Three Years Ago, I Told You So

"unexpectedly"

Leftists hate the idea of a 401k retirement account.  Only the filty disgusting rich get to really benefit from them, and they discriminate against the poor, poor, pitiful poor people not smart or willing enough to build up nest eggs for themselves.  So it should hardly be a surprise (especially to long-time readers of VFD) that the President's budget proposal comes right out and TAKES from your 401k savings.  The anticipated revenues to the government are supposed to be 9 BILLION dollars, but consider where that money comes from:

The retirement savings you strove a lifetime to set aside, and which you counted on to provide you with a comfortable lifestyle after you retire. 

Hold on there. 

No, wait, it's not your money anyway.  You are an exploiter, treading on the backs of the poor to get that money saved in your richevil taxhaven retirement account.  Having more than three million dollars in a retirement account, well, that's just about as bad as MURDER!

Don't hold your breath waiting for this story to make the nightly news.  Also do not be surprised when the idea somehow becomes law.  Also do not be surprised when the safe-from-confiscation limits change from "tax the really rich" through "tax the pretty well-off" and right down to "who really needs retirement savings anyway" and they start taking everyone's savings.

If you want to secure your wealth, you need to do it with actual property.  Real estate is a traditionally good bed, but it is in a price bubble just now and is easy enough for government to steal (ask the farmers in Rhodesia!) Guns tend to hold their value pretty well over time, but with the current scare-buying still underway, you probably don't want to buy those for investments now either.  Gold is tricky to time but probably going to head north again soon.  The best thing to save your money in these days increasingly looks like a safe in your mattress.  But perhaps our fortunes will change and you will wish you had bought MREs and ammunition instead of making to-be-confiscated 401(k) account contributions.

If you depend on the legal constructs of wicked men to help you save money, don't be surprised when they take it from you, legally.

Bank Holiday Extended to Thursday. ATMs Empty.

Monday they closed the banks so the banks could transfer Cypriots' savings to the EU.

The bank holiday was extended to Tuesday, and then Wednesday on well-founded fears that the fractional reserve lending system in Cyprus would be immediately destroyed.

Surprising probably no-one, the bank holiday has been extended to Thursday, and the ATMs in Cyprus are all empty of cash.

Also not surprising, there are official denials that the same sort of direct theft from savings accounts is being considered for Spain as well, which should set the smart people in Spain to emptying their accounts and the dumb ones will possibly be hammered within a year.  Oh, and the bondholders for these countries will NOT be getting a haircut as long as the game of musical chairs continues.

Historical Fulcrum?

News out of Europe may be . . . interesting next week.  A "bailout" deal for Cyprus was approved.  It did not kill the speculative investors, and it only changes things by a few billions of Euros.  The interesting part is that they

taxed all Cypriot bank deposits at 10%

Yes, you lose 10% for keeping your money in a bank in Cyprus this week.  Because fuck you.

Expect bank runs if they let the banks re-open.  A bank holiday was declared until Tuesday and will possibly be extended indefinitely.  Cypriots with savings and a lick of sense will be emptying their bank accounts immediately.  Spaniards, Italians, and Greeks, Irish, Portuguese and probably French depositors had better get their money out while it is still available, and many of them will. European banks are bankrupt as it is but it is very hard to kick the can down the road when you suddenly have a NEGATIVE accounts balance!

So.  Look for either some fairly disastrous-sounding news out of Europe this week, or look for a scandal of any degree (none to huge) to be widely reported by the corrupt press in the USA to try to keep the Dow Jones average in record territory until (at least) 2014.

This is one of those rare times it actually DOES pay to be cash-poor.  Ouch.

P.S. for those who don't already know?  Michael Shedlock is about the only current economic analyst who consistently gets it right.  MSNBC is not the place to get economic news.  Mish is.

Germany to Exit Eurozone

Michael Shedlock called the top before the Great Recession, called Greece, Spain and France imploding well before they were on the downstream media's radar, and now he's calling Germany out . . .  out of the Euro, that is.  IF the Germans are smart, that is.

"A breakup is inevitable, just as it has been from the beginning. The key is to manage a breakup in the least destructive manner.

"Breakup Options

"Option 1: If Germany (and the northern states) left the eurozone, the Deutschmark (and respective currencies) would immediately be credible. The downside to Germany (and the northern states) is debts to German banks would not be paid back in Deutschmarks but rather deflated (but not worthless) Euros.

"Option 2: The second option is a piecemeal, destructive breakup. Should Greece and Spain leave first, those countries might experience a complete loss of faith in currency resulting in hyperinflation. The Northern states would be paid back in worthless notes, if they were paid back at all.

"Germany Suffers Regardless

"Note that Germany and the Northern creditor nations suffer regardless. ...

