I have mentioned in the past that the Government and specifically politicians should not get involved in Economics but it does give them a huge club in which to garner favors and redistribute wealth which all leads to power. This is always at the expense of the consumer and investors.

As Investors we need to be aware of the back door deals that are done and take advantage of them. The following will give you a reason why not to short Oil at the moment and just how truly crooked many of our Senators are, and points out how big of liars they are as well. They can do more to harm the US economy in two paragraphs than any market changes ever can.

Read on and you will see what I am talking about. Why this is not the largest news story in the media is beyond me. My Dad actually alerted me about this.

This is from Fox News and Steven Malloy who has one of the sharpest scientific and economic minds around. You will have to dig to find this story but it is there. Here is a link to his column and story.

This one is almost beyond belief. But what is done is done. And you think our politicians really care about our economy. It also points out the real anti-technology and capitalism agenda of most environMentalists.

Junk Science: Candidates Fail Energy Independence Test

Thursday, February 28, 2008

By Steven Milloy

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All the presidential candidates say they’re for energy independence. So why didn’t they do something about it when they had the chance?

Hillary Clinton rails on her Web site about Americans sending “billions of dollars to the Middle East for their oil.” Barack Obama warns that Middle East oil is the “lifeline of Al Qaeda.” Republican hopeful John McCain says that, if elected, his energy policy will “amount to a declaration of independence from our reliance on oil sheiks and our vulnerability to their troubled politics.”

But Clinton and Obama recently voted for a bill that can only promote dependency on oil from the Middle East. And John McCain went AWOL, not voting on the bill at all.

A little-noticed provision of the ironically named “Energy Independence and Security Act of 2007″ that was passed by Congress and signed into law by President Bush last December bars the federal government from purchasing fuels whose life-cycle greenhouse gas emissions are greater than those from fuels produced from conventional petroleum sources.

Before we get into the energy independence implications of this provision, it’s worth appreciating the obscurity of the provision and the fact that the media doesn’t seem to understand its import.

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  Full-page Junk Science Archive

I only learned of the provision while thumbing through the Feb. 15 Financial Times, serendipitously noticing the egregiously mis-titled article, “U.S. risks trade dispute with Canada on fuel.” A bit of research turned up no other media reports relating to this particular section of the bill.

The Financial Times article reported on how section 526 of the energy bill prohibits the federal government from buying oil that was produced from Canadian tar sands, a reserve that holds about two-thirds the amount of recoverable oil as compared to reserves in Saudi Arabia.

Because it takes greenhouse gas-producing energy to extract oil from the tar sands, the article focused on the fact that the law could affect billions of dollars of trade in oil, particularly since the U.S. Department of Defense is the world’s largest single buyer of light refined petroleum.

But while I give the Financial Times credit for reporting this story, it really dropped the ball with respect to understanding it — this is yet another effort by environmentalists and their congressional henchmen to cause chaos in our energy supply.

Sure enough, it turns out that Rep. Henry Waxman, D-Calif., and Rep. Tom Davis, R-Va., already are pressing the Department of Defense to comply with the provision. In a recent letter to the secretary of defense, Waxman and Davis asked how the DOD will ensure that the fuel it buys doesn’t come from Canadian tar sands or from domestic coal-to-liquid processing.

Waxman and Davis apparently expect the military to expend the Herculean effort of tracing the source of the fuel it purchases and then to refuse North American oil from unconventional sources apparently in favor of oil from OPEC sources such as Saudi Arabia and Venezuela. How’s that for energy independence and security?

It gets worse if you’re one of those who believe that biofuels are the path to energy independence.

The plain language of section 526 also would seem to ban the federal government from purchasing biofuels like ethanol, since their life-cycle greenhouse gas emissions are greater than that of conventional petroleum.

“Turning native ecosystems into ‘farms’ for biofuel crops causes major carbon emissions that worsen the global warming that biofuels are meant to mitigate,” researchers from the University of Minnesota and the Nature Conservancy reported in Science (Feb. 7). Another study in the same issue of Science projected that the life-cycle greenhouse gas emission from ethanol over 30 years is twice as high as from regular gasoline.

