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.