Chuck’s Ruminations & Rants

Not that all the all the ideas are his, you gotta figure that Reid & Pelosi are partners in crime.

The country is going to hell in a hand basket. Consider these items:

·         The nationalization of Citigroup

·         General Motors’ problems

·         Potential insolvency of the FDIC

·         Geithner’s remarks on the oil industry

·         Obama’s remarks on the stock market.

Today, Citigroup stock fell another 10 per cent. It dropped below a dollar per share briefly today. That means that 10% of the government’s (the taxpayer’s stock)  stock fell by the same amount. Citigroup should be allowed to go bankrupt right now. There is no reason to believe that Citigroup’s corporate culture will change even if the government is watching.

There is more talk about GM filing for bankruptcy. Whether it does or not, we will never see the taxpayers’ bailout money anyway. The unions will fight like hell to keep GM in business because bankruptcy will force a complete renegotiation of the labor contract.

I believe that GM actually wants to file for Chapter 11 which would allow them to shed the unsustainable benefits costs. I don’t think the government will let it happen, because the politicians are in the unions’ pocket.

If GM goes belly up you can bet that Ford and Chrysler won’t be far behind. They would not be able to compete otherwise. As it stands, the Big Three haven’t been able to compete with Toyota, Honda & Hyundai for a long time. My guess is it that the government will force GM to manufacture nothing but electric cars with no infrastructure to support them.

Sheila Bair, Chairman of Federal Deposit Insurance Corporation (FDIC), said that FDIC may become insolvent by the end of the year. The FDIC approved a “one time emergency assessment” on banks to forestall this eventuality. This assessment will wipeout 50% to 100% of smaller banks 2009 earning according to a Bloomberg.com article.

Apparently this assessment will not hurt larger banks as much. It’s the smaller banks who are doing well in this economic mess because they lent money to people and businesses who could afford to pay back the loans. Again the good guys are paying the price.

Then there are Ted Geithner’s remarks on the oil and gas companies. In addition to the “cap and trade” taxes that are intended, there will be a 13% hike in gas and oil production. He also wants to remove other tax breaks, such as disallowing the deductions on leases and labor drilling costs.

What the hell is this guy thinking? He is going tax labor costs? How is that going to create jobs? He will not allow expensing of the leases where every other business lease is a legitimate business expense. How is this different?

He wants no drilling until all the leases in the Gulf of Mexico are drilled. The reason that these are not being drilled it because there is no oil there or it costs too much to exploit.

On top of that he is going to tax the leases that are not being drilled. So now oil companies are being taxed for not drilling, being taxed for drilling and they have to eat the expenses of drilling. How the hell is this supposed to reduce our dependency on foreign oil, and create more jobs?

For a while I thought that the US was going the way of Venezuela. It’s worse than that. Venezuela exploits it’s oil resources. We are killing them.

Finally there are Obama’s remarks on the stock market. He say that everything is OK, that the market “bobs up and down”. Yeah, like a lead anchor bobs.

Since Obama was elected the Market has dropped over 3000 points from 9625 on November 4, 2008 to 6557, today March 5, 2009. He even said “buying stock (now) is potentially a good idea”. Who is he trying to convince? 3^rd graders? IRA’s have lost at least 35% of their values some more some less. Retirement nest eggs are going rotten. He says that he is confident. I don’t know anyone else who is.

Tomorrow is Friday. There probably will be another sell off. Maybe not as big as today’s 280 DJIA points. Traders will want to be in cash lest Obama and his minions open their mouths over the weekend.

As I see it, the only hope we have now is to kill the Obama’s budget proposal and write one that reduces taxes, eliminate pork (as Obama promised), and roll back the 8% increase else. This might signal and end to this fiasco.

It’s not Bush’s catastrophe it’s Obama’s.

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It took two days for the DJIA to drop around 120 points following Obama’s address to Congress. Like I said, all he has to do is open his mouth.