Interestingly, Waxman and Davis specifically excluded biofuels from their letter to the DOD. Not to worry, though, biofuels likely soon will become fuel-non-grata as the environmentalists have already started to demonize them.

Similar to the case of compact fluorescent lightbulbs discussed in this column last week, The New York Times editorial page this week signaled that biofuels soon will become as politically incorrect as the Canadian tar sands and domestic coal-to-liquid fuels.

The Times opined that, “Done right, ethanol could help wean the country from its dependence on foreign oil while reducing the emissions that contribute to climate change. Done wrong, ethanol could wreak havoc on the environment while increasing greenhouse gases.”

“Done right” for the Times is what’s required in the energy bill — a 20 percent reduction in life-cycle greenhouse gases as compared to gasoline. But, of course, this is a next-to-impossible goal since the life-cycle greenhouse gas emissions for ethanol are projected to be 100 percent greater than for gasoline.

It likely will require nothing short of a technological miracle for ethanol to achieve the energy bill’s standards in the near or even distant future.

Now, if the federal government is barred from bio-, tar sand, coal-to-liquid fuels, how long will it be before such a ban spreads to contractors that do business with the federal government, to states and their contractors, and then, by default, to the nation as a whole?

It’s hard to take the presidential candidates, President Bush and Congress too seriously on the energy independence issue when none of them opposed a bill that actually makes us more dependent on OPEC.

Steven Milloy publishes JunkScience.com and DemandDebate.com. He is a junk science expert, advocate of free enterprise and an adjunct scholar at the Competitive Enterprise Institute.

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For this, the US Senate and President Bush get this week’s Big Fat Fibber Award.

I thought you might enjoy this as much as I did.

Who’s Afraid of Prosperity?

Opinion Editorial by John Stossel - Jan 31, 2008

According to The New York Times, Americans should be fretting about the fact that China and India are getting richer. Are these scaremongers right — or are they just succumbing to zero-sum economics?

Should we worry that the people of China, India and other undeveloped countries are getting richer? Apparently so, according to the newspapers and the “experts” they quote.
They don’t come right out and say that global prosperity is bad for us. Instead they say, as The New York Times recently said, “As development rolls across once-destitute countries at a breakneck pace, lifting billions out of poverty, demand for food, metals and fuel is red-hot, and suppliers are struggling to meet it.

“Prices are spiraling, and Americans find themselves in what amounts to a bidding war with overseas buyers for products as diverse as milk and gasoline.” (more…)

I get up every morning determined to both change the world and have one hell of a good time. Sometimes this makes planning my day difficult.
- EB White

And I would add to that, make a lot of money. Even in jest, planning is the key. Do you have an investment plan? How about your goal for the year? Hopefully it is at least our 21.5% and more.

With the monetary supply increase of about 14% or so by the Feds in the past year or so, and inflation running at a good 4%, if you did not go up 18% in the past 12 months no matter what your portfolio said, you lost money.

That darn old Fiat currency. The only problem with it, is when they want more they just print it. And that is exactly what has happened… a lot lately. Ok, more than just lately.

Want to see what happened since we (the US) went off the Gold Standard and became a a Fiat Currency? This is from the Grandfather Economic Report. Some great reading there by the way and recommended by Milton Friedman and Andrew Anderson.

Now I am not going to get into a discussion on Fiat Currency here in detail other than to quote Wikipedia and to make you aware of what it can do to your portfolio.

OK, don’t laugh because I am quoting old Wiwk, but they have it about right in that up until the time the US did it. Whenever a currency was taken off a standard, i.e. Gold, Silver, etc. tt was usually down so by totalitarian regimes.

A better way to look at this graph is to turn it upside down and and use it to show the buying power of a dollar since the Feds got involved. Ouch…. We are from the Government and we are here to help you.

What this shows it that a dollar back then was worth about 550% more than what it is now. And no that is not a typo.

