Welfare Racketeers and Stock Buybacks

         According to the averages, a welfare family of four makes $61,194 tax-free annually, while your working family with two kids pulls in $50,000 of taxable income during the same year.

         It’s long past time for salaried men and women to shift the conversation from entitlement to secession.  Given today's numbers, continuing to compete against an oppressive political ploy that buys votes by giving away free stuff to a conniving pack of good-for-nothing belligerents is no longer a viable option.

         Elsewhere, Blatant Umama’s call to destroy private capital when financial institutions fail rather than use “taxpayer” funds has a curious ring to it once one considers the reality that this man’s political base is diametrically opposed to doing anything that would ever cause them to pay Federal income taxes.

         It's you and me who are being targeted, subscribers.  The typical stock option swindle takes the CEO and them out of the picture every time the company pulls off a stock "buyback", which is Crime Family lingo for laundering the company stock elitists have been looting from shareholders pretty much on a continuing basis since Jan 1, 1981.

         Seems like the decent, hard-working folk from Middle America should be getting together to dump this loser, his kind, and the 1% who own him, and break away to forge a renewed start to the real American way of life.

         Our Founding Fathers deserve a second chance.  Hopefully, we'd get it right this time.

Jobs

      Near as we can figure, there are 158.1 million people in the American labor force (155.8 million civilian plus 2.3 million military), of which 11.5 million are unemployed, leaving 144.3 million at work.  The country’s total population is 316.8 million, and, taking out children and seniors, there are somewhere in the very general vicinity of 200 million adults who could be working and 44.2 million who should be but are not.

      44.2 million divided by 200 million gives us an unemployment rate of 22.1%.  Of those 144.3 million people who are working, empirical evidence indicates that at least 50-100 million of them are in sh!t, dead end jobs, generally way below where their education was supposed to have taken them, and hate it, our definition of chronically underemployed.  Therefore, the un/underemployment rate in the United States can be estimated to range somewhere between roughly 47.1% and 72.1%.  At least.  That’s a very conservative estimate.

      So where does the Obama White House get off telling us that unemployment “edged down” to “7.4” last month, trumpeting this as some kind of improvement?

      The man has devastated the quality of life in this country by ignoring the horrific problem we’ve got with JOBS.

    JOBS, you pathetic, do-nothing incompetent.  America needs JOBS!  

Still.

Job Outsourcing, Automatons, and the 3D Printer

      The flip side of technology’s bountiful impact on rigged-market Nepotism is the destruction that modernization leaves in its historical wake.  From the automobile blindsiding a proud and long established buggy whip industry, the neoclassical example, to today’s high-frequency trading algorithms chopping stock quotes off at the knees for absolutely no humanity-related reason whatsoever, the collateral damage caused by progress has, at times, been extreme.

      Enter robotics.  We’ve bemoaned job outsourcing since Day One, but always with an unwritten disclaimer in mind.  If the powers that be 1) had seen that a new generation of automatons and whatever were about to replace workers anyway, and 2) couldn’t fire everybody without getting labor union cretins off their backs first, then someday history will rewrite pretty much everything we blogged you on the subject, and rightfully so.

      Paramount still, however, is how to restore the demand side of our economy, providing the displaced working force with enough income to buy stuff again.  Lots of stuff.  The way they used to.  But the real onus here may not have been on outsourcing at all, but on productivity, and nobody wanted to talk to us about the permanence involved with that one.

      Progress may have reached the point where something outrageous had to be done, and shipping transitional blue collar jobs to China and them certainly qualifies as outrageous.

      We’ve seen video of the modern factory floor that tends to bear this theory out.  In some areas there are no people at all, just scary mechanical devices.  Big scary mechanical devices.  The media released a story along these lines once, and then the talking heads dropped it, which also lends credibility to our conclusion that some kind of structural economic deterioration has taken place here that would freak people out were somebody to acknowledge what’s actually been going on.

      Which brings us to the 3D printer, a kind of Xerox machine that copies a real thing and makes you another one just like it out of powdered something or other.  Real thing like a handgun, which enthusiasts are already printing out at home through some website that gun control crazies are trying to shut down - even though the printed guns don’t even work yet.  Anyway, there’s a guy who thinks that 3D printing technology, like automation, will wreak further job loss, the kind of damage that, coming on top of all the outsourcing, could finally crush rigged-market Nepotism entirely, and soon.  Like within 5 years, which just happens to sit on the outer rim of the boiler plate Wall Street 3 to 5 year long-term projection.

