Have We Gone Nuts? And Merry Christmas!

Within the past week a newscaster was castigated for stating the historical reality that Jesus Christ and Santa Claus were white. A few days later a school teacher told a 14 year old black student that he couldn’t dress as Santa Claus because Santa Claus was white. This was certainly in the spirit of peace on earth and goodwill toward men, wasn’t it? Could you imagine a Jewish man at a costume party being told he couldn’t dress as a knight because Jews weren’t knights in the Middle Ages? Probably not because that’s not likely to happen.

Its common knowledge that Saint Nicholas was a Greek Orthodox bishop in the early 300’s AD whose gift giving provided the basis for Santa Claus. We say “Santa Claus” from our Dutch colonial inheritance, the British say Father Christmas. The now traditional looking Santa was standardized from a Coca Cola ad in 1931 inspired by Clement Clark Moore's 1822 poem, "A Visit From St. Nicholas" better known as 'Twas the Night Before Christmas. But the reindeer may have come from an earlier source. The Roman goddess Diana was believed to sail through the night sky with deer. Some say the basis of Santa is a Siberian shaman high on hallucinogenic plants flying across the sky with the reindeer. If this is the case than Santa is more closely biologically related to the Native Americans than any other group in the USA.

But whatever the mythological or historical origins, Santa Claus, like Jesus, belongs to all of us; including that black teenager and his seemingly racist teacher.

Merry Christmas!

Copyright 2013, Mark L. Bennett

Obamacare: Social Security Redux

As millions of Americans are smarting from the inanities of Obamacare, we must not forget another similar liberal scam that has been perverting our economic lives since the 1930’s: Social Security. Over the past 50 or so years Social Security has returned about 1.6% while the average return on invested capital in the United States has averaged over 8%. One reason for this is the vast Social Security Administration which is so rotten to the core that some of its employees have retired on disability from the stress of going to work and having nothing to do. But the primary reason for the low return is that it’s invested totally in US government debt. In other words, it’s just a scheme for the government to borrow even more money that it has no feasible way to pay back.

Last week I received a letter stating that the Medicare benefit portion of my Social Security will be reduced for 2014 based upon my “income” in 2012. But in 2012 I was negative cash flow and was forced to buy groceries with credit cards. However, I withdrew money from retirement accounts in that year to repair my roof and install a solar energy system. That made me a high income person under their arbitrary criteria. However, my basic monthly Social Security amount is very low because for many years I was engaged in owning and maintaining residential rental properties. I could not have paid into Social Security even if I wanted to because my income was considered “unearned income”.

During those years I routinely cut out rotten waste plumbing pipe. Often I would be covered from the neck down with their contents. (But I won’t be more graphic in describing those contents since I’m not an eloquent MSNBC commentator like Martin Bashir.) At that time I often thought of photographing my effluent covered self, pairing it with a photo of a Senator dining at a fancy DC restaurant with a lobbyist and sending it to Congress with the caption: Which of these activities creates earned income? During the Depression there was plenty of work according to my father, but since wages were so low many people didn’t bother. But he didn’t want to be poor, so he worked three jobs. Two were daytime sales jobs for differing wholesalers and then a graveyard shift as a drop forge laborer. Because his efforts made him higher income, he paid into Social Security at the maximum rate from the day it went into effect until his last paycheck was received after he was already dead and in the ground at age 49. Where did that money go? Probably into the monthly checks of someone who took too much LSD and drank too many beers in the 1960’s and is now “disabled”.

When my mother retired she was unable to collect on my father’s Social Security and instead received the lower benefit my stepfather had earned. But she did get a $500 dead benefit and my brother and I were able to go to college on a benefit that lasted until we were 22. My average check was about $93 a month. These sums received were a small pittance of what my father had paid in without even considering about 30 years of interest or investment income.

In the peak year of 1977 about 900,000 students received the Social Security survivors’ benefit for college. Ending this benefit during the Reagan Administration is certainly a contributing factor to the current student loan mess. How stealing someone’s money is considered by some as a legitimate means to shore up Social Security baffles me. The money we pay into Social Security is our money despite it being called a tax. That is why payments into Social Security are not deductible from the computation of taxable income, unlike state income tax or other items. All these rules, terms and definitions define how we live and hopefully prosper in a manner seemingly divorced from reality. All I can conclude is that

Washington must indeed be a very strange place.