After he announced some of the details of budget plans the market dropped about another 80 points. All he has to do is open his mouth

Today, Friday 8/27/2009, the DJIA is down 119 points, the news is that the Feds will wind up owning anywhere between 36% to 50% of Citigroup’s common shares. It was bad enough that the Fed owned preferred share, but now these preferred shares will be converted into common shares. All he has to do is open his mouth.

This is true nationalization. This is Socialism.

I won’t bother summarizing all the idiotic things Obama and his administration have said, are saying and have done. Other news sources have reported on the tax and spending increases, as well as Obama’s totally unrealistic view of of his budget plan and projections.

When I started Chuck’s Ruminations & Rants on November 6, 2008, the market had dropped around 800 points since Obama’s election. I gave Obama the benefit of the doubt. I thought it might be the hedge funds.

Since then, every time Obama opened his mouth, or his administration unveiled plans, the DJIA dropped. This is no longer correlation , this is causality.

At this rate it won’t make any difference if Obama raises the capital gains tax, because there will not be any capital gains with the Market being so depressed.

All he has to do is open his mouth.

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On Election Day, November 4, 2008 the DJIA closed at 9,625. Right now (2/2/09 AM PST) the market is sitting at 7337. Down 2300+ points. It is clear that the trend is down. Every time Obama or one of his henchmen open their mouths the market takes another dive. I am surprised that the market isn’t even lower than it is now.

Obama’s push to Socialism is the driving force. His Big Government spending is being seen by mainstream America as being ineffective. Common sense tells us all that simply spending will not stimulate the economy. Obama say that spending is spending and then equates spending to stimulus Spending in order to create something new and job producing, such nationwide broadband, “green” energy production have at least a chance of being stimulating. Spending for some infrastructure might be stimulating. New bridges and highways would be supportive of a thriving economy. Renovating library’s and government building is pure spending and will have no long term positive economic effect except to perpetuate the bureaucracy by populating them with people who can’t make it in the private sector.

Glorious Leader’s Secretary of Treasury’s ideas or lack thereof stimulated the stock market in the wrong direction. Glorious Leader is reported to be leaning towards the “Swedish Banking Model” which is a euphemism for nationalization of the banking industry. It is amazing to me that so-called conservatives such as Lindsay Graham and John McCain are seemingly supportive to this approach. So much for conservative principles. This “Model” is pretty much what happened with Fannie Mae and Freddie Mac. Both were nationalized and the losses socialized. No wonder the market is depressed.

The other day, CNBC’s Rick Santelli, ranted about the current plan on behalf of us who are successful, or are at least maintaining our heads above water to pay those mortgages for those who cannot. Treasury’s plan is pure communism. “From each according to his ability (those who are competent and successful) to each according to his need (those who are incompetent and losers).”

With all my complaining, I ought to offer a solution. I can think of many but I will only present one that is nonviolent.

1. Stop the bailouts immediately. Banks, and companies either need to find private capital or go bankrupt. Do not permit bankrupt business to be taken over by other businesses. To stop this from happening, simply alter the tax code to disallow the deduction losses of the purchased company.

1. Auction the assets of the bankrupt businesses. Responsible banks will purchase the “toxic debt” for pennies on the dollar and will realize huge profits as they are able to sell underlying real estate. Once purchased, the purchased debt will no longer be toxic but will reflect the current value of the asset.

1. Those who will be able to buy real property at these bargain basement prices will be able to pay the mortgage assuming that the qualify for a home loan.

1. Reduce or eliminate capital gains taxes on the sale of these formerly toxic assets. This will make much more money available for credit which will further stimulate the economy.

These steps are aimed primarily at the banking sector but are also equally applicable to Ford, Chrysler and GM. It is also applicable to the United States Postal Service. The beauty of this approach is that it would destroy the existing corporate culture which has shown itself to be irresponsible, and yes, greedy. Everyone would get a fresh start.

Sure it would be painful for a lot of people, but the pain would be short and would reduce if not eliminate the debt that our children, grandchildren and successive generations will be otherwise burdened.