From Wikipedia -

“Another aspect of fiat money is its relation to property rights. Many economists argue that since a government that has control over its territory can requisition, confiscate or otherwise ban the use of specie within its boundaries, or suspend promise payments — as has often happened in the past — the presence of fiat manipulation of money is seen as being a signal that a government is intent on abrogating property rights for other purposes. ”

That bottom line is that the Feds have opened the sluice gates on the money supply stream and for all of those folks that think they are treading water and staying in place, they are actually getting swept down stream at a pretty good clip.

So, in order to stay afloat and get ahead, 21.5% returns definitely should be your goal. Otherwise, you might be hearing the sound of those famous roaring falls in Going Broke Gulch .

The Inefficiencies Of Government Economic Intervention

Happened to turn on the boob tube at lunch and see what it was on Cspan. State of the State Address by Ohio State Governor (D) Ted Strickland. He was talking about the State Government’s Initiative to save and create jobs. By those statements alone, I knew that it should be an entertaining show as last time I remember from Economics 101, state involvement by spending taxpayer money is usually the least inefficient method to create jobs known to man.
(more…)

Once again we are showing what could be a vastly different number for home sales than what the NAR or National Associate of Realtors just released for December Home Sales according to Bloomberg. My spot number shows that there appears to be as much as a 4.5% increase in homes sales from November to December rather than the stated 1.5% decline in home sales.

If you go back to my other article about how the data is pulled by the NAR, they only use homes that are listed with Real Estate Agents and not those that are sold privately, and as I showed you using data from the Franklin County Ohio Auditor’s own conveyance numbers this number is off by several factors. (more…)

The only function of economic forecasting is to make astrology look respectable.
- John Kenneth Galbraith

You have to love it.

We now have 60 Minutes talking about the Housing Bust, and Newsweek talking about the “Recession”. Historically whenever these two media outlets take note of something involving the Economy, they are always the last ones to the party.

So, this must could mean the bottom of both markets. Don’t quote me on this, but I think that at least Newsweek said the equities would never recover back in 1979. Don’t you wish that you had bought then?

I also think that 60 Minutes is usually about a year or so behind the 8 Ball. In September of 2000, CBS news had a stunning revelation that that Real Estate prices are determined by location.

With scintillating indicators like these, who needs to look at data or charts?

Opportunities abound in Chaos and Kevlar Umbrellas

I recently wrote this for another website I work on but, I felt that it really has much more relevance for us investors. This was originally published for readers of the Muse Blueprint which helps people start their own business or want to take an existing one to the next level.

If you listen to the news and I suggest that you don’t very often, you would think that the sky is falling with the economy. Well, parts of it actually are but it does not have to be so for you. I suggest that you think of yourself as the person selling Kevlar Umbrellas, like I do.

While you should be aware of economic trends such as the US dollar’s values falling like a rock with no end in site, it does open up opportunities.

I will give you just a couple of examples. As gas prices keep going up (and they will but more on that later) , it is going to make locally made products and services more competitive against those that are not local.

Do you have a product or service that can save people from driving for instance? Do you know where one is to invest in?

Here are two of my Muses or other Businesses that I have recently picked up (another strategy I will cover is buying small businesses) that do exactly that, www.888360Pixs.com and www.888EZToOwn.com . The first is a service that provides pictures, virtual tours, and Videos of Real Estate, Boats, Cars and just about everything else. The second provides FREE Real Estate Advertising.

Ok, time out here. Here is the Definition of a Muse from my Book, The Muse Blueprint.

(more…)

The Real Estate Data being used by most of the financial media and in many economic reports could be off by at least 120% in many areas and in one major metropolitan area (Central Ohio), the number used for home sales alone could be off by a whopping 374% (see chart) . To put it another way, this means that possibly only 1 out of every 5 sales are being reported.

As the Real Estate market as a whole is a major part of the US economy, this finding could have a major impact on the world markets. The questions first asked are, how could this have happened and how could this be?

It all comes down to this. Statistics = lies, lies and damn lies.

I will show you how this happened, how it became possible and the ripple effect it may have on almost every major market out there. As to the why, you will have to decide for yourself.

