In the usual bombardment of suspect statistics subject to revision next month there are a couple with considerable prospects for amusement, only partially because Messires Obama, Geithner, and Bernanke did not enjoy them if they even bothered to look. We here in the Bar seldom believe official numbers these days, partially because we all know that whatever the jobs report is it will be “revised” downwards at least a hundred thousand during the next reporting cycle while jobs lost will increase hefty numbers mysteriously.
Reports are that economic “growth” slowed from 3.5% to 1.9%. Just off hand can any of you think of anything that is growing other than the deficit, regulations, politicians salaries, and voter outrage? If we take those numbers as representative of the full faith and credit of the United States you may choose to view that as a modest 1.6% decrease which shouldn’t bother anyone. Not so for those of us who turn numbers into percentages automatically. That is a drop of over 40%! (40% would be 1.4, 50% is 1.75%, and anyone who really cares can work out what to do with the remaining .2, which is 1/7th of 40%…Contrition; not everyone shares a passion for arithmetic, which is a pity because that subject is a great deal simpler than Boolean Algebra and far more useful.) That certainly sounds like an additional painful pothole in “just another bump in the road.”
Now to the report which should cause rejoicing in the streets for those not part of management of big corporations, Bankstas, and government. As a prank perhaps we should send Turbo Timmy and Helicopter Ben recipes from Gilroy, California, the Garlic Capitol of the world, because the vampires of stimulus, taxation, and “quantitative easing” are surely recoiling in horror over learning that 12% of manufacturers/corporations/retailers are raising prices, encouraging the Inflation Monster. Far, far worse from their viewpoint, however, twice as many, 24%, are lowering prices. “Why?” should be obvious to anyone other than a Keynesian: because their goods are competing for ever-scarcer dollars (Timmy’s fine product being locked away in banks and what I can only describe as money-laundering schemes, and the terrified populace is loathe to part with their greenbacks), and if businesses want to sell much they have to slash prices. I keep reminding everyone to peruse the classifieds to see what luxury goods are real bargains and what sectors are down (in the last two years, bass boats, farm machinery, vehicles, cattle, horses, trailers, motor homes, hay, and building materials, among others. Today Charles picked up a hundred sheets of brand new plywood at two-thirds retail, no sales tax!)
This is marvelous for the rest of us — at least those who have some cash set aside for buying opportunities, upgrades, and replacements. There is no reason to suppose other than very poor results from “Back to School” sales, Hallowe’en, and Christmas. “Tax Free!” weekends never do more than shift timing on purchases. Those, combined with possible higher-than-usual end of the year selling for tax reasons* should cause a giant “Ka-WHUMPF” of collapse in January, just in time for the reality of “Health Insurance Policies are Taxable as Income and Your Taxes Got Raised, Too” to deliver a giant dose of reality to Main Street and the ‘burbs.
It gets difficult to keep up with all the dangers in this video arcade; have you thought about the coming crash in the commercial real estate market and the fate of the bond market, recently, to say nothing of increasing hostility from China? There are a lot of loaded freight trains headed into the yard at full speed and Timmy and Benny are pulling all the wrong switches. If you have been following the advice dispensed for some years from the Agora crew, if only the freebies from The Daily Reckoning, Gary North, Whiskey & Gunpowder, and Taipan Daily, you should be in good shape to take advantage of many of the disasters headed our way.
“Mrs. Traynham! You ought to be ashamed of yourself for rejoicing over coming catastrophe!”
Really? Do you think so? I didn’t cause any of it and my reasoning is conservative and flawless. Until Mr. Market gets his several cwt. of flesh he isn’t going to calm down; until taxes are lowered and regulations scaled back we aren’t going to see job creation or start-up operations; leaner corporations are learning happily exactly how dispensible a lot of former employees were and eyeing others thoughtfully in terms of pink slips; until the “off budget” “entitlement” programs are scaled back vigorously there is no way out of the dilemna; and until all of these things happen at once, the USA will continue to skid down the economic slope increasingly faster. Some of us have been insisting that mixed inflationary and deflationary results are inevitable all of this century, and Howard Ruff and others began several decades ago.
