Stock Valuation under Commiecapitalism

     If, as we have repeatedly suggested in these pages, our formerly capitalist nation began to fall under communist control with the nationalization of the US Treasury bond market a while back, and, following Japan's lead, central bank ownership will spread to corporate bonds and ultimately stocks, then what does the future hold?  For starters, the day could come when one branch of the government or another would seize all financial assets they don't already own and replace our electronic interest and dividend payments with electronic welfare payments.  At that point all marketable securities would be valued at zero.

     Fortunately, rising stock prices seem to tell a different story.

     Commie China has been playing at faux capitalism for some time now, establishing zones of commerce, industry, and finance that pinko officials allege are owned by private interests even though the Communist Party has not ceded control over so much as one single thing ever over there, retaining the right to pull the Marxist rug out from under whatever it wants any time it so chooses via this weird kind of whatever-it-takes due process officials dream up after the fact to justify anything they need to get away with once all is said and done.  They even print stock certificates in Red China, just like we do, and say that private interests own them, again just like we do, and trade their faux stocks in faux stock markets, and everybody involved pretends the state doesn't own everything in commie China even though it really does and has a serious habit of shooting anybody who says otherwise about anything the party says.

     Could that, or something like it, be happening here?

     Sure.  Since we're really talking about the American Liberal now, a nut case if ever there was one,  anything's possible.  One look at the lying, fleecing scum they've got running for President until the bitch gets indicted should tell you that the do-and-say-anything-you-freaking-want part of commie governance is alive and well in our backyard too.

     Such being the case, how should the investor value his/her holdings in the event we're falling under some Chinese style faux capitalist commie wonton soup of a socioeconomic structure?

     Lets take a look at an old favorite of MacDougal's, this sweet electric utility outfit that's been an industry leader for as long as anyone alive can remember, a gilt-edge blue chipper if ever there was one.  It shall remain anonymous as there's no sense dragging a pristine name through Americal liberal commie wonton soup mud just because our valued subscribers need to know what they're worth under the spreading waves of Marxism sweeping across our beleaguered amber plains of Red America these days.

     Selling for 85, Anonymous Electric yields a tad under 4% with a price:earnings ratio (PE) rounded up to 19x on earnings per share (EPS) close to $4.50.  The stock has been making a bull run as investors are thinking 1) everything central bankers say is a crock and 2) Washington will never be paying the bond-holding public appropriate rates of interest on Treasury bonds ever again.  Utility stocks and them have turned into an oasis of much-needed dependable income for all kinds of wandering victims of unrestrained commie American Liberal spend-all-you-want politics.

     The balance sheet carries $38 billion in long term debt and $40 billion of shareholder equity, and management pays interest expense that's a bit under $2 billion before arriving at diluted net income a touch over $3 billion.  Interestingly, on the books the company gives bondholders close to 4% interest, about what the stock yields today.  What all this means is, under Zero Interest Rate Policy (ZIRP), if Anonymous eliminates interest expense by refinancing its long term debt at zero interest, EPS jumps 35% to something a bit over $6.00, after screwing with the after-tax effect.  Under Negative Interest Rate Policy (NIRP), should bondholders have to pay the company 4% a year to "invest" in their bonds, EPS climbs to almost $8.00, a pop just under 45%, after the aforementioned screwing with.

     If the PE holds at almost 19, Anonymous stock pops 45% too under NIRP.  Given the insane conditions we're left with, however, where you pay the company 4% to "invest" in their bonds or they pay you 4% if you hold their stock, one can conservatively assume that the PE on that stock would rise exponentially, at least doubling.  More realistically, the forecaster might call for a PE explosion of something like fourfold, maybe ten times or more, depending on how many abused bondholders are forced to jump into utility stocks and when.  Remember, reader, business risk disappears when bondholders give the company cash each year to hold company bonds.  If management screws up, THE CEO AND THEM GET FREE MONEY TO PAPER IT OVER WITH!  Look at that this way, Anonymous isn't just being subsidized through ZIRP/NIRP.  Being a great big blue chip industry leader, Anonymous is part and parcel of the Federal Government here, at least the company's entire financial end.  

     That puts our ZIRP forecast of Anonymous stock prices at something between 300 and 3,000 under conditions that call for bondholders to pay Anonymous 4% a year on Anonymous bonds.  That's up somewhat more than handsomely from a current price of 85, you will recall.

     Conversely, under the aforementioned case where American Liberal commies seize all financial assets and replace personal interest and dividend income with welfare checks, Anonymous stock would be valued at zero, along with everything else in the portfolio.

     Extrapolating this analysis, we feel it would be prudent for our valued subscribers to incorporate both forecasts into their long range financial planning, assuming that in the long run one's net worth will be valued within a range of 1) something like 10 to 15 times what it is today or 2) zero, depending on which way it goes with the fruitcakes in Red Washington.

