Precision Trading Solutions

Housing Report Card

2011-09-02T09:01:00.003-05:00

"The market is really dead in the water, but it's not going down or up. It's just plodding along." So says Carl Case, the co-founder of the Case-Shiller Index. As another hot summer winds down, it seems like a reasonable time to stop and report on the state of the housing market in this country.

Let's get right to it, why don't we! Our grade for the Obama administration's handling of the housing market is a big, fat, bold F!! This is one of the easiest grades we have ever given, and it comes without any lost sleep.

Here are the reasons for our grade:

* Nothing kills an economy more than slowly falling housing prices. A home represents the largest single investment for most Americans. Even in a good market the return on a home is questionable in the short term, and slim over the long term, when adjusted for inflation. If your single largest investment is declining in value, or you perceive that it will decline in value in the near term, your overall spending and confidence will decline dramatically. The last thing we want is a prolonged period of slowly declining or weak housing prices. Unfortunately, that is exactly where we find ourselves.

* Everything that Obama has done to this point has been to slow the decline of housing prices. The home buyer tax credit and foreclosure modification plans were put in place just for that purpose. They are nothing more than political gimmicks put in place to create the appearance that he is trying to "ease our pain". They only serve to prolong the decline and the pain for everyone, including those that pay their mortgage on time and handle their finances properly.

* The solution is to let the housing market self-adjust, find a real bottom in prices, and then begin to increase slowly. Nothing should be done by the government to slow this process. Remember, there are two sides to every sales transaction, a buyer and a seller. Yes, taking a loss on your home is very difficult in the short term. It can mean relocation, bankruptcy, and starting over from scratch. The emotional toll can be significant. However, by allowing the market to self-adjust, those losses are taken once, and duration of suffering is far shorter. Buyers will immediately stabilize the market at the new equilibrium and stop the decline, which in turn increases confidence for all Americans.

Below are two videos that provide some additional insight into the housing situation. We also provided a map that illustrates the change in home prices in the top markets across the country. Unfortunately the outlook remains the same as it did earlier this year. Home prices should continue to slowly decline overall, with some small bumps along the way. As long as Obama continues to try and "help" and does not make us take our medicine, we will remain sick for a long time to come.

Housing Outlook 2012, Housing Prices, Housing Depression, Obama Policies, Housing Solution

Hurricane Irene Maps

2011-08-29T09:38:00.000-05:00

Sharing these interesting maps of Hurricane Irene and the impact she had on the East Coast. The first map illustrates the exact path of the hurricane and the associated rainfall. The second map shows the effects of Irene on the power grid along the East Coast (click images to enlarge).

Source: Washington Post

Source: NY Times

NEXT >>> HURRICANE IRENE CARTOONS

Hurricane Irene Maps, Hurricane Irene Rainfall, Hurricane Irene Power Outages

Hurricane Irene Cartoons

2011-08-27T09:18:00.001-05:00

Steve Jobs - Stanford Commencement '05

2011-08-25T16:19:00.003-05:00

Steve Jobs Stanford Commencement Address 2005, Steve Jobs Resignation, Steve Jobs Apple CEO, Stanford University

Steve Jobs - Ten Interesting Facts

2011-08-24T21:55:00.007-05:00

This truly is a monumental day in the history of technological advancement. Most of us can remember when we sat down in front of our first Apple computer. Perhaps it was in college, or for others, grade school. About the only thing you could do at that time was make a little "turtle" move around the screen and draw colored lines. Steve Jobs revolutionized the personal computer and changed the world forever. We thought it might be a nice to share ten little-known facts about such an inspirational man.

Steve Jobs was born in 1955 and was adopted by Paul and Clara Jobs.

Jobs actually worked for Atari in early 1974, during which he saved up money to travel to India and search for spiritual enlightenment.

After receiving an order for 25 Apple I computers, Jobs and Wozniak raised needed capital by selling Jobs' Volkswagen van and Wozniak's Hewlett-Packard scientific calculator.

Jobs and Wozniak actually offered the very first Apple computer to HP in 1976, however nobody at HP was interested!

Again in 1976, Jobs and "Woz" approach another company, Commodore, about purchasing their product because they did not have the funds to produce it in large quantities. Again they are turned down!!

