MONEY 115 - THINGS

THIS IS MY 115^TH BLOG ON UNDERSTANDING MONEY TOOLS

In this blog we are going to address three varied topics; technology hacking in today’s world, interest rate hikes effect on investing and the American travesty of companies hiring HB-1 foreign workers replacing US citizens.

Let’s start with technology and hacking.  I am not a techie but want to address how bad hacking has become for every citizen, not just branches of the government.  It is outrageous and will get worse, there is no such thing as privacy.  Shortly after I signed up for Facebook my contact list was hacked and stolen.  I am going to concisely inform of my latest scenario of how I was hacked.  Most of you already are familiar.  My Microsoft Office annual subscription was due.  I paid the amount in person at the local retail store and returned home to install it on the “up to 5 computers”.  As I entered Microsoft’s website exactly as instructed an unfamiliar screen popped up with Microsoft’s logo and information asking for my personal information.  Then, as happened to me before, another screen popped up stating that installation could not be accomplished and to call an 800 number. I did, and of course a nice English speaking man most likely from India came on line identifying himself from Microsoft and willing to help if I turned my computer over to him.  Last time I did this, similar things occurred and I was told my computer had a virus. It cost me about $100 to find out I did not have a virus on the computer and I was scammed. This was similar, I disconnected.  Finally, through a true Microsoft 800 number I reached a tech person. He assisted, same thing happened on my computer and he asked me to close out my screen as I was hacked.  The true Microsoft tech person informed me that 1/3 of the time when you go to a Microsoft site you may be hacked and the company can’t keep up with the criminals…..great!  Be aware if you aren’t already.  Same goes for getting phone numbers from sources like Google.  The first few phone numbers may be phony, as it is when a person wants Microsoft’s local number or 800 number. Google knows these are phony but these scam artists are paying Google more than honest companies.

A friend in the tech industry gave me some advice:

-       Use Ad Blocker.

-       Disconnect your phone “locator” except when using it.

-       Turn off the phone whenever possible.

-       Don’t leave your computer connected to sites, servers or emails for long periods.

-       Again, turn off the computer whenever not using.

-       Remove phone apps that aren’t needed.

Let’s head now into what has happened in the last week or so and implications.  Janet Yellen and the Feds raised interest rates another 1/4% (25 basis points) and likely to raise rates more this year.  This will affect interest rates on credit and car and home loans; short term credit more so than long term loans.  This should have had a negative impact on markets as it will slow the economy and hurt exports because of a stronger dollar.  Just the opposite happened; stocks further rose and bonds held steady.  Go figure, as no one can.  The Trump effect?!

The effect on bond markets should have been negative and were not.  What is the norm for exchange traded bond funds (ETF’s)?  Down.  With the rising of interest rates “open end” bond funds would be advisable versus “closed end”.  We have discussed this in past blogs.  With open end bond funds the funds will use new money to continue buying bonds with higher yield. The NAV should rise (Net Asset Value of fund).

With the announcement of higher interest rates, the government came out with the statement that they were going to alter the way credit scores were calculated with the end result being your credit score going up.  This will enable more people to continue buying things, like cars, even though higher interest rates may have normally shut them out of markets.  Not good. All we are doing is taking the average American more into debt. For instance, the already enormous debt of people with car loans (over $1 trillion) will go even higher.

Let’s quickly touch upon HB-1 worker visas.  60 Minutes on March 19, 2017 had an excellent segment addressed to this topic.  We have discussed this along with Globalization in prior blogs.  I only wished more Americans would have watched 60 Minutes and that reality would set in as to what the big companies are doing and why.  We are forcing our current American workers to train foreign workers so they can be hired for significantly lower wages, then laying off our American workers many who are 45 years and older.  These workers are being threatened that if they don’t go along with this training they will lose their pensions.  These workers will most likely never be let back into the US work world, and have to settle for part time jobs at minimum wage.  Horrible that our country and politicians would permit this to happen!

Permit me to briefly comment on our new proposed health care bill; should not happen.  We should have a good national health care reforming and adding to the existing “Obama Care”.  Any health care proposal should stand on it’s own credibility rather than being intermingled with tax reform and lower tax rates.  I believe it is impossible to reform health care without bringing these 4 essential ingredients together in compromise, they are:

-       Hospitals

-       Insurance carries

-       Doctors

-       Drug companies, with competitive bidding

Oh well, the US government debt going higher, people’s debt going higher, more Americans out of the work place, and less health care.  When is the balloon going to bust?

MONEY 114 - LOYALTY

THIS IS MY 114^TH BLOG ON UNDERSTANDING MONEY TOOLS

Let’s call this blog “loyalty” and more.  I try to bring forth a couple ideas or pieces of information in each blog that might help you.  As a teacher once told me, only give out a couple pieces of information/education with each class and leave a carrot hanging, or you may never get anyone back.

I write when I want, or get so irritated by today’s world I feel compelled to write.  LOYALTY.  It is a profound element expected each day by the wealthy, big business, our government and even the Mafia, however we might jump right to the bottom line; it is a very uni-lateral expectation by the above, expected by them with little in return.  It was much more bi-lateral years back when we had strong unions for good reason.

In light of this as a standard, let’s look at a few things and see if we can help.  Recently, in a chat with a friend it was brought forth in regard to one important thing to say when interviewing with a company.  It is vital to state that you “want to work” for the company and how you can help in that process versus “you want a job”.  Leave the salary out of the first interview except when asked.

