Showing you the world that has been pulled over your eyes to blind you from the truth - one post at a time

Silly Rabbit, Tricks are for Kids

Rabbits have been much on my mind lately.  Recently, I planted my small garden area with spinach, mustard greens, kale, etc.  While I am already anticipating the succulent salads and slow cooked greens that I will reap in a few weeks,  I am haunted by little furry animals.  Yes, these conniving maruaders attack my garden almost every night and I wake every morning with damaged plants and rabbit droppings (come to think of it; they look like gray Trix).

Of course, I know what you are thinking "John, why don't you get a dog."  Well, the sad fact is that I have a dog.  Even worse, Cooper is a hunting dog so chasing furry mammals should be right up his alley.  Not exactly.  Despite my urging, I think Cooper actually doubts the existence of the rabbits.  He would rather come in at night (prime-time for rabbit feeding) when the temperature drops than chase rabbits.  I keep telling him that I'm going to trade him in on a beagle.

In Louisiana, there are another species of tricksters that you have to keep your eyes on.  On the ballot on November 19th is a constitutional amendment that could institute a new form of taxation.  This would be a tax on certain real estate transfers.  You would pay this tax when you sell your home.  Here is the catch.  At your normal tax election, you vote yes if you support the tax and no if you don't.  That's where the Louisiana legislature devised this little trick.  This tax, if you vote yes, the tax is prohibited; but if you vote no, the tax could be levied.  So, be warned and keep a clear eye.  Tell our politicians, "Silly rabbits, tricks are for kids.

 

It Is What It Is

 One thing I notice is that I find myself uttering this phrase more often as I get older. In fact, I don’t ever remember saying it in my 20’s. Recently it’s taken on some rather negative connotations. Something blows up at work – "well, you know it is what it is". You have some issues you’re dealing with in your personal life – "hey, it is what it is.

 Yesterday, my pastor’s sermon gave me a new spin on "It is what it is". He has been preaching a series entitled Answering God’s Call where each Sunday he preaches on a different Old Testament prophet. Today was Moses. While growing up in Egypt as Pharaoh’s fosterling, Moses was struck by the plight of the Israelites and in anger killed an Egyptian. Moses expected this to be the start of a revolution but the Israelites accused Moses of the murder and he fled into the deep desert.

 When Moses receives God’s call he is tending sheep and far away from Egypt. The key to Moses answering the call was to recognize the reality of his situation or if you will; "It is what it is". In that connation, the phrase takes on a more inspirational tone. Yes, I’ve made mistakes but "It is what it is. It’s like stop worrying about the past and accept the reality of the situation, leave it behind, and be open to new opportunities.

 You can find the sermon at http://fbccov.org/portfolio-item/answering-gods-call-part-4-moses-god-calls-people-who-have-failed/

 

My Jobs Plan

I realize now that it was wrong to criticise Obama's jobs plan without offering some ideas of my own.  I hope this post corrects that error.

Our economy has some major systematic problems that will not be corrected by short-term stimulus.  For the last 2 decades, we have been riding a debt bubble (government, individual and commercial) and that will not work itself out painlessly or quickly.

    Energy - Peak oil is in our near future and will profoundly change our systems.  No longer will we be able to have our goods shipped across the planet.  While solar, wind and other "green" energy sources have their place, true energy independence will only be gained using a fossil fuel that is still in abundant supply in the US - natural gas.  We should build an CNG infrastructure which will allow the country to switch its motor fleets to affordable CNG.  We also need to build more nuclear plants - I say one new plant fore each state.  Also, we need to encourage rather than discourage oil drilling in the gulf and around the country.

    Tax Reform - We must throw out the entire tax code and replace it with one consumption tax that everybody pays.  Individual, Corporate and payroll taxes have to be abandoned.  The current tax code is a huge disincentive to free enterprise. 

    Free Trade - The free trade experiment which began under Clinton and continued in the W presidency is an irrefutable failure.  It has allowed business to export jobs to all places around the globe while not exporting our living standards or pay.  Our country began as one that imposed tariffs and we became a super power.  As peak oil arrives, the tariff will provide more incentive for Corporations to return those jobs to the US as it is no longer feasible to ship goods around the globe.

    Currency - I'm learning more about this but basicly we need to do whatever Ron Paul prescribes.