In early 1985, there was a huge power struggle at Apple, and Jobs is stripped of all his authority, although he still remains the Chairman. Later that year, Steve Jobs stood up in an Apple board meeting and said in a flay, unemotional voice, "I've been thinking a lot and it's time for me to get on with my life. It's obvious that I've got to do something. I'm thirty years old." He would not return to Apple until 1997!

In recognition of his pioneering work in technology, he was awarded the National Technology Medal by President Reagan in 1985 and the Jefferson Award for Public Service in 1987. In 1989, he was named Entrepreneur of the Decade by Inc. magazine.

Jobs purchased the Pixar Animation Studio from George Lucas for $10 million in 1986.

At one point during Jobs career, his net worth jumped by $2.8 billion in one year!

Apple Stock Holdings: Now owns only a symbolic one share; he's paid $1 a year from Apple so that he can be on the health plan.

NEXT >>> Listen to Steve Jobs Commencement Address
at Stanford University in 2005

Tags: Steve Jobs Interesting Facts, Top 10 Steve Jobs Facts, Steve Jobs Apple Facts, Steve Jobs History

Earthquake Comparisons

2011-08-23T16:53:00.003-05:00

Amazing to watch how social media blows up when anything substantial happens across the world!! There are reports that people received Tweets about the earthquake even before they felt the shock waves!!

Those that felt this quake know how scary even a small quake can be, but let's just take a moment to revisit just how devastating the earthquake in Japan was when compared to what we felt today!! The Japanese quake was over 1,000 times stronger!!

Source: Washington Post

Source - NY Times

Tags: Virginia Earthquake Comparison Graphic, East Coast Earthquake, U.S. Earthquake vs. Japan Earthquake

Harvey Golub's Response to Warren Buffett

2011-08-22T11:32:00.000-05:00

Interesting response from Harvey Golub to the statement by Warren Buffett that the rich should pay more taxes. If you are readers of our blog, you will notice this sounds a lot like our post on the Matt Damon interview (see Popular Posts in sidebar).

____________________________________________________________________

MY RESPONSE TO WARREN BUFFETT

Wall Street Journal - Harvey Golub

August 22, 2011

Before you ask for more tax money from me, raise the $2.2 trillion you already collect each year more fairly and spend it more wisely.

Over the years, I have paid a significant portion of my income to the various federal, state and local jurisdictions in which I have lived, and I deeply resent that President Obama has decided that I don't need all the money I've not paid in taxes over the years, or that I should leave less for my children and grandchildren and give more to him to spend as he thinks fit. I also resent that Warren Buffett and others who have created massive wealth for themselves think I'm "coddled" because they believe they should pay more in taxes. I certainly don't feel "coddled" because these various governments have not imposed a higher income tax. After all, I did earn it.

__________________________________________________________

"What gets me most upset is two other things about this argument: the unfair way taxes are collected, and the violation of the implicit social contract between me and my government that my taxes will be spent—effectively and efficiently—on purposes that support the general needs of the country." - Harvey Golub

__________________________________________________________

Now that I'm 72 years old, I can look forward to paying a significant portion of my accumulated wealth in estate taxes to the federal government and, depending on the state I live in at the time, to that state government as well. Of my current income this year, I expect to pay 80%-90% in federal income taxes, state income taxes, Social Security and Medicare taxes, and federal and state estate taxes. Isn't that enough?

Obama's Vacation Postcards

2011-08-18T11:46:00.001-05:00

It looks like the Republican's are taking off the gloves early in this election cycle! The Republican National Committee just came out with these new postcards that mock Obama with pictures from his recent vacation to Martha's Vineyard. If this is any sign of things to come, we are in for a very nasty, but very FUNNY campaign next year! Enjoy!

Stock Market Cartoons

2011-08-15T09:54:00.001-05:00

We always like to lighten things up after a number of "doom and gloom" posts. It is interesting how just reading some cartoons can really put things in perspective sometimes. We have to be able to laugh at ourselves, so here are some stock market cartoons to help you through your day.

Map of Global Risks

2011-08-11T08:58:00.006-05:00

We have heard plenty about the increasing risks in the United States and across Europe in the last few weeks. Unfortunately, there are plenty more risks across the global that are very serious, especially if they affect you directly. Take a look at this map of global risks published by Maplecroft, which gives a visual representation of the biggest threats around the world.

