Hidden Inflation: Gold

One of my clients came into the office last week faced with what she perceived to be some financial issues. She was a woman in her early sixties who lived alone, and had run up credit card debt of approximately $10,000.00 and was having difficulty in paying it back. She was receiving unending phone calls and letters. She came to me contemplating bankruptcy.

We sat and looked at her assets. She rented an apartment. She owed money on her car. She had some savings but was reluctant to wipe herself out. On a hunch, I asked her about jewelry. What did she have? I told her to go home and take inventory.

When she returned a few days later, she had a smile on her face that went ear to ear. In her jewelry collection she had numerous gold chains, rings with fake stones, bracelets, earrings, most of which she hadn’t worn for years. Many of the rings were 18 carat, and she told me many of them were forty years old, heavy, and "butt ugly," her words, not mine.

She took them to her local gold dealer, and she walked away with $13,000.00 in cash. Her jewelry box is now substantially emptier, but her debt is paid with some left over. I asked her what she did with the other three grand, and she told me she went and bought some inexpensive costume jewelry but was stylish nonetheless so she could actually wear it.

Those of us who live in the real world, not the Washington DC world, know that there is inflation in the economy. We see it at the gas pump. We see it in the grocery store. We see it in clothing costs. Of course, the government says it isn’t there. What can I say?

But the real inflation is in precious metals. Gold is pushing $1600.00/oz. Silver and platinum are trading at all time highs. Diamonds are going through the roof. If you want to know what your money is worth, a stack of 18 one ounce American Gold Eagle coins is worth $28,000.00. THAT should give you pause. You can hold those one ounce coins in one hand. That is what your money is worth, and it ain't much.

We should be disturbed that countries like China and India have been steadily moving their reserves out of the dollar and into commodities, and making noises about returning to the gold standard in order to protect the value of their assets. Nobody wants to hold debt denominated in currency that is being devalued. Printing currency and excessive debt, whether held by individuals or governments, is inflationary.

While my client’s story is light hearted and interesting, it is also a cautionary tale. Inflation is insidious, especially when it is occurring in an area in which most Americans don’t have any actual experience. Average Americans are not familiar with precious metal commodity markets and don’t hold gold as an investment.

The markets are out of whack. If the world moves to a new reserve currency based on gold or a basket of commodities, we are screwed in a major way. The financial crisis of 2008 will look like a walk in the park.

Energy: The Hole in the Dike

While Obama and Boehner spar over raising the debt ceiling, unemployment continues to go up. While the debt is a small part of the problem, the real problem goes unabated. Once more with feeling, it is energy, energy, energy.

Picture the United States in the 1960’s as a vast reservoir of money sloshing around North America. Then OPEC comes and pokes a hole in the reservoir by violating American anti-trust laws. The money starts to leak out of the reservoir. First a little bit, then more, then even more. By the 1970’s it turns into a crisis, and the government makes a half hearted effort to the plug the hole out from which American money is leaking…except now they are called petro-dollars.

Rather than actually fix the problem, America looks the other way as the government sticks a finger in the dike rather than permanently fix the leak. Over the years, the leak has become bigger and bigger, and the money continued to flow out…until there was no more.

Financial derivatives may have been the tinder that started the financial in September of 2008, but it was the complete draining of money from the reservoir to OPEC that prevented the fire from being put out. The reservoir was empty.

But once again, rather than fix the problem, the Federal Reserve opened the spigots and tried to fill the reservoir with water by pouring money into the dry lake bed. Funny thing, because the hole was still there, the money flowed out of the reservoir as fast as the Federal Reserve could pump it in at the other end. The money was worthless.

And now there is no money. The Fed shut off the tap. And the nation is broke with a national debt equal to the entire GDP of the nation. And so long as we are energy dependant on OPEC, things cannot and will not get better. The reservoir cannot refill itself so long as the leak is still there. We send $1 billion/day to OPEC to pay for our oil. The figure is unfathomable...and the EPA blocks all efforts to plug the hole.

