I just figured out a secret that I don’t think most people in America have noticed. The fact is it’s not much of a secret, it’s more like the elephant in the room. And Democrats have successfully avoided mentioning it for a while now.

Looking at the supposed “stimulus” package that is trying to be shoved through Congress before the public realizes what’s in the package I noticed something. Now we have to step into the way back machine called facts for a moment. Democrats be prepared.

“So, if you make $31,850 or more you may not feel like Bill Gates and Warren Buffett but you are going to get taxed like them.”

Remember that? It was March of 2008 when all the Democratic candidates (including then-Senator Obama) voted to increase taxes on anyone making more than $31,850. It was at that time that Democrats started to insist with high order of polispeak that only the rich would suffer under their leadership.

Of course that leadership also was asleep as the mortgage crisis grew and then spawned the credit crisis. Both of which are still evolving into bigger problems. But I digress.

As then-Senator Obama won the Primaries, he began to discuss, vaguely, his economic and tax plans. It was a central point that he envisioned the rich as the sole point of higher taxes. This of course raised the question, what is rich?

The Obama campaign started to almost answer that question with anyone making around $250,000. That later went down to $200,000. Shortly after that it became $150,000. Then the nation got distracted, as financial institutions fell left and right. The only question at that point was who else Rep. Barney Frank might blame the collapse on other than himself.

Now we can move up to the present.

The House Democrats (minus 11 bi-partisan Democrats who joined the entire Republican membership) voted to pass the bloated, non-immediate, useless, stimulus package that also seeks to fund Honey bees, fix NASA, and study ‘global warming’ among other useless actions. But in this current version of the non-‘stimulus package’ there is a provision for tax rebates.

The money is to be provided to the public, as a savings each month for 4 months of about $120. But here is the catch. It’s only good for up to the first $8150 you earn, so if you exceed that amount before the 4 months are up you lose out.

Worse yet is who will get that money. And this is the elephant. You must make less than $75,000 (or $150,000 jointly). And there is the new definition of rich. The answer that has been over 6 months in the waiting has presented itself.

So if you thought Obama would only tax the rich, hello you very likely are now part of that group. Honestly I never considered making $75,000 as rich. It isn’t poor but its just as far from Bill Gates.

Think about that. Middle class income is a cut-off point for Democrats in Congress, and President Obama who is all in favor of the stimulus package as is. Can anyone tell me this is what they expected when they voted for President Obama?

If this is the threshold for who gets help, and who pays for that help, it seems more lopsided than even during the Primaries where Democrats were leapfrogging each other to sound more moderate and friendly to the public. But Congress is not partisan, nor are the current batch of polispeak promise socialisic – according to the self-admitted major news media.

Let’s be honest. If President Obama told the American public the truth, that he considered $75,000 rich, he never would have been elected. No wonder he never gave a firm answer. And why Democrats have avoided the issue entirely, because the public backlash would sink the approval ratings faster than Nancy Pelosi can waste money. And that is very fast indeed.

Well you may not hear the truth in many other place, but you have heard it from me. If you doubt this, just look up the provisions of the stimulus plan. It’s right there for you to see.

Labels: Barney Frank, Congress, Democratic Party, Nancy Pelosi, stimulus package

I had a friend ask me why the Republicans are causing trouble. The reference was to why all the House Republicans (and 11 Democrats) voted against the Stimulus Package. And when I mentioned some of the things I have long written, I was asked for more details.

Now I imagine others are wondering about details as well. How can I claim this is a horrible plan that will bankrupt America if there are no specifics. How can I be sure that this won’t stimulate the economy. Perhaps this is just a giant plot of Republicans to make President Obama look bad.

Well back in the land of reality, I decided to see if I could find a few more details on the stimulus package. And here are some of the things your money is being spent on. Remember that this is your money, and you will have to pay for this out of your pocket sometime soon.

$245 million for maintaining and modernizing the IT system of the Farm Service Agency
$175 million to buy and restore floodplain easements for flood prevention
$2.7 billion for rural water and waste disposal direct loans
$150 million for emergency food assistance
$50 million for regional economic development commissions
$1 billion for "Periodic Censuses and Programs"
$650 million for Digital-to-Analog Converter Box Program
$100 million for "Scientific and Technical Research and Services" at the National Institute of Standards And Technology
$30 million for necessary expenses of the "Hollings Manufacturing Extension Partnership"
$300 million for a competitive construction grant program for research science buildings
$400 million for "habitat restoration and mitigation activities" at the National Oceanic and Atmospheric Administration
$600 million for "accelerating satellite development and acquisition"
$140 million for "climate data modeling"
$3 billion for state and local law enforcement grants
$1 billion for "Community Oriented Policing Services"
$250 million for "accelerating the development of the tier 1 set of Earth science climate research missions recommended by the National Academies Decadal Survey."
$50 million for repairs to NASA facilities from storm damage
$200 million for "academic research facilities modernization"
$100 million for "Education and Human Resources
$4.5 billion to make military facilities more energy efficient
$18.5 billion for "Energy Efficiency and Renewable Energy" research in the Department of Energy
$2.4 billion to demonstrate "carbon capture and sequestration technologies"
$6 billion for energy efficiency projects on government buildings
$600 million to buy and lease government plug-in and alternative fuel vehicles
$150 million for deferred maintenance at the Smithsonian museums
$700 million for "comparative effectiveness research" on prescription drugs
$1 billion for Low-Income Home Energy Assistance
$1 billion for Amtrack