Click map for larger version >>>

Global Risk Map, Global Threats, World Risks, Largest Risks to World, Major International Risks

Bernanke's Interview on 60 Minutes - Dec 2010

2011-08-10T14:57:00.004-05:00

Let us revisit Bernanke's interview on 60 Minutes from December 2010. In this interview Bernanke makes many interesting statements:

* 100% certain he can control inflation.
* Does not seem likely that we will have a double dip recession
* Housing is already weak, and it can't get much weaker
* Unemployment would be much, much higher had the Fed not acted
* Wishes he would have been "omniscient" and seen the crisis coming
* The standard of living gap between the rich and the poor is due to educational differences

Feel free to provide your thoughts on these statements in the "comments" section below. The burning question is, what does Bernanke see coming next for the U.S. economy? Whatever the answer is, we are very unlikely to hear the truth. Remember, a Fed Chairman cannot go on TV and tell the world we are facing the beginning of an inflationary depression. That reason alone means we should not put any stock into his forecasts for the future.

Ben Bernanke, Bernanke Interview 60 Minutes, Federal Reserve Chairmen Interview

U.S. Dollar Mysteries

2011-08-08T09:42:00.002-05:00

Our poor, humble U.S. Dollar has been trounced and trashed relentlessly over the last century. It has now lost over 95% of its value in the last 100 years! However, the dollar is still hanging on as the reserve currency of the world, and deserves at least a little respect. Check out this fascinating graphic on the mysteries of the U.S. Dollar, which makes for some great water cooler talking points!!

U.S. Dollar Mysteries, U.S. Dollar Design, Dollar Questions, U.S. Dollar Facts

World Debt Ratings

2011-08-08T09:10:00.001-05:00

This morning we are watching as the world markets react to the S&P downgrade of the United States. Certainly this downgrade is warranted, regardless of the fact that these agencies have proven themselves to be way behind the curve, out of touch, and borderline fraudulent. Markets still react to what these agencies do, so we need to pay attention. It now looks like there will be some additional downgrades of various other sovereign debt ratings around the world.

U.S. Sovereign Debt Rating, S&P Downgrade of U.S. Debt, Debt Crisis, National Debt Rating, World Debt Ratings

Unemployment Cartoons

2011-08-05T16:48:00.003-05:00

Enough "doom and gloom" already!! Yes, unemployment is bad and jobs are scarce, but there nothing we can do about it today, so let's laugh a little with these unemployment cartoons!

Unemployment Infographic

2011-08-05T15:47:00.005-05:00

We all know the unemployment situation continues to be bleak, but take a look at this animated graphic that puts the situation into perspective. Notice how the red circles absolutely explode in mid-2009, and then compare those to the green circles before and after the crisis. If nothing else helps you understand why we will never get those jobs back in the short therm, this should do it. Nothing recovers quickly after a nuclear explosion, and certainly not an economy with the policies and leaders we have in place today.

Click image for full animated graphic >>>

NEXT >> Check out these Unemployment Cartoons!!

Unemployment, U.S. Unemployment, Jobs Report, Unemployment Outlook, Economic Crisis, Jobs Crisis, Unemployment Infographic

Forecasting our Future

2011-08-05T15:13:00.001-05:00

Back in late January, we provided some commentary on why the path forward for our country and our economy is so clear. Given the recent drop in the market and today's unemployment report, we though it was worthwhile to revisit our original post and provide some additional insight into where we are today.

We are seeing signs that economic activity is slowing and many are concerned about results during the second half of the year. We are hearing terms like "double dip" that suggest we may be headed back into a recession. Folks, this could not be more misleading. Every dollar of "growth" that we have seen over the last three years has been completely manufactured by artificial stimulus from our government and Federal Reserve. The amount of resources they have pumped into the world economy is staggering, and is unlike anything the world has even seen in its history. We are not talking about token tax cuts or policy changes. We are talking about a flood of liquidity via 0% interest rates, QE1, QE2, and billions in federal stimulus dollars. All of these efforts created "false growth" and the illusion that things were getting better.