It is fixable.  We can do it.  But our political class seems to be dealing with symptoms, badly I might add, rather than fix the problem. While the national debt and the debt ceiling are important issues, neither can be fixed without first becoming totally energy independent. It would keep the money at home.  The reservoir could fell again…and that would resolve most of the problems.

The largest reserves of natural gas and coal are in the United States. We have the capability of producing safe nuclear energy. The second largest reserve of oil in the world is in Canada, not the mid-east. And we haven’t even begun to touch oil reserves off shore and in Alaska.

Now it is time to cage the environmentalist. Challenge the nation to become energy independent within five years with infrastructure spending to support cars and trucks powered by natural gas, hydrogen, diesel, and electricity. Fund by selling energy bonds to the public, not to China.

This effort will create millions of jobs funded by Americans rather than the Chinese, and make us wealthy and prosperous once again.

It’s time to plug the hole in the dike.

Senate Bill 5

It is the lull before the storm over Ohio Senate Bill 5. The Democratic Party, with much aplomb, had its million signature march in Columbus whereby it presented to the appropriate state officials over a million signatures to repeal Senate Bill 5. Leading the pack were the Democratic Party representatives from the Mahoning Valley. They claim they are fighting for the middle class. That getting this issue on the ballot is a victory for the middle class.

How is this a victory for the middle class? To me, it looks like a victory for public employees. As it stands now, if the vote were held today, Senate Bill 5 would be repealed. On the other hand, when each of the component parts is polled, the public overwhelmingly supports the provisions of Senate Bill 5. Therein lays the challenge for the election. The Republicans must educate the public as to what Senate Bill 5 does. The Democrats must confuse the public with emotion and false information.

This is NOT a referendum on the middle class. At the base level, Senate Bill 5 does the following:

1) Outlaws strikes by public employees.

2) Sets minimum standards for employee contributions to benefit programs, including health care and retirement programs.

3) Introduces merit pay for teachers.

4) Eliminates binding arbitration by third parties in disputes whereby the third party can ignore the current fiscal situation of any government body in dispute resolution. It can’t force a township to put a tax levy on the ballot to fund a labor arbitration award.

5) Comparable salary determinations are eliminated, particularly in university situations. You can no longer base a salary on comparable pay including areas where the cost of living is substantially more than the area in which the university is located. You can’t look to a comparable wage in New York City, with the highest cost of living in America, to justify a similar salary in Youngstown, Ohio, which is among the lowest for cost of living.

Under Senate Bill 5, Ohio public employees will be treated exactly the same as current federal employees, and the same way they were treated in Ohio up until twenty years ago when public employees were granted the right to strike.

At the end of the day, the only folks who will benefit from the repeal of Senate Bill 5 are the public employee unions. And the rest of us will be left to pay the continuing rising cost of local government.

If you voted against the last county sales tax levy; if you voted against the last local police levy; if you voted against the last school levy; if you are tired of levies being place on the ballot over and over and over again after they have been defeated one, twice, and more…then you will vote to retain Senate Bill 5.

Given the history of levies in Mahoning County, my money is on Senate Bill 5 being around for a long time… a million signature march notwithstanding.

Have Republicans made the "dill"?

For the Republicans, it looks like the show is over before it begins. Things seem to have settled down after debates in South Carolina and New Hampshire. All of the candidates seem to have bought into Ronald Reagan’s 11th Commandment: Thou shalt not speak ill of any fellow Republican. Tim Pawlenty tried to attack Mitt Romney, and was quickly silenced. And recent polls and public appearances and statements have led me to believe that while there will be a primary, it will be between three front runners, with the runner-up spot being the Vice Presidency.

