As I am writing this, it is Monday April 7, and the stock markets opened the morning by taking a beating, but before I even finished typing this post had reversed course. I have been saying, and I still believe, that this is a major buying opportunity. I pulled all of my money out of the stock market during last year’s election because I thought the fix was in.
Trump is trying to force two things-
He wants other countries to loosen tariffs on US goods, so American made products can be sold in other countries
He wants to make it more cost effective for goods to be made in America
US workers are some of the most productive in the world, but thanks to government regulations like the EPA, OSHA, Obamacare, and other regulatory cost burdens, along with the crushing tariffs that American products face overseas, it is impossible for goods manufactured in America to compete. Trump is trying to change that. That change won’t happen without some blood, sweat, and tears.
That’s where the buying opportunity comes in. Buying while the market is down is the way to go. History shows that market downturns pay off. When the COVID market crash happened, we bought Royal Caribbean (RCL) at $32 a share and sold less than a year later at $112 a share- that is a 350% return.
This time around, I am buying SPY (an S&P 500 index fund), and TSLA (Tesla). We bought 50 shares of Tesla at 240. We are down for now, but I think it will rebound by the end of the year.
Keep the faith. Things in the short term will hurt a little, but you don’t lose money until you sell.
The press is filled with stories of people protesting Trump’s policies. If you believe the reports in the MSM, you would have to think that Florida is taking a huge financial hit because Canadians are angry with the US President. The problem is that this take is complete fabricated nonsense. This article in money wise is a great example. In it, the writer claims that Canadians are leaving en masse because of skyrocketing costs brought about by Trump’s tariffs. The cost increases haven’t even happened yet, but even once they do it won’t be that large of a hit. If you read on down the article, you hit the money quote:
The Federal Reserve Bank of Atlanta found that an additional 10% tariff on Chinese imports, 25% tariffs on Canadian and Mexican imports, and 10% tariffs on other countries could raise consumer prices on everyday retail purchases such as food and beverage items and general merchandise, covering about a quarter of the total consumption basket, by 0.81% to 1.63%, assuming the costs are fully passed to the consumer.
So the tariffs will increase costs by up to 1.63%? That is a fraction of the increase in costs brought about by the Biden inflation. Any costs that are causing people to flee have been going on for years. The media is lying. Again.
The real culprit happened in 2021 when the 12 story Surfside condo collapsed, killing 98 people. The condo wasn’t being maintained, and seawater intrusion had corroded the steel supports. In response, the state of Florida instituted regulations and inspections to require condo buildings be repaired and properly maintained- especially of the buildings are over 3 stories or located near the beach. Nearly 90% of the 1.6 million condos in Florida are more than 30 years old, and most haven’t been inspected or repaired in that time, because the condo associations don’t want to spend the money to do so.
The new law requires associations to have sufficient reserves to cover major repairs and to conduct a survey of reserves every decade. Because of the law, older condos are facing hefty increases to association payments to fund the reserves and repair costs. Condo owners went to Tallahassee and demanded that the state set aside tax dollars to pay for those repairs. Those increased repair and insurance costs are hitting condos hard.
In 2024, Canadians buying vacation homes accounted for 25% of all home sales in Florida. This means that wealthy northerners and Canadians, who are overwhelmingly the owners of beachside condos and were members of condo associations that were voting against paying the costs of properly maintaining the buildings are selling as the cost of owning second homes in Florida is too high, especially when you take the falling value of the Canadian dollar into account.
Real estate agent Gatien Salaun, who owns a waterfront condo in Miami Beach, said what appears to be a recent reduction in average sale prices is largely just buyers negotiating with sellers to eat some of the costs.
“They are simply asking for price reductions that are commensurate with that exact amount that they will have to pay over the next 20 years, 30 years in assessments,” Salaun said. “And the sellers are somewhat stuck in terms of negotiating with the buyer or just paying for the cost themselves.”
Still, the real estate prices in Florida are as high as they are because the weak US dollar (see the price of gold) caused people from other nations, especially Canadians, to buy up a lot of prime US real estate to use as vacation homes. Now that the costs are being realized, they want to sell and leave. Good. Take a friend with you.