Far worse times for all save the “elite,” are inevitable, so take advantage of the process where you can.
Again, begin preparing now by reducing expenses to compensate for known increases which will reduce discretionary income severely in 2011, including withholding on the value of your employer-provided health insurance plans, higher income taxes, and capital gains taxes increasing over 50%. Replace or repair household items that will hurt far more a year from now. My dishwasher died at this opportune time; how old is your hot water heater? Your water softener system? Given our demographics at W&G a fair number of you are homeowners, and a reasonable surmise is that most of you aren’t stuck in upside down mortgages. Putting money into a house you will lose would be most unwise, but if you’re perhaps ten or twelve years from paying off a mortgage at rates that aren’t too painful the rest of this year will be an excellent time to take care of any deferred maintenance and make modest upgrades.
My reasoning is that you’re likely to be in that house for a long time since the market is bad and going to worsen and demands that at least energy “efficiency” be brought up to code before you can sell or even rent are going to catch most people unawares and dead in the water. Replacing windows and adding more insulation, alone, is a very pricey project…and what if the Inspector demands a new roof and appliances to say nothing of rewiring a house? Codes change all the time, and so do requirements. If you have to tear anything apart for any reason, use that opportunity to put it back together right. The same holds true for car repairs; ask your mechanic what else could be replaced economically while he has your car in a bunch of pieces.
Odd how events favor those who think long term and expect the worst…when several tons of tree fell across the ranch house last year in a five-minute storm it would have been so easy to call the roofers and have the damaged rafter repaired and new shingles put on in return for the entire settlement check minus the deductible, but nothing out of pocket. Problem is, that gets a ten or twelve year roof, and next time a tree fall might not fall on it fortuitously at just the right time to balance age and insurance checks. The same funds covered materials for a fifty-year roof that meets the new standards for sale or rent that hadn’t even been mentioned at the time, if we provided the labor. True, “We have the technology” as dear Charles loves to quip, but more to the point we have enough deferred maintenance around Mildew Manor from the fifteen years Mother was a widow without making any short-sighted decisions ourselves.
One of the most dangerous trends in the last two or three decades is how few households attempt to fix anything, even granting that increasing regulations make simple tasks all but impossible in many cases. Still, most plumbing problems can at least be diagnosed and a large number can be corrected without “professionals” and permits, for just one example. The really big problem is that something like 86% of you live in the cities now, under Big Brother’s watchful and greedy eye.
I won’t say that any idiot can nail shingles on a roof because I have never tried. I will attest that a couple of even mildly competent and muscular men can 1) screw down 1″ thick OSR; 2) nail on 1″ thick styrofoam “Thinsulite” the same dimensions using special nails with little rubber gaskets to stabilize long enough to; 3) cover the result with sheets of Galvalume and screw them in place with ludicrously expensive screws; and 4) trim the edges neatly to conform to the previous roof and install flashing. This is roughly as difficult as making a peanut butter sandwich, although more time-consuming and expensive. Charles instructed and supervised, Asia and Clay did the work, our electricity bill has seen a pleasant drop, and the new roof is 100% waterproof and should require no maintenance before 2060, if then. “Bad” deflation is when your assets are worth less; “good” deflation is getting all of the materials at deep discounts.
The time is coming fast, dear readers, when if you can’t make repairs and solve problems yourselves you may well have to live with maintenance problems. I will leave you with some wise words from one of my favorite Editors, Taipan Daily’s Justice Little:
“In another theme that has long run through these pages, your humble editor’s solution is to focus on the small things, the personal things… to opt out of the system in as many ways as possible.
