Yesterday's San Bruno Municipal Election may have marked one of the lowest voter turnouts in the history of San Bruno elections. The message is clear; the vast majority of San Bruno's residents are disconnected from the political process and have given up on trying to fix San Bruno's failed City government and school district.

The vast majority of San Bruno's Registered voters don't even care enough to vote anymore. This low voter turnout has opened the door for otherwise unqualified or undesirable candidates to win election to Council and School District Board Member jobs that most people would not only not waste their time running for, but wouldn't even take the time to vote for. This is the dynamic that has been and is largely responsible for the bad government we have in San Bruno.

As I have said several times, there was never any real doubt that Ruane would win the Mayor's race. In an isolated contest where Ruane was pitted against a very weak, almost non competitive opponent, Ruane got about 2,620 votes while his opponent pulled in about 934 votes.

In an 11/03/2009 interview with the San Mateo County Times, after his victory, Ruane stated, "I took nothing for granted. I got out there with the electorate, which is the best place to be." Yet, even with all of his self described efforts, Ruane won by a margin of 1,686 votes which represents less than 9% of the registered voters in San Bruno. You don't have to be a seasoned political pollster to see that even as Ruane breaks out the champagne to celebrate his victory, the numbers tell us that Ruane has very limited political capital and is skating on very thin political ice.

There are approximately 19,000 registered voters in San Bruno. The data presented in the previous paragraph suggests that Ruane is working from a shallow base of support that would be relatively insignificant in a well financed recall campaign with medium to heavy voter turnout. Even though Ruane won the Mayor's race, there is the possibility that he, and one or more of his Council cronies, may lose their Council seat in the not too distant future. Kind of a low rent Gray Davis syndrome. In a highly competitive election, with an energized electorate, many of the candidates who won election to the Council or SBPSD Board of Trustees on November 3rd would not stand a chance.

Right now, Ruane and the other two Council winners have a 90 day recall immunity. As previously mentioned, Ruane has a mandate from less than 9% of San Bruno's registered voters. As I see it, Ruane is a few, no more than 5, major mistakes away from being successfully recalled with some of his Council cronies.

Ruane aside, no winning candidate for the San Bruno City Council was able to get more than approximately 2,722 votes. In the SBPSD Board Election, Henderson pulled in about 2,079 votes, Sanchez won with about 1,750 votes and Prescott won with about 1,666 votes. These low vote tallies also make all of these "winners" particularly vulnerable to recall efforts when their recall immunities expire.

Based on the election results, the San Bruno Park School District (SBPSD) will continue to provide a poor education to its students even though they have the resources necessary to provide a quality education to the District's students. A significant number of students now in the SBPSD will never graduate from college because they will not have the skills necessary to do so. The new SBPSD Board of Trustees will waste more SBPSD money trying to force a new tax down the throats of San Bruno's already overburdened taxpayers to pay for even more waste and incompetence.

With the exception of the Mayor's race, nobody except incumbents representing San Bruno's destructive political machine cared enough to run for San Bruno City Council or Treasurer.

Araujo's campaign in the Mayor's race was beyond pathetic. It was abysmal. It is surprising that Araujo got any votes. Which further proves the point the Ruane is highly vulnerable to a recall effort. In the SBPSD election, the campaigns of the non incumbent candidates were also embarrassingly bad. Sanchez won a SBPSD Board seat because it was a mathematical certainty that one of the three non-incumbent SBPSD challengers would win. So, you could say that his almost non-existent campaign was the best of the worst.

And now, San Bruno's pathetic, possibly corrupt, failed City Council and Government is free to sink the City of San Bruno deeper in debt; continue to hand out taxpayer supported platinum pay, perk, and retirement packages to the City of San Bruno's middle and upper management employees; continue to feed Council cronies with more taxpayer dollars; continue year after year of budget deficits; raise rates and fees through the roof, and find more ways to tax the hell out of San Bruno's residents. No new ideas, no change, just the same failed, lame City government.