Again this is only part of the list of things that are needed “immediately”, and will “improve the economy”. Please do correct me and explain how Food assistance, research, or climate data modeling are going to improve the economy and help the guy/gal down the block keep their job at the local Macy’s or Office Depot. Please explain how those ex-employees of Home Depot are going to feed their family and pay the bills for the next 2 or 3 years because of repairs to NASA or Earth science research.

I dare you.

Do I think funding for education is important? Definitely. Is it part of a stimulus package meant to help people stay employed tomorrow? No. Thus anything that does not help the NATION create jobs or maintain employment is a waste of time and money in this package.

If Democrats really wanted to improve things, why not take the billions of dollars that are being wasted, roughly $36 billion just from the examples I cited above, and give it directly to the public. That would be about $123 for ever man, woman, and child in the United States right now. Take out children and those not paying taxes (since they can’t repay they don’t get the benefits) and you get around $250 each.

There is still another $790 billion more to look at. Think that there might be just a bit more waste in the 25% of the package that won’t even be spent for 2 or 3 more years. How abut just giving us the money today and not wait 3 years. That would be almost $2,500 each. That would stimulate the economy.

But that isn’t going to happen. Which means the entire package is nothing more than polispeak, and a way for the Government to gain more control of your life. The Republicans that voted against this aren’t bad guys, they are actually helping you. But don’t expect the major media to explain it.

Labels: Congress, Democratic Party, House of Representatives, stimulus package

The more I hear about the Obama stimulus package, the less I like it. Yet it is the most “urgent” piece of legislation that his Administration is working on passing, immediately. Just as the $800 billion for the credit crisis had to be immediate.

And just as with the mortgage/credit bailout quick action without forethought provides for mistakes, waste and a few political amendments that no one will notice until after the fact.

As of right now, the Obama stimulus package is being referred to by President Obama as

“All we can do, those of us in Washington, is help create a favorable climate in which workers can prosper, businesses can thrive, and our economy can grow," Obama said. "And that's exactly what I intend to achieve - soon.”

Now think about this for a moment. The stimulus package is intended to avert a depression and reverse the recessionary trend currently happening. This is important to remember as I continue.

25% of the Obama stimulus package will not take effect until after 2 years have passed. That’s not my opinion, that’s from the White House itself. Thus the package is not immediate.

The package includes several hundred billion dollars for environmental studies. That also takes an extended amount of time, and provides nothing to the economy. But it does make the global warming crowd feel all warm and fuzzy.

The package requires that:

“Much of the spending would be for items such as health care, jobless benefits, food stamps and other such programs.”

Jobless benefits do not create jobs, and therefore does not help the economy. Food stamps do not create jobs and therefore does not help the economy. Healthcare could create jobs, except that the money allocated for that is to supplement the coverage and cost for those that have lost a job. Again it does not create anything.

And a huge portion of the stimulus package is targeted to give the public money. But that’s not exactly true. First you have to make less than $75,000 (or $150,000 for those filing joint). Second you must receive a paycheck. Third you will receive a discount on the federal taxes you pay – up to the first $8150 of your annual salary.

That last one is important. It means that if you get paid once a month (as an example), and in month 2 or 3 your income exceeds $8150 you will no longer get the benefit. Of course the entire benefit only amounts to about $120 a month anyway. Which should be plenty of money to go out and buy hoards of new items. Which would create new jobs.

Except that $120 a month isn’t much at all. For most major purchases, like a new TV that will work with the HD changeover, cost far more than a mere $500 (which would take 4 months to save up to and is not immediate). Add to that equation the fact that the average American has $6000 in debt, and with tens of thousands of jobs being lost so far in this month alone most are more concerned with lowering debt as opposed to buying a new shiny something to compete with the Jones’ next door.

So again this is not creating jobs.

But there is some portion of the funds that will go to small businesses. Roughly $2.7 billion dollars. Or in other words, next to nothing. And larger businesses will get money as well, if they can prove they can create jobs through Government approved calculations that have been proven to be next to impossible to qualify for.

But do not fear. The Government will be funding jobs via public works. Like in the time of FDR. Except that just like then, if nothing is being done to create private sector jobs, which the above proves it is not, when the Government stops the funding there are no jobs for people to apply for.

In essence, this is a political polispeak attempt to look good. The long term effects are negligible at best. The quiet side provisions are definitely not popular. In virtually every aspect it fails to create jobs, or spur consumer confidence. It fails at its immediate and definitive purpose, stimulus.