Copyright 2013, Mark L. Bennett

Is this really happening?

This past summer I visited a friend in Colorado. He told me that his seamless gutter business was doing OK, but that he had a new and difficult problem. He now has to order parts from so far away that the freight cost vastly exceeds the parts cost. This is not surprising since Barron’s Business and Financial Weekly recently reported that “…nonresidential fixed investment as a percent of gross domestic product shrank to a 50 year low.” Yet many, including those in government, say that the economy is improving and point to the reviving housing market. But many of the newly sold homes are purchased for cash by Real Estate Investment Trusts (REITs), hedge funds and Sovereign Wealth Funds from “friendly” foreign countries such as Abu Dhabi and rented out. California alone has added 500,000 renters and lost 233,000 homeowners since 2007. But this increased demand, partly due to the investments just cited, has raised the price of the median California home from $274,000 in May, 2012 to $352,000 in May, 2013, a 28.4% increase. To make home ownership more affordable the Federal Reserve is trying to stimulate the economy (under its price stability mandate?) to 2% inflation. This means that prices will quintuple during an average lifetime.

Real economic growth is being stifled at every turn. The Bristol Bay/Pebble Bay project in Alaska, mentioned in a prior commentary with its 42,000 jobs, has been abandoned due to strictly ideological regulation. Almost 300 coal fired power plants are being shut down. President Obama has threatened to veto a House bill that would open the outer continental shelf to drilling with the potential for 1.2 million full time jobs over 30 years. At the same time the Washington regulators seem afraid of foreign powers like China that steal our trade secrets and intellectual property. The National Security Agency estimates the loss at $300 billion which some equate to about one million jobs.

While the capital that is entering the United States is buying assets like our homes our domestic capital is fleeing. Covanta Holdings processes about 5% of our garbage. They recycle the metals with a new, more efficient method and burn the rest to produce energy. But because a waste to energy facility has not been approved since the 1990’s, they are building their new plants in foreign countries. A recent Indonesian government auction received as many as five bids for one bond. This is a county where burning down churches is a popular pastime.

Talk of change continues to eminent from Washington, usually in the form of increased regulation. Recent rules governing initial public offerings (IPO’S) of stock haven proven so costly that middle market companies have been unable to finance themselves. IPO financing has created 92% of all job growth at public companies since the 1970’s. In a likewise manner, the new rules governing speculative trading in commodities contain loopholes for the mega corporations. These mega corporations, or crony capitalists, in turn do Washington’s bidding. They have driven down the price of gold so that China can exchange the depreciating dollars they receive for something of real value. Almost 50% of the world’s annual gold output now lies within China’s borders. Schemes such as this are necessary to finance our increasing deficits since foreign buying of US Treasuries has decreased to $104 billion from $503 billion a year earlier. This slack has been picked up by the Federal Reserve which now holds about $2.1 trillion in US treasuries and about $1.4 trillion in mortgage backed securities. If, or when, interest rates rise the Fed becomes insolvent. Nothing in the world can bail out the Federal Reserve Bank.

But the clever people in Washington, to whom some Americans still trust their well being, have an answer. Instead of the current definition of wholesaler or wholesale trader for an American company like Apple that makes all of its products aboard, the government will now classify them as manufacturers because their product design and production oversight occurs in the US. This definitional change would have added up to two million “American” manufacturing jobs in the study year of 2007.

The picture doesn’t look as bleak now, does it? If this reminds anyone of the torture/finger counting scene in 1984 you are probably not alone. Our situation is called an “enormous doomsday machine” by former budget director David Stockman.

While I have no magic solution, I do know that we have some power locally and that we must exercise it. It is essential to support the Newman Ridge project and the expansion of gold mining. We must assume jurisdiction over our national forests and begin productive ventures. Potential developments such as the portable slaughter house for cattle and a Pioneer biomass plant must be explored. Do we have any choice if we wish to survive?

Copyright 2013, Mark L. Bennett