Thursday, January 27, 2011

Top 10 Low Pass Flybys

I believe all my readers will enjoy this video, but my steely-eyed, gray haired former military pilot colleagues will especially appreciate it. The last flyby occurred over San Francisco Bay with a fighter pushing the Mach as evidenced by the pressure wave at the tail of the aircraft.  I am told many windows were shattered on the boats and yachts during this flyby and that it brought great solace to the participating unit as payback for the city's nonsupport of the military.  Take a three minute break, turn up your volume and enjoy this exciting video.



[My thanks to Shelley and Ira Steinberg for forwarding this video]

Wednesday, January 26, 2011

State of the Union Address Fact Check

Last night PRESIDENT OBAMA delivered his second STATE OF THE UNION ADDRESS. Though we were all hoping to hear specific programs he and his administration were planning to execute during the next year and for the remainder of his presidency, all we got was more PROPAGANDA. You may remember from your political science classes that one of the elements of Propaganda is "Glittering Generalities". There were ALMOST NO SPECIFICS. Rather, most of the speech was campaign-like POLITICAL RHETORIC DESIGNED TO PUMP UP THE MASSES AND APPEAL TO SPECIFIC GROUPS TO RALLY SUPPORT .

Worse yet, the facts the President did present ranged from INACCURATE TO OUT-IN-OUT FALSE! USA TODAY writers, RICHARD WOLF and GREGORY KORTE, published an article today, "STATE OF THE UNION: FACT-CHECKING OBAMA'S SPEECH". For those of us who were hoping the President got the message of the recent elections in November and that he would modify his reckless and arrogant agenda, this speech confirmed it will be BUSINESS AS USUAL IN THE OBAMA ADMINISTRATION, and there will be NO MEANINGFUL CHANGES.  I have included the article for your review, below.
State of the Union: Fact-checking Obama's speech
By Richard Wolf and Gregory Korte, USA TODAY

President Obama focused about 80% of his State of the Union Address on the economy, offering proposals designed to create jobs, make the United States more competitive with other developed nations and reduce future budget deficits. Those goals can conflict, however. Here's a look behind the rhetoric:

Statement:
"Cutting the deficit by gutting our investments in innovation and education is like lightening an overloaded airplane by removing its engine. It may make you feel like you're flying high at first, but it won't take long before you'll feel the impact."

•Reality check: This is the central thesis of Obama's speech — that the United States needs to invest in clean energy technology, a crumbling physical infrastructure and education in order to compete better with developing nations such as China and India.

The president says any investments should not increase the deficit, but he didn't say how to do that, other than by eliminating billions of dollars in tax breaks to oil companies. House Transportation Committee Chairman John Mica, R-Fla., has mentioned using money left over from the $814 billion stimulus law passed in 2009. Ed DeSeve, the White House point man on stimulus implementation, said in October that only $110 billion remained unspent, including $45 billion in tax cuts.

And the Highway Trust Fund — which also helps pay for mass transit — can't pay for current transportation needs without raising the gas tax, now 18.4 cents-a-gallon, the Congressional Budget Office says. At the current rate of spending and gas tax collections, CBO analyst Chad Shirley wrote last week, the highway account "would be unable to meet its obligations sometime during fiscal year 2012."

"Big-government advocates have a history of calling nearly all government spending 'investment,' because it sounds better," says Brian Riedl of the conservative Heritage Foundation. "It's very dangerous to claim these investments will pay for themselves."

Statement:
"Now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in. That is not sustainable."

•Reality check: Obama revised last year's proposal to freeze domestic spending, excluding Social Security, Medicare and Medicaid, defense, homeland security and veterans programs. Now he wants five years, not three. But by exempting so much, the freeze would apply to only about $500 billion of a $3.8 trillion budget — "a fairly narrow part," White House economic adviser Gene Sperling admits.

The White House claims the freeze would save $400 billion over 10 years. It says the part of the budget to be frozen, measured as a share of the nation's economy, is lower than it's been in a half-century.