Since Real Estate in the US has been used as the reason for a lot of the good and bad in the markets world wide recently, with the very real possibility of the data being off by not just 10%, 20% , or even 50% but by well over 100%, this needs to be examined closely. With the Real Estate data being possibly wrong by over 100%, what does that mean for you as an Investor?

As a Real Estate Investor I have surmised that the figures were way off for at least 10 years now and started really looking into it a couple of years ago to prove to myself that my theory that housing and Real Estate sales were being grossly under reported was indeed correct.

(more…)

The Eeyore’s were on the run today. The Markets are going to need some time to settle it would appear but all of the doom and gloomers are a bit befuddled. What does this mean for most of us? Not a whole lot. Most people are not in a panic about the retirement funds or their holdings. The little guy is not selling off for the most part, nor going crazy buying either.

Overall, I give the individual for more credit than the news media does and they just can figure we all don’t act like idiots most of the time.

With the Dow up almost 300 points today it did put a stick in the spokes of the Bear unicycle for the time being.

Basically I think it is just some long overdue house cleaning. The good companies with solid earnings will probably continue to do well and the flash in the pans and those that are going along on a hope and a promise of big earnings are going to get whacked. Also, some of the Dinosaurs are going to become extinct if they don’t adapt. I can think of at least many examples in this category with two of them being GM and Ford. I think both could end up losing another 20% of their value shortly. But, we shall see.
While these two have been making strides, they really need to pick up the pace of change, cost cutting and just dealing with reality. If they don’t, their slide will continue and both may get no longer be in the top three and on the road to follow in the path of Edsel.

This goes for dozens of other companies that can’t or won’t change fast enough in the new fast moving economies of the world.

What this does is open up room for smaller more nimble companies that can change tactics, products and services quickly to meet customer and market demands.

This is where I see the best opportunity for growth. What new companies have a different way of doing things in some of the older more established niches?

Find them and you will be well rewarded. I will revisit this and give you a couple of examples that you might not have heard of. Do you have one that you think is a great play? Let us know and we will let everyone else know about it as well and let them know that you told them about it too.

Happy Investing

This will be the first in an ongoing series that I and others will be writing on the how and why of getting at least 20% returns.

For some of you this sounds like a pipe dream and yet for others, you stick you nose up at only 20%. But, if you are a serious investor, this a worthy goal for you to shoot for.

With some vehicles this is a bit easier than with others. Without going off on too many tangents, 20% is what Warren Buffet shoots for so, why not you?

If you can hit the magical 20% number you have a pretty good chance of retiring with a nice nest egg. For those of you that are a bit skeptical about hitting this number on a regular basis there are numerous ways to do so.

You can do it through and with or without leverage of various types. You can trade on margin, using options, or just plain borrow money, or last but not least, figure out how to purchase your investments on a wholesale basis. Then, you don’t even need to use leverage at all.

I am not going to attempt to go over every way to do this in the first installment but I do want to show you at least one way to do this in each one.

The first way that I will show you virtually anyone can do with a little bit of education and know how. The fact that it is so easy is perhaps that is why it is overlooked so often. That plus the fact that it is in no way shape or form sexy and does not make great copy. Well it does, but only for those of us that interested in results that end up in our wallet.

What I like about this is that you can do this tax free in your IRA or just pay taxes on it and do it however you want. The IRA is preferred way to do this though. I will touch upon this and get into more details later on.

The first way I will explain how to do this is with Real Estate.

Ok, quite yawning and don’t tell me that the Real Estate Market is tanking.

This is in fact one of the best times to do this. Have figured out that the best time to get into something is when everyone else is getting out?

This image to the left is from an actual deal that I was involved with late last year. Look at the numbers, they don’t lie. The truth of the matter is that instead of renting this out, you could easily sell it right away and gain at least 20% in less than 60 days. Yes, you can sell deals like this even in the current Real Estate Market.

(more…)

Have you ever worked around someone that I call an Eeyore? You know the Donkey from Winnie the Pooh. The person that that always sees the glass as half empty, they are constantly gloomy, never ever really upbeat, or happy. If you have ever spent any time around them you too start to get gloomy and negative and thinks start not to look too good. Even sunny days start to appear dark.