If this passes, Democrats in Congress and President Obama will look good. For a while. And Republicans will have yet another thing that will be blamed on them. And when the built in failure of the plan becomes apparent, Republicans will be the first people selected to blame for their disagreement.

What is needed is a stimulus plan. Not the word stimulus, not the projection of sending the public checks that will need to be paid back at some point in the future. Least of all is the need for the Government to take care of everyone as if they were children, which this package does in abundance.

I don’t want the Government to give me what it thinks I need. I want the ability to earn enough to make my own choice about what I actually need, and if I do well what I want.

All politicians should reject the Obama stimulus package. Democrats won’t. Most Republicans will. And it will get passed because there are more than enough Democrats who seek political gain over their constituents well being.

Not the definition of change most voters expected, but it is change indeed.

Labels: Democratic Congress, President Barack Obama, stimulus package

Well I read something that was quite interesting the other day. It dealt with the questions of what we can expect from an Obama Administration. The article by Jim VandeHei and John F. Harris titled What we don't know about Obama points to some interesting thoughts.

So far we know that President Obama has ordered the detainee prison in Guantanamo Bay closed. He expects this to take one year, though the Bush Administration has spent at least 2 years seeking to move some 60 of the worst prisoners to any nation that will not just release them to Al Quida. This is part of his promised acts as a peace maker. That is in conflict with his plans for Afghanistan.

President Obama believes we can win in Afghanistan. He has stated that is the center of the war on terror. And that is where he wants to focus, then end our fight. But to do so is anything but being a peacemaker.

“Most military experts think a decisive win in Afghanistan — as opposed to a muddle-through strategy leading to a gradual withdrawal —will involve a major surge in troops and a willingness to tolerate high costs and high casualties.“

And speaking of war, there is Iraq. Which President Obama continues to move towards running from. The country is finally in some semblance of stability after our prolonged presence and several gaffs of the Bush Administration.

“But this remains an extremely volatile region that could erupt in new bloodshed. Will Obama still cling to a speedy pull-out if it means the country could implode?”

With anti-war hawks like Hillary Clinton in his Cabinet, and a majority of the Democratic Party looking for nothing less than absolute withdrawl what would President Obama do in that situation? Especially as he focuses our troops in Afghanistan thus escalating that conflict? Especially as military history states that a war involving multiple fronts usually end up with loss.

Also along these lines is the question of torture and interrogation. The first part of which is what to do with the detainees in Gitmo as I stated above. But moving forward is what to do about any future suspects we might encounter. They will not be able to be detained. Thus we must presume they will be interrogated in the field. But under what rules?

No matter what some may feel about the use of questionable techniques or outright torture there is one absolute truth. America gained needed information that has led to no more attacks on American soil. With many of the prior interrogation techniques now banned will we still be able to gain that information? Since we will not have detention areas to hold these suspects will we have an opportunity to learn the information that would prevent another major attack?

Then there is the question of the economy. An issue I have long has major problems with. The proposals made by the Obama Administration demand and create multi-trillion dollar deficits, which President Obama has said cannot be maintained long-term. But there is nothing in the proposals that would indicate that the deficits would be paid off in the next 4 years, or even 10.

The public is now becoming used to, and insistent on stimulus checks. If you ask the average American right now they believe that another stimulus check will be in the mail – which has been directly refuted by President Obama. And the poorer the person the more they are anxious for that check.

But that is a mere $850 billion dollars. If President Obama also goes forward with his healthcare plans, his expanded Government, and the declared spending (bailouts) for the economy the imbalance will be at least $1.6 – $2.1 trillion dollars when it’s all said and done (this year alone).

If President Obama plans to keep his budget in massive record deficit only for the short term then he must raise taxes sharply - for ALL Americans, cut entitlements drastically – including the new healthcare and social security, and reduce the military’s budget even as we have soldiers fighting in Afghanistan. And a major deficit will still exist, with no guarantee that the economy will have improved.

And then there is a hot-button issue for me. Darfur. A subject that most politicians have avoided on all levels. America has yet to pass the laws sitting in Congress for 4 years that would prevent corporate or individual investment in the Sudan (Darfur Accountability and Divestment Act). This is similar to the laws passed that prevented funding Apartheid in the 1980’s. Yet even in the Democrat-led 110th Congress nothing has been done.

Will President Obama step up and use his extreme approval ratings to draw national attention to this genocide that has been ongoing for some 7 yeas now? Will he place financial bans, or even use military force to help save millions of non-American lives? Does his role as peacemaker end at the shores of America or does it include other parts of the world that have dire need and no strategic benefit to our nation?

What will President Obama do? No matter what he chooses he will piss off some part of America. But is he strong enough to piss off his main support – far-left liberals? They gave him the money to win. They rallied him over Clinton. They want some of the most extreme (I believe socialistic) changes to the Government. And if President Obama is to be an effective President for all of America, the far-left must be pissed off often and on major issues at times.