So, there you have it. San Bruno's government entities will continue to be broken wrecks until San Bruno's voters decide to throw Ruane and his Council cronies out.  ]]> http://www.sanbrunobeacon.com/2009/11/san_brunos_residents_vote_for.html http://www.sanbrunobeacon.com/2009/11/san_brunos_residents_vote_for.html Wed, 04 Nov 2009 04:19:59 +0000 By Bill Baker, J.D.
Editor and Publisher, The San Bruno Beacon

Calpers is a disgrace. As I mentioned in an earlier Beacon article titled, CALIFORNIA'S COLLAPSE. 5 THINGS CALIFORNIA MUST DO TO SURVIVE:

"To survive the current economic crisis and become competitive again, California's State Government needs to make some heroic changes. These changes include, but are not limited to:

.....2). Dismantle the CalPERS system that is playing a very large role in bankrupting the State, destroying California's educational system and the ability of the State, county, and local governments to provide essential services to California's residents. Transfer these obligations to the Federal Government's Pension Benefit Guaranty Corporation or the Federal Social Security and Medicare systems."

The following observations about Calpers were made in an October 15, 2009 Wall Street Journal article titled, Calpers Rocked by 'Pay to Play':

".....With its investments tanking, Calpers has requested more money from municipalities. To pay up, many of these governments will have to cut services or raise taxes.....Calpers' losses amid the financial crisis topped $50 billion and shrank the fund by more than 23% through June 30, leading to its worst fiscal year ever.......Public criticism of Calpers has been building for months, over poor returns, the deep burdens it places on municipalities and pensions that in some cases exceed $100,000 a year. In August, the fund's chief actuary, Ron Seeling, publicly said California's pension costs were 'unsustainable'."

This latest Calpers scandal, reported in the Wall Street Journal, revolves around a scheme in which a now former CalPERS Board Member received $50 million in fees to arrange investments amounting to $3.5 Billion in Apollo Funds. California's taxpayers will now have to pay for the hundreds of millions of dollars lost by Calpers in the Apollo Funds scandal so that Calpers can keep paying out rich pension benefits to its members. As was mentioned in the previous paragraph, Calpers has lost so much money that the current level of outrageously high, unrealistic retirement payouts it is making cannot be supported internally by the current pension fund assets.

When most people lose money in their retirement plans it is tough luck and they have to live with consequences of their retirement plan losses. On the other hand, when Calpers loses hundreds of millions of dollars, California's taxpayers have to make up the losses. That is absolutely unacceptable and should be outlawed. However, there may already be laws on the books stopping Calpers from milking more money from California's taxpayers to cover its losses.

I really don't care how much the Calpers retirees are able to suck out of their pension fund as long as Calpers is able to is able to meet its obligations to these folks using the contributions paid in by its members, the intial matching funds paid in by California's taxpayers, and whatever earnings on these contributions Calpers can generate. However, if Calpers loses money it should not be up to California's taxpayers to cover these losses and adjustments should be made to the retiree payouts and benefits reflecting these losses.

In my opinion, Calpers is a reckless organization that is destroying California and needs to be dismantled. If Calpers cannot sustain its pension and retirement payouts because the clowns managing the fund are too incompetent or worse to figure out how to invest Calpers money, and make a profit, then the Federal Government's Pension Benefit Guaranty Corporation needs to take over this broken down wreck of a retirement system, cut the payouts and benefits and remove this poisonous entity from California's books.

California's taxpayers are sick and tired of watching California's public infrastructure crumble away, having fire services, police services, their children's educations and other public services cut or eliminated to cover Calpers' investment losses so a slecet group of retirees can live off of fat pensions even though the retirement plan they chose to invest in is losing their retirement money and cannot support the pension payouts.

Calpers should not be immune to risks and the realities of the financial markets by being able to lose as much money as it wants with California's taxpayers guaranteeing that all losses by Calpers' reckless fund managers will be covered. This taxpayer guarantee encourages reckless, potenitally illegal behavior by Calpers fund managers. California's taxpayers already paid the Calpers retirees quite well when they were working at their government job well and pitched in a lot of money for their retirement plans. Retirement should end the obligation of California's taxpayers to these people.

This situation kind of reminds me of the Will Ferrell movie Step Brothers where he plays a 39 year old living in his mother's basement because he can't cut the proverbial umbilical cord. California's taxpayers should not have to play mommie and daddy to Calpers forever and keep supporting this broken pension system while California falls apart and goes bankrupt to pay these losses. It is time for these folks to get a dose of economic reality like the rest of us. If Calpers runs out of money tough luck; let the Federal Government's Pension Benefit Guaranty Corporation work things out for the Calpers retirees.