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I find it curiouser and curiouser that the Market took another plunge right after Hillary was named as Obama’s choice for Secretary of State.

Today, December 1, 2008 the DJIA closed down 486 points to 8184. If I am not mistaken, this was the biggest single day market loss since November 5, 2008, the day after Obama was elected. This could be a coincidence. But then again maybe it’s not. If B follows A then there is at least a chance that A caused B.

The National Bureau of Economic Research said that the US has been in recession since December of 2007. I am not sure that I believe the “since” date but we are certainly in a recession now. The Treasury is printing money like Charmin makes toilet paper. I can’t believe that the Market just made the discovery.

Obama promised Change. He wasn’t very clear on what Change would look like. We now know it is going to look like the old Clinton administration with a few shufflings thrown in. Since the Market is generally skeptical of Change, this should be a good thing.

But with Hillary as SoS, and Bill’s international meanderings (and philanderings?), what is the Market to think? On top of that, Bill Clinton is being mentioned as possibility to fill Hillary’s Senate seat. I don’t EVEN want to predict what THAT would do to the market.

Talking about experience. Dodging sniper fire in Yugoslavia is Hillary’s is the only foreign policy experience that I can think of. And we know what that’s all about. I am sure that the Market is not impressed.

The Market needs good news. It looked like the Market liked Obama’s appointment of Paul Volker to head up the Economic Recovery Advisory Board. Volker was credited with being an effective Fed Chairman during the Clinton years. The market liked it and it had a good week. But that was last week.

Black Friday wasn’t a complete bust. There was 1.3% improvement over last year. Granted that retailer markdowns were huge, but I cannot believe that this contributed in any major way to the DJIA’s plummet.

During the campaign, Obama criticized Hillary’s lack foreign policy experience and rightly so. But he is appointing her to Secretary of State.

It’s not so much that the market doesn’t like Hillary, it’s that Obama speaks out of both sides of his mouth.

No consistency to the Market means no confidence.

Chuck Scherl

Posted in: Uncategorized by chuckscherl / Tags: Bill, DJIA, Hillary, Obama, Stock Market, Volker

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On Election Day, November 4, 2008 the DJIA closed at 9,625. Today, November 20, 2008, it closed at 7,552. That’s over 2000 points. I am pretty sure that Obama’s mandate was at least a contributing factor, but it certainly is not the who story.

One of the theories goes something like this. Obama is going to raise the capital gains tax. As a result investors are going to get out of the market before that happens and take their profit now (what profit?). There might be some of this of that going on. I doubt that this has much to do with the drop in the market. Assuming that a capital gains tax increase is passed in 2009, it probably will not be effective until at least 2010. That is long time.

I am convinced, still, that hedge fund short selling is a big factor. These guys make a lot of money selling stuff they do not own, and rake it in when the market drops. You and I would be in jail if we sell things that we do not own.

The market is typically driven by uncertainty and current events. The bigger the uncertainty the bigger the volatility. The bigger the gloom the bigger the emarket decline. When bad news is reasonably certain, that is when the short sellers start short selling which accelerates and magnifies the decline over what would otherwise be expected.

The current source of bad news it that a potential bailout of Ford, GM & Chrysler is not looking too good.

The environmental liberals don’t really want a bailout because automobiles pollute the environment. And fewer automobile are good. Besides 25 billion dollars can be spent on a lot of social programs.

The conservatives and Blue Dog Democrats are not in favor of a bailout for the traditional reason: the Federal Government should stay out of the private sector. Real Conservatives are against welfare, even corporate welfare.

Bush wants it because he is trying to save his legacy. He lost his conservative credentials a while back.

A good portion of the Democrats want a bailout because they are beholden to the unions. But right now there is not enough of them to get it passed otherwise it would already be a done deal. Don’t underestimate these guys (and gals) though. They will try to bribe the current opponents of this bailout and will probably be successful.

Right now the possibility of a bailout for automobile manufacturers is looking pretty bleak. That means bad news for a lot of people, and the short sellers really love bad news.