Republicans want to cut spending much more. House GOP leaders, led by Speaker John Boehner, want to cut $100 billion this year and about $1.5 trillion over 10 years by reverting to 2008 spending levels. Conservative Republicans led by Rep. Jim Jordan of Ohio want to go further, saving $2.5 trillion over 10 years by reverting to 2006 spending levels.

Statement:
"Over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries. … Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense, and it has to change."

•Reality check: By focusing only on corporate taxes, the president is putting off a more sweeping overhaul of the tax code called for by his bipartisan fiscal commission and other panels.

He would eliminate or reduce many of the tax breaks inserted into the tax code for specific industries and use the money to lower the 35% corporate tax rate, which is the highest among 31 developed countries ranked by the Organization for Economic Cooperation and Development.

Lower rates might be good for most corporations — but fewer than 6 million businesses, or 18% of the nation's total, file as corporations. More than 23 million, or 72%, are sole proprietorships, while 3 million more, or nearly 10%, are partnerships. "I am certain that they do not want to be left out of tax reform," says R. Bruce Josten, an executive vice president of the U.S. Chamber of Commerce.

Statement:
"Most of the cuts and savings I've proposed only address annual domestic spending, which represents a little more than 12% of our budget. To make further progress, we have to stop pretending that cutting this kind of spending alone will be enough. It won't."

•Reality check: Beyond his proposed domestic spending freeze, which comes with lots of exclusions, Obama didn't take the lead on broader deficit reduction. He spoke about the need to protect Social Security for future generations and to get further savings in health care beyond those envisioned in the overhaul signed last year, but there were no specifics.

Budget watchdogs had hoped Obama would embrace specific proposals from the bipartisan commission that last month voted 11-7 for major spending cuts, tax increases and changes to Social Security and Medicare. The federal budget deficit stands at $1.3 trillion, and the accumulated national debt is $14.1 trillion.

"A spending freeze is a step in the right direction, but it is only one element of the long-term fiscal plan we need," says Pete Peterson, chairman of the Peter G. Peterson Foundation, a fiscal watchdog group. "We cannot become more of an investment economy if we don't have future resources to invest."

Statement:
"To help businesses sell more products abroad, we set a goal of doubling our exports by 2014 — because the more we export, the more jobs we create at home. Already, our exports are up."

•Reality check: Obama called for doubling U.S. exports in five years during last year's State of the Union address. He's on track so far: U.S. exports in the first 11 months of 2010 were up 17%, according to numbers released this month by the U.S. International Trade Administration.

The White House claims that recent export deals with China will "support" 235,000 jobs. It says the pending free trade agreement with South Korea will support another 70,000, and that business deals inked with India last fall will create 50,000.

Those figures are based on a Commerce Department formula that translates export dollars into jobs, according to John Murphy of the U.S. Chamber of Commerce, who says the figures are conservative. The AFL-CIO says the figures for South Korea are inflated.

Statement:
"Because the American people deserve to know that special interests aren't larding up legislation with pet projects, both parties in Congress should know this: If a bill comes to my desk with earmarks inside, I will veto it."

•Reality check: Obama's stance on earmarks has evolved since he was first elected to the Senate. Obama has called for increased disclosure of earmarks, which he claimed as a senator, but the veto threat is his toughest stance yet.

"To me, it's the smart political play," says Steve Ellis of the budget watchdog group Taxpayers for Common Sense. With House Republicans already pledging an earmark moratorium, Obama's stance puts additional pressure on the Senate not to load up spending bills with pet projects.

Two points, one fiscal, one political: Earmarks represent only about $16 billion, or less than 0.5% of the $3.8 trillion budget, so eliminating them won't accomplish much. And Senate Majority Leader Harry Reid, D-Nev., on Tuesday called wiping out earmarks "a lot of pretty talk, but it is only giving the president more power. He's got enough power already."