This absolutely unacceptable situation of Calpers retirees receiving rich retirement checks and benefits that are not supported by the assets in the Calpers pension fund must stop. This potentially illegal, grossly unfair ripoff of California's taxpayers is being perpetrated at the expense of our children's educations, our State's crumbling infrastructure, public safety services, etc. This has got to stop or California is going to become a bankrupt, empty shell.
  ]]> http://www.sanbrunobeacon.com/2009/10/opinion_latest_calpers_scandal.html http://www.sanbrunobeacon.com/2009/10/opinion_latest_calpers_scandal.html Sun, 18 Oct 2009 10:28:34 +0000 By Bill Baker, J.D.
Editor and Publisher, The San Bruno Beacon

One of the best ways for the City of San Bruno to cut expenses is by consolidating municipal services with other Peninsula cities.

Creating one police department out of the San Bruno, Millbrae, Burlingame, and San Mateo Police Departments would dramatically reduce the cost of police services in these cities. With this merger, the City of San Bruno could save a million dollars or more each year on police services. This would not only solve San Bruno's annual budget deficit but also create an annual budget surplus!

For starters, there would be one Police Chief (Susan Manheimer) instead of four. There would be one police headquarters building instead of four. The costs of administration would be lower because there would be fewer high ranking commanders, captains, and lieutenants, dispatchers, clerks, and other administrative people to pay. There would be economies of scale associated with the purchasing of expensive capital equipment (like police cars).

In this deal, San Bruno's Redevelopment Agency and the City of San Bruno might also be able to negotiate their way out of some or all of the millions of dollars of debt used to finance the building a police station at Tanforan.

I'm not going to beat a proverbial dead horse. However, aside from the financial considerations, for San Bruno's residents and businesses there would be other tangible benefits associated with merging these four police departments. If you read the Beacon you have a clear understanding how the City of San Bruno, its residents, businesses, and most of its police officers would benefit by being part of a new, larger consolidated police department.

Most San Bruno Police Officers would also benefit greatly from this change because they would be part of a larger team with immediate access to even greater resources, more professional opportunities for advancement and higher pay. Also, from a resume standpoint, being part of a significantly larger police organization gives you access to more opportunities for career advancement.

The San Bruno City Council should set the goal of making this merger a reality during the next 18 months.
 ]]> http://www.sanbrunobeacon.com/2009/10/san_bruno_millbrae_burlingame.html http://www.sanbrunobeacon.com/2009/10/san_bruno_millbrae_burlingame.html Thu, 15 Oct 2009 07:40:11 +0000 By Bill Baker, J.D.
Editor and Publisher, The San Bruno Beacon

To be a successful long term equity / derivative market investor, you need to embrace the illogical, often insane nature of the equity markets. You must develop a strategy that will identify and profit from equities whose price movements are most vulnerable to emotional, speculative investor mood swings and manipulations.

One of the biggest problems you will face as an equity investor is reconciling macroeconomic realities with equity market behavior.

Let's look at the major stock averages to see what has happened since equities hit their lows in March 2009:

1). The Dow Jones Industrial Average has risen from its March 2009 lows in the 6900 area to a current 1 year high of approximately 10,000. On October 12, 2007, the Dow was trading at 14,093.08.

2). The S&P 500 has risen from its March 2009 lows in the 688 area to a current 1 year high of approximately 1092. On October 5, 2007, the S&P 500 was trading at 1,557.59.

3). The Nasdaq has risen from its March 2009 lows in the 1268 area to a current 1 year high of approximately 2172. On March 10, 2000 the Nasdaq was trading at 5048.62.

As I pointed out in my 10/02/09 Beacon article titled, ALL SIZZLE AND NO STEAK EQUITY MARKET RALLY TELLS US THAT OUR ECONOMY IS LIVING ON BORROWED TIME, ".......the equity markets have been trading higher on smoke and mirrors". From an economic standpoint, things are getting worse in the United States. Yet, the equity markets continue to rally. You could say that the equity markets are a sort of alternate reality universe where common sense and logic give way to emotion, speculation, and investor mania.

That being said, the equity markets are still trading much lower than they were earlier in this decade.

Many investors and "investment professionals" are still surprised by the depth and degree of the equity market rally we have seen between March 2009 and October 2009. This rally caught many investors by surprised and it is fair to say that a great number of investment managers and individual investors have not participated in this rally.

Before and after March 2009 I have been using and adjusting my option hedging strategy to navigate the equity markets. The reason why I use an option hedging strategy is that with the leverage this strategy gives me, it allows me to spread my risk among a wider range of positions while also offering me the protection I need if I do not correctly predict the price direction of the equity I am targeting. The insurance purchased to implement this strategy may reduce overall profit for any given position. However, this is mitigated by the ability to spread risk over a wide range and participate in what have been huge price swings that reduce the cost of this insurance to a negligible percentage of the overall profit.