To the mainstream media- we are done with your lies.
I think that there is an important thing you need to realize has been overlooked about the US tax rate- it only is looking at IRS income tax. It isn’t taking the US Social Security tax rate into account. Adding that into the mix, and the highest US marginal rate is about 49 percent.
Furthermore, property, sales, or other indirect taxes are not included. It also omits state, provincial, and municipal taxes. In total, the US total tax burden averages out to about 31 percent of total income. Still, more than half of the people who live in the US are net receivers of US tax money. It’s a critical number. When more than half of the people who vote receive more money than they pay in taxes, there is no way that you can get the public support and votes to change anything.
Most of the people in the country care more about what people have left over after taxes than they are about the taxes that they themselves are paying. When I point out that a flat ten percent income tax with no deductions or adjustments permitted would get the nation $2.3 trillion a year in income tax revenue, people still complain. Why?
This would mean that a person who makes $10,000 a year would pay $1,000 in taxes, while a person making $10 million would pay $1 million in taxes, ten times as much. This isn’t as fair as a flat rate, but it’s more realistic and practical.
Still that isn’t good enough, because when I do point that out, the counter argument that they make is “Yeah, but that leaves the poor guy with only $9 thousand, while the rich guy still has 9 million.” To these people, taxes are a way of taking money from the rich so that everyone is equally poor. In other words, communism. It’s caused by pure envy and jealousy.
I maintain that if you took all of the wealth of the nation and redistributed it to each person, giving every one a million dollars, within 10 years the people who are now poor would all be broke, and the ones who are rich would mostly be rich again. Why?
The poor would spend it because they see money as something they use to buy things. Give people with this attitude a million bucks, they will have a house full of big screen TVs, gold chains, and fancy cars.
The rich would be rich again because they see money as a vehicle to make more money. While there are people who are rich due to graft and corruption, largely those people are government officials who earn their money by peddling influence. Most of the nation’s rich, the people in the top quintile, are there because of skill, hard work, and attitude. Give them a million bucks, and they will start a business selling those baubles to the people that are soon to be poor.
All taxes are supposed to be so that a society can have the things that it needs for us to exist- fire, police, courts, and common defense. Instead, it has become a way for one group of people to steal wealth from those who have earned it.
I don’t think that we should have ANY Federal level taxes on individuals. Instead, the Federal government should charge a per capita tax to each state. Let the states figure out how they want to come up with the money. Each state can charge it to their citizens, or perhaps they can add it as a tariff to exports. You want Alaskan oil? Salmon? Crab? Alaska is charging a tariff on that good in the amount of $$ to cover Alaska’s per capital tax obligations. Perhaps Florida could charge a tourist tax for beach or theme park access, or a tax on oranges. New York would be free to have an income tax. Each state decides. You get the idea.
I have been the victim of identity theft a couple of times. A year ago, someone opened an online bank account using my information. I am sure that information had been obtained through one of the many data breaches that have happened in recent years. This episode was easy to clear up. Just call the bank in question, tell them that it was fraudulent, and it’s a done deal. Identity theft is so common nowadays, it’s become routine.
That wasn’t always the case. About 25 years ago, I was the victim of identity theft. I had just divorced my first wife and I needed a car, seeing as how she had gotten most everything in the divorce. I went to a small used car dealer, and it turns out that they were a bit, shall we say, shady. The finance manager had a scam going- he would file finance paperwork for several cars using the information of customers and by cutting and pasting their signatures onto multiple sales contracts. He would then take the checks for the car sales that had never actually happened. Since the dealer hadn’t sold those cars, they never missed the checks. He was also making money on the side by selling people’s financial information.
You can complain to the credit reporting agencies, but their investigations are a joke. In the end, it took me about two years to clear my name.
I solved it by becoming a pro se litigant. I sued several collection agencies and one fairly largish bank- SunTrust. I wasn’t greedy about it. Each entity I sued, I settled out of court for a few hundred dollars and for removing the credit line from my record. The Suntrust people were vindictive. They reported the “forgiven” loan to the IRS as income, and I wound up having to pay the IRS about 8 thousand dollars in taxes on the income when they subsequently audited me. I tried telling the IRS that my identity had been stolen, but back then it was such a new crime that they didn’t believe me.
