In a past posting, I argued that investing money in mutual funds was a massive mistake, given the immense fees that funds and fund managers charge, and that those excessive fees erode returns over time substantially. In this post, I want to pursue this argument and offer low cost alternatives that capture the same effects as mutual funds while further clarifying the case against mutual funds.
A mutual fund is simply a basket of stocks that a fund manager selects. Its that simple. There isn't inherent magic associated with owning a mutual fund and if the value of the stocks in that basket decline, you lose money. Fund managers are paid generally a percentage of the amount of assets they manage. Typically, a fund might have 20-40 stocks in it, depending on the appetite of the manager at the helm. The concept of the mutual fund was a brilliant tool in years gone by for the average investor to gain exposure to multiple stocks without incurring the fees of buying each one individually through a broker.
The advent of the internet and technology, however, have greatly changed the opportunities afforded to the average investor and I urge you to rethink your portfolio if you are one of the millions who own mutual funds. The main aspects of trading in today's climate are: where do you trade (which brokerage firm) and what do you own in those accounts.
Instead of owning mutual funds (and therefore paying unnecessary fees for the fund manager's salary), I recommend purchasing similar ETF's (exchange traded funds) that hold almost identical baskets of stocks with much lower fees. For example, rather than purchasing a mutual fund that mimics the S&P500, purchase the S&P ETF just like buying a single stock (ticket symbol SPX).
If you want to buy gold, no need to go to Fort Knox: buy the ticker symbol GLD which tracks the exact price of gold.
DIG: Oil up
DUG: Oil down
FXI: China
IIF: India
EEB: Brazil, Russia, India, China (aka BRIC countries)
GLD: Gold
SLV: Silver
SLX: Steel
NRG: Natural Gas
HHH: Internet stocks
There are ETF's for almost any industry such as telecom, home builders, financials, consumer staples, commodities and many more. A great place to start is:
www.ishares.com
Along the left side of that page is a list of the major categories you can chose from to learn more. Click on one of the ETF offerings and it will show you the major holdings in that ETF, which is how you can compare and find similar ETF's to your current mutual funds.
Online brokerage firms are NOT created equal:
50 years ago, one would have to call a broker to buy a stock, pay a huge fee, and then repeat that process to sell that stock (or a portion there of). Mutual funds came along and allowed people to buy the fund, gain exposure to that basket of stocks, and add or subtract to their holdings at set times. Presently, there are a plethora of discount online firms that have greatly lowered the costs to make a trade, as noted in the June 2008 issue of Smart Money magazine. You may note that Charles Schwabb, Etrade, and others tout their 'low fees' ranging from $10-15 per trade with Scottrade being as low as $7/trade.
I recommend, however, using:
www.foliofn.com
They only charge $3/trade which is roughly 80% less expensive than Schwabb for the exact same service. More importantly however, for an annual fee of ~$300, one can instead do unlimited trading in their 'window' system, which basically means that all trades placed before 11am or 2pm are free. That annual fee may seem daunting but consider that with Schwabb that would only afford you 20 trades a year!
At Foliofn, you can build your own folios of stocks and ETF's, and add or subtract funds from the folio virtually as much as you like, avoiding the immense fees associated with traditional brokers and mutual funds. They also offer preset folios that you can chose from, that include baskets of stocks, just like many mutual funds, WITHOUT the excessive fees!
My suggestion is to open an account with foliofn, choose preset folios you like or create your own filled with ETF's that include the stocks you want from sectors, industries, or geographies.
Remember to diversify. I recommend a newsletter called 'The Oxford Club'. They suggest following a strict asset allocation formula: in simple terms this means owning x percent US stocks, x percent foreign stocks, x percent gold, x percent bonds, and so on. They also make and track stock recommendations and adhere to firm rules: always use a 25% trailstop. PLEASE learn from my mistakes: although I have soundly beat the market in the past 3-5 years soundly (more than double, in fact), my returns suffered because I was not mechanical. By this I mean, always SELL a stock if it drops 25% from its last high. Do not be emotional and say "I know the stock will rebound".
Minimizing losses and high fees will maximize your returns in the long run.