But that would bode poorly for his approval rating and chances at re-election. And virtually all the plans of the Obama Administration seem to require 2 terms to come to the proposed fruition. Is President Obama willing to risk that second term for a more balanced Government?

All serious issues, all serious repercussions. And all without any assurance of what will happen. Many wanted change, and in some form or another they are about to get it whether they like the outcome or not.

Labels: Afghanistan War, American economy, Darfur Accountability and Divestment Act, Guantanamo Bay, Iraq, Jim VandeHei, John F. Harris, President Barack Obama, stimulus package, torture techniques

I have been talking about the economy and what would happen if a Democrat would win since late 2007. When it became clear that President Obama was the Democratic nominee I discussed how the stock market would react to his win. And after the election I forecasted what would likely happen to the Dow Jones Index on inauguration day.

I hit the nail on the head. Well close enough to that anyway. I called for a 7600 Dow on or shortly after the inauguration. I called for a 500 point drop on inauguration day. And I detailed how the economy would continue to tailspin to levels last seen in the Carter Administration.

The Dow Jones Index closed down 332 points. The Dow currently sits at 7949. That’s down 4% from Friday and 12% since the start of the year.

Some will want to blame this all on President Bush, but the reality from Wall Street is that a Liberal Democratic President is a negative for the economy. If only ½ the economic promises made on the campaign trail come true the national debt will tower over any level seen before, and none of the plans are good for private business. And that is bad for investing.

Still crude oil is at lows, and the inflation hitting food has not increased in a while. So maybe Joe Public doesn’t realize how bad things will get, yet. But Wall Street is preparing. And they are looking at the long haul.

I still target the low of the first half at about 7600. I still believe that the money wasted on the mortgage/ credit bailouts will increase drastically. I say again that the 2nd stimulus plan will be a worse waste of money than the first under President Bush. And I insist that the Democrat-led Congress under Pelosi and Reid are the worst Congress in at least my lifetime.

I really hope to be wrong. But so far I am 4% or 349 points from being exactly on target. Any spike in oil prices, a run on gold, a blip in the value of the dollar, continued fighting in Israel, or any of a number of anti-American nations - and terrorist groups - beating their chests (as Vice President Biden promised will happen) and my targets will be exceeded. And all the feel-good talk prior to the inauguration will evaporate.

Yes the stimulus plan will be a great political boost for our new President. And public opinion will soar, until everyone realizes that the extra $60 a week (or less) will not prevent them from losing jobs. Or that at some point soon you will be paying taxes for a house you don’t own. Or paying for a healthcare system that is substandard and as convoluted as any department of the Government. Stock will lead the way down.

But there is time to avoid all this. Congress can reel back all the new additional spending. President Obama can give up on the 2nd stimulus plan. Taxes could be cut, at both the corporate and personal levels. And departments of the Government could be trimmed of wasteful spending.

In a pig’s eye.

Congress is going to spend more than what has been used to bailout the financial industry as the first shot in the bow. Additional money will soon be needed to balance the financials already continuing to flounder, not counting those that will follow like dominoes. And the auto industry that stated flatly that a penny less than $50 billion in a bailout would mean Chapter 11, will become bankrupt as they did not get their money.

Increased regulation will increase cost, and fail to increase good business decisions. And companies will fail. The stock market will lead it all down. Lines will form for Government corporate handouts. The national debt will soar.

Sounds bleak doesn’t it. It should. It is happening before your eyes. By the end of the 1st quarter Joe Public will feel it, badly. Just in time for taxes.

And if I am only as correct as I was about my prediction for the inauguration, well you can see what that will mean. I hope, honestly hope, that I will be wrong.

I really want to be wrong. But what I see in the marketplace tells me that I am right. That double digit inflation and unemployment are mere months away. And that it will last at least as long as the Obama Administration, if not longer.

So since putting your money in a bank will gain you nothing, the taxes on investments make that plan dumb for anything with a return in the next 2 years, and gold is already moving just wait. Wait and take small bites all the way down. Because America will rebound at some point. Because I hope to be wrong soon. The reward from that will be better than me eating crow, it will be a stronger economy.

I can’t wait.

Labels: American economy, Congress, Dow Jones Index, Harry Reid, mortgage bailout, Nancy Pelosi, Obama Administration, stimulus package, Wall Street

Now that we have entered 2009, the time for details has begun. President Obama has now stated that he intends to make 40% of the proposed stimulus plan, that was championed by Speaker of the House Nancy Pelosi from $50 billion to its now $800 billion level, business tax-cuts. That is the first logical and reasonable thing I've heard about this plan since its inception.

Some $300 billion dollars will target businesses by cutting taxes on new workers hired and accelerated depreciation among other thoughts. The tax break from hiring new employees is critical. Tax on employees is one factor that cannot be controlled by an owner and is devastating to the bottom line. If this proposal, which is short-term, could be made more substantial - by being proposed long-term or matched by a cut in corporate taxes - it will have a definite impact on the economy. But that is not thinking like a liberal Democrat.