"There are no other options, and no other choices. ... "

Recession? What Recession?

In case you missed it between all the "fiscal cliff" and "gun control" blathering on the news, the world is still headed deeper into a global recession (or, if you like, the second downturn of the ongoing global depression).

Japan and Europe are currently on deck, with most of the rest of the world out of the headlines but on the same greased slide.  The solution is the opposite of what most countries are doing to fix the problem.

WHEEEEEEeeeeeeee!!!!

USA Economy Unexpectedly To Improve Next Year

In case I have been insufficiently clear on the subject: When Romney begins to be perceived by the business community in America as the likely winner, the economic indicator polls will start to turn toward "right track" and "positive outlook."  After Romney wins the White House, a stronger-than-1% recovery will begin.  On or before Inauguration Day, the economy will begin to come roaring back as business owners realize they no longer have a self-declared enemy* for a POTUS.  

Then within a couple of years the initial headrush of freedom will wear off and things slow down, hampered by regulations that were never taken back when Romney got into office  -IF- we allow it.  IF the Tea Party hammers on Mitten/Ryan, the whole thing could be turned around.  IF Obamacare and a few tens of thousands of pages of executive department regulations are reversed, the economy picks up.  If Obamacare is allowed to stay, the economy only gets slightly better.  Either way: with Romney, we will see growth.  With obama, we would see a continued "growth" rate of ~1% but everyone will somehow be worse off except government and union employees, and maybe a few well-connected-to-Democrats businesses.

Unexpectedly: What they say who were not paying attention before the fact

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* the line is ambiguous, like the man himself.  If you want him to hate private enterprise, he does.  If you want him to feel like the token black guy feeling out of place in a corporate job vs. community organizing like he wanted to do, that's how he felt.  Either way: Barack Obama described -in his own book about himself- working at a real job vs. rabble-rousing as being behind enemy lines.

Not A Problematic Economic Situation At ALL!

In addition to shadow bankers disappearing/committing suicide/going bankrupt/leaving the country, China's economy is in the middle of another body blow.

Say you're a Chinese businessman "needing" a loan. Go to the bank! No, not the shadow banks, a legit REAL bank. They have been ordered by the Communist national government to lend, regardless of your credit-worthiness. All they want is collateral. Tell them about your warehouse full of steel, and they'll give you a loan.

Well let's say your business plan wasn't as great as you thought. You end up in default on the loan. Here comes the bank looking for their collateral warehouse-full of steel. Except you lied, and there is no steel.

Or, probably, copper and other commodities. To say this is a huge problem is an understatement. Let's see if the Chinese government lets the banks take a hit, even on paper, or if bailouts become "necessary" to "save" the banks in China.

Why The Ryan Budget Balanced: Dynamic Modeling

The Congressional Budget Office, by law, must only consider static calculations when marking up budget proposals. By this logic, a tax decrease means revenues fall (in contrast to twice in recent history when revenues ROSE huge when taxes FELL huge). Static calculations also say that when taxes are increased revenues to the government will increase. Funny then, how in Spain when they raised taxes and expected 4.3% increases, revenue just fell by 3.5%.

Really, the international left should do something about this pesky reality mucking up the numbers.

What Communist Horseshit is THIS?

I got a letter in the mails, saying that because my health care payment insurance provider of choice did not meed the "80/20 Rule" they would be refunding my plan 3.2%. It turns out Uncle Sam himself is offended that anything less than 80% of my insurance premiums should go to actual medical care. 20% profit LIMIT? I thought. No friends, it's a 20% administrative amount limit, the maximum they can spend on salaries, sales, and advertizing. Profit is nowhere mentioned in the letter.

WTFPPL. If they aren't making a profit, why would they stay in business? Makeup companies get a 50% margin and we love them but health care payment insurance can't make a buck for their trouble?

This is due to the Obamacare law. I know that because it was on the letter and the two-page FAQ they sent with the letter. This probably-half-a-million-dollar mailing was paid for by my health insurance premiums (but only 20% or less of my premiums!). Oh well, I'm sure they couldn't have found a good use for that money anyway.

It sucks watching my America swirling down the drain like this.

Hard At Work

Yeah, so you remember how for the last 50-ish years the U.S. government has been monopolizing space travel in the USA? And how it was supposed to be the end of U.S. dominance in space, when President Obama cancelled everything about NASA except the Muslim outreach department?

Well a private company has seen a need and is stepping up to fill the need. Virgin is going to start launching satellites. Wait time probably to be significantly less than waiting on Uncle to get one up. The investment dollars are there, now that tax dollars are not. Free market theorists 1, Statists 0.

Here It Comes.