Good luck in taking control of your assets and please let me know if I can be helpful in any way.
Monday, June 30, 2008
Saturday, June 14, 2008
The G-8 wants the poor to bare the brunt of higher food prices
I have been writing about the global food supply, inflation, consumption, and the ability of world's most powerful to enrich themselves at the expense of the world's poor. This trend continues to be demonstrated in myriad ways, as noted in a recent Bloomberg article (attached below) regarding the recent G-8 summit (France, Germany, Russia, the US, Canada, Japan, Italy, and the UK) from which the conclusion was made that emerging market economies (India, China, Indonesia, and others) must cease subsidizing the prices of fuel and food.
The argument is that emerging markets are accounting for the largest portion of the 'growth' in demand for fuel and food. By subsidizing the prices for food and fuel, those governments allow their citizens access to these goods at cheaper prices than might otherwise be in place, therefore causing these countries to consume more. The G8 wants these prices to float to dampen that demand. It is obvious the global middle class is growing and with that comes increased consumption as more of the world is afforded access to the American mentality of consumption through growth of international trade and productivity.
But there is no mention of curbing the consumption of citizens and companies of the G8 themselves who doubtlessly account for the vast majority of consumption now.
By requesting the governments of emerging economies to lower their subsidies, the G8 is essentially demanding that the world's poorer citizens handle the brunt of higher prices disproportionately so that the nations in the G8 don't have to see their ways of life change.
(Rerefence a recent article in Foreign Policy "Can the World Afford a Middle Class?")
Indonesia and others have recently announced such price increases and lowering of subsidies. The effects of this are to desocialize those governments' efforts to ensure their citizens access to the very goods (at affordable prices) that Americans have come to assume were a born right. Countries such as Pakistan and China recognize that such price controls keep massive portions of their populations above the poverty line.
I have argued that Americans, and by default the other industrialized nations as well, will have to see their way of life limited, their consumption levels pulled back, as the global middle class increases its consumption.
What is evident however is that the world's richest NEED the ranks of the world's poor to swell. Capitalism thrives on the failures of the masses. Our government doesn't use price controls, it is true; instead we use an arsenal of other mechanisms such as tax credits and subsidies to artificially lower the prices we Americans pay for many goods such as gasoline. Exxon noted that although they are recording record profits, they are 100% reliant on the $28 billion in tax credits they received in order to properly invest in infrastructure.
These policies highlight the shallow arguments about 'Free Markets': There is no such thing. The US subsidizes farming, airlines, big oil, and many other industries so that our companies have an unfair advantage in the global economy yet touts the value of free and open markets and borders for trade?
The world's emerging participants should have equal right to execute policies that most benefit their citizens. The G8, therefore, should focus on policies that lower demand in their own nations, and NOT put pressure on the poorest nations to curb their demand.
As other countries begin to benefit from precisely the rigged structure the US has enjoyed for a long time, we will see more and more language about the 'death of free market ideals' substituted by protectionist ideologies, to best ensure the 'American way of life' for the world's richer citizens.
Rising prices in the poorest economies will only ensure the world's poor stay where they are. It is evident therefore that poverty alleviation is definitely not a priority and that the World Bank's mandate to accomplish this is purely a veil behind which hides the ugly truth that those in power know they actually don't want to see these consumers empowered to consume more. It is a threat to their seats at the top of the world.
We are beginning to see defiant acts of protest around the globe as citizens voice their opposition to the continued divergence between the rich and the poor. I have asked the question countless times before and it is still quite applicable: How far can the gap between rich and poor go before the poor revolt? How many people have to lose affordable healthcare in the US before they demand change? 100 million more than the current 47 million? People rise up when they don't have food and water. We are heading towards a lagerhead and these demands by the G8 highlight the deliberate unspoken agenda of the world's richest nations to keep getting richer at the expense of raising the quality of life for the world's poorer citizens.
What's next? Will the US and others create a body akin to the WTO that will prosecute emerging economies for consuming too much and put consumption caps in place? It is certainly not uncommon for the US to develop mechanisms to allow it unfettered access to consume as much of world's resources as it wants. Now that others in the world seek those same level of consumption, it is seen as unsustainable.