If President Obama goes to his consistent style of thought, and Speaker Pelosi is able to forge ahead with her plans, we will see more of the compartmentalized thinking that dominated the election speeches. That is the thought that there is no connection of one economic plan with any other part, nor that new deficit widening spending or raising taxes might counter any other stimulus proposed. Listening to the Democratic leaders one would believe that each of these things are isolated and do not interact, but in the real world they always do.

Thus if corporate taxes are raised, any gains created from a tax break on new employees will evaporate and those new hires will quickly become unemployed again. But it will buy the politicians a few months of back-patting on the lowering of unemployment.

But the majority of the new stimulus plan is still solidly in the realm of polispeak. Only in that realm is the thought that $500 for singles and $1000 for a family able to turn around a mortgage crisis, credit crunch, and shrinking economy.

The last stimulus plan, which was completely ineffective, came about as a direct payment of money from the Government to the public - which will be repaid in taxes at a later date. That money was used by the majority of Americans to stave off mortgage default and pay down on debt. This time President Obama believes that by directly cutting payroll taxes for 4 months it will have a bigger impact. Which is perhaps even more dream-like an expectation.

That equates to around $120 per month, or $240 for families -

"The $500 tax credit would apply to the first $8,100 of wages, meaning a worker who earns $24,400 a year and is paid twice a month would get about $60 extra per paycheck for four months."

While that is not insignificant, it is not a factor either. If the average person in America has $6,000 in debt currently, and basic monthly costs of some $1500 to live the extra money is 1 night out, or 2% payment on the debt not including interest, or 1 month of cell phone service. Which seems most likely for a person to do?

From what I have heard across the nation a free month of phone service, or paying down on the auto insurance, or electric bill, or catching up with the cable bill, or having a bit of extra food, or paying on the car loan, or replacing clothing are higher priorities than going out for drinks and a dinner. Sure some may buy an new video game, but they may well be doing so because they will be losing cable and thus the game is their only entertainment.

The fact is that stimulus plans that depend on creating money to give to the public, that will need to be paid back via taxes, will never work. Unless the nation were to get $6,000 per person it will never work. The current individual debt and the interest on that debt is too high. And any amount below the current debt load is too small to invest in anything - even if consumer confidence were there.

This stimulus plan is a failure just as much as the one proposed by the Bush Administration was. There is no improvement. There is no greater gain. Money given to the public will garner no positive lasting effect in the economy any more than the last one did. The only thing that will happen is the polispeak will be positive for a time. Great for politicians, but ultimately bad for the public.

If this stimulus were to be a real fix, corporate taxes would be reduced, new employees would create a tax break, accelerated depreciation would be tied to new equipment purchases, and Government would not be directly involved in the daily actions of private business. But that too is a pipe dream. Just like watching the Dow go above 9000 any time soon.

Labels: corporate taxes, Nancy Pelosi, Polispeak, President Barack Obama, President Bush, stimulus package

Last year I was looking at the gold markets and speculated that gold would surge along with several of the gold stocks. On December 6, 2007 I rebuffed the claims of Goldman Sachs when they stated to sell gold. At the time the spot price was $855.

In January of 2008 I pointed out a few gold stocks:

• Streettrack Gold Trust
  
• Barrick Gold Corp.
  
• Agnico Eagle Mines Ltd.
  
• Goldcorp Inc
  
• Western Goldfields Inc
  
• Agnico-Eagle Mines Ltd
  
• Alamos Gold Inc
  
• Anatolia Minerals Development Ltd
  
• European Goldfields Ltd
  

- each of which was soaring. At the same time I was pointing out my belief of what would happen to gold spot prices, oil, and the Dow Jones Index.

"All stock markets, all financial markets, move on emotion first. That’s given. And few things are more emotional that 1.25 basis point moves by the Fed in a week. But fundamental facts of the markets always come to fore and correct the emotion. To me, $1000 gold, and higher gold stocks across the world, is as fundamentally sound today as when I discussed it earlier this month and in December of 2007."

Which lead me to state

"Now I will go one step better. If supply remains constrained, as we can see is likely, and the U.S. economy has the mild recession now being stated by the Federal Reserve. If oil production is cut, in combination with the recent U.S. refinery accident that has placed pressure on capacity, and Senator Barack Obama becomes the Democratic nominee for the President of the United States. If all those actions occur, which seem 80% probable to me at this time, then I believe that gold spot prices in excess of $1125 are possible by the end of this year. Commensurate with this move should be gains among the gold mining stocks across the world."

How close did I get? $1035. Close enough for me and many others. And then gold drifted down. The power outages in South Africa were resolved, oil prices peaked and then dropped. The world was consumed with the problems of the mortgage bailout and then the credit crisis. Major financial institutions failed and/or were on the brink of collapse as politicians (like Barney Frank), The Fed, and the Secretary of Treasury all scurried around like rats on a sinking ship.