“For yours truly that means no mortgage debt, no credit card debt and no auto loan debt. It means no financial accounts at major banking institutions, instead using independent brokerage houses, smaller local banks, and megabank alternatives like EverBank. It means a readiness to profit from systemic breakdown, via the shorting of exposed financial players and/or the purchase of silver and gold. And, in general, a habit of minimizing accidental patronage of the system to as great a degree as possible.”
Splendidly put, Justice.
Regards,Linda Brady TraynhamWhiskey & Gunpowder
August 17, 2010
* Being a cynic of the first order, it is my opinion that the stock market “rally” of ’10 is almost entirely an entirely artificial one caused by using Timmy’s fine product to purchase stocks, and I had to stop and work out if it made sense for the government to sell stocks to pay itself Capital Gains taxes, thus proving I can be magnificently dim-witted when I put my mind to it. Of course it does! That completes washing suspect funds all snowy clean. The Feds put up the money to buy the stocks, then sell them to…themselves? The Fed? Agreeable banks/mutual funds?…paying blameless-appearing taxes to themselves, and “justifying” higher bonuses. Yuss…expect higher than usual “tax” sell-off this December. LBT
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I have never understood why people dislike deflation so much. The only thing I can come up with is that they dont like paying off debt with appreciating dollars. In my way of thinking an appreciating dollar is like owning a stock whose value is going up that also pays a nice dividend. Also I have shingled several buildings so yes any idiot can shingle a roof lol.
Greetings again Linda. In response to “old man river”(by 88 yr old man), The big D was an example of deflation. In less extreme deflations, Fixed income drops, Retirees suffer, Loans are restricted, Public purchases drop as people hoard their funds or wait to see if prices will drop more. Businesses tighten their belts as demand drops. Bernanke, like him or not(not) is fixed and dedicated to avoid deflation no matter what. Again, agree or not, plan your investments in light of what is likely coming—–weaker USD, inflation, higher commodity prices. If wages rise even fractionally apace with inflation, Mortgages and debts can be paid off with cheaper USD–including the debt of the US Govt and States. All i can do is prepare my family for the coming tsunami. Herach
The internet ate my comment.
I firmly believe that we will see major inflation of prices due to the excessive running of the printing press. I also believe though that we will see some deflation as well. But because of the Fed’s utter aversion to it, and the total lack of self control most of the US leadership seems to have, some of it will be camouflaged so that they, along with a few investors don’t have cardiac arrest. What I mean is, the “price” of certain things could stay the same as they are now, but because the dollar is worth less, it is actually deflation in disguise. The day may come when those formerly million dollar mcmansions are again worth a million dollars, but that same million dollars could be used to purchase a new bargain basement economy car. It ain’t labeled as inflation or deflation in their heads, because the price tag still reads the exact same.
A side benefit for them could also be higher taxes. If they can keep from reporting it as inflation by cooking the books the way they have so far, the tax rates don’t need to be adjusted to show it. Then when your wages go up as a result of non existent inflation, you are far richer, because you earn more cash, and the official inflation rate is still not showing the truth, you can afford to pay a lot more in taxes.
Funny , I was in Home Depot today in Fairfield Ct.( 8-17-20) and the price of 1/2 in. cdx plywood was $18.00 and chnge. Just a month ago it was $13. 00 and change.
Just generalizing, it looks to me like we’re in a situation of deflation of capital assets, stagnant as to economic activity, and increases in the prices of many consumer items. Stagflation seems like an appropriate label.
What bothers me in all this is that I see no way for any sort of return to pre-problem conditions. We have an absence of competent leadership at all levels of government. We have all manner of special-interest groups vying for more political power–whether locally or nationally. The professional race-card folks don’t help, nor does the Aztlan crowd. All this is contributing to social stress.
Add in the various regulatory inhibitions against investment and business. EPA is a major culprit, along with those in the Congress who would institute this Cap’n'tax program.