The US consumes $9 Trillion of goods and services annually. Maybe that is where limits on consumption need to begin? A fractional reduction here would certainly balance out the growth in emerging markets' consumption patterns. But can the G8 swallow that, remains to be seen?
Note: I have argued that the US dollar should be strengthened, even artificially through Central Bank manipulation as this is one of the few variables that can lower the skyrocketing prices of oil and other commodities which are traded in US dollars. That theory is beginning to play out and should give the world a short-term breather. Unfortunately, the long term trends remain that these prices will eventually rise much higher than they currently are, unless the world falls into a global recession, which essentially is the event when the world's population independently chooses to consume less and prices will fall, potentially dramatically.
Note: I want to follow up on my piece last week about the Bush/McCain policy of deficit spending, after I received comments from readers. Yes, it is true that the US has used deficit spending (borrowing from the future) in other circumstances such as during the eerily-similar-to-today era of the Vietnam war. But it seems to me the current deficit spending is unparalleled and the benefits are not being distributed to the masses except through the idea that 'We are safer' while private corporations reap the fiscal benefits.
**************
G-8 Urges Emerging Markets to Cut Oil, Food Subsidies (Update1)
The argument is that emerging markets are accounting for the largest portion of the 'growth' in demand for fuel and food. By subsidizing the prices for food and fuel, those governments allow their citizens access to these goods at cheaper prices than might otherwise be in place, therefore causing these countries to consume more. The G8 wants these prices to float to dampen that demand. It is obvious the global middle class is growing and with that comes increased consumption as more of the world is afforded access to the American mentality of consumption through growth of international trade and productivity.
But there is no mention of curbing the consumption of citizens and companies of the G8 themselves who doubtlessly account for the vast majority of consumption now.
By requesting the governments of emerging economies to lower their subsidies, the G8 is essentially demanding that the world's poorer citizens handle the brunt of higher prices disproportionately so that the nations in the G8 don't have to see their ways of life change.
(Rerefence a recent article in Foreign Policy "Can the World Afford a Middle Class?")
Indonesia and others have recently announced such price increases and lowering of subsidies. The effects of this are to desocialize those governments' efforts to ensure their citizens access to the very goods (at affordable prices) that Americans have come to assume were a born right. Countries such as Pakistan and China recognize that such price controls keep massive portions of their populations above the poverty line.
I have argued that Americans, and by default the other industrialized nations as well, will have to see their way of life limited, their consumption levels pulled back, as the global middle class increases its consumption.
What is evident however is that the world's richest NEED the ranks of the world's poor to swell. Capitalism thrives on the failures of the masses. Our government doesn't use price controls, it is true; instead we use an arsenal of other mechanisms such as tax credits and subsidies to artificially lower the prices we Americans pay for many goods such as gasoline. Exxon noted that although they are recording record profits, they are 100% reliant on the $28 billion in tax credits they received in order to properly invest in infrastructure.
These policies highlight the shallow arguments about 'Free Markets': There is no such thing. The US subsidizes farming, airlines, big oil, and many other industries so that our companies have an unfair advantage in the global economy yet touts the value of free and open markets and borders for trade?
The world's emerging participants should have equal right to execute policies that most benefit their citizens. The G8, therefore, should focus on policies that lower demand in their own nations, and NOT put pressure on the poorest nations to curb their demand.
As other countries begin to benefit from precisely the rigged structure the US has enjoyed for a long time, we will see more and more language about the 'death of free market ideals' substituted by protectionist ideologies, to best ensure the 'American way of life' for the world's richer citizens.
Rising prices in the poorest economies will only ensure the world's poor stay where they are. It is evident therefore that poverty alleviation is definitely not a priority and that the World Bank's mandate to accomplish this is purely a veil behind which hides the ugly truth that those in power know they actually don't want to see these consumers empowered to consume more. It is a threat to their seats at the top of the world.