So, let’s take a look. Tim Pawlenty and Rick Santorum are non-starters. They are barely showing in poll numbers in the Iowa. They are nice, capable guys, but so is my plumber. Newt Gingrich is self destructing before our eyes. He is a conservative icon that should continue to be a conservative icon. He will continue to be the conscience and sage of the conservative movement…but Dude, your whole staff quit on you. Then there is John Huntsman…John who? He is the darling of the liberal media, speaks fluent Mandarin, but he was Obama’s Ambassador to China while China cleaned our clock. If NBC likes him, he doesn’t have a chance in the Republican primary. And let’s not forget Ron Paul. The lovable libertarian will continue to remind us of things about which we should be concerned, but global warming will be actually proved before he gets elected president.

We are left with the declared front runners, a charismatic black guy who sells pizza and a bunch of heavyweights skulking in the background. And it is here that I have decided that Republicans have made the “dill”. Let’s start with the undeclared. New Jersey’s Chris Christie appeared on Fox News yesterday morning and stated once again he is NOT running for President. He doesn’t feel it is right. I believe him. Sarah Palin has kind of dropped out of site. She is making her movie debut this week in Iowa, but she is being out politicked and out classed by another conservative female. And Texas Governor Rick Perry has been flirting with a run…but he can’t make a decision until after his legislative session is done in Texas, and he has completed some back surgery. The back surgery did it for me. He’s out.

It almost appears as if there was a Republican summit to weed out the field and leave the three strongest candidates standing to duke it out in a civilized manner with the issue being not who can beat whom in a Republican primary, but who can beat Obama in 2012. And I wouldn’t be surprised if the powers that be talked to each one of these guys to form a strong, unified front against Obama.

Mitt Romney is the putative front runner, but barely holding on by one point against Michele Bachmann in Iowa. He is ahead in New Hampshire. And both Romney and Bachmann face a strong challenge from Herman Cain in South Carolina. These are the three that have out maneuvered the rest of the field, both declared and undeclared. Right now, the only decision to be made is who will be at the top the ticket and who will be number 2…and who gets the consolation prize.

I believe that Bachmann will ultimately win Iowa…and watch Herman Cain move to second. I believe Romney will win New Hampshire, with Bachmann number 2. I believe Herman Cain will win South Carolina, with Bachmann coming in at second. This will extend the primary season so less dogmatic states have some input.

Although I think Herman Cain is a great guy, a great conservative, and the most dynamic candidate in the Republican field, at the end of the day he is a businessman, and I don’t think he seriously wants the job. He may be in it to win it…but “it” may be a Chairman of the Council of Economic Advisors. I think he will eventually withdraw from the race.

So…here’s the “dill.” Ticket will be Romney/Bachmann. If they win…Palin will either be Secretary of the Interior of Secretary or Energy, the former controlling public land leases and the latter speaks for itself. Cain will be put into any number of economic related jobs. The rest of the candidates will ultimately be content to stay where they are.

On the other hand, I thought Giuliani was going to be the Republican nominee in 2008. Pay your money and take your chances!!!!!

Boeing vs. the NLRB: 2012 Sleeper Election Issue

From BOEING BOEING starring Jerry Lewis and Tony Curtis

Barack Obama has been able to disguise, misname, spin and otherwise explain away his socialist policies so that they may make some sense to those who aren’t really paying attention. But he can’t do that with what his NLRB is doing to Boeing. The hubris of it all; the arrogance in its execution; and the complete political stupidity accompanying it is staggering. Nothing in his presidency, including health care, TARP, the takeover of GM and Chrysler, the suicidal spending, and the bowing the Arabs can come close to how the Boeing debacle shows the nature of the man, and its simplicity in understanding his beliefs.. It will be the Waterloo of the Obama presidency.

The Dreamliner is Boeing's entry into a new class of fuel efficient airplanes. It delivers 20% fuel economy, and is destined to be one of its most popular and successful aircraft. It built a new plant in South Carolina after a series of labor disputes with its union in its plants located in Seattle, Washington. It initiated, with no compulsion, discussions with the machinists union to possibly build the plant in Washington State. What is got instead were three union demands: 1) A seat on Boeing’s Board of Directors; 2) A promise that any new plants would not be built anywhere but in Washington State; and 3) A no layoff policy for all current workers. Boeing couldn’t live with that, and neither could any other company in the United States. Boeing decided to build its plant in North Charleston, South Carolina, and spent a billion dollars on the complex over the past two years.

