and publisher of The Gloom, Boom & Doom Report, considers gold overbought and warns that it may correct on the downside. However, over the long term, he believes people should have part of their savings in gold “because not to own gold is to trust governments,” he said on television this week.
Posted in: Investing  Tags: , , , , , , , , ,, , , 

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posted by Gene | 12:39 PM | 0 Comments

August 09, 2011

Now, for something not funny

I am in my capitulation mode, so while I shake off the stupidity the GOP in Congress, permit me to just deal in mockery.  Seems like that is all that works, as logic and history mean nothing.  (Get more peanut butter).

From Chicago, of all places, earlier this year if I recall:




I found an interesting site listed on some of the pictures in an email from Kathy:  foundingbloggers.com

Worth checking out as it may be good.  

In my capitulation, I can still remember that we all must sign up to vote in primaries.  That is where the future is. The elections are meaningless if crowd that brought us the recent moronic piercing of the debt ceiling is reelected - I mean Republicans. There can be no excuse for voting for that last straw, let alone promoting it. 

Thomas Soul had backed the plan and, now, has changed his mind as the details are being released. Our legislators have no such excuse for stupidity.  And, there is no other word as apt as "stupidity." 

The point of being a representative, is to represent, not plot on how to avoid criticism of those who criticize you anyway.  The latest group comment is that the collapse of the stock market was caused by the tea party, who also caused the drop to a AA+ rating. There are the drones who will believe that drivel.

There is also no question the leadership of the GOP had a plan to negotiate with itself and agree to a "compromise." There is no compromise of principal. Those who say there is, do not understand what they are. 

In addition to voting in primaries (this is important as the GOP is going to sweep no matter what clown is nominated) I suggest you spend your days telling everyone you talk to that the destruction of our economy and will is INTENTIONAL.  One people get that, even the drones may have a light go off in their heads.  

We need to win over 5% of the drones, so try and talk to them without violence. 

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posted by Gene | 7:40 PM | 0 Comments

August 05, 2011

This was easy: Your Enemies List Begins

Below is a list of your enemies. They are dedicated to taking your property and subjugating you.

Life is easy when you know those who are admitted.  Here is an absolute enemies list, but it is not complete. For example, Hilary says she is a progressive.






  • Click Here
  • Support THE PEOPLE'S BUDGET!
    Add your E-mail Address to Join the Team.

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posted by Gene | 1:33 PM | 0 Comments