We are beginning to see defiant acts of protest around the globe as citizens voice their opposition to the continued divergence between the rich and the poor. I have asked the question countless times before and it is still quite applicable: How far can the gap between rich and poor go before the poor revolt? How many people have to lose affordable healthcare in the US before they demand change? 100 million more than the current 47 million? People rise up when they don't have food and water. We are heading towards a lagerhead and these demands by the G8 highlight the deliberate unspoken agenda of the world's richest nations to keep getting richer at the expense of raising the quality of life for the world's poorer citizens.
What's next? Will the US and others create a body akin to the WTO that will prosecute emerging economies for consuming too much and put consumption caps in place? It is certainly not uncommon for the US to develop mechanisms to allow it unfettered access to consume as much of world's resources as it wants. Now that others in the world seek those same level of consumption, it is seen as unsustainable.
The US consumes $9 Trillion of goods and services annually. Maybe that is where limits on consumption need to begin? A fractional reduction here would certainly balance out the growth in emerging markets' consumption patterns. But can the G8 swallow that, remains to be seen?
Note: I have argued that the US dollar should be strengthened, even artificially through Central Bank manipulation as this is one of the few variables that can lower the skyrocketing prices of oil and other commodities which are traded in US dollars. That theory is beginning to play out and should give the world a short-term breather. Unfortunately, the long term trends remain that these prices will eventually rise much higher than they currently are, unless the world falls into a global recession, which essentially is the event when the world's population independently chooses to consume less and prices will fall, potentially dramatically.
Note: I want to follow up on my piece last week about the Bush/McCain policy of deficit spending, after I received comments from readers. Yes, it is true that the US has used deficit spending (borrowing from the future) in other circumstances such as during the eerily-similar-to-today era of the Vietnam war. But it seems to me the current deficit spending is unparalleled and the benefits are not being distributed to the masses except through the idea that 'We are safer' while private corporations reap the fiscal benefits.
**************
G-8 Urges Emerging Markets to Cut Oil, Food Subsidies (Update1)
By Gonzalo Vina and Shamim Adam
June 14 (Bloomberg) -- The Group of Eight nations called on emerging markets to cease subsidizing the price of oil and food amid concern such support was propelling demand and prices higher.
``It is imperative to remove supply side constraints and export restrictions, replace general food subsidies in developing countries with well-targeted help for the poorest,'' G-8 finance ministers said in a statement after meeting today in Osaka, Japan.
Governments in Asia, where about 600 million people survive on less than $1 a day, have been divided between the need to rein in surging prices and to shore up growth. The G-8 today said price rises have ``severely hit many low-income importing countries'' and that they expect demand to stay high.
Price controls on food and fuel have long been policy tools in nations with large populations living in poverty, including India and Indonesia. Reducing support for energy prices would also help the struggle against climate change by sending a ``price signal'' to reduce consumption.
Still, rising energy and commodities prices are increasing the subsidy bill and putting pressure on national budgets, forcing the region's governments to pass on the costs of gasoline, grains and even poultry to consumers.
`Growing Concern'
``There is growing concern on part of the G-8 about the impact of rising food and energy prices,'' said U.K. Chancellor of the Exchequer Alistair Darling. ``Particularly in relation to food, this is something governments can solve.''
Indonesia's President Susilo Bambang Yudhoyono, facing elections in 2009, raised fuel prices in May for the first time in almost three years. The government would have to spend 190 trillion rupiah ($20 billion) on subsidies if fuel prices were not increased, the government said.
Southeast Asia's largest economy may also stop subsidizing makers of soybean-based food products next year and end a policy that helps poor families to buy cooking oil.
In Malaysia, Prime Minister Abdullah Ahmad Badawi's embattled government on June 5 raised gasoline prices by 41 percent and diesel by 63 percent, the steepest increase since May 2004. Fuel prices have been increased seven times since Abdullah became premier in October 2003.
Oil Record
Record oil prices would have increased subsidies by 51 percent this year to 53 billion ringgit ($16 billion), the government said last month. Malaysia has also scrapped a price cap for chickens, the Star newspaper reported on June 5.
India, Sri Lanka and Taiwan have also raised fuel costs in the past month.
``We commend several emerging market economies for their recent moves in this direction,'' G-8 ministers said.
Others aren't budging, choosing to allow deficits to widen to keep food and utility costs affordable for their people.
