Watch Out

If Uncle Sam thinks I’m going to “voluntarily” buy Treasury bonds with my 401k, he’s going to have a big surprise when I simply stop contributing and opt out, assuming that option is even available.    For decades third world countries have been nationalizing and seizing pension plans and now the U.S. seems to be headed down the path of nationalizing 401k plans.

Oh sure, it’ll start off slowly, just 1% here or 3% there then it’ll get to 10% or 20% then the government will fiddle it all away like social security.  If this rule is enacted I think I will be done with ever investing in the 401k.  What about the free match you ask?   Well there’s nothing for free and especially if the government is going to take it.   We’ll see what happens in a couple of weeks…

For the first time in what must be years, we will actually be driving to our vacation destination this labor day weekend.  To be fair, it’s only a four day vacation but we normally fly to our destination and that won’t be happening.   Quite honestly, I’m sick of the current state of air travel:

First, you need to drive to the airport and waste a huge amount of time and gas to get there, then park car and spend more money.  Then there’s that bag fee that doesn’t seem to be included in the price of airfare any more.  Secondly, you need to walk through a virtual strip search because someone might blow up the plane.  If you wait and stop to think about that for a minute, it gives anyone pause to wonder why anyone should ever fly…strip naked to be sure the plane won’t be blown up.  Oh yeah and it irks me that there are 20 TSA guys just standing around doing nothing but collecting salaries and likely absurd pensions.

Then it’s another wait until you board the plane and consider yourself lucky if the flight isn’t delayed because of weather or something else because the airlines run on a skeleton plane schedule, you’re next flight might not be till the next day.    When you finally get on board, it’s generally a horrible experience with crap seating, little or no food, and flight attendants that might pop the hatch and jump off the plane with a beer.

Finally, you arrive at your destination and pay more fees, taxes and god knows what when you rent a car and head to your final destination.   The whole system simply isn’t sustainable any more and it will all come crashing down soon.   As for this family, we’re avoiding the air hassles and simply driving to our destination!

Why aren’t companies hiring?   Why is unemployment growing again?   The answer is simple, for those people who currently have jobs, we’re currently doing the work of 3 people so why should a company go out and hire additional workers when one will do the work of three?

I have been working 12 to 18 hour days starting early in the morning and working late into the night.  I don’t dare complain because there are hundreds of people applying for jobs at McDonald’s.  The situation is pretty grim for most of my peers and few complain about it because they’re too deep in debt with their McMansions and other lifestyle perks.   Personally, I have sufficient cash to pay off all debt and be out for a while but right now is not the time to do it as the economy will continue to deteriorate over the next 12 months.  I continue to bank cash for the great fiasco coming.

At some point in 2012, I anticipate a huge labor crunch as people seek greener pastures in droves but that is over a year away!

So these past few years have been filled with earthquakes, tsunamis, volcanic eruptions, and now meteors streaking through the sky and I just can’t help but wonder about that Mayan prediction that the fifth age of the sun will come to an end.   Seriously, the massive airline disruption has highlighted yet another band of critical failures in the infrastructure we’ve all come to expect and take for granted.

Really all we need now is a large electromagnetic pulse to wipe out chips in cars, trains and airplanes and we’d be instantly royally screwed.  Why not have a large x-ray burst do us in while we’re at it?  Supposedly airlines have lost over 1 billion dollars and are now seeking bailouts from governments which means taxpayers – some business model huh?

All anyone can do is have a little bit of preparation…only 974 days till Galactic Solstice…..

This Wall Street Journal article points out what I’ve been suspecting for years: Pre-paid college tuition is a scam!  It’s a scam or rather “ponzi” scheme just like social security, medicare and any other government program with similar characteristics.

This poor woman has contributed $100,000 under the false assumption that her grand kids college education would be taken care of but now the state is struggling to keep up and finding all sorts of loop holes to not fulfill their obligations.  Hmmm…..sound familiar?