Now we have entered 2009 with several important facts known. Interest rates are at all-time lows, the mortgage crisis has yet to be abated, oil is on the rise again - albeit from lower levels than seen in recent years. The American economy is leading the world into a depression, and at our helm is a new inexperienced highly liberal Democrat. None of these things are positives.

The American Government is about to spend even more money than all of 2008 combined, with a Democrat-led Congress that has no desire to reign in the Democrat President. Both his policies as stated and his indicated primary goals are wastes of money on a grand scale few countries could ever command as their GDP.

Thus we are seeing gold sit at $879, the Dow at 9034. That's just about 2000 points lower than my initial expectations for 2008, but above the lows of the year - barely. What will happen next?

In a move much like what was seen in 2008 we will see gold and gold stocks rise. I again call for gold spot prices to hit $1125, with gold stocks reaching new 52 week highs. This will likely be coupled with a reduction in oil production, increases in crude oil prices (to a high of around $105 a barrel again), an ethanol glut, higher energy costs, increase home losses, the failure of more financial institutions, the bankruptcy of at least 1 major auto company, and higher unemployment.

The new stimulus plan envisioned by President Obama, some $850 billion dollars (about 5x the Bush stimulus), will stabilize investor fears and consumer confidence for 1 quarter. Then the resulting fact that most of the money was spent on mortgages, credit cards, bills, or placed into bank accounts and mattresses will be seen. And the economy will drop again. The stock market will drop to about 7600 - as I stated in 2008. The bear will roar.

Gold and gold stocks will be one of a few places investors and those that fear financial institutions will run to. Crude oil will be another. Demand will outweigh supply, and emotion will propel prices ahead of that. For 9 months of the year the economy will be abysmal.

If I am as correct as I was in 2008, then my expectation for gold will be in excess of 90% correct. In terms of the Dow I am being overly generous, if my past predictions are accurate. And Crude oil will likely exceed and then under-perform my belief.

While many will feel my thoughts are overstated, as they did and were partially correct in 2008, I believe that the overall outlook is less stable than in 2008. Politics internationally are as bad with Israel and Palestine trading rockets and Iran moving forward on creating nuclear weapons. Fewer banks are making loans, and fewer people and businesses are qualified to get them. Democratic spending is looking to increase the national debt to levels unseen, without any real expectation of improvement. Government interference with private business is greater than ever before - with the Government consistently proving it has no clue on how to run anything.

It is quite early in the new year. Our new President has yet to be sworn in. Much in the world is in flux. So I hope to be wrong, I hope very wrong, in what I am predicting. But I believe that at the end of this new year I will be no less than 60% correct. How you act on that is up to you.

Labels: American economy, bear market, Congress, crude oil, Dow Jones Index, gold spot prices, mortgage crisis, President Barack Obama, stimulus package

Ok, now that the Obama election win inspired drunkenness has passed the question for many is what is he going to do. Fantastic speeches, and pointing fingers at the past are wonderful ways to get elected, but mean nothing when you need to lead. What can we discern now?

Well we know that Obama is leaning heavily on his old Chicago political contacts. And so far they have been very non-partisan Democrats. I am speaking of Chief of Staff Rahm Emanuel. So that means that bi-partisan policies are likely going out the window right after President Bush exits the White house door.

This bodes well for House Speaker Nancy Pelosi, Harry Reid, and the Democrat-led Congress. They will have a field day passing all the laws they hoped for. Whether that will be good for the Average American is highly questionable.

Speaker Pelosi is relatively giddy right now, because he 2nd stimulus plan is well on the way of being passed. After her failure to slip the plan into the $700 billion dollar bailout (then only a mere $50 billion plan) without notice – and the failure to fund ACORN and other pro-Democrat organizations with any proceeds from the bailout (instead of paying back Americans) – Pelosi didn’t give up. Her next step was to approach the Bush Administration with a $150 billion stimulus package, right after the auto industry received $25 billion for their woes. When that also failed (something Pelosi has been familiar with) she got quite and waited for after the election. And just as was expected President Obama has promised that a 2nd Stimulus Plan, for at least $300 billion will be passed.

The problem here is that it won’t work and will either increase taxes, the national debt, or both (most likely). Why won’t it work? The same reason the first was a failure. The economy sucks.

The stimulus plans are in essence the equivalent of adding more water to a leaky bathtub. It doesn’t solve the problem, it just gives you more water on the floor. The first time most took the money and paid down on their gas and oil costs. A few were able to lower their credit card debt slightly, and a small portion actually went and bought something.

That was all before several massive banks and brokerages failed, Fannie and Freddie died (to the apparent amazement of Chris Dodd and Barney Frank), several industries started to lay-off jobs or close, and the auto industry walked up to the free money line. And just as many are in danger of losing their homes, if not more.