Let me illustrate the information presented in the previous paragraph with an actual option hedge play that I set up earlier this year. On 08/05/09, AIG opened at 13.64 and closed at 22. Common sense would have, and still does tell you that AIG was and is a worthless company that is trading on "smoke and mirrors". However, the 08/05/09 I thought that the price of AIG represented an excellent hedging opportunity. As I saw it, AIG, even after it's big revrse split, was either worth pennies or under the greater fool theory worth whatever one sucker was willing to pay to the next sucker for AIG stock. In a nutshell, on 08/05/09 I saw a $13 near term downside to AIG and a sky is the limit near term upside. Here's how I set up a hedge play on AIG on 08/05/09:

I bought AIGAT (AIG JAN 2010 20 CALLS) for 2.75 and AIGWC (AIG NOV 12.5 PUTS) for 2.08.

On 10/14/2008 AIG closed at 44.41. At the market close on 10/14/2008, the AIGAT (AIG JAN 2010 20 CALLS) traded at (b) 24.65 x (a) 25.10 and the AIGWC (AIG NOV 12.5 PUTS) traded at (b) 0 x (a) .06.

The per contract profit on the above position, if profits were taken today, would be:

[AIGAT (24.65 - 2.75)] - [AIGWC (0 - 2.08)] = 21.9 - 2.08 = 19.82 or $1982

Assuming a one-to-one ratioed hedge; if you bought 10 contracts your profit would be $19,820 [not including a de minimis trading cost]; if you bought 20 contracts your profit would be $39,640, so on and so forth.

In a situation, such as the AIG position presented above; the put side of the equation becomes worthless while the call side of the position results in a profit that more than covers the put side loss.

The primary risk using this type of hedging strategy (where out-of-the-money options are used) is that there will be insufficient price movement and the time value side of the option contract will deteriorate to zero, leaving you wiith a worthless contract. Of course, before the contract(s) got to zero you might trade them and take a smaller loss.

The previous discussion about AIG stock and options illustrates the fact that economic reality has little or nothing to do with equity market reality. I suppose there are people who will disagree with me on this point. However, we should all agree that trading speculation, be it speculation in dutch tulip contracts, the dot-com bubble, or any other stock market bubble usually has no basis in fact. This point was illustrated by Charles Mackay in his book, published in 1841, titled, Extraordinary Popular Delusions and the Madness of Crowds.

As I said a the start of this article, "To be a successful long term derivative or equity market investor, you need to embrace and not fight, the illogical, often insane nature of the equity markets and develop a strategy that will identify and profit from equities whose price movements are most vulnerable to the emotional, speculative investor mood swings and manipulations."

That being said, remember that during any given market cycle in a good economy, bad economy, terrible economy, or great economy; there will always be equities that are experiencing dramatice price movements. Your job, as an investor, is to identify those equities with the dramatic price movements and develop a strategy to profit from those price movements.

Let me conclude this discussion with these caveats:

1). DO NOT EVER INVEST MONEY THAT YOU CANNOT AFFORD TO LOSE. Managing your money, making sure you have enough money to meet all of your financial commitments and having a healthy reserve of cash are the most important rules of investing you must follow.

2). DO NOT EVER INVEST YOUR MONEY in stocks or derivatives if you do not have a plan or strategy that you thoroughly understand and have practiced over and over and over again using hypothetical investment scenarios. Take classes, study on your own and take a year or two to thoroughly learn everything you can about investing before you invest one penny.

Trading equities or derivatives, without a high level or training and experience, is the financial world equivalent of getting into a cage fighting match, against a professional cage fighter, without any training or experience.

3). DO NOT EVER INVEST MONEY with any company or person unless you understand exactly what you are investing in and who you are investing your money with...
 ]]> http://www.sanbrunobeacon.com/2009/10/dont_let_common_sense_stop_you.html http://www.sanbrunobeacon.com/2009/10/dont_let_common_sense_stop_you.html Wed, 14 Oct 2009 22:15:34 +0000 By Bill Baker, J.D.
Editor and Publisher, The San Bruno Beacon

The biggest problem the United States must confront is not terrorism, the war in either Iraq or Afghanistan, Swine Flu, a broken education system, a tragically destructive health care system, rampant crime, etc. The single biggest problem threatening the United States is the demise of the U.S. Dollar. A worthless, nearly worthless, or even significantly devalued U.S. Dollar will make it very difficult, and in some cases impossible, for Federal, State, and/or local governments in the United States to continue their current level of expenditures on the military, health care, education, police, fire protection, vaccines, etc.