What kind of jobs are out there?  Technology to a degree.  Medical to a degree,  Here is a surprise, our largest industry is now the financial industry.  The point I will make here is that our largest industry in the USA is financial which means we produce nothing, however extract a portion of money out of each package or transaction, and those hit world markets. Quite sad.  I wrote a blog long time ago on this, but wanted to reinforce the feelings.  I haven’t looked recently but I bet our biggest export remains the same, cardboard and paper sent back to China and Asia so that they can reprocess it into cardboard containers to be filled with products that come to America.

To control any country you take over the media and the money (power).  Then, the country is at your mercy.  The International Monetary Fund, World Bank and our Federal Reserve are controlled by the wealthy.  World banks have lent money to many countries they know can’t pay back loans.  There is a lot of corruption here.  Let’s use Greece as a good example.  Greece should never have been permitted into the European Union, except for the fact that Wall Street and the Investment Bankers filed false balance sheets and income statements, (this being of public record.)  Greece has not been able to make payments on loans, so the IMF and lenders want Greece, and like countries, to sell their public assets off at fractions on the dollar to pay off bonds.  We did this here in a similar fashion in 2008-2009 when the banks foreclosed on homes and called business loans due and payable.  In come the wealthy, reaping rewards.  The wealthy would love another strong recession here in the US.  Once again, the banks would call loans due and payable and the wealthy would take control of assets, now about 55% would go to 65-70%.  What a deal for the wealthy!  As pointed out the largest banks remaining in this country have become powerful with little risk and returns better than casinos.  Banks used to operate on profit spreads between borrowing and lending at 2-3%, not any longer!  The same can be said about Globalization: one entity, no nationalism, eventually a one “race”, no one to fight back and the wealthy have perfect slave labor.  The falsehood of immigration in an automated and robotic world.  It has been proven that the poorest of countries have increased births to the degree you could never immigrate these people fast enough to avoid starvation and problems.  There is no loyalty!

President Trump and the markets.  Few people would have thought the election would carry the markets upward as far as they have gone.  Shrewd world investors like George Soros and Carlos Slim have lost billions shorting the overpriced stock markets.  I think they had the direction right for a major correction that should have happened 2-3 years ago but their timing was off.  As a theorist, I will state we are in for corrections.  Trump’s plan is an FDR approach; borrow more money and put to good use in rebuilding infrastructure.  This month we need, as a country, to borrow trillions of dollars, will we get the approvals?  Secondly, construction of manufacturing plants, bridges, highways, oil pipelines only goes so long and then jobs are replaced by automation to continue on.  Yes, this country is in dire need of repair from airports that look third world to water/sewer lines, to bridges and roads.

Let’s look at the stock markets.  Insane!  No way can a financial analyst come to conclusions on stocks and what to buy.  It is Las Vegas time. As I wrote many blogs ago, Venture capital firms now look at “outs”; can you bring another sucker in to play after you?!  The stock market has become similar.  One example.  Last week an “app” went public, Snap, Inc.  It has no earnings, no assets.  You probably heard the news the day it went public that the capitalization was $35 billion.  I wouldn’t have paid $350 thousand for the stock let alone $35 billion! (Market cap is the amount of stock in public or institutional hands times the price per share.)  Not only is Wall Street getting more audacious in guiding companies going public, they are really testing investor’s stupidity.

Bonds? If Janet Yellen and the Federal Reserve have their way it looks as though they may raise interest rates 3 times this year.  This will be a pass through of interest rates on loans, and also negatively impact the bond markets.  If you hold a bond until maturity you will be fine, sell into the market your value will be adjusted to the new interest yield.

Real estate?  Some markets ready to pop.  From Vancouver to San Diego a lot of the new building relies on wealthy Asians coming in to purchase.  Other coastal areas like the Northeast rely on wealthy Russians and Europeans to Florida with South Americans and retirees.

Gold?  Who knows?  It is a hedge.  I thought it was a good buy around $1,000/ounce, but now sits around $1,200.

The government on your side, no way!?  Let’s look at only a couple of things.  Again, we have discussed the new miracle accounting for company’s reporting in the US.  Briefly, we have always had accounting regulations.  Ever since my college days I new them as GAPP or GAP.  These initials stand for General Accounting Principles and Practices or General Accounting Practices. The government has changed the regs on so many things make a bottom line look better.  Wall Street lowers the P/E on stocks and the price goes up as companies look more favorable.  Then, there is the inflation price index.  Do we have inflation?  You bet.  Do the figures from the government tell the truth, no.  The government has an inflation index, however it varies. If certain items are very inflationary the government pulls them out of the index. If items are deflationary or favorable to the government they leave them in.  Examples:  when oil and gas hit highs several years ago the government excluded oil and gas. Farm, dairy and agricultural products are running high inflation so now they are excluded.  Clothing and electronics from Asia have come down in price so they are included.  You get the point, why does this matter?  For one, Social Security payments are based on inflation from year to year. The government has stated, using these figures, that we essentially have no inflation so our Social Security payments to our seniors have risen very little.  This has saved our government billions in payments.

It is much better to have smaller recessions every 5-6 years than what I am afraid will happen. Recessions are like giants, the bigger they become with more years apart, the harder they fall.

So much for this blog.