Problems with energy costs, whether transportation fuels or electricity. These, again, may be laid directly at the feet of government. Supplies are being curtailed by the anti-drilling moratoria. A weakening dollar will drive costs up, with negative effects on consumer spending.
How do we pay for renovations of existing infrastructure? How do we pay for additional infrastructure for a growing population? Just because times are hard doesn’t mean that folks are gonna quit making babies. (As a northeastern school administrator once said of high school students in the poorer parts of town, “It’s the only recreation they have!” Live on ABC TV.)
Could well be that the issue of making money will become insignificant as compared to avoiding social upheaval–or surviving it..
I guess that many of us have good and rational answers. I’d bet real money that they’re not politically viable.
it took 5 daze for my comment to post to yer last, “choosing whose blood to shed”. i’m wondering: a) do i hold a W&G record? b) did you see the comment? c) would it be better if i used the post office?
new business: i can’t figure what 1″ OSR is, but i think i understand the roof, and i think it is a great example of inflation/deflation conundrumation. i like that you penned that what is generally called a “25-year roof” (shingles) actually lasts 10-12 years. reality is fine. you have installed a “50-year roof”. this roof may last twice that long, assuming charles built it correctly to defend against all bi-or tri-metallic electrolysis.
so, what did the new roof “cost”, and what is it “worth”? even if we figure the answers in units called “sliding scale Fed. Reserve US Dollars”, we still must decide how to value the “labor”. will taxes increase due to re-appraisal? can you get a tax or utility credit because this is “green and saves energy?”
these are “guesstimates”, along with the guesstimated life of the roof, which are necessary to figure the cost, at present value (which also assumes a tad or two about the discount/interest rate) of the damned thing, and whether this is “inflationary or deflationary.” if the roof cost 3X as much, but lasts 4X as long—it’s deflation! trust me!
the point is: who knows?
i think this is why most “economists” are bald.
assumptions. assumptions. assumptions.
very much like, say, theology, eh?
linda, b4 you come to a final answer on the cost or value of the roof, call yer insurance peeps. tell them you now have a roof with about 5X the fire safety of the old one. the roofing mfg’s have quantified the fire safety factor for insurance purposes. so they will lower your insurance because of safety, while increasing it for inflationary reasons, or perhaps because they, too, need to keep things screwed down with ludicrously expensive galvanized/anodized aluminum fasteners, themselves.
maybe it won’t take 5 days to get my comment out of the grease trap, like the one i sent on “choosing whose blood to shed”. perhaps you saw my last one. perhaps it didn’t get posted b4 you stopped looking. perhaps you can get the one i wrote, today, b4 the weekend. who knows?
I agree with much of what Linda has written, some things depend on individual circumstances. I really like the Justice Little quote, it answered a question that was bouncing around in my mind.
I took me my whole life to develop a persona living philosophy, and to supplement what Linda and Agora has taught me I am working on a live plan. The idea is simple. learn to be more self sufficient and get of the radar as best you can.
1. Decide where you wish to live and go build a home and life there. Make it a safe haven a place you can always go. Do it for you and your children.
2. Live debt free. If you have debt get rid of it.
3. Pay cash for everything
4. Save save save.
5. Put at least 10 percent of saving in Gold and silver.
6. Put away at least 1 year worth of food, medical, and hygene supplies
7. Invest in land and get it paid for debt free.
8. Filter your water and eat organic as much as possible.
9. Have a spiritual life for your own personal growth and protection
10. Do some type of community service for what it will do for you.
11. Stockpile barter supplies, things people would need not nessecarily want.
12. Learn life skills, cooling, sewing, butchering, gardening, food stoage, emergency medical, handling weapons, personal protection