Really bad news gives them the opportunity to make really a lot of dough.

That is what I think.

… Chuck Scherl

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We are now into the second day of trading since the results of the election have been known and the NYSE is down over 800 points (11/6/08 at 1pm EST). There is definitely a correlation between the two, but those of us who are statistically trained understand that correlation is not causality.

With the Democrat agenda being implementable, it is easy to speculate that the election results are the cause of the DJIA plummet. But it’s not just about Obama’s election, but a perfect storm that includes the Democrat large majority in both the House and Senate.

There are pundits out there, Robert Novak is one, who say that the election results are not a mandate, but it sure looks like one to me. I think it makes sense to attribute at least some of the DJIA drop to the election results.

I think the primary culprits are short selling in general and the hedge funds’ in particular.

The short sellers are very aware of the Democrat agenda. They are playing the election results like a toddler with a temper tantrum whose parents do not have a clue how calm them. As parents know, tantrums can be very manipulative if not handled consistently and appropriately.

In the meantime the short sellers are making a ton of money on the Democrats’ election victory while trying to put the screws to the coming administration in hopes of side tracking the Democrat agenda of higher capital gains taxes.

Whether this works in the long run is anybody’s guess. With the financial mess this country has, it will be an extremely difficult task to bring back the economy regardless who is in charge.

I happen to think that the stated Democrat tax agenda will be impossible to implement without causing more damage to the economy.

I also think that Obama is not stupid and will not try to make it happen.

In this case, perhaps the correlation substantiates causality.

…. Chuck Scherl

Posted in: Uncategorized by chuckscherl / Tags: Election Results, Obama, Short Selling, Stock Market

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Michael Barone wrote an article on “The Coming Thugoracy” for the National Review on October 11, 2008, describing what will happen when Obama and the Democrats take charge. In a Fox News interview this morning Chuck Schumer (D, NY) described his, and presumably the Democrats rationale for supporting repeal of the FCC’s Fairness Doctrine and legislating “card check” legislation, which would abolish secret ballot elections in determining whether employees are represented by unions..

Shumer’s position on these subjects have done nothing to allay my fears that the “Thugocracy” is well on its way to be supported by legislation.

On the “secret ballot” issue, Schumer complained that only 6% of the work force is represented by a union and that forcing non-secret ballots would increase union representation. The ballots would be replaced by employees simply signing cards in support of a union. The union would then be put in place when the unions presented 51% of the work forces’ signatures to management.

The primary reason that this would be effective is that it would encourage union organizers to coerce favorable ballot from the targeted employees. It would also encourage companies to find ways to legally intimidate employees.

It is ironic that when the current secret ballot vote was first put in place (back in the 1930’s, I think), that the Democrats and union leaders pushed for and got the the secret ballot. I would not be presumptive of me to suggest that Schumer is effectively pandering to unions, but not the employees, in return for support of the Democrats’ agenda.

The Democrats have been vocal about the sacredness of the Right to Privacy … even when it comes to security from terrorists. But they sure talk out of the other side of their mouth when it comes to a private vote for or against union membership.

Except for votes of public officials doing the public’s business, all citizens in the U.S. have had the privilege of secret balloting not only for our leaders, but also private clubs and fraternal organizations. Schumer and his ilk want to take that away.

I suspect that most people targeted by such legislation would probably not want their vote to become public knowledge. Doing so would leave them vulnerable to both employer and union coercion.

The employee ought be able to make the decision to join a union private.

If this is enacted we will be put on the track of “no union membership … no job”. This is what we have to look forward to. There will be fewer jobs because companies allow themselves to coerced into paying for employee benefits that becomes a huge economic burden. And we all know that unions are complicit in the failure of Ford and General Motors.

And then there’s the fairness doctrine. Schumer says that all sides of an issue should get a fair hearing by forcing broadcasting companies to allocate equal time for different perspectives.

