Taking Our Profits

In the Fall of 2021, I saw the financial problems coming and promptly got out of the stock market. It crashed just a couple of months later. I posted about it at the time, but I can’t find the post. That meant for 2022, we had no Capital gains because we weren’t in the stock market.

Anyhow, I bought back into the market last July, at my wife’s insistence. She bought 450 shares of Royal Caribbean (Symbol: RCL) at $32 a share. Total cost was $14,400.

Today, RCL announced their Q2 profits, and they went from a $500 million loss for Q2 2022 to a $450 million profit for Q2 2023. The stock price skyrocketed to $112, which put the stock price near its pre-pandemic price. The value of those 450 shares was $50,400 when we sold, which is a $36,000 profit. A return rate of 350% for the year.

My other stock buys haven’t done as well. I bought 100 shares of Smith and Wesson last December at $9.82, and it is only selling today at $13.09. I own a few shares here and there, but they are sitting flat. The market may go up from here, but I am not looking to be greedy. Still, I think this is a good time for profit taking on stocks.

Still, we have done well in the market during the past year, having made just shy of $40,000 in capital gains. That will mean we owe $6,000 in capital gains taxes, but that is still less than what we would have paid in taxes on a second job. My wife knows far more about investing than I do, and that’s why I let her make the calls on that.

Exploding Debt

On June 1, the Republicans caved by giving President Biden a blank check to borrow whatever and how ever much money he wants to spend. On that day, the US debt stood at $31.46 Trillion. Within a month, the US had borrowed another Trillion dollars. Here we are, just six and a half weeks after they handed him the credit cards, with $32.54 Trillion in debt.

Proving that the Democrats never deal on ANYTHING with good faith, they are already calling for the abrogation of the handshake agreement that the parties reached to rein in the spending. They are borrowing money at a rate of over $100 Billion every business day. To put that in perspective, I wrote in 2009 that Obama had broken a record by borrowing a Trillion dollars in only six months.

It took this nation over 200 years to borrow a trillion dollars. Trump did it in seven months, Obama did it in only 6 months. It took Biden 9 months to borrow his first Trillion dollars, but he soon got better at it. His second trillion took three months, borrowing $2 trillion in his first year. In fact, he has increased the national debt by 118% in just two and a half years.

President Trump increased the National Debt by 134% in four years.

Obama increased the debt by 194% in eight years.

President George W Bush borrowed his first trillion dollars in two and a half years. He borrowed his second trillion a year and a half later. Another two years, another $1 trillion. All told, President Bush borrowed $5 trillion in 8 years, increasing the national debt by 187%.

It took President Clinton 3 and a half years to borrow his first trillion dollars. All told, he borrowed $1.2 trillion in his first term, and $600 billion in his second. He increased the national debt by 140% in eight years.

George HW Bush borrowed his first trillion in 3 years, and he increased the National debt by 170% in four years.

Reagan borrowed his first trillion in 6 years, and doubled the National debt during his eight years in the White House.

Carter increased the National debt by 150%, but “only” borrowed $300 billion in 4 years. I guess that was when $1 Billion was real money.

Ford increased the debt by 147% in 3 years., Nixon by 135% in 5 years, Johnson by 116% in 6 years, Kennedy by 106% in 2 years, Eisenhower by 108% in eight years.

Democrats, and Republicans, both in a contest to see who can spend the most in our society of “how much can you give me if I vote for you.”

Remember when the Biden spokeswoman told us that borrowing trillions didn’t cost anything because it was already accounted for? So that’s where we are- under Biden, the US has borrowed $4.75 trillion in just two and a half years. This can’t continue.

By definition, anything that can’t continue, won’t. There is no amount of voting that will fix this.

Biden’s War on Banks

So the Biden administration has just guaranteed all depositors of the SVB bank. Now that he has taken this step, this has effectively nationalized all of the deposits of all banks in the country. Now banks are free to take all of the risks that they want, because they aren’t risking their own, or even their depositors’ money. It’s more free money from Uncle Sugar’s printing press.

The thing is, those who owned stock in the bank are getting screwed out of their money. The bank has declared bankruptcy, and anyone who owned stock in the bank can’t even sell it. In fact, those who were selling the bank short have also lost all of their money. The billionaire depositors are being bailed out, but the bank’s stockholders are not.

The government has removed risk from the banking sector, now it doesn’t matter if you are a good bank manager or not, you are gonna get paid by the taxpayers. There are those calling this a failure of capitalism, but they are wrong. In a free market system, well run businesses are rewarded, poorly run businesses fail. That is how the market stays healthy- the poorly run businesses are eliminated.

Not so in our system. In this system, poorly run businesses that are favored by government are continually bailed out, thus avoiding all consequences of their poor decision making. This is the government picking winners and losers. So let’s look ahead and see the consequences:

Stocks in small banks just became a whole lot riskier, while keeping huge balances in them are now without risk. Banks will have gigantic pools of money that they are now able to use to make risky loans and investments. If the risks don’t pan out, the depositors will be made whole, and the stockholders left holding the bag. A larger bank will then buy out those risky investments for pennies on the dollar. It’s a system begging for abuse and fraud. The ultimate consequence is the destruction of small banks, concentrating all banking in the realm of banks that the government has deemed “too big to fail.”

I wonder who paid one of the Biden clan to make this happen, and how much did it cost?