      Anything within that window is supposed to impact stock market prices in the here and now.

      More and more we find ourselves turning to the ancients and their “all roads lead to Rome” metaphor.  To this antediluvian blogger, 2013 is the scariest year yet, and now a guy shows up trumpeting the fall of jobs as we know them, and there’s already been a $#&%ing precedent.

      Valued subscribers, whatever comes along these days, including this 3D thing, the answer always seems to be the same: hold gilt-edge blue chips at this moment in time, and nothing else.  Nothing.  All roads lead to the highest quality portfolio in town.  Everything you read should be telling you that such stocks will be the only investments standing amidst brutally gory rubble if western civilization actually does come down, and it might.  Given the bought and paid-for leadership running Washington today, it just might.

      Anyway, the 3D printing guy’s time frame is more than a little suspect, and there’s no hard evidence yet that the new technology will ever actually, well, work at all really, so don’t go getting your panties all bunched up in a knot.  We’re simply writing this piece because it sheds rare light on the mystical side of investing - trying to position yourself for a future we’ve no way of divining based on a present the rich and powerful keep us in the dark about through lies, disinformation, deceit, and….

      Silence, the most effective propaganda weapon of them all.

      Here’s the 3D printing guy’s piece; enjoy:

http://seekingalpha.com/article/1578652-printing-our-way-to-negative-jobs-growth?source=email_macro_view&ifp=0

The Nightmare Scenario in General Obligations - We Couldn’t Address it Better Ourselves

         With savvy investors anticipating a stampede in municipal bankruptcies, our valued subscribers need to listen up:

http://seekingalpha.com/article/1569622-market-vectors-high-yield-muni-ind-etf-hyd-why-detroits-bankruptcy-could-detonate-a-3-7-trillion-muni-bond-bomb?source=email_investing_income&ifp=0

That REIT Sinkhole of Yours

Part 1

         At 72, one forgets his share of nitty-gritty, and sometimes when the nitty comes back, the gritty doesn’t, and you’re always coming up with some gritty when you never had any nitty in the first place.  Couple weeks ago, a valued subscriber asked why one particular Real Estate Investment Trust (REIT) was a financial, and what we shoveled out had neither nitty to it nor gritty, but we piled it on deep and stinky anyway.

         The Crime Families look upon financials as public companies holding significant paper assets, and for an REIT, those are leases.

         There.  That’s the real answer.  Leases.  Most REIT’s rent property to leaseholders.  Often, all their income comes from this paper.  This is what makes most REIT’s financials.

         Problem with financials is, Wall Street goons have the power to gangbang prices of these securities by forecasting changes in interest rates, giving the Securities and Excuses Commission (SEC) all the reason it needs to overlook the kind of flagrant concerted action it takes to rip off the public so thoroughly over nothing more than a glimmer in somebody’s criminally insane eye.  Where financial institutions earn money at longer rates than they borrow at, profits can be projected to suffer when the yield curve inverts, a thing always assumed in a profiteering monster’s argument against financials.  That’s the case with REIT’s holding leases that extend well out into the future.

         Note that the Family jibber-jabber focuses on expectations.  Profits don’t actually have to get hit.  The crooks short REIT stocks en masse, industry-wide, then print fables about why the SEC can excuse this criminal behavior, and our regulatory hotshots turn a blind eye.  Similar smears are spread about others throughout the financial sector.  Such scams have been a huge source of gangland revenue over the years.

         Generally, buy-side investment professionals wheel and deal with financials at some point near perceived interest rate inflection points, or do not hold them at all.  As the financial holocaust so clearly demonstrated, real estate paper is not exactly excluded from Crime Family attack.  In fact, at such times rental leases can be the weakest asset class in the whole sector.  Part 2 below, in addition to making its own point, touches on why.