Philippine President Gloria Arroyo's government last month said it would delay its plan to balance the budget to 2010 as it boosts rice subsidies and investment to spur growth. Arroyo also reduced power, toll and mobile phone rates while creating subsidies for public transport and programs to help the poor buy rice and pay electricity bills.
The Philippines' deficit may widen for the first time in six years to as much as 75 billion pesos ($1.7 billion) in 2008 before easing to 40 billion pesos next year, according to the government.
Subsidizing Food
Pakistan's government in its budget on June 11 said it will spend about 295 billion rupees ($4.4 billion) to subsidize items including food, power and fertilizer in the year starting July 1. Almost half of Pakistan's 160 million people are at risk of running short of food due to rising grain costs, according to the United Nations World Food Program.
China, too, is holding steady, saying last month that it had no plans to lift fuel-price caps. Consumer prices in the world's most populous country rose 7.7 percent in May.
Fuel-price increases in Asian countries such as Sri Lanka, Indonesia and Malaysia are too miniscule to have a ``meaningful'' impact on global oil demand growth, Goldman Sachs Group Inc. said in a June 3 report.
Price increases in China, which accounts for 9 percent of total oil demand, would have a larger impact on consumption and may lower Asian usage by 30,000 barrels a day for the rest of 2008, Goldman said.
To contact the reporters on this story: Gonzalo Vina in Osaka, Japan at gvina@bloomberg.net; Shamim Adam in Singapore at sadam2@bloomberg.net
Last Updated: June 14, 2008 05:44 EDTTuesday, June 10, 2008
Modern 'Taxation without Representation': The Bush/McCain tax policy
Today McCain called for a review of Federal Programs seeking ways to 'reduce spending'. This policy falls directly in lock-step with his mentor, Bush's amazing cuts to hundreds of social services, as military spending surely isn't McCain's target. I raise this because Americans are fooled by the Republicans into believing that lower taxes means smaller government.
The trick that Bush pulled off was to lower taxes for Americans today but funded an ENORMOUS spending habit with our children's tax dollars and their children's tax dollars. How does this work? It preys on Americans love of debt, embracing 'credit cards' at every level. Americans clearly have been programmed to believe that any amount charged to the future is worth the spending that occurs now.
Obama will get pegged in this election of being for 'Big Government' and 'higher taxes'. Please don't be fooled: the Bush/McCain policies are equally 'Big Government' masked through massive borrowing from generations that can't even vote on the issue. Isn't that brilliant? Talk about taxation without representation: Bush could never have paid for his wars with money from current tax payers because he would have had to raise taxes! Instead, he and congress 'requested' the money from future generations through massive debt. What would those taxpayers think if they actually had a voice?
Our children and grandchildren will find their taxes being spent on servicing debt that could have been spent servicing their education, their roads, their electrical grid, their health. Instead, George Bush found the largest credit card in human history: the US tax payer. It is no secret his tax cuts helped the rich disproprotionately while the average US citizen will payoff the long term debts.
Tax cuts do NOT inherently mean the candidate advocates for small government. In the current Republican party, there is no fiscally conservancy except when it comes to cutting social services for the poor or middle-income Americans. McCain will only continue to allow private interest unhindered access to US taxpayer monies.
Obama's policies might scare some people, but please, tell them it is time for Americans to pay for programs as we go, or PAYGO as it is referred to. If Americans truly want to fight wars (which they don't), then let's raise taxes now and fight as much as we want? The reality is, Americans would NEVER have supported Bush's wars if Joe Taxpayer saw the price coming out of his paychecks along with Social Security, Medicare, and War Funding!
(FYI: The theory that Bush was 'mislead by false information into mistakenly taking the US to war in Iraq' has been debunked by the Congressional Five-year report released this week that documents how Bush, Cheney, Rumsfield, Rove and others systematically aggressively pushed the war, ignored intelligence contradictions, manipulated information, and used the media to generate public support')
McCain is looking to appease the wealthy now by supporting the Bush regime. But please: let's be fair and do the Democratic version of the 'flipflop' dance the Republicans used so successfully to kill John Kerry's bid: McCain voted against the Bush tax cuts in 2001 and 2003 yet now has a bearhug around them now?