It was set to open the facility, and was beginning to hire workers, when the National Labor Relations Board filed a complaint against Boeing claiming building the plant in a Right to Work state was an intimidation of the union. Boeing is now prohibited from starting production in the plant unless it is unionized. Boeing has obviously started legal proceedings to prevent this from happening. It expects to be lost in the agency bureaucracy and then the federal courts for at least three years.

The attorneys behind this action are all Obama appointees. The lead attorney is an Obama “recess” appointee who has yet to be confirmed by the House of Representatives. When called to testify in front of Congress last week, he was smarmy and arrogant. He is the worst of what the Obama administration has to offer.

The United States is basically divided in half along a line roughly equivalent with Mason Dixon line. Those to the north are union states. Those to the south are Right to Work states. As everyone knows, what manufacturing is left in the United States has moving from the northern states to the southern states. Ohio, for example, has lost hundreds of thousands of jobs over the last ten years….not to Mexico or China….but to Tennessee and Georgia.

As in all things socialist, Obama has decided the solution to the problem is coercion. Simply decree that it is illegal to build a factory in a right to work state if you are operating in a union state. He will be the arbiter to where a business may or may not open a plant.

Of course, as in all things Obama, he has not taken the consequences of such a policy beyond the immediate political gratification he hopes is blown back from the machinists union. Boeing is an international corporation with plants all over the world. It employs 150,000 people worldwide. When Boeing builds its next plant, you can bet your bottom dollar it won’t be in the United States. It will build it in Mexico or China…with China being the odds on winner. China will ultimately be the largest consumer of Boeing’s products, and it is just as easy to build them there than build them here.

Several union leaders know this, and have spoken up against this action by Obama’s rogue NLRB. They know that NO new business will start up in a union state if it binds them to that state for the rest if that business' existence. It in effect guarantees that all future new start ups will be in Texas or Alabama or Georgia or Tennessee; not Ohio, Pennsylvania, Michigan or New Jersey. Capital is fungible. It will always seek the past of least resistence.

This is a simple issue, but absolutely reflects the attitude of this administration. This is a message the vast number of independent voters will understand and will turn into the single, biggest campaign issue in the 2012 election.

The Press and the Waitress

A waitress at a restaurant I frequent on a regular basis was “chewing the fat” with me while I was having dinner at the bar tonight. She was new to the place, and was as friendly as could be. She was telling me a little about herself. She is divorced and is raising two kids on her own. She also had a boyfriend with a child, and he took off leaving her with his kid. She now has legal custody of his child. She told me she was on unemployment for awhile, but couldn’t do that anymore.

The restaurant is a high end place, and pays restaurant wages plus tips. She commented that minimum wage today cannot buy a gallon of milk and a gallon of gas. She is right. She then commented that one of her co-workers said they should raise the minimum wage. She responded that instead of paying $6.00 for a gallon of gas and gallon of milk, the price would rise to $7.00. She gets it!!!! Here is a single mom with three kids hustling to make a living who gets it.

Why can’t the press? Where is the press? If George Bush were president with unemployment at 9.1% you would see story after story about the homeless. You would see front page pictures of lines of people standing in church soup kitchens and the local food bank. You would see evening news human interest stories of babies whose mothers couldn’t afford milk. Do these folks not exist under Obama?  When Bush was president, the unemployment rate was just under 5% and you heard these types of stories ad nauseum over and over and over again.

Right now we are at war in Iraq, Afghanistan, Libya, and Yemen. The latter two are probably illegal and have been “covert.” That alone would have the press screaming if Bush were president. In addition, you would see pictures of flagged draped coffins in airplanes along with interviews with the bereaved families of America’s finest who sacrificed everything for freedom. Do these folks exist under Obama?