Part 2

         Investment grade companies like Coca-Cola (KO), Johnson & Johnson (JNJ), and Procter & Gamble (PG) publish annual financial statements and unaudited interim releases reporting quarterly results.  So does every speculative-grade publicly held corporation in America.  This lets Wall Street Crime Families delude naïve investors into comparisons where there are no comparisons, and that scam pushes retail clients into reaching all the wrong conclusions.  Like saying that yields in the Real Estate Investment Trust (REIT) sector are more attractive that those of gilt edge consumer non-durable blue chips, so you should “diversify” by cutting back on KO, JNJ, and PG to make room for the ghetto strip mall operator of your choice.

         Subscribers, would you ask the United States Navy to diversify military assets by decommissioning an aircraft carrier to add a canoe?  A fleet of kayaks?  Real estate of any kind has never been anything but pure speculation, in large part because of the outrageous financial leverage involved.  (See Trump, Donald, for appropriate discussion.)  How does holding land and/or buildings in the very same way through some weird legal form suddenly change all that for you?

         In another life, your blogger spent 365 days at a public accounting firm.  It was exactly 365 days because that’s precisely what he needed to qualify for a CPA certificate, and small business in that community was so full of small-time crooks your blogger couldn’t get out of there fast enough.  The job consisted entirely of 1) cheating Uncle Sam out of pretty much all his tax dollars and 2) hiding entrepreneurial income from all the entrepreneurial girl friends, wives, partners, and sundry business associates.  Any actual accounting was ancillary, if done at all.

         Anyway, getting back on point, the first thing every successful businessman/businesswoman in that community did upon finding their success was … buy the place of business.  The facility.  It simply had to be self-owned.  Second thing was picking up that waterfront home on the Intracoastal.  With dock, of course, for the next big purchase.

         Subscribers, this means that the remaining pool of properties in that entire area excluded the real estate of successful business owners, or, put a less polite way, represented, by and large, the aggregate property of every loser in town.  Be it retail space, the riskiest small industry in America (see Wal-Mart, community impact on), hotel properties (see recession, occupancy rates during), or whatever, the kind of real estate we’re talking about when we’re talking about REIT real estate always at least starts out as suspect…. until proven otherwise.

         In some metropolitan locations, the best commercial sites are located in great big buildings, and healthy businesses do sign on there, but even then, big time real estate operators are notoriously overleveraged, and in the worst of economic times that will sink the ship anyway.  Nobody but nobody should be holding managed real estate in dire times.  Why investors have come to give REIT’s a bye on that one is beyond comprehension.

         Lastly, consider all the reasons why occupants would want to, or have to, rent instead of own, and the list gets awfully depressing awfully fast - from an investor’s point of view, that is.

         The speculator, however, sees opportunity galore, which is the whole dang point here.

         We’ve been struggling for weeks now to try and explain why real estate investment trusts deserve the drubbing they’ve been taking lately.  As financials, their yields are interest-sensitive, as are their profit margins, but the nub of it is this: in an economic downturn, the weakest elements of our economy get hurt the worst, and the Crime Families can make a bundle scaring small investors into concluding that their own REIT must be renting to the weakest of the weak – simply from the licking gangland psychopaths have been giving its stock in the market.

         In any case, that’s why the racketeers crush these targets at the first hint of a business downturn, and every capo on Wall Street gangbangs the quotes to oblivion, or as near as they can get.

         You won’t hear this when your customer’s man is selling you REIT stock, but it’s certainly on every consigliere’s mind when that consigliere gets all the customer’s men in the place setting clients up to take that inevitable crippling fall.

         KO, JNJ, and PG are gilt-edge consumer non-durable blue chips.  By comparison – if you could even make a comparison - that REIT of yours is probably a worthless pile of calamari.

         Note:  In the early hedge fund days, we remember a rush to hold property in and around the District of Columbia as well as wealthy enclaves elsewhere in the country, both considered recession-immune.  Too, the case why medical real estate falls into the same category is similarly persuasive.  We’ve always bought the reasoning behind these approaches, and consider it possible that the best of those kinds of REIT’s could be considered investment grade, but our opinion never seems to curtail their gangbanging all that much.

"The Worst Kangaroo Court in Living Memory"

         Bill Whittle on the Zimmerman lynching:

 http://www.pjtv.com/?cmd=mpg&mpid=56&load=8689