Well, not that that this totally explains what is going on, but I do think it is part of what is happening with the US and World economy. While we do have problems, the press over the past 10 years has gotten gloomier and gloomier. Everything is a crisis, and the economy has become the proverbial football in this US election season.

The Democratic candidates seem like they are trying to make it seem even worse as they try and pitch the various new government sponsored fixes for everything from your teeth, your oil changes, to the way you raise your children. The government is the answer supposedly. They have apparently named Eeyore as their official mascot.

They want the government in every part of your businesses. So, of course for you to allow them to take over control of all of those decisions, things have to be bad and getting worse by the minute and in need of fixing. There has to be a crisis.

To be fair, some of the Republicans candidates are in the same boat.

Just a friendly reminder, economic crisis’s are causes by government interference in free markets, they are not the fix for them normally.

The best thing for them to do is to get out of the way. Not play with interest rates, not do a myriad of other things to tinker with the economy.

They are caused by governments taking away the ability or incentive of the market to make good decisions. This goes way; way back with perhaps the two worst US government blunders are the Fordney-McCumber Act and the Smoot-Hawley Act.

There were several other stupid moves leading up to this that helped as well, but we will save those for another time. This is only a few decades after the government promised to implement income taxes in the US as an emergency measure to be put in place only until the crisis was over. The crisis of politicians spending your money unwisely is apparently ongoing.

If you don’t know what Fordney-McCumber Act or Smoot-Hawley was, here is a direct excerpt with a decent explanation from the US Department of State.

The Smoot-Hawley Tariff Act of June 1930 raised U.S. tariffs to historically high levels. The original intention behind the legislation was to increase the protection afforded domestic farmers against foreign agricultural imports. Massive expansion in the agricultural production sector outside of Europe during World War I led, with the postwar recovery of European producers, to massive agricultural overproduction during the 1920s. This in turn led to declining farm prices during the second half of the decade. During the 1928 election campaign, Republican Presidential candidate Herbert Hoover pledged to help the beleaguered farmer by, among other things, raising tariff levels on agricultural products. But once the tariff schedule revision process got started, it proved impossible to stop. Calls for increased protection flooded in from industrial sector special interest groups and soon a bill meant to provide relief for farmers became a means to raise tariffs in all sectors of the economy. When the dust had settled, Congress had agreed to tariff levels that exceeded the already high rates established by the 1922 Fordney-McCumber Act and represented among the most protectionist tariffs in U.S. history.

The Smoot-Hawley Tariff was more a consequence of the onset of the Great Depression than an initial cause. But while the tariff might not have caused the Depression, it certainly did not make it any better. It provoked a storm of foreign retaliatory measures and came to stand as a symbol of the ‘beggar-thy-neighbor’ policies (policies designed to improve one’s own lot at the expense of that of others) of the 1930s. Such policies contributed to a drastic decline in international trade. For example, U.S. imports from Europe declined from a 1929 high of $1,334 million to just $390 million in 1932, while U.S. exports to Europe fell from $2,341 million in 1929 to $784 million in 1932. Overall, world trade declined by some 66% between 1929 and 1934. More generally, Smoot-Hawley did nothing to foster trust and cooperation among nations in either the political or economic realm during a perilous era in international relations.

While there has been a fix offered by Bush, there are many that think that the market should be allowed to sort itself out. Be that as it may, the treasury is whipping up the printers to turn out more money and lower interest rates which could help devalue the dollar even further.

Apparently none of the World markets liked what they heard or did they? Is Eeyore out there braying for everyone to hear that will listen? It does make a good cover story for sure.

I guess we will have to wait and see what happens. The only advice I can offer is that if you have not figured out how to play the short side of the market, you are missing more than half of some of the best investment opportunities out there. If you are long stock, you should at the very least be selling covered calls if they are available.

The next few months will tell what is going on. Oh and by the way, the best defense against Eeyore is to not allow him anywhere near you. Because with him braying so loud, it can be hard to figure out what is really going on. Let him ruin someone else’s day.