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Bruce Vanderveen
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The Federal Reserve has pegged interest rates to all time lows. This leaves income investors in a quandary - not knowing where to invest. Bruce looks at the best income, growth, natural resource, and technology equities while taking a contrarian approach. ETFs can often be used to mitigate risk... More
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  • Bang! Zoom! Straight to the Moon!
    On hearing the latest jobs report Larry Summers told the Financial Times "we are now moving toward escape velocity."

    According to Summers the Great Recession is now rapidly receding in the ship's rear-view portal.  Whether we reach the moon, fall out of orbit, or end up lost in space remains to be seen though.  "One of these Days America . . . ."  Yes!  We will find out!

    After the bang of money creation, we are zooming!  Stocks are up 70% in a year, gold, federal debt, interest rates, all seem to be nearing "escape velocity".  The boosters have ignited, the rockets are thundering.  Off we go, pushing rapidly into the deep black depths (or is it debts) of outer space.

    163,000 people found jobs last month, 48,000 of them as census counters.  Bill Bonner comments "If you could create wealth by having people count one another, perhaps we could create even more wealth by having them count the stars in the heavens." Maybe put em to work in  Montana, no light pollution.

    Alice never did get ". . . Pow! Right in the Kisser!".  It was all bluff.  Let's hope Larry Summers is so kind.

    Note: For those of you under 60: "Bang! Zoom! . . .", "One of these days ...", and "Pow! Right in the Kisser!" are paraphrased from "The Honeymooners", a 1955 TV sitcom starring Jackie Gleason as Ralph and Audrey Meadows as Alice.   I took the liberty of substituting "America" for "Alice".

    Disclosure: No Positions
    Apr 13 4:43 PM | Link | Comment!
  • It's Time for Public Sector Haircuts
    The private sector has born the brunt of this recession with layoffs, benefit losses, pay cuts, etc.  This has cut a deep swath of distress across America.

    Not so the public sector.  19% of federal employees make over $100,000 a year, up from 14% just 18 months ago according to USA Today.  It is highly questionable whether these people do anything useful.  Shuffling papers and going to meetings is today's equivalent of digging and filling a hole in the ground, (only it doesn't keep them in as good physical shape).

    Consider the Department of Energy with its $25 billion budget.  Originally established to promote US energy independence it has failed miserably in its goal.  The DOE, of course, works on other things, same questionable results, things the free market could handle much more efficiently, at no cost to tax payers.

    I guess governmental employees could claim they spend their earnings in the private sector, thus stimulating the economy.  If that is so great let's double or triple the number of federal employees.  Heck, while were at it, lets pay em all over $100,000.  Break out the band boys, the party is rolling again!

    Then, consider the beneficiaries of government spending, everyone from bank executives to social program beneficiaries.  In order to solve our problems they ALL need haircuts, especially at the upper end.  AIG executives should be getting pay cuts not bonus's, same for Fannie and Freddie and the other beneficiaries of governmental largess.  Will this happen?  Will pigs fly?

    Think of California.  California is in danger of default on its obligations.  They could do it orderly with haircuts or disorderly with default.  Since no one wants haircuts the disorderly option becomes increasingly likely.

    Oh, of course, I'm forgetting something:  The cavalry (Feds) could ride to the rescue.  The governator is already writing his proposal.  Other financially strapped states will surely follow.  This is how it all will probably play out.

    California's dismal options now become the US's dismal options.  Again: "Since no one wants haircuts the disorderly option becomes increasingly likely".   We are well down that road.

    Jan 10 2:02 PM | Link | Comment!
  • Not Telling Jennifer . . .
    "I'm not telling Jennifer" he said.  This from the man selling wooden chopping blocks last summer at a Michigan craft festival.  He was responding to my query concerning sales tax.

    Not tell Jennifer? . . . Who is Jennifer? . . .   His wife? . . . Co-worker? . . . Why would she care?

    Then I got it.  Jennifer Granholm is the governor of Michigan.  Conditions in Michigan are really bad right now, and may be looking worse for the future.  The state,  businesses, residents . . .  everyone is scrambling!  Unemployment is 14.3%, up from 8.7% a year ago.

    A recent, and rather frightening article, predicts that Michigan's General and School Aid funds will need to be cut almost 50% by 2017 (see here)  if the budget is to be balanced   More and more residents are revolting, clamoring that state employees along with their benefits and social welfare recipients also need to start sharing the pain.  Its a mess.

    In a way ,the state brings on its own problems.  We collect sales tax on summer rentals in Michigan.  What I found quite astounding was how difficult it was to just send money to the state.  You need to fill out forms, go to cumberson websites and jump through a lot of hoops -- just to send money to them!

    The state doesn't seem to have a provision for individuals to pay sales or use tax, even if they owe it.  The forms are all company oriented, but there is less and less traditional employment in Michigan.  After unproductive phone calls and emails I finally gave up and just put my last name in the "Company Name" field.  Not sure if it was correct, but they are accepting and cashing the checks.

    Untaxed, unregulated, unlicensed, unreported . . . America's underground economy keeps growing.  The Christian Science Monitor recently estimated the shadow economy to be as big as $1 trillion or 8% of GDP  (see here).  Every uptick in unemployment, every tax increase, and every new regulation drives the figures up.

    If you are unemployed and ambitious you do what it takes to get by.  Telling Jennifer is, all too often, just not a priority.
    Dec 02 3:36 PM | Link | Comment!
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