Years later, SunTrust and their lawyers turned out to be just as shady and I wound up suing them half a dozen times with the mortgage scandal that caused my bankruptcy. It’s why I won’t do business with Truist to this day, that being the bank that SunTrust morphed into.
“Living wage” is defined as the income required to cover 50% necessities, 30% discretionary spending and 20% for savings.
They then take the $23,637 cost of housing, $10,069 for food, and $7,350 for healthcare, which adds up to $40,056 for necessities. These necessities should be half of your income, so this extrapolates to a living wage of $80,112 per year, which they then somehow round up to more than $112,000.
Note that a “living wage” is what is being used to demand a minimum wage based upon 50% of the expenses of an average family of four. They begin with the expected cost of housing for a Florida family of four: $23,637. Let’s call that $2k a month. According to rent.com, that is the average cost of a two bedroom apartment. Not the minimum, the average, and that is the average across the entire state. If you move to a more affordable area, the rent will be less.
So the left takes the average cost of rent across the entire state, adds in a 40% fudge factor, then states that this is the minimum required to live. Liars figure.
Expect liars to push for yet another increase in Florida’s $15 an hour minimum wage.
In a string of poor decisions from Central Florida government, the Orlando Utilities Commission (OUC) is announcing a new surge pricing plan called Peak Shifting. Under the plan, electric rates will be higher during the hours of 2pm through 8 pm. This is an idea that OUC first proposed back in March.
The plan, according to OUC, will be to charge more for electricity use between the hours of 2-8 p.m and decrease rates during other hours. This is where a Powerwall, either with or without solar, can be a good thing to have. You program the Powerwall to charge during off peak hours, and power the house during peak times.
Another part of the plan is called Truenet Solar. Under this plan, the 10,000 people in OUC’s area who have solar systems would see the amount paid for their excess solar generation reduced from 10.7 cents per kWh to 4.6 cents kWh. Customers who are already part of the program on June 30, 2025 are grandfathered in for 20 years.
This plan would merely make me add more Powerwalls, because it no longer is worth it to send power back to the grid when you are buying it at 10.7 cents, but can only sell it back at 4.6 cents. Picture that I send solar power into the grid during the day, selling it at 4.6 cents. Then when the sun goes down, I have to buy that power back at 10.7 cents. I am better off storing it in my Powerwall and not sending it to you at all.
Remember that the price of 6.1 cents is the starting point. It will get higher.
I am not part of OUC’s service area, but this is a great bellwether of things to come. Electric rates are going to climb, and I think that Florida will begin to see more and more of this peak pricing. I also see those of us who are on solar will be under siege because there are enough of us to be cutting into electric utility profits, especially the ones that are run by government such as OUC.
Communism and communists get power from the jealousy of others. They convince poor people that the reason that they are poor is because others are rich. It’s a form of scapegoating that enables the would-be dictator to gain power by exploiting the jealousy of the poor by telling them that it isn’t their fault that they are poor- it’s that the rich guy has gamed the system and is somehow cheating. This results in stuff like this:
The reality is that investment entails risk- and this is true whether the investment is your labor, your money, or anything else of value. The riskier the investment, the higher that the reward must be, or else the juice simply isn’t worth the squeeze. If you remove the reward by telling a person that he will stop getting paid at a certain point, then that person will stop investing at that point.
If you set that limit at $999 million, then the person will stop investing beyond that point. After all, why risk losing your investment for no prospect of a reward? No more Tesla, Microsoft, or Apple. The person will shelter their wealth and simply retire.
The same goes for limiting income. Tell someone that they can only earn $200k a year, and your doctor simply stops seeing patients some time in October and takes the rest of the year off. Would you work for free?
The facts are simple-
there is not one single human endeavor that ensures that everyone has the same outcome. More talented people are more successful that less talented people
The more talent, the more the reward
people won’t work if they aren’t getting paid.