Back on September 9, 2009, in a Beacon article titled, UNCTAD REPORT CALLS FOR REPLACING U.S. DOLLAR WITH ARTIFICIAL INTERNATIONAL CURRENCY, I wrote:

"In their 2009 Trade and Development Report, the UN Conference on Trade and Development (UNCTAD) has suggested replacing the U.S. Dollar with an artificial international currency as a way to help international economic stability and solve some of the world's deficit related problems."

The 2009 UNCTAD Trade and Development Report was a harbinger of more troubles for the falling U.S. Dollar as evidenced by the fact that the UN is now calling for a new reserve currency.

The UN is not alone in advocating the demise of the U.S. Dollar. As expected, countries involved in secret talks to end US Dollar dealings in oil are actively denying reports by The Independent that:

"...........Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years."

You can bet the farm that the abovementioned countries don't want the US Dollar crashing before they have an opportunity to transition out of U.S. Dollar denominated holdings. This point is made crystal clear in a 2005 Foreign Affairs article titled, How Scary is the Deficit?:

"The falling dollar also reduces the value of foreign investments in the United States. Eventually, foreign creditors are likely to demand higher interest rates to offset the risk of further decreases. Now, foreign central banks with large [US] dollar holdings are facing the prospect of huge losses as a result of the dollar's decline. A 20 percent increase in the value of the yuan against the dollar would reduce the value of China's roughly $450 billion in dollar reserves by about $100 billion -- 6 percent of China's GDP...................Let's face it: most Asian central banks view financing the U.S. deficit as a burden, one that they would rather not shoulder."

The United States is only as strong as it's currency. As the U.S. Dollar declines in both prestige and value, so does the United States. At the national, state, and local levels we need to start making some tough decisions about the impending economic catastrophe we now face. Our nation's creditors are growing impatient and, as I have said before, from an economic standpoint, the U.S. is living on "borrowed time. As evidenced by the abovementioned events taking place, that borrowed time is quickly running out..
 ]]> http://www.sanbrunobeacon.com/2009/10/demise_of_us_dollar_is_the_sin.html http://www.sanbrunobeacon.com/2009/10/demise_of_us_dollar_is_the_sin.html Tue, 06 Oct 2009 21:16:57 +0000 By Bill Baker, J.D.
Editor and Publisher, The San Bruno Beacon

As is often the case, the best perspective about a situation is provided by an outsider who can view things from afar and see the forest without having to look through the proverbial trees.

Paul Harris, a U.S. Correspondent for The Guardian, wrote a poignant article about California's collapse titled: Will California become America's first failed state?

As I see it, California is already a failed State. The only question left is what degree of failure are we talking about? Harris' article points out some depressing facts about California:

"The percentage of 19-year-olds at college in the state dropped from 43% to 30% between 1996 and 2004, one of the highest falls ever recorded for any developed world economy. California's schools are ranked 47th out of 50 in the nation. Its government-issued bonds have been ranked just above "junk"......................And if it were a company, it would likely be declared bankrupt."

California's State, county, and local government entities are too large and there are too many people feeding off of this government food chain supported by private sector tax dollars.

To survive the current economic crisis and become competitive again, California's State Government needs to make some heroic changes. These changes include, but are not limited to:

1). Press the reset button and declare bankruptcy to wipe out all State debt and contractual obligations, that can be wiped out under bankruptcy law, so the State can start with a clean slate.

2). Dismantle the CalPERS system that is playing a very large role in bankrupting the State, destroying California's educational system and the ability of the State, county, and local governments to provide essential services to California's residents. Transfer these obligations to the Federal Government's Pension Benefit Guaranty Corporation or the Federal Social Security and Medicare systems.

3). Reduce the overall size of government in California by eliminating California's County and local Government entities and merging their operations into the State government.

4). Consolidate all law enforcement, fire and emergency medical services into one State agency.

5). Eliminate all State Sales Taxes.
  ]]> http://www.sanbrunobeacon.com/2009/10/californias_collapse.html http://www.sanbrunobeacon.com/2009/10/californias_collapse.html Mon, 05 Oct 2009 03:40:50 +0000 By Bill Baker, J.D.
Editor and Publisher, The San Bruno Beacon

It is true that the equity markets have rallied this year and it has been fun playing the rally. The fact of the matter is that this rally has been based on the false hope of an economic recovery that is virtually impossible given the almost $12 trillion U.S. National Debt.