Wednesday, January 5, 2011

NIA Top Ten Predictions for 2011

Over the past year I referenced an organization called the National Inflation Association (NIA) several times in my articles.  NIA's mission is to prepare Americans for hyperinflation and help Americans to survive.   During the past year the accuracy of NIA's predictions has been uncanny, resulting in national renown for the organization.  Now, the NIA has released its top ten predictions for 2011.   I found them to be very interesting.  Take a few moments to view them.
NIA's Top Ten Predictions for 2011

1) The Dow/Gold and Gold/Silver ratios will continue to decline.
In NIA's top 10 predictions for 2010, we predicted major declines in the Dow/Gold and Gold/Silver ratios. The Dow/Gold ratio was 9.3 at the time and finished 2010 down 15% to 8.1. The Gold/Silver ratio was 64 at the time and finished 2010 down 28% to 46. We expect to see the Dow/Gold ratio decline to 6.5 and the Gold/Silver ratio decline to 38 in 2011. Later this decade, we expect to see the Dow/Gold ratio bottom at 1 and the Gold/Silver ratio decline to below 16 and possibly as low as 10.

2) Colleges will begin to go bankrupt and close their doors.
We have a college education bubble in America that was made possible by the U.S. government's willingness to give out cheap and easy student loans. With all of the technological advances that have been taking place worldwide, the cost for a college education in America should be getting cheaper. Instead, private four-year colleges have averaged 5.6% tuition inflation over the past six years.
College tuitions are the one thing in America that never declined in price during the panic of 2008. Despite collapsing stock market and Real Estate prices, college tuition costs surged to new highs as Americans instinctively sought to become better educated in order to better ride out and survive the economic crisis. Unfortunately, American students who overpaid for college educations are graduating and finding out that their degrees are worthless and no jobs are available for them. They would have been better off going straight into the work force and investing their money into gold and silver. That way, they would have real wealth today instead of debt and would already have valuable work place experience, which is much more important than any piece of paper.
Colleges and universities took on ambitious construction projects and built new libraries, gyms, and sporting venues, that added no value to the education of students. These projects were intended for the sole purpose of impressing students and their families. The administrators of these colleges knew that no matter how high tuitions rose, students would be able to simply borrow more from the government in order to pay them.
Americans today can purchase just about any type of good on Amazon.com, cheaper than they can find it in retail stores. This is because Amazon.com is a lot more efficient and doesn't have the overhead costs of brick and mortar retailers. NIA expects to see a new trend of Americans seeking to become educated cheaply over the Internet. There will be a huge drop off in demand for traditional college degrees. NIA expects to see many colleges default on their debts in 2011. These colleges will be forced to either downsize and educate students more cost effectively or close their doors for good.

3) U.S. retailers will report declines in profit margins and their stocks will decline.
Although most analysts on Wall Street believe retailers will report a major increase in holiday season sales over a year ago, NIA believes any top line growth retailers report will come at the expense of dismal bottom line profits. NIA expects many retailers to report large declines in their profit margins for the 4Q of 2010 and first half of 2011. Retailers have been selling goods at bargain basement prices in order to generate demand. Americans, being flush with newly printed dollars from the Federal Reserve, have been eager to buy up supplies of goods at artificially low prices. However, shareholders will likely sell off their retail stocks on this news. As share prices of retail stocks decline, retailers will begin to rapidly increase their prices by mid-2011.

4) The mainstream public will begin to buy gold.
Although the mainstream media continues to proclaim we have a gold bubble, it is impossible to have a gold bubble when mainstream America isn't buying gold. The average American is more likely to be a seller of gold through companies like Cash4Gold, in order to raise enough dollars to put food on their table. Most Americans today don't even know the price of gold. During the next 12 months, we expect to see a huge ramping up in the public's knowledge about gold. More Americans than ever will know the current price of gold and understand that it is real money. By the end of 2011, we expect the general public to begin looking at gold as an investment, just like they began looking at Real Estate as an investment in 2003. Sometime during the next six months, we believe you will overhear a stranger at a restaurant talking about investing into gold. We believe the price of gold could surge to as high as $2,000 per ounce in 2011.