     Hope that helps all of you out.  If the crystal ball clears up any, we'll be sure to let you know.

     Hey, chill.  We're doing the best we can here.

Where Do the Brits Go from Here?

     Here's a useful take on the little that can be seen at this time:

http://finance.yahoo.com/news/mohamed-el-erian-key-questions-regarding-brexit-eu-referendum-233441569.html

Brexit vs 1% Utopia

     A presupposition throughout Guruland that Brexit means the Brits will abandon ZIRP/NIRP (zero interest rate policy/negative interest rate policy) and the rest of it, and spark a global return to free market capitalism fails to address the core issue.  Commie policies like ZIRP/NIRP have been adopted by central bankers worldwide to keep failed wild-spending politicians in office.  Are there no failed wild-spending politicians languishing in Great Britain?  Why would pols there want to give up the enormous power grab spawned by pinko bureaucrats that's brought central party members into permanent total control of their hapless electorates?  Are the 1% and their political lapdogs anywhere going to give up constant asset appreciation in a world where everyone else loses economic ground year after year after year?

     We think not, but only time will tell.  Whatever, there are no answers coming from those in a position to know.

     The Post holds to its projection that twenty years from now our leaders will announce that the United States has been transitioned into a communist nation over the previous two decades, starting with the nationalization of the Treasury bond market, and the peaceful revolution is done.  The next day, your dividend payments will stop, and our subscribers will get emails informing us that monthly stipends from the Department of Health and Human Services have begun.




   

Supreme Court Denies Whites College Admission while Depriving Whites of Weapons Needed to Defend against Lawless Black Violence

http://www.reuters.com/article/us-usa-court-affirmativeaction-idUSKCN0Z91N3

http://www.reuters.com/article/us-usa-court-guns-idUSKCN0Z61JE


And the media vilifies one outraged American's attempt to get our country back:

http://www.usatoday.com/story/news/nation-now/2016/06/22/tennessee-congressional-candidate-make-america-white-again/86248816/

Will a Brexit Topple the EU?

     A British exit from the European Union leads to a total breakup - with France next.  The Telegraph's Ambrose Evans-Pritchard tackles the reasons why grave unrest over socioeconomic issues all across Europe could grow into political upheaval:

http://www.telegraph.co.uk/business/2016/06/07/france-shuns-europe-as-brexit-revolt-spreads/ 

Mars by 2025

     The entrepreneur who wants to colonize Mars first, leaving settlement of the relatively nearby moon to the professionals, has put a date to his wild-eyed plan: launch by 2024, meaning ETA is only 9 years away.  Valued subscribers, if Hollywood ever sets out to make a science fiction movie about our times, now would seem the perfect moment for those opening credits to roll: 

http://techcrunch.com/2016/06/01/elon-musk-wants-people-on-mars-by-2025/

     Break out the popcorn and await the first astounding twist in what'll surely turn out to be a captivating, star-studded plot.

Pyramid Building and China

     In Ancient Egypt, sovereign projects constructing humongous objects of, at best, questionable economic value ushered in prosperous times.  Somehow, massive monoliths carved from stone quarried at faraway sites were dragged, carted, barged, tugged, pushed/pulled on rollers, or otherwise lugged, and likely manhandled into place, piled atop one another in ways scholars can't begin to explain, let alone agree upon, today.

     The sophistry of John Maynard Keynes has fallen into this very same category over his recent NIRP ZIRP era.  Only, the pyramids remain, looted but still basking under their brutal desert sun, while worldwide, economic structures built by Keynesian theory lie in shambles, crumbling to the ground.

     Looking away from the failed hooey of academia and casting one eye on the ancients and the other on our commie friends in China, modern man can see a sure way out of his current economic malaise ....

     Build more empty cities.  Lots more.  Tear the old ones down if you want, pulverize everything, and begin anew.  Or not.  Just build more.  What difference does it make, how many empty cities you have?  What difference did it make, how many pyramids they had?  Millennia from now, people will marvel at what we will have done.

     Everybody join in.  New York City is way overcrowded.  Build New York City 2.  If somebody moves in, all the better, and they will in many, many places.  London 2, Paris 2, Mexico City 2.

     Mexico City 3, Mexico City 4, and Mexico Cities 5 through 9 if Donald Trump gets elected.

     And while we're at it, lets get rid of the central bankers too.  Keynes needed a banking system to screw with, and we probably ought to keep that, but you can eliminate the means by which his extravagant poppycock has thrown the world into a Lords of Finance forex free-for-all amidst backbreaking debt raised by failed politicians kept in power through an attack on savers, the very people who are any economy's greatest strength.

     Dump them all.  With demand side economics, or supply side, a case to keep central bankers around could be made, well conceivably anyway, but under pyramid side economic theory, we won't be needing a single one.