What we are now facing is the scenario that we discussed in our original post in January (see bold section below). Talks of QE3 are beginning to take place, which is no surprise to us. This is only the beginning of what will eventually turn into QE4, QE5, and on and on. None of this will help our economy heal, it will only create more illusions of prosperity and drive our currency lower.

_____________________________________________________

ORIGINAL POST - JANUARY 26, 2011

Well, another Fed decision is in the books, and as expected they will continue to throw money at the problem in an effort to stimulate growth in the U.S. and across the globe. We have said many times that this path forward is extremely predictable, however it is important to revisit why that is the case.

We need to step way back and look at how this system is setup. Our entire society is based on short-term results. Whether it is companies that focus on quarterly earnings, investors that move stock prices based on short-term news events, or politicians that are only in office four years before facing re-election, in every case those in power must focus on short term results, or they will be replaced with someone that will.

The inherent problem with this system is that decisions made to benefit our society and economy in the short term often have long term consequences. However, that is of very little concern to those in power, as they are forced to show progress or make improvements to appease voters in the short term. A politician who tells the voters that there will be no funding for improvements in the short term, because we cannot risk our country's future, will not be a politician for long. He/she will be replaced with someone that will show results now. You can see how the end game is a government filled with “short timers” focused solely on the here and now.

Matt Damon Interview on Debt Ceiling

2011-08-03T16:17:00.016-05:00

This video is making the rounds, unfortunately for the wrong reasons. In this clip, Matt voices his opinions on taxes, and his feelings that the rich should pay more of their fair share. He says that he would not mind paying more himself.

It sounds so simple and so fair. "People that have money should help others by paying more taxes." On the surface it is such a hard point to argue with, unless you have time to really sit down and discuss the deeper issues surrounding this idea. It just so happens that we do have time for that today, so let's discuss!

Let's break down the statement, which really has two parts. The first part has to do with the idea that people with resources should help those that do not have resources. Yes, Yes, Yes!!!! Who could argue with that statement. That idea is what makes our country so great. No other country in the world donates more time and money to charities than the United States. It is the "American Way" to give of ourselves and our time to help others. We only wish that more Americans would find ways to help, but overall we can feel proud of our selfless nature.

The second part of this idea is what is so concerning. The idea that paying taxes is "helping others" is simply not true. Yes, some of what the government provides does benefit some, but that help comes at the expense of many others, and at a very high price! This is because the government is very inefficient overall. Every $1 paid in taxes results in far less than $1 of value on the other end. That means that the government is wasting resources that could otherwise have been used to benefit others. Yes, many charities and other organization have inefficiencies as well, but we are free to donate our money to those that are most effective and efficient at delivering benefits to others. That freedom of choice drives charities to strive for better efficiencies in an effort to attract more donations. Those that are not run effectively should ultimately go away as funds dry up.

When we pay taxes, we don't have that choice. There is virtually no accountability for how those funds are used and how effectively they are managed to provide maximum benefit to others. That is the whole problem in a nutshell. It comes down to inefficiencies and total lack of accountability at the highest levels. When the government takes over, there is a significant waste or resources that could otherwise have been used for the greater good of society.

Of course, many will try to make the point that "people will save their money if taxes are lower, not donate it all the charity." You may be surprised that the answer is "Yes, that is exactly right, and that is a great thing"! First, we only need to donate a fraction our "saved taxes" to charity to get the same end result and benefit as we had from our entire tax bill! If it was taking $20 a day to feed that child with our taxes, it now may only take $1 a day to feed that same child via an efficient, private charity. That leaves $19 to spend or save as we see fit via our individual freedom and liberty. If we save every dollar, what we end up with is a nation sitting on trillions of dollars of savings, rather than trillions of dollars of debt! That is real financial strength that can be put to use in the most effective manner in an effort to earn a decent return on investment. If that money is spent, money flows into the economy in a way that rewards innovation and hard work. Don't let anyone try to tell you that "saving" is a bad thing for our economy. Saving is what creates strong, innovative, growing economies that can weather any financial storm.