Much is made of the fact that “Elon didn’t found Tesla, he bought it.” That may be true, but Tesla wasn’t as successful until AFTER he bought it. It was Elon’s talent and skill that made the company what it is. That’s the reason why he is the richest man in the world. It’s no different than Michael Jordan. He played basketball like no one ever has- because of that, he was paid obscene amounts of money to play that game.
This jealousy of his wealth is what leads to communists using that wealth as a wedge issue to gain power, where the communists themselves then gain power and become wealthier than everyone else.
Which has the result of people becoming angry and killing CEOs. Was he doing things that many of us despise? I would argue that using a computer system to deny legitimate insurance claims wholesale, which resulted in needless death and illness is indeed evil. However, that isn’t an indictment of the entire economic system, and certainly doesn’t mean that citizens should begin executing CEOs. That ends in a place that is far, far worse than where we are now. The real fault here lies in government oversight that permits companies to get away with this.
Insurance companies argue that they can’t be held legally responsible for a person’s illness or death because they aren’t the ones who make medical decisions. After all, it’s the doctor who decides on your course of treatment, they argue. The courts and our laws have agreed. Of course, this completely ignores that a medical procedure that can’t be paid for is as good as prohibited. After all, if your doctor wants to order an MRI, but the insurance company won’t pay for the expensive test, it isn’t going to happen.
Now I am not arguing that the government needs to intervene. I am against the retarded intervention of power hungry bureaucrats into affairs of business. When legislatures have the power to dictate what is bought and sold, the first thing that is bought and sold will be the legislature itself.
No, the way to settle this is through the legal system with the use of lawsuits. That doesn’t mean that lawsuits where juries award someone a billion dollars because they called you a crisis actor is a perfect system, and there should be some limits on that sort of thing, but that is a different discussion. However, an insurance company that refuses to pay for someone’s surgery, despite the fact that they were supposed to insure that very person, is clearly involved in medical decisions and shouldn’t be permitted to claim that they aren’t.
It would be easy to blame healthcare and claim that we should have government run healthcare. This doesn’t solve the problem, it simply transfers the power from a CEO to a random government apparatchik that decides who gets medical care based upon his own whims: “Oh, only left handed transwoman lesbians with purple hair get MRIs this month.”
It’s a complicated situation, as most adult problems are. Looking for a simple solution to a complex problem is to believe in the tooth fairy and Santa Claus. It’s a childish dream that just can’t work when we talk about hundreds of millions of people interacting and trying to gain advantage over one another.
Ray Dalio says America’s $35,327,646,622,839 national debt will continue to grow no matter who wins the race for the White House. The national debt is bound to be ignored while the government uses inflationary policies to reduce the real burden of its debt, according to the Billionaire.
“We have an enormous amount of debt, and it’s going to keep increasing. And one man’s debts are another man’s liabilities… Nobody’s going to deal with the debt policy. That’s going to end up being monetized down the path.”
Regardless of the electoral outcome, Dalio sees the US heading towards a more “fragmented” existence, where portions of the country look to their state governments for leadership due to “irreconcilable differences” with the next administration.
The US dollar has to be inflated so we can pay on our enormous debt with less valuable, inflated dollars.
Buy PMs, Real Estate, and other things that have intrinsic value. The dollar is headed for the end.
Let me use a real life example to explain how that works. In 2009, Microsoft unveiled a new search engine. To get people to begin using it, they started a promotion. If you used Bing to arrive at a website and made a purchase, any purchase, on that website, you would get a ten percent discount (maximum $100) and you could do this once per day for ten days.
Armed with a new $10,000 credit card that offered zero percent interest and no payments for the first year, I bought 8 one ounce gold Eagle coins from Ebay. They were costing $1000 each, and with the discount, I managed to only pay $900 each for them. Why didn’t I buy ten? Because a lot of other people were doing it, and the coins had risen in price quickly and it was no longer a deal. In les than two weeks’ time, the price of gold Eagles went from $1000 to over $1100, even though the price of gold didn’t move.
Why did that happen? Because the demand side of the supply/demand equation was pressured, while supply remained the same.