13. Keep some cash hidden away for sudden emergencies.
OMR, I figured I could overlap and nail down shingles, but getting myself up on the roof? I get dizzy standing on a chair. When, in our lifetimes, have we ever seen appreciating dollars? We hear how we’ll be paying off debt with “cheaper” dollars, but most of us have fixed incomes, not “more” dollars. The best we can do is collect items we expect to be able to swap for “cheaper” dollars in amounts sufficient to maintain current value. Tell us what’s up in the ethanol biz, huh? Cordially, Linda
Hi, Dr. C! Another great comment. Now y’all know why my eyes always light up when I see Dr. Chakoian’s name. Could we coax you out of some good strategies for living through deep depressions? How did your relatives and their friends cope? In retrospect, what are the best preparations “ordinary” citizens like us can make? I remember your sensible advice on dealing with last winter’s harsh storms well. We have a far less rural population now, and I worry about insufficient food and far more people who will be inclined to use violence as currency. Hug, Linda
Delight! New blood. Hi, Econ Guy, and welcome to the crew. (I’m hopeless at ‘phone numbers and http://www.gibberish but have a good memory for handles.) Half inch is what we got, and the prices at HD and Lowe’s were c. $18. Did you ask why they had raised prices 50%, not that anyone local would know? I wrote somewhere about the seller, who had bought property in the country and materials to build a nice house, only to discover his nearest “neighbor” has a passion for frivolous lawsuits. Interesting…this means that the guy got back what he paid (minus tax and possibly delivery charges), but his wood did not hold value when he bought it because he couldn’t sell it commercially, a good thing for all of us to remember when building “portfolios” of tangible goods. A thing is only worth in money what you can sell it for and far more frequently it is worth more to us than anyone else. THAT is one reason we never sell silver, jewelry, furs, or luxury items; we can’t beging to recoup what we put into them. Thanks for writing! Linda
Brendgard, dear, right all down the line…except you didn’t count “bracket creep!” Filter ate my welcome to Econ Guy. Will come back later and see if I can get one or two more answered before being regarded as SPAM…
Ok Brendguard you say you have income lower than me. How much lower? It Won’t take much being lower than me to get assistance in many ways. So are you like me and making a descent living for your your future or are you a pussy looking for sympathy and pity? Cuase the US government does not pay you enough for being alive and voting?
Brenda I don’t believe you and call shennanigans on you. All data I have is easily verifible, How about you? How many years did you pay into SS? How old are you? What have you done with your life? You tell me you make less than my SSD and VA benefits, so that just puts me out of reach. So how much are you earning per month? You say you make less than me how much less? Please tell me, Cause right now I think you are full of stuff and nonsence and looking for a “pity party”. I’m not from the government, just an a
If this comment does not get ate. Brenda I’m sure you are a lovely person. Why should I support you or your lifestyle? Why should anyone? Is your art better than a Mattice or a Picasso or a Guagain? You ain’t special. I’m sorry butter cup it takes time recogonise genius. Hell I don’t no that you got it I just know what I like when I hear it or when I see it. Now you may call me a Phillistine but I like Motzart and Litz and bach and brahms. I know the art I like it may include picasso and matisse. Not cause I’m trying to impress any one just cause I like the colors and harmony. If I get a painting I want nice if not I have in books and art galleries. I’ll never own anything like a Mona Lisa. So should I never look at paintings? I’ll never conduct a symphony so I can’t listen to Tocatta in Fugue or all of the great music out there? I can’t listen and see Shaksperian plays well just cause, well thanks to you your children will never see Othello or a Mid summers nite dream or Romeo and Juliet . Cause it just to hard to learn. Iamic pentamter is hard! Old english is just to hard. Sweetie in the 8th grade way back when they taught greek and latin in jr hi.
So I don’t have a lot of tolerence for the willfuly ignorant. I learned doing reports via Funk& Wagnels Encyclopedias. There is a critter that build your vocabulary.
So boy’s and girls you got screwed on your education? Will you crawl into hole or mouth your professors talking points or will you learn?