Yes, we all need to donate our money and more importantly, our time, to help others. However, the notion that paying taxes is the best way to achieve that help is a terribly misguided idea.
________________________________

Matt Damon Interview, Debt Ceiling Interview, Debt Crisis, Tax Policy, Rich Pay More Taxes

Heat Wave Cartoons

2011-08-03T11:10:00.002-05:00

It's a very slow news day, now that the debt ceiling deal has saved us all from "Armageddon". Unemployment is bad, economy is weak, gold is skyrocketing, dollar is tanking, and so on. Therefore, let's have some fun with this wonderful weather that is slow-cooking our nation like a nice brisket over a hot Texas BBQ pit! Take a look at these heat wave cartoons and enjoy a few laughs!

Debt Ceiling Jokes

2011-08-02T14:41:00.004-05:00

This is great stuff! It's so refreshing to see the mainstream media pick up on this nonsense and expose our "leaders" during times like these. John Stewart has a great way of delivering his commentary on these matter, regardless of whether or not you agree with his politics. These debt ceiling jokes are the perfect elixir for what has been going on over the last few weeks!

Check out the segment near the end, where a goofy looking reporter helps Obama understand how "leverage" works in Washington and explains what the Republicans are likely to do in terms of debt ceiling negotiations in the future. If this was not on video, I would not believe it!

Debt Ceiling Jokes, Debt Ceiling Humor, John Steward Debt Ceiling, Debt Crisis, National Debt Humor

Debt Ceiling Deal

2011-08-01T09:23:00.000-05:00

We all should feel very secure this morning! Why? Well, not because the debt ceiling deal has been reached that will save us from total collapse. It is because we again have faith that the government will behave in a very predicable manner that we can then use to make decisions that will affect our livelihood and our families. We wrote last week that we "guaranteed" that the debt ceiling would be raised at some point, which really only means we have a firm grasp of the obvious. Well, at lease it seems obvious to anyone that understands human nature, politics, and our political and economic systems. Everything that went on in Washington over the last few weeks was nothing more than a game, a circus act, smoke and mirrors, and a sideshow to the real problems we face.

This debt ceiling deal is again proof of the above statements. Take a look at this graphic from the Washington Post this morning that summarizes the deal at a high level. First, they are raising the debt ceiling $2.4 trillion now, and then cutting $1 trillion over 10 years?? The debt ceiling will need to be raised again in 2013, which means at least another $2.4 trillion at that time, and so on, until we get down the road ten years and we have raised it another $10 trillion! Second, this new committee is now responsible for making the tough decisions? What did we elect these politicians for anyway, to punt the big problems to a special committee? Third, even if the "enforcement measures" are put in place, that's only another $1.2 trillion. Folks, the total U.S. Unfunded Liabilies are nearly $115 trillion dollars!!

The bottom line is that you can be guaranteed that the government will continue to spend money at a record pace in the future, which will further decrease the value of the dollar and increase the value of all "hard" assets. Please contact you investment advisor and make sure your portfolio is positioned to protect you and your family from these certain events.

Source: Washington Post

Debt Ceiling Deal, Debt Ceiling Limit, Debt Crisis, National Debt, U.S. Debt Limit

Debt Ceiling Charts

2011-07-27T09:49:00.001-05:00

This morning we are sharing a number of debt ceiling charts and infographics to help put the situation in perspective. By now everyone should be aware that this is not only the fault of one party. Both parties have significantly contributed to the current debt ceiling crisis. One of the charts clearly shows that this has been a problem going back 30 years and beyond! Reagan, Bush, Clinton and others have contributed significantly to the problem. The bottom line, as we have mentioned in other posts, is that this is a problem that goes way beyond Republicans and Democrats, Fed Chairmen, and Presidents. This is a problem with the way our society is setup and the fundamental views we carry on money, debt, fiscal responsibility and personal spending habits. Don't expect any of this to change until the people begin to feel real pain.

Debt Ceiling Charts, Debt Limit, Debt Crisis, Debt Ceiling Infographic, National Debt, U.S. Debt Charts

The Truth on the Debt Ceiling

2011-07-26T09:05:00.002-05:00

Why won't anybody listen to this man? Many people are asking that question these days as the debt ceiling gets ready to expire. Frankly, the reasons should be obvious. First, almost every person living in this country today, and those in power, have only lived in an economy funded by debt - personal debt, private debt, & government debt. Mortgages, credit cards, car loans, and margin accounts fuel the world economy. Debt is so ingrained in everything we do, that we cannot imagine living without it. Can you imagine buying a home without a mortgage? Suggest that to your friends, and see what reaction you get! Well, 100 years ago that is exactly how most people purchased a home. You could get a mortgage, but you had to put down 50% for a term of only 5 years! After the Great Depression, nobody could get a mortgage.