We know that the equity markets have been trading higher on smoke and mirrors because we can trade and make profits on a worthless company like AIG, whose stock is now trading in the 40s. Then there are the worthless burned out shells of FNM, FRE, CIT seeing big volume trading as penny stocks. If these companies did a reverse split like AIG, they too could get their stock prices into the double digits.

With the exception of CIT; but for the fact that the Federal Government bailed out the worthless companies, mentioned in the previous paragraph, with money the Federal Government borrowed from creditor nations, these still worthless companies would not exist. Is this not a case of living on borrowed time?

The current equity market rally will end bad for novice, non trader investors and newbie mutual fund managers who are going to be left holding the bag when the traders decide they are tired of playing the upside and take the air out of the equity markets so they can make some money on the downside, then reload and drive the markets up again.

If you invest in equities, you should be hedging your bets because sooner or later, investors are going to realize that all of the money poured into the economy by the Federal Government has had little or no effect on the recession, depression, or whatever word you want to apply to the dismal economic conditions that exist. Market sentiment will turn negative when the news spin cycle goes negative and the good news is sold by the media as bad news and bad news is sold by the media as worse news. As opposed to the current news spin cycle where bad news is sold as news with a silver lining and good news is sold as better news. When market sentiment finally does turn negative, the equity markets will plummet.

Here's the reality of the economic situation we must all deal with:

In a Beacon article written on 09-09-2009, I observed:

The Congressional Budget Office has reported that the Federal Budget Deficit, through August 2009 is $1.4 trillion. The U.S. Treasury reports that the total U.S. National Debt is $11.785 trillion.

Based on that facts presented in the previous paragraph, there is no way we can spend our way out of this economic catastrophe because that is what we have been doing and it is only driving us deeper into debt. Not unlike that person who tries to live on credit cards, when their expenditures exceed their income, the United States will suffer economic collapse if it loses access to the credit lines extended to the U.S. by creditor nations that have so far made it possible for us to run up this astronomical amount of national debt. In economic terms, the United States is living on borrowed time.

An October 2 Bloomberg article, titled Banks With 20% Unpaid Loans at 18-Year High Amid Recovery Doubt, paints another bleak picture showing how bad things really are. This article states:

"The number of U.S. lenders that can’t collect on at least 20 percent of their loans hit an 18-year high, signaling that more bank failures and losses could slow an economic recovery.............Ninety-five banks have failed this year at the fastest pace in almost two decades, depleting the FDIC’s insurance fund. The agency proposed on Sept. 29 that financial firms prepay three years of premiums, which would add $45 billion of reserves. The fund sank to $10.4 billion as of June 30, the lowest since 1993. It will run at a deficit starting this quarter, the agency said."

The most important point to take from the Bloomberg article, mentioned in the previous paragraph, is that there are still so many bank failures that the FDIC's insurance fund is depleted and will be running a deficit this quarter. Now, the Federal Government will have to borrow more money to bail out the FDIC.

Unemployment is also continuing to get worse. On October 2, the U.S. Labor Department has reported that:

"Since the start of the recession in December 2007, the number of unemployed persons has increased by 7.6 million to 15.1 million, and the unemployment rate has doubled to 9.8 percent."

The problem with the previously mentioned unemployment report is that so many people have fallen off the proverbial grid, where they are no longer officially tracked, that the actual number of unemployed people in the United States may be closer to 30% than the reported 9.8%.

The fact of the matter is that, from an economic standpoint, during the next 20 years most people in the United States are going to experience a dramatically reduced standard of living. State and local governments trying to push back the tide of economic reality, with tax increases, will find that these tax increases will result in lower overall tax revenues as people move to avoid the tax increases and many of the people who don't move are unable to pay the increased taxes.

The overall scarcity of economic resources resulting from the economic catastrophe, we are and will be experiencing, has and will have a disproportionate impact on the lower and middle economic classes. This is going to result in a brutal social and economic Darwinism that will exacerbate the already strained relationships between America's economic classes.
  ]]> http://www.sanbrunobeacon.com/2009/10/equity_market_rally_has_been_f.html http://www.sanbrunobeacon.com/2009/10/equity_market_rally_has_been_f.html Fri, 02 Oct 2009 16:08:58 +0000

  ]]>