It is interesting that the most successful radio broadcast hosts are conservatives. Rush Limbaugh, Sean Hannity and Laura Ingraham are just a few that come to mind. It is also interesting that Air America, founded by the left wing as an alternative to the right ring talk radio, has filed for bankruptcy. Radio audiences simply did not want to listen to them…. and as a result, Al Franken is out of a job an now wants to be a Senator.

Is it presumptive of me to suggest that Schumer simply wants to silence conservative radio hosts?

Such a move would likely coerce broadcasters to cancel all political talk shows because the other side could not generate sufficient revenue to justify both liberal and conservative hosts. The Democrats know this. The Democrats know that people who think become more convinced when they hear it from others who think likewise. They also know that their constituenies do not have the mental discipline to string two cohereent thoughts together let alone listen to someone who can. Either way it’s a win for the donkeys.

Schumer says “…the very same people who don’t want the Fairness Doctrine want the FCC to limit pornography on the air”. He says that it is inconsistent, that we can’t have it both ways. It is incredulous that Schumer cannot discern the difference between pornography and free political speech…unless he is saying that they are one and the same and that conservative talk shows are pornographic.

After hearing about the exit polls today, it appears that Obama and the rest of the Democrats are going to be in charge shortly. This liberal agenda that Schumer has elucidated is very scary to me.

It looks like a step back into the days of union thugery and company goons. It smells more like Stalinism and Nazism than simply strong-armed politics.

Let’s see what happens.

I do not think that it is going to be pretty.

…Chuck Scherl

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…and I am pretty sure that Obama is going to win in a landslide. I was interesting to hear the conservative Talking Heads on Fox News say that McCain is still in it. I think that we, as a nation, will lose no matter who wins the election.
Obama, in the last few days and weeks, almost seems to be trying to make it hard on himself:

• His “Joe the Plumber” statement: “I think when you spread the wealth around, it’s good for everybody.”
• Taxing the wealthy is the “neighborly” thing to do.
• Suggesting that tax avoidance is “selfish”.
• Expressing disappointment that “the Supreme Court never ventured into the issues of redistribution of wealth.”
• The phony outrage when Joe Biden was asked if Obama was a Marxist.

If those five points are not summarized by Marx’s statement “From each according to his ability, to each according to his needs” then nothing is. Obama knows exactly what he is. He will bring change. His measure of success will be, how many “wealthy” folks he has made miserable, and how much he can give to poor folks. If he gets his way, and with a Democrats having a near supermajority in the legislature, productivity will decrease, taxes will increase, public sector jobs will increase (remember the “New Deal”) and in general the economy will grow weaker until we rival Sweden for the nanniest of nanny nations. I do not believe that he will relieve misery, he will simply spread it around.
McCain isn’t a whole lot better.

• His position on the bailout was appalling. He had the chance to be against it and he would have run away with the election.
• He hasn’t started “hammering” Obama until just recently and then only happazardly.
• He is too much of a “middle of the road guy”. He is more about appeasement than doing the right thing. He displays not passion or leadership. He is lukewarm.
• In one “Town Hall” meeting he told the audience, “Obama is a decent person and a person you don’t have to be scared of as President of the United States”. Need I say more????

McCain claims that he (and Pailin) opposes special interests. Well the Bailout certainly contradicts that position. He lacks that “fire in the belly” to campaign like he actually wants the job of POTUS. His way of screwing the taxpayer is to simply print more money. That’s what happened with the bailout. The money that we do have is worth less because we are printing more. All that money that was lost by the Banks and Mortgage companies is out there in the economy. Someone has it. It will just be replaced by the Bailout $$. Besides, if McCain somehow pulls off a miracle and wins the election, all that he has to look forward to is four years of being pushed around by Pelosi & Reid.

If you are wondering who I favor for President, it is not one of these two.

I cannot stand people that lack passion and the courage of their convictions (McCain).

I really don’t like Socialist or Communists or Redistributionists (Obama).

There is no vote for either from me.

I wrote myself in for President!!!

Vote for Chuck.

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