The point is not to go back 100 years. The point is that we are "debt zombies" who wander the city in search of the next credit card to eat. We need debt to survive, or so we have been taught. Ever watch a documentary about a cult leader who brainwashed his followers into doing terrible things, and wonder how anyone could let that happen to them? Look in the mirror folks, because each of us has been brainwashed. Ron Paul is the outsider who enters the cult and starts shaking people telling them to "wake up, this is not right"! Of course, nobody will listen, as expected.

Ben Bernanke is the cult leader, along with other politicians. They are not as evil as a cult leader, because they are just doing what their job description tells them to do. It is the system that is the problem, and they are just puppets in the system. Their actions are very predictable, and unfortunately, the result will not be much better than many of those cults we see on TV. The only good news is that you can protect yourself if you are willing to "wake up".

Debt Ceiling, Ron Paul Speech, Debt Crisis, Debt Limit, National Debt, Debt Speech

Debt Ceiling Cartoons

2011-07-25T16:23:00.008-05:00

As the circus act moves closer to August 2nd, this mess is beginning to get more and more attention. Let's join the fun with these debt ceiling cartoons. Rest assured, the debt ceiling will be raised and the United States will not default, guaranteed. The actions of our politicians are as predictable as the sun coming up every morning. You can bet your ass the it will be hot in Texas and the debt ceiling will be raised.

Federal Tax Dollars Infographic

2011-04-12T09:46:00.000-05:00

Sharing this interesting visual on which states are net/net the biggest beneficiaries of federal spending. Many of our posts have touched on how the events in Washington surrounding the budget are simply a circus act. As the titanic sinks, Congress is arguing over who will get to play the next song on the ship's deck! So much energy is wasted in the actual events and in terms of media coverage across the 24-hour news channels covering this song and dance. Government shutdowns and debt ceiling arguments are just simple and childish token threats and only serve to distract from the real problem. We have even seen some attempts recently of folks trying to argue and prove that American does not have a debt or spending problem. Unfortunately, all the arguing in the world won't change the events that are unfolding before our eyes. We have a perfect storm forming out at sea and it is coming our way. Remember, there were some people that did not evacuate even in the face of Katrina, and simply felt the threat was over hyped. Certainly there will be many, many people that will deny the course our nation is on even when the storm is crashing down on their heads.

Tags: Federal spending, Federal Tax Payments, Federal Tax Allotments, State Tax Receipts, Federal Budget, Government Shutdown, Debt Crisis, Debt Ceiling,

Corporate Tax Loopholes

2011-03-29T17:49:00.003-05:00

This past Sunday, 60 Minutes ran a fantastic and mostly factual story on how companies are hoarding money oversees to avoid paying taxes in the U.S. Every American should watch this video, it is that important!

Emotions run very high on both sides of this issue. Groups like USUncut recently protested against these companies and feel strongly that the government should close these tax loopholes. Others feel that corporations are already paying too much in taxes and the rate needs to come down. Let us provide some perspective on this situation.

Capital flows like water. What that means is that water will flow downhill and look for the path of least resistance. There is nothing anyone can do to change this basic phenomenon in nature. Water will never flow uphill on its own. Capital will always flow to wherever it can earn the highest perceived return on investment, period. The key word is "perceived", because the end result is not always the choice that results in the absolute highest return. However the capital will flow wherever the decision makers "think" it will earn the highest return. This is how capital SHOULD flow, as it results in the most productivity and value for each dollar invested. The end result is the world we live in today, where society moves forward with new discoveries, increased productivity, and a higher overall standard of living. It is hard for anyone to argue against this, unless they feel we would all be better off riding horses, using the Pony Express to communicate, building fires to stay warm, or going without basic pain medicine or anesthetics. Amazingly, there are some folks that feel this way, but for the rest of us, we like the way things have progressed over the last 200 years.

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