Thursday, January 29, 2009

Joseph Everitt Gates

This evening we take a break from the usual outing of mushy brained thinkers for a little personal news.

Just before 11pm on Wednesday, January 28th, our second grandchild, and first grandson, was born. He showed up in most excellent health, wasting no time discovering America once he clued his mother in that he was ready.

At 20 inches, he was about the length of his older sister when she was born, but outweighed her by over a pound, tipping the scales at 7 lbs 13 oz. He arrived with the full complement of parts, and all systems appear to be working as designed.

Speaking of which, what is this totally lunatic idea that humans morphed from amoebas? Where did that mushy brained idea come from?

Back to the grandson. I am grateful that we have been given this most excellent gift, for the blessing he will be to the world, and to parents who are committed to rearing a son after God's own heart.

Until next time...


Wednesday, January 28, 2009

Zero Population Growth?

Some in our culture are suggesting that too many children are being born, as new children create a drain on society's resources. The proposed solution is fewer children. Whether this encouragement would come by way of the bully pulpit, or fines via legislation as in China, or even death as per partial-birth abortion is yet unknown.

The challenge is that the entire premise is hogwash and foolishness. The first part of the foolishness is the assumption that new mouths to feed are an expense to the government. They should not be, and if they are, it is purely a result of misguided charity. This misguided charity comes in the form of government programs that may mean well, but missunderstand completely human behaviour.

Moving on, a call for fewer children flies in the face of the way healthy, growing economies operate. The cultures that are dying in this world, including Japan, Western Europe, and to some degree Scandinavia, are those cultures where the birth rate hovers just over 1. The average age of the population is moving through the 30's, and toward the 40's. The natives, who have become relatively affluent, aren't reproducing, but are slowly dying off.

These cultures are being overrun by immigrants, many of them Muslim, who have large families and are changing the nature and culture of these societies. Even Japan, which for centuries has been extremely Japan-centric and abhorred immigrants, is importing Latinos from South and Central America to work in its factories.

An older population absorbs substantial government services, with very little relative production. Large families, on the other hand, provide an impetus for guys to focus on someone besides themselves. Government policy, properly structured, would encourage the formation and longevity of large nuclear families. These children are wonderful consumers, and provide encouragement for the parents to be tax paying producers.

These children are also those who will solve many of the problems we continue to face as a world. They will be consumers of diapers, baby food, pre-schools, hulahoops, iPods, tennis shoes, college educations, new homes, and the list goes on and on. Without a healthy, young, and growing population, a nation and culture begin to die.

The one saving grace of America is the number of immigrants, primarily Latino, who inhabit our country, legally and otherwise. On the immigration issue, we need to allow only legal immigrants, who come to the US to pay taxes, produce, start businesses, have families, and learn English. If they don't want to do these things, they can stay home. However, many immigrants from Latin countries and around the world want to do these things. For those that do, let's open the doors, encourage them to come, and bring their children with them.

It is only with the repopulation of our country with the young that we will stay young, vibrant, and financially healthy as a country.

Until next time...


Tuesday, January 27, 2009

What Does It Look Like?

The strength of America lies in four principles, namely:

1. A small federal government

2. Personal responsibility

3. A culture of life

4. Fiscal responsibility

These four principles, built around the pillars of economic opportunity, religious liberty, and political freedom, have made America the leader of the world, and the envy of most of the world.

Where are we today? In the last twelve to eighteen months, we have watched as those who were given the option of self government threw off the restraints that came with this responsibility, destroyed trillions of dollars of customer and shareholder wealth, gave themselves bonuses to secure their future, and then had the absolute gall to show up in our nation's capitol asking for a handout. With no shame, no integrity, no regret. What happened to personal honor, courage, commitment, duty, perseverance, others above self?

Our congressional leaders, if they can be called that, willingly sold our grandchildren under the guise of saving large employers, when in reality they were attempting to lock in the votes of the employees, and secure future campaign funding. Their behaviour is no surprise. We have long had the best politicians money can buy.

The Detroit auto show was just that. All the posturing, the penitence on the part of the CEO's, was merely grandstanding for the benefit of the electorate.

We now have a $10 trillion national debt and growing, what appears to be a $1 to $2 trillion deficit for each of the next couple of years, elected officials across the political sprectrum with jelly for backbones, and a voting populace who has willingly traded freedom for the vague promises of change and security. Churchill was right. He who would trade freedom for security will have neither.

What does the future look like?

1. National health care within the next five years. This means that if you want meaningful, top quality health care, get out your checkbook. If the system our federales put in place doesn't allow a private pay system, be ready to explore medical tourism, and see Asia in the process.

1. National auto industry. This will be reminiscent of Ladas and Volgas, until the entire industry is shut down. This only after Washington invests $100 billion or more.

2. National banking system. The downside is that the federales could nationalize your money. The question then becomes where do you hold financial assets in a way that provides some personal security?

4. Higher personal income taxes. The tax rate will drop to zero for those with less than $50,000 of income. It will increase steadily and quickly, reaching top rates of 90%, with most households above the $50,000 threshold paying 60% or more of their income in taxes to support the system. There will tax credits for those earning $30,000 or less, giving them a standard of living equal to those earning $100,000 annually.

5. Devaluation of the dollar due to inflation caused by the uncontrolled printing of money.

Is there hope in any of this? Yes, there is. It will take real leaders, who are willing to sacrifice themselves for the sake of the idea that is America. Can this happen? Absolutely. Who will answer the call?