It’s no secret the press is left leaning. What is new is they are doing very little now to hide it. The most you can say after the last round of abysmal economic news is they gave a feeble attempt at spin…and it wasn’t very good at that. Their silence speaks for itself.

Even more telling are the Sarah Palin emails. The New York Times and Washington Post called its readers to arms asking them to help sift through the 24,000 Freedom of Information Act pieces of email looking for things to nail Palin!!!! What???? Meanwhile, Anthony Weiner plastered a pornographic aroused picture of himself along with other pictures he took of himself in the Congressional gym across the internet. It was so blatant it was fodder on the Sunday morning Fox News channel last weekend, showing the pictures that appeared on TMZ, the National Enquirer of the internet. And the press said he should wait for his wife to come home from Africa before he decides to resign...as he checked himself into “sex rehab” along with every other left wing Hollywood whacko, all of whom have enough celebrity and money to know better.

But in spite of it all, the waitress at the restaurant who should be a natural Obama constituent figured it out. All of the spin didn’t affect her. She told me she could sit at home on unemployment, or be out in the world with people making a living. She chose the latter. Good for her. She will succeed in this country.

Do you think the press would do a story on her? Don’t hold your breath.

Time For America to Lead Again

The world is in a downward spiral. In all of my life I cannot remember a more depressing time. Even after 9/11, it was inspirational to see how the country came together to face a common enemy…how we stood by each other and helped each other. Now, the anger bubbling just beneath the surface is palpable. And people are growing more willing to express that anger in ways that would have been unthinkable ever a few years ago.

My wife is a home economics teacher. Last week, Michele Obama introduced her new nutrition chart. This is a pie shaped chart as opposed to the old food pyramid. Actually, it’s not half bad. It will be easy to visualize as I sit down to my burger and heap o' fries. Notwithstanding, while leading a nutrition discussion in her class the other day, my wife mentioned the new chart. She also mentioned some of the more aggressive tactics particularly at the local level to monitor food consumption. She asked her students whether what we eat is our own personal responsibility, or the responsibility of the government. A student raised her hand, and I am not making this up, and said that the government has to make those decisions for us because we are unable to make them for ourselves. The government is only looking out for our well being. 

My wife was shocked. Is this what we have regressed to? Is this what they are teaching in government classes in the schools? Is this the America in which we want to live?  Somebody get this gal a copy of the Constitution.

The anger people are feeling I think is more of a sense of helplessness as the Obama administration continues to move government into every facet of our lives. Drive this. Eat this. Don’t do that…over and over and over again. It is intrusive into our toilets, our light bulbs, our refrigerators, our garages, our menus. It never stops. It just keeps bullying us around.

It’s not anger we are feeling, but an ingrained feeling that this isn’t right. Nobody can believe it because this type of government is not in our frame of reference. It can’t be defined, so it comes out in personal attacks and personal behavior that is off the charts.

We have watched our families disintegrate; our economic well being disintegrate; our future disintegrate. In the past we believed in a strong America, an America where anything is possible if you work hard. Now we have an America where the leadership focuses on “global warming” as it criticizes and dismantles everything we have worked for. It is destroying our currency. It is destroying our place in the world.

Instead of offering a framework in which we can prosper, it calls us now to depend on it for everything. Come to us, little children, we know what is best for you. We will take care of you. It is a false promise. It is the second of the three big lies: “I’m from the government, and I am here to help you,” That's a deal with the devil.

America needs to grow a spine. Americans need to stand up and say we are a free people. Our best days are ahead. We will not let the federal government suffocate our country into submission in order to achieve flawed policies of social justice. We need to reclaim our place in the world and not be bullied or cowed by aggressive mercantile countries defeating the rest of the world economically through unfair trade practices. And we need to stand up to those who are anathema to our way of life. We will not tolerate countries that subjugate women or anyone else in the name of some religious belief. We will not tolerate countries that use God as an excuse to keep people enslaved and under control of fanatics. And I will eat salt and transfats if I choose.  It's none of their damn business.

It’s time for America to lead again. And it’s time we find a leader to do it.