5) We will see a huge surge in municipal debt defaults.
In the closing months of 2010, we saw yields on municipal bonds rise to their highest levels since early 2009. After 29 consecutive weeks of inflows into municipal bond funds, investors are now pulling money out of municipal bond funds by record amounts, with $9 billion exiting municipal bond funds in the five weeks leading up to Christmas. NIA believes there could be a small dip in municipal bond yields over the next couple of months as investors realize that municipal debt defaults might not be imminent, but we expect municipal bond yields to begin rising again by mid-2011 with a huge surge in municipal debt defaults coming in the second half of 2011. Although the Federal Government has a printing press that it uses in order to pay its debts, cities and municipalities do not.

6) We will see a large decline in the crude oil/natural gas ratio.
When we released our top 10 predictions for 2010, crude oil was $73 per barrel and we predicted that oil prices would rise to $100 per barrel in 2010. Crude oil ended up rising by 26% in 2010 to $92 per barrel, coming short of our outlook. However, it is possible our $100 per barrel oil forecast might be off by just a month or two. We wouldn't be surprised to see $100 per barrel oil within the first two months of 2011 and if so, we expect to see a huge movement in America this year towards natural gas.
The crude oil/natural gas ratio currently stands at 20. Historically, the crude oil/natural gas ratio has averaged 10 and based on an energy equivalent basis, crude oil and natural gas prices should have a 6 to 1 ratio. Brand new fracking technology has caused natural gas supplies in the U.S. to rise to record levels. Although our country might be flooded with natural gas, the natural gas fracking boom that is taking place across the U.S. today is causing ground water in the U.S. to become contaminated. Americans living near natural gas wells that use fracking, are finding that they can now light the water coming out of their faucets on fire. New government regulations are likely to crack down on natural gas fracking and this will come at the same time as American individuals and businesses begin to convert their automobiles and machinery to run off of natural gas. A large decline in the crude oil/natural gas ratio in 2011 is likely, possibly down to as low as 15.

7) The median U.S. home will decline sharply priced in silver.For the past couple of years, being able to make ones mortgage payment has been the primary concern for the average American. In an attempt to support housing prices and keep mortgage interest rates at artificially low levels, the Federal Reserve has been implementing massive quantitative easing and buying mortgage backed securities. NIA believes the Federal Reserve will be successful at putting a nominal floor under Real Estate prices. NIA also believes that the Federal Reserve's actions will cause a massive decline in the value of the U.S. dollar, which will allow Americans to more easily pay back their mortgages with depreciated U.S. dollars.

However, the Federal Reserve will not be successful at reinflating the Real Estate bubble. In fact, in terms of real money (gold and silver), NIA believes Real Estate prices will decline to record lows. The median U.S. home is currently priced at $170,600 or 5,500 ounces of silver. Priced in silver, the median U.S. home price is down 16% from one month ago and 45% from one year ago. After the inflationary crisis of the 1970s, silver rose to a high in 1980 of $49.45 per ounce. The median U.S. home price in 1980 was $47,200, which means the median U.S. home/silver ratio declined to a low of 954.
With the Federal Reserve printing money at an unprecedented rate and record amounts of new homes built during the recent Real Estate bubble, NIA believes it is inevitable that the median U.S. home will decline to a price of 1,000 ounces of silver this decade and possibly as low as 500 ounces of silver. In 2011, we believe a decline in the median U.S. home price to 4,000 ounces of silver is possible.