I can’t verify these statements:
“Health Insurance Policies are Taxable as Income”
“…to compensate for known increases which will reduce discretionary income severely in 2011, including withholding on the value of your employer-provided health insurance plans…”
I know we have to report the value of our insurance but at this point it’s just a way for the IRS to track who should be fined for not having insurance coverage. In 2018 we’ll pay a surtax for having a plan above a certain value but even still, it’s not counted as taxable income.
Agonized shriek! Have you the least idea how many hours a day I research? In order to go back and verify how I came to that conclusion I would have to go back through all my archived articles (I write at least 500/year) to find the right time frame and then go through the thousand or more e-mails a month I keep on screen for ready reference, and if that didn’t work go bat around in saved files or Google…How about a compromise, sort of like on whether or not there is an afterlife. For the next five months let us suppose that we WILL see the theoretical value of our health insurance plans taxed as income. If this does not happen, you can be glad and take Wendy and the Nana Babe out for dinner. If it does…I told you so. Hugs, Linda
Okay…backup plan. I’ll see if I can get a quick answer out of busier and far more famous Constitutional Attorney Michael Connolly.
why not just read the law and see what it says? then, you could follow with the 196 pages of new government “guidelines”/regulations that have been issued. “Kaiser” has already received its copy! then, you could see what the irs is up to; they have already re-designed the W-2! maybe not for taxes, but for penalties, fines and “negative rewards”. big freaking difference, eh?
if you call a constitutional law guy, like obama, he may be hung up on the constitutional issues involved. i use the plural b/c there may be more than one! or, like obama, he may have more pressing agenda items, and not care…
HaHahaha! (that’s a direct quote from the mogambo!) most of these folks are relating to your main points, though. i tried. got trapped. what’s another 5 days in “the hole” as long as i make it out, soon? i’m starting to feel like steverino mandela, here!
part of my comment was to advise you to talk to your home insurance person, b/c your insurance costs should go down due to having a new roof with a v. high, if not the highest, fire protection rating. call now! that’s right! pick up the phone, & call now!
it’s delightful, it’s delovely, it’s DeSoto! 57′s had the best fins ever! cheerios!
’58 deso-toes! typo?
Dear Steverino: Thank you for the good advice on insurance, because we have to look out in terms of too much, too little, or the wrong thing and not knowing loopholes, and excuse me for not being able to appreciate anyone’s wit this morning, please. I’m not supposed to be unprofessional and off-focus because someone tore something I wrote apart with vicious, unfair–no; not unfair. Lying.–slurs it took several hours to refute civilly, which I handled well. It was today’s response of “Haha, just thought I’d see if I could get anyone to admit that Jesus would have tasered someone.” Well, gee, I’m not amused by being accused of being a member of the KKK or advocating violence, “hate crimes,” fascism, and so forth as a prank. Forgive me, dear friend. Linda
LOL I can remember my brothers laughing at me as I clung for dear life to the roof which in reality has a very low pitch but i was certain I was climbing Mt Everest.
On ethanol…the industry is running at break even hoping for a political solution to profits. Everyone has their eye on the E15 decision that is to come out this fall. The problem being is that once that demand is met then the industry goes back to operating at breakeven. unlike the other livestock being fed corn , yeast have a biological cycle of hours rather than months or years and moves to breakeven quickly.
jesus tasered ME!
just noticed my comment from august 18, 8:03AM got posted!!!
linda–don’t let the ad hominems get you! help! the paranoids are after meeeee!
What happens to Amish who don’t have health insurance? Will they be exempt from the IRS tax…er…penalty…er…health insurance company bailout?
LBT as a hateful, violent racist? I don’t think so. I picture her more as a very busy grandmother-type. 3 articles in draft form, cookies baking, livestock well fed and to-do list done. On top of that she keeps her serfs motivated and the rabble at bay so Charles can wrench on jeeps. How could she have time to hate?
let’s dust off mary baker eddy and all become christian scientists!
mandatory health care insurance?
we don’t need no stinkin insurance!!!
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