Obama may raise taxes but he recognizes that social services in the present are important and that spending the next two generations' tax dollars without asking them first is sinister and irresponsible.
The Republicans have found new methods of taxation without representation. But is it surprising that they have rolled back yet another basic principle upon which we live? Not at all. Jose Padilla was already an example of a US citizen held for years with no representation and stripped of citizenry, a right inherent to precisely being a US citizen. Likewise, I feel my children and their children should be able to vote for how their tax dollars should be spent.
Obama agrees and wants Americans to pay for their priorities with current tax dollars. McCain's policies will only bury this country's future six feet under.
The trick that Bush pulled off was to lower taxes for Americans today but funded an ENORMOUS spending habit with our children's tax dollars and their children's tax dollars. How does this work? It preys on Americans love of debt, embracing 'credit cards' at every level. Americans clearly have been programmed to believe that any amount charged to the future is worth the spending that occurs now.
Obama will get pegged in this election of being for 'Big Government' and 'higher taxes'. Please don't be fooled: the Bush/McCain policies are equally 'Big Government' masked through massive borrowing from generations that can't even vote on the issue. Isn't that brilliant? Talk about taxation without representation: Bush could never have paid for his wars with money from current tax payers because he would have had to raise taxes! Instead, he and congress 'requested' the money from future generations through massive debt. What would those taxpayers think if they actually had a voice?
Our children and grandchildren will find their taxes being spent on servicing debt that could have been spent servicing their education, their roads, their electrical grid, their health. Instead, George Bush found the largest credit card in human history: the US tax payer. It is no secret his tax cuts helped the rich disproprotionately while the average US citizen will payoff the long term debts.
Tax cuts do NOT inherently mean the candidate advocates for small government. In the current Republican party, there is no fiscally conservancy except when it comes to cutting social services for the poor or middle-income Americans. McCain will only continue to allow private interest unhindered access to US taxpayer monies.
Obama's policies might scare some people, but please, tell them it is time for Americans to pay for programs as we go, or PAYGO as it is referred to. If Americans truly want to fight wars (which they don't), then let's raise taxes now and fight as much as we want? The reality is, Americans would NEVER have supported Bush's wars if Joe Taxpayer saw the price coming out of his paychecks along with Social Security, Medicare, and War Funding!
(FYI: The theory that Bush was 'mislead by false information into mistakenly taking the US to war in Iraq' has been debunked by the Congressional Five-year report released this week that documents how Bush, Cheney, Rumsfield, Rove and others systematically aggressively pushed the war, ignored intelligence contradictions, manipulated information, and used the media to generate public support')
McCain is looking to appease the wealthy now by supporting the Bush regime. But please: let's be fair and do the Democratic version of the 'flipflop' dance the Republicans used so successfully to kill John Kerry's bid: McCain voted against the Bush tax cuts in 2001 and 2003 yet now has a bearhug around them now?
Obama may raise taxes but he recognizes that social services in the present are important and that spending the next two generations' tax dollars without asking them first is sinister and irresponsible.
The Republicans have found new methods of taxation without representation. But is it surprising that they have rolled back yet another basic principle upon which we live? Not at all. Jose Padilla was already an example of a US citizen held for years with no representation and stripped of citizenry, a right inherent to precisely being a US citizen. Likewise, I feel my children and their children should be able to vote for how their tax dollars should be spent.
Obama agrees and wants Americans to pay for their priorities with current tax dollars. McCain's policies will only bury this country's future six feet under.
Wednesday, June 4, 2008
Bush's True Mandate: Insuring the Rich against the fear of not making enough money
How much would it be worth to spend to have a President write you an insurance policy in case you don't make enough money? That has been the mandate of this president. Use the White House to promote policy to privatize wealth while the taxpayer covers any losses. Brilliant for some I imagine.