The coins: I held on to them for almost a year, sold them for $1800 each, used the proceeds to pay the credit card off, and walked away after doubling my money- well, their money. I made $8k using the credit card’s money.
Many people who are in the general public don’t like “bankers” but without them, it is very difficult to build wealth and for a modern economy to function. Money is the means with which we engage in trade- it enables two people to trade goods and services.
Money permits the farmer to barter for medical services without having to travel to the doctor’s office with a lamb in tow to use for barter. It permits the doctor to barter with others for things that can’t readily be traded for- the doctor can’t mail a leg of lamb to the electric company, and it’s difficult for the electric company to barter with a bushel of electricity.
Once we admit that money is a necessary commodity that permits modern trade, we also realize that we sometimes don’t have enough liquidity to make large purchases. In these cases, we find someone willing to loan us the money. Seldom do we have friends and family that have enough in liquid assets to loan us money for a house or a car, so we enlist strangers and acquaintances to loan us money.
Those people aren’t going to loan us money without knowing the risks of not being repaid. They evaluate that risk, and looking at people with similar financial profiles, determine how risky it is to loan you money. That is, how likely is it that you will default on the debt and walk away with their cash? So let’s say that the lender determines that people whose financial situations are similar to yours default on loans 1% of the time.
The lender needs to be compensated for his administrative overhead, the risk he is undertaking, and still have enough for a profit. If he were to invest that same cash into a mutual fund, he would have significantly less risk and expense, so he needs to make more than he would make investing in that mutual fund.
In this case, the mutual fund would pay 2.5%. The lender’s overhead is another 1%. If the lender doesn’t get to charge at least 3.5% interest on this loan, he is only breaking even with that mutual fund, and that doesn’t even account for risk.
In order to measure risk, the lending industry has developed credit scoring, with Fair, Isaac, and Company (FICO) being the company with the most widely used scoring model. Let’s look at default rates for different FICO scores:
You can see that loaning money to people with a FICO score of 700 or higher means that you have a 6.4% chance of losing your investment. Using the numbers from our example above, if we were the lender, we would have to charge 9.9% interest to get the same 2.5% we would get from that mutual fund. In this case, we have one of two choices: we can lend to people with a 700 credit score or more, but at 10.9% interest, or we can loan to people with a 750 FICO or higher, and because the risk is lower, we could offer loans at 6.5%.
The issue here is that only 40% of the public has a score of 750 or higher, and everyone wants to lend to them because the risk is so low. For those reasons, competition is fierce for their business, and we will likely only be able to charge 5.9% for loans without collateral, and 5.7% for loans with collateral, because collateral reduces our risk.
This is of course a simplified example, but it does show that this is a simple math problem that balances risk with reward. This doesn’t mean that bankers are evil.
Let’s suppose that you had a chance to choose between two employers. One offered to pay you $20 an hour, and there was a 99% chance that your paycheck would cash without a problem. The second employer offers you $100 an hour, but there is a 35% chance that your paycheck will bounce. It’s a choice that you want to be careful with.
Banks do the same thing. Why would someone loan you money unless there was a reward for them doing so? Anyone who has loaned a friend or family member knows that there is a chance they will never see that money again, and that is for people you know. Absolute strangers are even more likely to walk.
I discovered that myself when I invested money in some peer to peer lending on Prosper.com. I put $500 into that website, loaning that money by partially funding several different loans. The terms there are simple- people see the credit scores of lenders, and bid on funding those loans at whatever interest rate they are comfortable.
So let’s say that you want to borrow $1,000 and your credit score is a 740. There is a 6.4% chance of a default, so the bidding begins. Your loan is funded by 30 people who offer to lend you the money at 8.9% interest. You have to repay that loan in 36 months, with a monthly payment of $31.75. At the end of the three years, the people who funded your loan would have received $1.10 in return for every dollar that they loaned you- a profit of 10% over three years. (some of the interest charged is given to Prosper to cover their expenses)
If you only make a year’s payments before defaulting, each dollar invested would only return 69 cents, meaning that the investors lost 31% of their investment.
That’s why interest gets charged, and a basic idea of how it’s calculated. If interest wasn’t charged, then there would be no money to lend to anyone.