What will a second Stimulus plan do? Well since gas and oil are cheaper, pay down mortgages, go into the bank savings incase you lose your job, buy extra food in case you lose your job, pay down on the credit card debt in case you lose your job – notice a pattern? Buying Christmas or Easter (depending on when the checks go out) gifts just doesn’t rate very high compared to losing your job, and thus will not promote the economy.

Another thing we can expect that has been stated is higher taxes. Yes the start of that plan is the $250,000 bracket. But with over $1.2 trillion spent this year, and other $837 billion proposed in new program spending, and $300 billion at least of a stimulus plan, higher taxes is not an exclusive tax the rich option. And we know President Obama favors removing the President Bush tax cuts, so that’s 3% more tax for everyone above $31,850. Expect quite a bit more very soon. My guess, a net 7% tax increase across the board.

To go with the higher taxes, expect higher unemployment and inflation. Someone has to pay for the higher cost of business, and corporations will always be the last to accept that bill. So the higher costs of everyday goods and fear of losing a job really kills the stimulus plan – which was a dumb idea in the first place.

To further ensure that the economy rattles at the bottom of the barrel capital gains taxes are going to go higher. This expectation is already hitting the stock market. As I was saying to a friend and former stockbroker

“The smart money is getting out. They started once it was likely that Obama would win the election. They cleared most of their positions before the election, waited for mom and pop to buy into the market before the election to raise prices, and the second President Obama won they started to get all the way out. My bet is that we lose 500 points on or in the week of the inauguration.”

I mean why wouldn’t you hold cash right now. Bond rates are useless, and capital gains taxes means you need a 35% profit just to break-even, which in a good market is tough to nail down.

You can also expect to see even less revenue in the media arena. Because of the Fairness Act, which requires that any talk show or political program must be followed with equal time of the same format for the opposing side. Liberals may love to say that the election was a mandate, but since liberal radio and programs lose money faster than Nancy Pelosi can increase stimulus plan budgeting it seems to be nothing but bluster. Still Air America Radio has a final chance to hit the airwaves again (they went bankrupt in 2 years because no one was listening). Until the loss gets so excessive that radio stations get rid of both liberals and conservatives.

What a great plan. If you can’t get anyone to listen to what you have to say, shut down your opponents from speaking too. Even if people are listening to what they say. Because silence is more fair than debate and criticism. It also helps to cut down on people noticing that your policies do more harm than good.

So far if the prospect of rising inflation, fewer jobs, higher debt, lower stock market, and the continued prospect of losing your home haven’t got you excited - while losing the distraction and/or conversation of talk radio – you can smile at the thought of higher wages. A minimum wage hike is very likely to come early in an Obama Presidency.

The hike must happen early in my opinion because the economy will worsen as the year progresses, and all the goodwill President Obama has will evaporate as fast as stimulus checks hitting the consumer market. But higher employee costs will mean more money the corporations have to pass off to the consumer, and more people that will need to be fired to maintain current (or even slightly reduced) profit levels.

Most of all this are items I expected and discussed prior to the election. And just as I predicted President Obama is following every step of what I mentioned. And the outcome is becoming more of what is obviously a bad plan. But there is something that most did not expect.

There will be no healthcare reform. Not in the first 100 days, not in year 2. The nation can’t afford it. The Government is too inefficient to run it. And because Biden believes that the nation will be under duress within the first 6 months of the Obama Administration, we will be too preoccupied (so much for a President doing more than one thing at a time). That campaign promise is out the window. As is stopping jobs from going overseas. In fact more companies will choose to go to cheaper markets rather than pay the rising cost of staying in America.

So in the first 100 days taxes will go up, as will inflation. The economy will get worse, and the stock market will drop to about 7600 – a true rout. National debt will increase, several more banks will fail. The auto industry will get a bailout of their own (around $100 billion at a guess), and so will AIG (again). Domestic drilling won’t happen, because that would make energy cost cheaper – which President Obama has directly stated he does not want. And we likely will have an international crisis that will bring us close to war, and cause Europe to go bi-polar again and dislike President Obama - though not as much as President Bush.

That’s my prediction of the first 100 days. I hope that I am wrong. I really want President Obama to hit the history books as a great President. I’m selfish and Black. I want to see his historical image live up to his speeches. But his policies as they stand means it won’t happen.

A real long prediction, President Obama loses in 2012 to a Republican. His legacy will be worse than President Carter. Expect inflation at about 15% and unemployment to match. And as I said Average taxes will be at least 7% higher across the board. Hope you’ve been saving money.

Labels: AIG, Congress, Nancy Pelosi, Polispeak, President Barack Obama, stimulus package, stock market, tax policy

I was made aware of something today that I wanted to share with you my readers. Now I have no doubt that none of my regular readers are affected but for those that find this post as an introduction to my site I hope it helps.