I have been writing about the continued vast socialization of risk and privatization of reward extensively and want to lay out the beginning research I am doing for a book to be written over the next two years. It is evident that the Bush years have marked immense economic deterioration of the United States, even if the stock market hit highs. Healthcare, social security, high debt load, falling dollar, and wage stagnation are apparent in spades. The media uses language that infers 'mismanagement of funds', 'errors in estimates of the projected costs of wars in Iraq and Afghanistan', where I contend the powers behind the Bush machine consciously raided the taxpayer. I plan to document this through analysis of the fabled line 'Follow the money': the basic premise I am curious about is who benefited financially from the Bush presidency and how much did they earn?
Recent reports estimate the cost of the two aforementioned wars to top $1.3 Trillion, when interest payments for all of the debt are serviced over x number of years into the future. To clarify: our children and their children's tax dollars will be paying back the loans this government took out to fund these wars. Much of the borrowed funds were then funneled directly into the private sector through massive contracts. Remember those delicious "$7 billion No-Bid contracts" that Halliburton relished, no thanks to an ex-CEO sitting in the VP's seat, of course.
The GAO recently acknowledged that 50% of the monies paid out in military spending in the wars goes UNAUDITED. This leads me to wonder how much of the overall military spending appropriations are audited, given it is 51% of our federal budget.
Our government has been simply writing endless checks of taxpayer dollars into the private accounts of corporations and other groups, in the name of fighting terror, an emotion against whom victory has never been detailed. Who will pay for all of it is clear: the next few generations. Who received these vast sums of money is a far murkier question, will almost zero coverage.
Another key example of this policy of socialization of risk and privatization of wealth is the current stance on disasters and insurance. After Katrina, Allstate and Statefarm wanted to raise rates for home-owners insurance in disaster-prone zones by 300%. Florida in particular limited the increases to 25% to the dismay of the private insurers, who in turn promptly ceased writing policies in those areas. Bush's brother then established a State insurance fund that would write policies for those homes, many of which were $1million or more in value. As this would play out then, if a disaster destroys the home, the State would pay out the value of the claim but if the owner sells, they alone keep any profit.
Likewise, this past week, a bill has been floated for a Federal Disaster Insurance plan rather akin to the Florida plan. Therefore, taxpayers from all state's would now contribute to cover losses of those who lived in disaster areas.
Of course, disasters can strike anywhere, and in theory, it may be a good idea. But shouldn't the taxpayers then benefit from any sales of homes covered by the federal policy? That would be too socialist.
If markets are free like all of the neo-cons want us to believe, then owners on coasts should pay private rates for the choice to live there. Why should the taxpayer cover the losses? Yes, there needs to be some regulation of insurers so they don't universally collude to raise rates indefinitely. But these plans benefit the wealthy whose real estate would be most at risk.
From school vouchers to tax breaks on capital gains, to costly wars, the Bush camp and the private machine behind it have in tandem not simply 'mismanaged the countries economic health' but have instead systematically privatized an never-before-seen amount of the public's money while socializing the risks associated. This is not conspiracy theory: it is in plain view. The numbers are right in front of us.
The debt burden of the US is not sustainable. Rising costs are facts. Rising interest rates on housing and consumer debt are facts. Wages have not increased, fact. Gap between rich and poor has widened, fact. Tax breaks benefited the rich more than the poor, fact, with little trickle down. Bush was not an idiot at the wheel. The benefactors of this unprecedented spending binge has masterfully orchestrated a massive money-grab, using the fear of attack as the premise for the taxpayer to mutely and blindly write the check, while millions are left uninsured or underinsured, food banks are failing, schools are failing (thank you underfunded No Child Left Behind), and infrastructure is cracking HERE AT HOME.
For investors: I am selling oil, buying the dollar, selling gold, in the shortrun. This scenario should lead to a short-term ease in global food prices and commodity prices. It will hurt US exporters/manufacturing which has been the only major support for the economy because of the battered dollar. There is more subprime fallout to be had. The FDIC is bulking up its staff to deal with bank failings they see coming in 2008-2009. Bernanke et al will have to raise rates to battle inflation which will hurt growth in US companies, and heading into Barack's first term, the best pill for the US economy is to swallow the pain quickly, go through a short recession, get all bank write-downs out in the open, and rebuild economic base.