    Government Spending - The government must shrink and shrink fast.  Foreign aid, our multiplicity of foreign wars must end.  Government needs to be run in accordance with the Constitution 

    One more bailout - We've bailed out the megabanks, now its time to do the right thing and reduce all underwater mortgages to the appraised value of the home.  No taxpayer dollars.  Banks lose like they should have lost in 2008.

   Freedom - Our government must start doing its primary job - ensuring the freedom and liberties of its people and quit spying and infringing on those liberties.

   Agriculture - I stole this one from Jack Spirko.  Each American must begin to take charge of their own food supply and grow a portion of their food at home. 

How's that for an eight point plan.

It's all about the jobs; or is it?

As I am now off of my media diet, I have been taking a look at the new Obama jobs proposal or Stimulus #14, if you prefer.  By the way, I strongly recommend that you take a media diet from time to time.  It has a detox effect and you will find that you really don't miss anything.  In some ways it's like The Bold and The Beautiful, no matter when you check in, one of the Foresters is sleeping with Brook and most everybody else on the show is very angry about it.

Now that ARRA and QE2's effect on the economy has waned.  Obama took an extended Martha's Vineyard vacation and has come back with the solution to all that ails the economy - another $450 billion in spending and tax cuts that he assures us will eventually be paid by budget cuts.

Really, after 800 billion in ARRA spending, the various Bush stimuli (at least when W did a stimulus, everybody got a check), all of the bailouts, cash for clunkers and caulkers, homebuyers credit, and untold trillions that Ben Bernanke spread across the globe, $450 billion is going to fix everything?  I'm not buying it and neither should you.  This is all just another political football for the Washington ideologues to play with and look like they are doing something while Rome burns to the ground.

 

 

 

 

Market Paradoxes or How I Learned to Stop Worrying and Love the Credit Downgrade

I would just like to warn you at the start of this blogpost that you probably will not learn anything from me today. 

Okay, so S&P downgrades US treasuries last Friday afternoon. I'm still not quite sure what message S&P was trying to send.  If it was that the U.S. could never retire its national debt, well their right.  I told you so at  http://johnmurraycpa.typepad.com/blog/2010/06/index.html   If it was that the U.S. is likely to pay its obligations back with an ever decreasing value of the dollar, well their right on that score as well.

So I wait with some excitement about what will happen when the market opens Monday.  For your information, my portfolio includes a mutual fund that shorts the treasuries and several gold and silver mining companies.  Well, what happens, all of the major indices turn sharply down while the yield on the treasuries go down.  Now when a debt obligation's yield goes down, that is pretty much the same thing as a stock's value rising.  Monday was followed with two more days of strength for Treasuries which is somewhat inexplicable since we were just downgraded.

A final rant on gas prices, oil went down from its April high of around $118 down all the way to $80 a barrel.  I feel like the mule who's carrot has been taken away.  I drive a Nissan Titan, so let's just leave it at this - near $4 gas is "effecting" me.  I took some solace that with the disappearance of so many trillions of American's collective wealth, at least gas prices would be going down (maybe even to the valhalla of $2.5, one can hope) 

Of course gas prices have not really went down at all.  I've heard it all before - "the gas that stations are selling are actually last weeks pricier gas and they cannot lower prices just because the oil price goes down.  But let me tell you, should a major hurricane form in the gulf or some conflict begin in the Middle East, gas prices are gleefully raised the next morning. 

As I stated earlier, this post was more about me expressing some angst than trying to impart some nugget of wisdom.

 

"Like Crabs in a Bucket" or How Much Freedom Have We Lost

 Local bluesman Kipori Woods has a song that goes like this "Like Crabs in a Bucket; Just can't get to the top.  I don't recall the rest of the lyrics and could not find them on the internet.  To me, It reminds me of the Matrix, particularly, "You are a slave, Neo"

All of this got me thinking, how much freedom have we lost?  I know as Americans that we have much more freedom than many in repressed societies such as some countries in the Middle East, China and North Korea and thank God for that. 

However, if we draw some comparisons to earlier Americans and to our founders, how would we score on the freedom scale.  Those earlier Americans were in many way more self sufficient (out of necessity) than we are today.   Most of them grew quite a bit of there own food whereas most of our food today comes in shrink wrap containers and was just flown in or shipped from somewhere a long way from where we live.  In fact, when Thomas Jefferson was not drafting the Declaration of Independence, he was back at his homestead farming and writing about vegetables and the like.