8) Food inflation will become America's top crisis.
Starting a few decades ago and accelerating in recent years, America has seen a boom in non-productive service jobs, mainly in the financial sector. Most of these jobs were made possible by inflation. Without inflation, which steals from the purchasing power of the incomes and savings of goods producing workers, the majority of the jobs on Wall Street would not exist today and our country would be in much better financial shape because of it.
With most Americans in recent decades seeking non-productive jobs in the financial services sector because that is where they could access the Fed's cheap and easy money, very few Americans sought jobs in the farming and agriculture sector. In the 1930s, approximately 28% of the population was employed in the agriculture sector, but today this number is less than 2%. Agriculture currently makes up only 1.2% of U.S. GDP, compared to the services sector, which makes up 76.9% of U.S. GDP.
There is currently a major shortage of farmers in the U.S. and a lot of land that was previously used for farming has now been developed with Real Estate. To make matters worse, agricultural products now trade on the international market and Americans must now compete against citizens of emerging nations like China and India for the purchasing of food.
Prices of goods and services do not rise equally when governments create monetary inflation. Inflation gravitates most towards the items that Americans need the most and there is nothing that Americans need more to survive than food and agriculture. As the U.S. government prints money, the first thing Americans will spend it on is food. Americans can cut back on energy use by moving into a smaller home and carpooling to work. They can cut back on entertainment, travel, and other discretionary spending. However, Americans can never stop spending money on food.
The days of cheap food in America are coming to an end. The recent unprecedented rise that we have seen in agricultural commodity prices is showing no signs of letting up. In the past few days, sugar futures reached a new 30-year high, coffee futures reached a new 13-year high, orange juice futures reached a new 3-year high, corn futures reached a new 29-month high, soybean futures reached a new 27-month high, and palm oil futures reached a new 33-month high.

We estimate that it takes as long as six months for rising agricultural commodity prices to be felt by U.S. consumers in their local supermarket. Even if food producers and retailers accept substantially lower profit margins in 2011, we are still guaranteed to see double-digit across the board U.S. food inflation in the first half of the year. That is correct, let us repeat, NIA guarantees that Americans will see double-digit food inflation in the first half of 2011.

Shockingly, except for Glenn Beck (who was kind enough to feature our food inflation report), absolutely nobody in the mainstream media is doing anything to warn Americans about the food inflation crisis that is ahead. In fact, left-wing groups like Media Matters (funded by George Soros) have been working tirelessly to try and discredit NIA's research while reassuring Americans that they need not worry about food inflation. The truth is, when Americans realize that they can no longer take food for granted, we will likely see the outbreak of an all out food price panic with everybody rushing to the supermarket to stock up on goods before prices rise even further. The end result will likely be government price controls and empty store shelves, but NIA doesn't project this to occur until later this decade.
 
9) QE2 will disappoint and the Federal Reserve will prepare QE3.

The Dow Jones is now back up to 11,670, which is where it was in mid-2008 before the crash. NIA believes that most of QE2 has already been priced into the market, before the Federal Reserve even prints the $600 billion. At some point, we expect it to become apparent to all that the U.S. economic recovery is phony and stock prices are rising solely due to inflation. In our opinion, we will see some sort of catalyst that causes the stock market to sell off at some point and the consensus on Wall Street will be that QE2 will not be enough to save the U.S. economy. By the end of 2011, we expect the Federal Reserve to begin planning QE3. QE3 might be the final dose of inflation that causes the U.S. economy to overdose into hyperinflation.

10) Sarah Palin will announce she is running for President as a Republican.
NIA believes that Sarah Palin has been setup perfectly to run for President in 2012 and that she will announce her candidacy for the Republican nomination with great fanfare from tea party supporters in 2011. We give Sarah Palin credit for recently speaking out against the Federal Reserve's QE2 and warning Americans about the food inflation crisis that is ahead. Unfortunately, we believe Sarah Palin is not a true independent and is being controlled by the Republican establishment, which is just as responsible as the Democrats are for the financial crisis we have today. As President, Palin would be unlikely to implement the measures that are necessary to prevent hyperinflation. In our opinion, we need to elect a true libertarian candidate as President who will cut government spending, balance the budget, and restore sound money. NIA intends to support Ron Paul, if he decides to run for President.