I have been writing about the continued vast socialization of risk and privatization of reward extensively and want to lay out the beginning research I am doing for a book to be written over the next two years. It is evident that the Bush years have marked immense economic deterioration of the United States, even if the stock market hit highs. Healthcare, social security, high debt load, falling dollar, and wage stagnation are apparent in spades. The media uses language that infers 'mismanagement of funds', 'errors in estimates of the projected costs of wars in Iraq and Afghanistan', where I contend the powers behind the Bush machine consciously raided the taxpayer. I plan to document this through analysis of the fabled line 'Follow the money': the basic premise I am curious about is who benefited financially from the Bush presidency and how much did they earn?
Recent reports estimate the cost of the two aforementioned wars to top $1.3 Trillion, when interest payments for all of the debt are serviced over x number of years into the future. To clarify: our children and their children's tax dollars will be paying back the loans this government took out to fund these wars. Much of the borrowed funds were then funneled directly into the private sector through massive contracts. Remember those delicious "$7 billion No-Bid contracts" that Halliburton relished, no thanks to an ex-CEO sitting in the VP's seat, of course.
The GAO recently acknowledged that 50% of the monies paid out in military spending in the wars goes UNAUDITED. This leads me to wonder how much of the overall military spending appropriations are audited, given it is 51% of our federal budget.
Our government has been simply writing endless checks of taxpayer dollars into the private accounts of corporations and other groups, in the name of fighting terror, an emotion against whom victory has never been detailed. Who will pay for all of it is clear: the next few generations. Who received these vast sums of money is a far murkier question, will almost zero coverage.
Another key example of this policy of socialization of risk and privatization of wealth is the current stance on disasters and insurance. After Katrina, Allstate and Statefarm wanted to raise rates for home-owners insurance in disaster-prone zones by 300%. Florida in particular limited the increases to 25% to the dismay of the private insurers, who in turn promptly ceased writing policies in those areas. Bush's brother then established a State insurance fund that would write policies for those homes, many of which were $1million or more in value. As this would play out then, if a disaster destroys the home, the State would pay out the value of the claim but if the owner sells, they alone keep any profit.
Likewise, this past week, a bill has been floated for a Federal Disaster Insurance plan rather akin to the Florida plan. Therefore, taxpayers from all state's would now contribute to cover losses of those who lived in disaster areas.
Of course, disasters can strike anywhere, and in theory, it may be a good idea. But shouldn't the taxpayers then benefit from any sales of homes covered by the federal policy? That would be too socialist.
If markets are free like all of the neo-cons want us to believe, then owners on coasts should pay private rates for the choice to live there. Why should the taxpayer cover the losses? Yes, there needs to be some regulation of insurers so they don't universally collude to raise rates indefinitely. But these plans benefit the wealthy whose real estate would be most at risk.
From school vouchers to tax breaks on capital gains, to costly wars, the Bush camp and the private machine behind it have in tandem not simply 'mismanaged the countries economic health' but have instead systematically privatized an never-before-seen amount of the public's money while socializing the risks associated. This is not conspiracy theory: it is in plain view. The numbers are right in front of us.
The debt burden of the US is not sustainable. Rising costs are facts. Rising interest rates on housing and consumer debt are facts. Wages have not increased, fact. Gap between rich and poor has widened, fact. Tax breaks benefited the rich more than the poor, fact, with little trickle down. Bush was not an idiot at the wheel. The benefactors of this unprecedented spending binge has masterfully orchestrated a massive money-grab, using the fear of attack as the premise for the taxpayer to mutely and blindly write the check, while millions are left uninsured or underinsured, food banks are failing, schools are failing (thank you underfunded No Child Left Behind), and infrastructure is cracking HERE AT HOME.
For investors: I am selling oil, buying the dollar, selling gold, in the shortrun. This scenario should lead to a short-term ease in global food prices and commodity prices. It will hurt US exporters/manufacturing which has been the only major support for the economy because of the battered dollar. There is more subprime fallout to be had. The FDIC is bulking up its staff to deal with bank failings they see coming in 2008-2009. Bernanke et al will have to raise rates to battle inflation which will hurt growth in US companies, and heading into Barack's first term, the best pill for the US economy is to swallow the pain quickly, go through a short recession, get all bank write-downs out in the open, and rebuild economic base.
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