I would imagine that busybodies or bureaucrats could not tell those earlier Americans what they could or could not do to their own property.  You never saw the episode where Ned Olsen told Charles Ingalls that he could not build a new barn without the proper permit and without the blessing of the planning and zoning committee.  I can imagine that land was not taken by imminent domain to build condos that often.  As the EPA had not even been conceived (back then we still governed based on the Constitution), those earlier Americans were never stopped from irrigating their farms because of a snail darter.  Most of those early Americans carried firearms and would not put up with such nonsense.

Early Americans were, as a whole, more devout and Christian than our society today.  As a result, they prayed whenever and wherever they liked.  They were not "plugged in" to the world system as many of us Christians are today.

As I resolve to live a life of increased freedom, I urge you to do so as well.  To quote my brother "It's all about freedom.

Finally remember the words of Jesus Christ: "So if the Son sets you free, you will be free indeed".  (John 8:36)

Ignorance vs. Inaction

What is holding back in life?  I would bet it is not a lack of knowledge but a lack of action on your part to make meaningful change.

One of my favorite movies is Dune (the original one with Patrick Stewart)  After an assassination attempt on Paul fails, Duke Atriedes is incensed and says to his advisers "You all know what to do!  Do it!  To this Patrick Stewart replies " As a wild ass in the desert go I to my labor".  And it should really be that easy, you know the proper course, just do it.

One of the ways this manifests in my life is my morning rituals or lack there of.  I like to practive yoga for a good hour each morning followed by meditation, prayer and reading God's Word.  On days where I have sucessfully accomplished this routine, I feel less stressed, focosed, much more effective, and I am a better person to be around.

The problem is that is not what happens every morning.  Most mornings, I will sleep through my 27 iphone alarms and my alarm clock.  I wake up all out of sorts, feel pretty lousy and am a bastard to be around.

To work on this area, I have again been reading Steve Pavlina who has some valuable guidance on this subject.  I've found that I have been going to bed too early.  Steve says that diet and exercise are key components as well.  Steve practices a all vegan diet.  I'm not willing to go that far, yet.   Steve's site is  www.stevepavlina.com   You may want to skip his writings on polyphasic sleep.  I tried that a few years ago.  Its misery incorporated.

Oh well, time to try it one more time.  I will wake up early, I will wake up early, I will wake up early.

 

State and Local Bondholders - A Word of Warning

Bonds of state and local governments used to be a slam dunk.  You park your investment and receive a regular semiannual interest payment.  Of course, the big advantage is that the interest was tax exempt from federal taxes and from state if you held the bond in the same state of your residence.  In fact, I've heard that many baby boomers have fled equities for the perceived safety of all sorts of bonds.

The only problem is that the economic downturn has hit state and local governments quite hard.  For instance, the City of Vallejo, CA filed for bankruptcy protection due to their inability to renegotiate salaries and benfits for union workers.  Of course, the state of California is not doing that well either.  However, states are not allowed to file for bankruptcy due the their sovereign status granted by the Constitution

So what signs are there that a bond you hold might have credit issues.  First of all, you should identify what type of bond do you have.  General obligation bonds are ones that are collateralized by a tax of some form.  Revenue bonds are ones that are secured by the excess revenues of the government.

1.    Read the latest audit report.  Auditors are required to disclose if they have determined that there might be substantial doubt about the entity continuing as a going concern.

2.    Pension obligations.  Many governments have their own retirement system which can become underfunded resulting in a net liability.  Other governments participate in state plans which are subject to increases in rates due to poor investment returns.

3.    Other Post Employment Benefits - These are liabilities for the present value of future retiree benefits.  Of course, the cost of healthcare is ever increasing and retirees are living longer and longer.

4.    Union shop - Does the government have substantial number of union workers who may have contracts that could limit a government's ability to make budget cuts.  Think of Wisconsin.

5.    Declining revenues - What the states cut to balance their budgets is passed down to local governments.  Most local governments rely on state funding for large % of their budget.

Their is a wealth of information at www.msrb.org.   Should you have concerns and would like some assistance, please email me at jmurray@laporte.com or call me at (985) 892-5850.  

 

Book Review - $1,000 and an Idea by Sam Wyly

An understatement - the internet was and is an amazing development.  Thank you, Al Gore, I don't think I ever expressed my gratitude.  Recently, I've been typing in various topics into Wikipedia and delighting in learning various tidbits of knowledge.