Until next time...


Sunday, January 25, 2009

Born Free - Taxed to Death

We have this federal tax system that punishes productivity and capitalism, and rewards sloth and debt. No wonder the world is upside down.

If you have two jobs to help put one of the children, or a part of the extended family, through college or graduate school, you risk throwing yourself into a higher tax bracket.

Bust a gut building a business, foregoing a really cool life for years or decades, and once you reach a meaningful level of profitability, you have the opportunity to hand large parts of your productivity to the federales in the form of income taxes. States and local municipalities get in on the action as well.

Stay at it long enough, and you can learn how to convert income into a meaningful asset base. If you learn enough, get good at making decisions and getting good counsel, and live long enough, you will have something to pass along to the next generation. Except the tax man shows up with his hand out, wanting a part of your estate when you die. The federales really don't want stock in your business, or acres of your farmland. They want cash. gotta figure out how to convert those assets to cash.

Now, the insurance industry has figured out how to help with this, which is all well and good. However, Judge Learned Hand, in the late 19th century, suggested that when you tax a man's income, he becomes your slave.

In America, we have become a nation of slaves and serfs, as we have quietly allowed the politicians and bureaucrats to extract through payroll deduction large portions of our income. It is crucial that we remove ourselves from this slavery, and in fact abolish the IRS.

It is time in America for the FairTax. The idea is one of a consumption tax. We must do away with taxes on earned income, taxes on unearned income of all sorts, and taxes on assets, both individual and corporate. One proposal for a consumption tax would have that tax set at somewhat north of 20% of the price of the item sold. My suggestion is that we set the national tax at 8%.

Two reasons for the 8%. First, an 8% national sales tax keeps the number in single digits. Second, there is absolutely no reason to give Congress an equal amount of revenue as they now have to squander. They must be put on a fiscal diet, and learn to allocate within the dollars we as taxpayers are willing to give them.

Check out, and choose to be involved.

Until next time...


Friday, January 23, 2009

That Planning Thing

Planning, whether you are discussing life, business, relationships, your future, a vacation, the purchase of a home, can be straightforward. In its most basic form, it is determining what you want, why you want it, and then determining how you will go about getting it.

Speaking of the markets, and how they relate to the financial side of life, any number of prognosticators have offered their observations about the market's 2008 performance, or lack thereof. The question is whether and how the market's performance had an impact, good or bad, on your ability to live out the future you have chosen for yourself.

The presuppositions here are that you have invested time in determining what your future looks like, and that you believe you have a choice. If you believe you have no choice regarding your future, then there is no reason to make plans to create that picture in your mind.

If you believe you have a choice, and have made no plans, perhaps making those plans isn't important to you. While not an option I'd choose, it is certainly an option that is open to you.

If you believe you have a choice, and have made plans for the future, my guess is that the important questions don't really concern market performance, or event how your financial statement or investments fared. The real question is whether, as a result of what has happened, you will need to change your plans.

If you have achieved financial independence, will you need to alter your lifestyle? If you are working your way toward financial independence, will you need to change the target date, or the amount of money you are setting aside, or both? These are the material questions, and ones you probably want to answer.

Market performance only matters in the context of how it helps you, or keeps from helping you, reach your goals, and live out the future you have pictured in your mind.

Until next week...


Thursday, January 22, 2009

Where To From Here?

This blog has been sporadic at best, over the last nine months. From this point, we intend to be diligent in posting daily. This forum will be used to discuss financial, economic, and political news in a way that offers insight and suggests meaningful questions.

On a regular basis, there will also be technical details we cover. You are welcome to respond and post comments. You are more than welcome to promote this blog to your circle of acquaintances if you find it of value.

Here are three things we can expect in 2009. First, a $2 trillion plus federal deficit for FY09. Second, the nationalization of whatever banks may be left standing. Third, the implosion of commercial real estate.

Am I right, wrong, or out to lunch?

Until next time...


Tuesday, January 20, 2009

Inaguration Day has come, and is for the most part complete. While neither a coronation nor the Second Coming, it was certainly a historic event. Regardless of our political persuasion, President Obama is our president. As such, he is deserving of our prayers.

In the tradition of Reagan and JFK, he is an orator who inspires hope. Many Americans need hope just now, as their personal situations are tenuous at best. Unfortunately, many have no hope outside this short span of life we have been given.

Given the recent turmoil in the economy and the financial markets, both domestically and worldwide, President Obama has plenty to occupy his time. He has four years, and perhaps eight, during which to have an impact. I trust that he chooses to uplift the good and combat evil, both here and abroad, in a way that inspires people to both pursue the good, and to be self-governing.

The markets gave him a raw introduction today, with the Dow off more than 300 points. Asian markets were in free fall Wednesday, and the next eighteen hours will tell us what the markets will deliver as a followup to Tuesday.

Until next time...


Monday, January 19, 2009

Welcome to 2009

Welcome to 2009! We trust you are prepared for a year of abundance and prosperity.

Washington is working furiously to shore up our financial system, although we expect the worst is yet to come. Commercial real estate is next. That will be followed by those insurance companies who are heavy in variable annuity assets. These companies have made promises and guarantees that will difficult to support in the current environment.

The incoming administration has its hands full. There is of course, the question of whether any administration or sitting Congress can actually solve the fundamental problems in our system. I suspect those issues will need to be addressed one household at a time.

In spite of that, each of us can take action concerning our personal economy, and make 2009 our personal best year ever.

Until next time...