Free Welfare House

Substitute teachers in Highland county make $119 a day. It’s a part time job, where they only work when there is a classroom needing a teacher for the day. They are only needed on days that there are students in the school in need of supervision, so at most they can work 180 days per year. That maxes out their earning potential at less than $25,000 a year.

One of those substitutes, Lashawn Kinsey, bought a house in Highlands County, Florida on January 13, 2021. She did it by getting a mortgage for $127,645, meaning that she made a down payment of $2,355. At the time of the mortgage, she had three kids, which placed her below the Federal poverty level of $26,500 for a family of four. I can’t confirm this, but she is almost certainly on public assistance. On top of that, she is a college student, meaning that we are likely paying for her education with Pell grants, because she is a black single mother.

It’s no surprise then that she was soon unable to make the payments, and had to seek assistance from the Florida homeowner assistance fund to avoid foreclosure. The state has been picking up the tab for her mortgage and utility payments, or at least they were until an administrative screw up caused payments to stop back in October.

I don’t feel sorry for anyone in this story, except the US taxpayer. As all of you know, I am shopping for a new home. In order to do so, I had to allow the bank to do a net worth audit, income verification, and credit check. How could a bank loan money to someone with a part time job and no assets? This sounds like the stuff that was going on in the early part of the 2000s that caused the mortgage collapse.

The fact that I had to work a full time and a part time job while going to school, so I could afford to pay tuition, then had to save money and build credit in order to be able to buy a house, while some black woman gets a free one at taxpayer expense must be all of that white privilege I keep hearing about.

No Money for White People

Wells Fargo was sued in April 2022 for not loaning money to enough black people. On December 21, the bank reached a settlement agreement where they agreed to pay $3.7 billion in damages and civil penalties.

The bank has decided to take the only path that makes sense from a business standpoint. They are not going to lend any more money to white people. The noose tightens. If you are a white person with a job, you aren’t wanted in this society.

The Scope of the Problem

According to figures from the Congressional Budget Office (CBO), the US government spent a total of $6.8 trillion in 2021. Of that amount, $4.8 trillion was mandatory spending, otherwise known as entitlements. In other words, money that has to be paid out by law: Social Security, Medicare, Medicaid, Unemployment Compensation, Refundable Tax Credits, Paycheck Protection Program (PPP), and other mandatory spending. Another $350 billion was interest on the debt that we already owe, bringing the total outlay for mandatory spending to $5.2 trillion. The government only collected $4 trillion in taxes. So without spending a dime on the rest of the things that the government must do: defense, courts, prisons, and all of the alphabet agencies, the government is already running a deficit of $1.2 trillion. Add in all of those expenditures, and the deficit rises to $2.8 trillion. Compare that to my post on this topic from a decade earlier.

What is most alarming is the deficit as a percentage of our GDP, which right now is 12.4%. Over the past 50 years, the deficit has averaged 3.5% of GDP. Think about how much spending has risen to expand the deficit to this point. The national debt is now 100% of our gross domestic product. A decade ago, it was 34% of GDP. Three years ago, it was 80% of GDP. That’s without accounting for the money we owe the Social Security trust fund. Add in that amount, and the debt to GDP ratio rises to 128%.

The US isn’t even in the worst shape. Take a look at the debt to GDP ratios of the world’s top 10 debtor nations:

  1. Venezuela — 350%
  2. Japan — 266%
  3. Sudan — 259%
  4. Greece — 206%
  5. Lebanon — 172%
  6. Italy — 156%
  7. Libya — 155%
  8. Portugal — 134%
  9. Singapore — 131%
  10. Bahrain & the United States (tie) — 128%

In contrast, here are the ten countries with the lowest debt to GDP ratios.

  1. Brunei — 3.2%
  2. Afghanistan — 7.8%
  3. Kuwait — 11.5%
  4. Democratic Republic of the Congo — 15.2%
  5. Eswatini — 15.5%
  6. Burundi — 15.9%
  7. Palestine — 16.4%
  8. Russia — 17.8%
  9. Botswana — 18.2%
  10. Estonia — 18.2%

Note that Russia is the only large, first world country in the bottom ten. The suspicious side of me wonders if that is why the Democrats are so keen on starting a war with Russia.

What we are seeing here is that the entire world is on the verge of an economic collapse caused by profligate spending and loose fiscal policy.

Gas tax

During October, gas prices in Florida were 25 cents lower, thanks to a “tax holiday” signed by Governor DeSantis. That tax expires this morning. I’m sure the headlines from the MSM will be how it is DeSantis’ fault that Florida gas prices just went up by 25 cents a gallon.

Meanwhile, Joe Biden is slamming oil companies for making “record profits” while “price gouging” the American public.

Exxon Chevron made a combined profit of $29 billion for the second quarter for all sales of everything they sell, worldwide. During that same quarter, Americans used about 35 billion gallons of gasoline, meaning that the Federal government collected $7 billion in profits from the sales of gasoline. Then there are the taxes on other Exxon products: oil, natural gas, diesel, propane, and more. Who is making the record profits here?

Ronald Reagan summed it up nicely: Tax and spend.

Meanwhile, the US has less than a three week supply of diesel fuel, which is less than half of the normal amount. That doesn’t mean we won’t have any diesel in three weeks. What it means is that supply is short. That means that the law of supply and demand dictates a rise in diesel prices. Farmers rely on tractors, and our supply lines rely on trains and trucking, all of which depend on diesel. This will mean that the prices on everything will soon begin to climb. Right now, diesel stands at $5.25 a gallon in my area. Let’s see how that goes.