Sometimes it sucks, being right. Well, I am right. I am right because I read Mish, who knows what he is writing about. I (and he) have been saying the "recovery" from the recession of 2008* was a dead-cat bounce since 2009. The first two pages of posts at his Global Economic Analysis Blog are full of charts and graphs trending the wrong way, big-time.

Hold on folks, this could be a little bumpy.

Unexpectedly 0% of Economists Polled Got It Right

Mish has been calling the USA in-or-near recession for a while. Bloomberg polled 70 "Economists" and exactly NONE of them guessed that the ISM would come back negative. Guess what? It did. Stop getting your economic news from the lamestream press and network news, and start reading Mish. Fer crying out loud.

Cheerful Thoughts

If President Obama fails to be re-elected, he will be leaving the office of the Chief Executive in the country. Whom do you think he may decide to pardon, come this January?

My company's sales have been weak. Like, we haven't had numbers this bad since the first dip of the Great Recession. Today we heard "new jobs created" numbers that missed expectation by a number greater than the number of jobs created.

The possibility of a chaotic Greek exit from the Euro Zone was actually covered on the evening radio news. Spain may actually beat them out the door.

So, good news prospects are busting out all over!

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Oh, wait . . .

Good News is Bad News

The good news: Gas is getting cheaper

The bad news: because nobody is using it, because the economy is in the tank. Still.

Unexpectedly!


Click the image to go to the full story

Great Good Economic News!!!

What a fine mess our Elected Heroes have gotten us into. I repeat (again) that those who want the true picture of what is happening in world's economic news should read Michael Shedlock's Global Economic Trend Analysis. But when you look at the real news and the news is bad, it can be depressing to read.

The F-35 stealth fighter airplane . . . ONLY to cost $1.5 Trillion for a few thousand airplanes that are less capable at everything than the several types of war planes they are intended to replace.

USA Gross Domestic Product last quarter: the government is reporting a 2.2% growth rate. Depending on how you look at the numbers, try a true GDP of 0% for Q1 2012.

In Case You Missed It

Greece is o-fishully in default on their sovereign debt. Credit default triggers swaps, and the big investors lose nothing, much. Those of you not reading Mish will want to know (because nobody else is saying) it: Greece is about to fall out of the Euro zone. The Euro was supposed to be a permanent institution based on strong national economies as members.

Right about now would be a bad time to be traveling to Greece, unless you don't mind a bit of adventure.

I Wonder What This Means . . .

So you say there's an ongoing collapse in global trade, eh? Hmm. Fancy that.

(you would almost think there was a recession going on or something!)

What Goes Up, Dead Cat Edition

Long-time readers will recall that the current state of our national economy is described by experts* as "in the middle of a Dead Cat Bounce." It can be hard to make that point to people when the President is cheerleading a falling unemployment rate** but here it is in chart form:

Gasoline, that people use to get to work and back, is statistically off a cliff.



Yeah, and?

Some people might say the reason people use less gas in this extreme is that people are losing their jobs and/or stopping working in huge numbers . . . regardless of the unemployment rate published by somebody looking to get re-elected this year.

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* that would be me
**fewer workers in the labor force = lower unemployment rate. More people by tens of millions but fewer counted "workers" than there were a decade ago. Lower unemployment just like that.

This Should End Well

Japan, with debt-to-GDP of about 230%, borrows money (mostly from its own people) at 1% interest. They are staring down the barrel of an imminent credit rating downgrade and talking about doubling their sales tax to avoid the downgrade. If their credit sours even just a smidge, they could go from 1% to 3% interest . . . and be totally unable to continue to carry their national debt. All their government revenue would be debt service and then some.

• If you earn $50k/year
• and owe $120k on your credit cards
• and suddenly they say you have to pay $53k/year on your credit cards

that's a problem. The alternative is printing more money, which leads to printing more money, and then you end up with wheelbarrows full of cash and expiration dates on your trillion-dollar bills. Japan is, to understate things, in a problem.

But mock quietly, because they paved the way down which we are driving at breakneck speeds.

Idiots. We're All Going To Fall Into A Pit

One of the biggest payroll companies in the country said most of the smaller companies will be totally unable to do something to payroll tax withholding that only lasts two months, beginning readysetNOW. It is, literally, impossible - in addition to being the dumb thing to do. Going for a 2-month tax holiday extension instead of holding out for the one-year extension and taking their case to the People shows that the Republican party is in desperate need for a change of leadership. I never was a great fan of Boehner and this just further proves how right I was about that opinion.

So you would be getting two more months without paying "your fair share" into the Social Security system. It is effectively a pay raise, at the expense of your retirement account. Sounds good in soundbytes but is stupid long-term. So of course Obama was for it and the Republicrats let themselves be dragged along for the ride. Public imaging AND logic fail.