Recently, I typed in my hometown (Lake Providence, LA)  Wikipedia lists famous people from a town.  I was amazed to find that 2 billionaires were born and raised for a time from Lake Providence.  Two brothers - Sam and Charles Wyly.  As it turns out Sam had written an autobiography.  While, I initially put it on the backburner, I read it while convalescing from brain surgery.

Sam tells a wonderful story.  He focuses on lessons he learns during his childhood.  He learned initial lessons of entrepreneurship from his fathers local newspaper and a failed farm, he learns character from playing football (they moved to Delhi in their early teens), and spiritual lessons from a variety of sources.  He receives his education at Michigan School of Business.

The brothers begin their careers at IBM.  Sam learns much while working at IBM and meets such luminaries as Ross Perot.  His initial idea is born from the fact that many smaller business cannot afford the several million dollar mainframes that Sam and Charles are selling.  He sees a real need there.  From this idea, the company University Computing Company was born.  The Company's premise was that mainframes would be provided to universities where they could be used by students and faculty.  Excess capacity was sold off to small businesses.  This business plan was started at SMU and expanded throughout the country.

This led the brothers to the formation of Datran.  Sam foresaw the benefit of having all of their mainframes talk to each other.  Datran's plan was to establish a national network using microwave towers.  It kind of sounds like the internet, doesn't it.  After many tries, Datran was unsucessful in creating their microwave network due mostly to the obstruction of AT&T who saw Datran as a competitor to their telephone monopoly.  An interesting note, AT&T was later broken up in part due to a lawsuit by Datran and 2 other companies.

The story progresses to the 70's where the brothers are again on the cutting edge in predicting the stagflation of the late 70's.  They form a resource company that purchases and operates an oil refinery, a silver mine and other commodity plays (kinda sounds like our current econcomy).  Their not through, they start a software company that is grown through purchases of smaller companies and finally the Bonanza chain of steak restuarants.  Sam took over Bonanza as a favor for a friend who holds the note on the failing company.  He tells with delight how he turns the restuarant around.  (I, personally recall many memories of meals at Bonanza.  Are your reading this Don Ingram)

Lessons learned from the book:

    1.  Sam repeatedly credits the management teachings of Peter Drucker for his successes.  Sam believed that the most important key was to hire good managers and let them run the business.

    2.  The power of adaptation in entrepreneurship.

    3.   No matter how good the idea, sometimes it is impossible to overcome macro trends.

It was a good read.  I strongly recommend it.

 

 

 

 

On flag burning - a personal story from my childhood

The recent incident at LSU brought back memories of my childhood, when your author himself burned the American flag.

During the summer my friend Phillip and I were consigned to roaming the campus of St. Patricks while our mothers worked in their classrooms.   It was boring but fun.  We had the gym to ourself (i would say average temp was 92).  Mrs. Marron, the principal, had just opened a package with a brand new flag in it.  She told Phillip and I that as loyal Cub Scouts we were charged with properly disposing of the old flag.  We consulted our scout handbook to find that a flag could be retired either by burning or burying. 

I know that does not sound right; but that's what it said.  Of course, you can only guess at the euphoria we both felt as our principal had just given us express authority to burn something on the school grounds.  So, when Mrs. Marron reentered the school, the burning began in earnest.  I still can't remember where we got the matches or lighter.

In the good old days of Betsy Ross, flags were made of natural fibers and would really go up in flames.  Not so in the 70's.  The 70's was the polyester decade and that's what the flag was made of.  It was more of a melting effect.  In fact, Phillip got burnt and yelled an obsenity.

On to option 2;  We would have to bury that glob of melted unnatural fabric.  Now, the melted part was like maybe the lower half of the bars.  It had been a really hot summer and had not rained in weeks.  The ground in the school yard behind the cafeteria was hard as a rock.  I'm embarrassed to say that we gave Old Glory a shallow grave with a couple of layers of mulch (oak leaves).  Well, what can I say, it was obvious that neither Phillip or me were destined to eagle scout. 

Well, the school year was progressing.  I think it was in October.  I blame it on some kids digging a hole to play marbles.  They dug up our flag and proceeded carry it around the playground.  In fact, they took the flag into one of the teachers, exclaiming "There must have been a battle fought here"  I think the teacher was buying it until Mrs. Marron rolled her eyes and stared through me and Phillip.  I think the 50 stars must have given it away.