Everyone is aware of the Economic Stimulus Plan authorized by President Bush and the Government. $600 is being sent out to those who filed their taxes as single, married families get about $1200 depending on how many kids they have. None of that is new news. But there are scam emails circulating the net that are using this information to phish and scam based on this check. [The following is from a scam email recieved by a friend of mine]

Sent out randomly as an email and supposedly from an IRS email account, like Internal Revenue Service (IRS) esr@irs.gov, it has a title of 2008 US Economic Stimulus Refund ! or something similar. This is a fake address, and it has nothing to do with the Government.

The body of the text may state:

Over 130 million Americans will receive refunds as part of President Bush program to jumpstart economy. Our records indicate that you are qualified to receive the 2008 Economic Stimulus Refund.

The fastest and easiest way to receive your refund is by direct deposit to your checking/savings account.

Please follow the link and fill out the form and submit before June 20, 2008 to ensure that your refund will be processed as soon as possible.

Submitting your form on June 20,2008 or later means that your refund will be delayed due to the volume of requests we anticipate for the Economic Stimulus Refund.

To access Economic Stimulus Refund, please click here.

Note: If you received this message in your SPAM/BULK folder, that is because of the large amount of e-mails we are sending out or because of the restrictions implemented by your ISP.

This is a fake and a scam.

The IRS will not contact you via your email account. They don’t even know if you have an email address. Any document from the IRS will state that it is from the Department of Treasury of which the IRS is a part. Also any official documents will be sent via the postal service and bear the U.S. seal. Not to mention that any document will be in proper American English - ie. the first sentence fails to have proper tense structure.

Any Stimulus check will be sent out to the address you have placed on your IRS tax form(s) you filed with the government. If you filed via electronic filing then you will receive your Stimulus check via direct deposit to the bank account you filed. There is no other means to get a check.

Checks are being sent out via social security number. You cannot speed up the process no matter what government department you contact. Plus any contact must be via writing and not email.

Any information from the U.S. government that could come via email will not trigger your spam filters. Nor is the Government limited on the number of emails it is able to send out or receive.

If you receive an email like this, DO NOT follow any of the links. Notify your email provider and delete the email.

Again this is a scam with the intention of either getting your bank account information, or to gather enough information to steal your identity.

I hope this helps someone out there.

Labels: Economic Stimulus Plan, fake emails, IRS, money scams, phish scams, stimulus package

Gold has hit $921 and the U.S. House of Representatives has passed a $146 billion stimulus package. The Fed is set to cut rates another .50 basis points, or so the world hopes, and financials are rising in the stock market.

So the run in gold and gold stocks is over? Not necessarily.

The fact is that little has changed. The mortgage crisis still has at least one more quarter to go. Oil may not be at the record levels set recently, but it is far above year ago levels. The cost of heating and gasoline are hitting the pockets hard, and the economy is slowing down causing fears of job loss. Demand is still high in China and India, and the political outlook in the world is no less volatile than it has been for years. And a recent power outage in South Africa looks like it will cause even more tightening of supplies.

In the most optimistic outlook, the rate cuts will not take a hold until late in the 3rd quarter at the earliest. Companies and individuals are now looking to pay off debt and not expand. The stimulus package will likely fail as many Americans will use the funds that will come in the late spring or summer to shore up debts and bills rather than going on a spending spree. And all this is just in America.

That also assumes that oil stays at current levels, no additional political instability, the mortgage crisis ends completely in this quarter, and the world economies have no surprises. It also assumes that new housing sales pick up from the 28 year low that was just broken, and a return to mid 1990’s or 2000 levels. How likely is that?

I expect that analysts are going to cut production rates across the board for the South African gold miners, and slash quarterly and year expectations. [Already gold miners like AngloGold Ashanti, Gold Fields and Harmony Gold have had thier share prices hit] Miners in other parts of the world should get a boost if new mines come on-line during the potential 6 weeks that South Africa is down, like Goldnev Resources Inc which just had positive results on recent core drilling tests.

So a glut in the gold market is not going to happen any time soon. Nor is political stability a reality. Oil is high, and the U.S. economy is lagging. And this says nothing of how the Dollar is valued versus the world currencies.

Given all this, do you think that calls for gold at $1000 just a week ago are inflated? Do you think that gold stocks have hit the wall of their appreciation?

All stock markets, all financial markets, move on emotion first. That’s given. And few things are more emotional that 1.25 basis point moves by the Fed in a week. But fundamental facts of the markets always come to fore and correct the emotion. To me, $1000 gold, and higher gold stocks across the world, is as fundamentally sound today as when I discussed it earlier this month and in December of 2007.

But then again I’m not a specialist. [You might want to look at what the one of the specialist – Goldman Sachs - had to say back in the ancient time of November 29, 2007 though] I suppose only time, demand, and investors will show what is the right view.

Labels: AngloGold Ashanti, Federal Reserve, Gold Fields, gold stocks, Goldnev Resources, Harmony Gold, housing sales, mortgage crisis, South Africa, stimulus package