Patti Lambert wanted to pay the college tuition for her eight grandchildren. So for the past 16 years, the real-estate agent signed onto the state of Alabama’s prepaid tuition program. She invested more than $100,000—a daunting amount but a good deal because the prepaid plan promises to cover tuition no matter how much it increases.

Or so she thought. Facing a severe funding shortfall, Alabama is trying to renege on its promise to foot the whole bill. Instead, the state wants to pay the average tuition rate, potentially forcing schools and families to make up any difference.

When my wife and I first got married, we went through our finances and my wife showed me some contributions she was making to a similar program for her younger sister.  I immediately told her to quit paying it and request a refund.  She got all of her money back and we put it in savings.   I told my wife that when the time came, we would help her out as much as we could but that ultimately the plan wasn’t going to work.   A few years after the state froze the program and significantly modified the plan, making many people unhappy.    My sister in law graduates this May and my wife’s been helping her along the way with tuition and other items.

I’m still waiting for the day when the exact same thing happens to social security and at the current rate of disintegration that should only be a few years away.

Here’s some food for thought, I looked at the USO and UNG call options for January 2012 (in the money) and I was surprised to see over 20% premiums on these two ETFs two years out.   I checked on UGA and this is showing 11% premium just SIX months into the future!  This bothered me quite a bit so I did some further research using my utility company.  I am fortunate enough to live in a state that offers competitive electric utility companies and all of them are pricing in electricity 20% higher than I have today for two years into the future.   My current rate is about $0.10 per kilowatt and signing a two year deal today would cost me $0.12 to $0.13 per kilowatt.

The utility companies are pricing in inflation at 20% two years into the future on electricity rates!   For reference (and control), Microsoft call options TWO years into the future barely show 10% premiums.  Verizon and AT&T are also at 10% or less two years into the future!

This is extremely concerning on one level and extremely profitable potentially if I can figure out what the reason behind this is that people aren’t seeing.  When I check the futures market on WTI Crude it only shows a 10% premium for January 2012.   Somethings out of whack.

Check out the sample charts and calculations.

On one level, I’m tempted to buy UNG or USO or even UGA and sell those options and book my profits for the year.   A 20% return on two years is about 10% per year and way much better than any bank is paying.   The risk?  Who the hell knows what will happen to energy prices two years from now but a 20% return over two years ain’t bad!

I was just amazed when I saw this article about the city of Phoenix implementing a sales tax on groceries!   If any astute readers can tell me what they see wrong with the logic, you’ll win a coveted RichSlick kudos!   I’ve given you a hint (see bold words).

Desperate to save police, fire and other city jobs, a divided Phoenix City Council on Tuesday approved a sales tax on grocery items that will generate tens of millions of dollars a year.

The 2 percent food tax will take effect April 1 and expire after five years, though Mayor Phil Gordon said the council has the option of reversing its decision after it hears from the public during 15 budget hearings planned for this month.

The tax on milk, meat, vegetables and other food purchased by shoppers will generate an estimated $12.5 million for the fiscal year that ends June 30. It will raise another $50 million for fiscal 2011. Food purchased with food stamps will not be taxed.

Uh, excuse me here but where is really the desperation in this scenario?   So the city’s brilliant plan is to make it difficult for people to buy food that they need to survive so they can have bureaucrats and other “essential” services survive?  Is this the worlds greatest oxymoron or what?

Long before we had police, fire or city officials, we had land and labor that meant food but somehow we’ve now inverted that logic where people must starve in order for police, fire and city officials survive.    I can tell you what is going to happen, the people of Phoenix are simply going to drive to Mesa or any other nearby town that doesn’t have this silly tax and the city of Phoenix will end up losing revenue.

Wow, just days after I wrote this post about Facebook, another article was sent to me about some privacy issues and this one pertains to personal finance:

Want a bank loan? Get yourself more Facebook friends — but make sure they pay their bills on time.

Banks are beginning to look at user accounts on Facebook, Twitter and other social networking sites to determine if an applicant is loan-worthy, raising privacy concerns as well as questions over whether a person’s online friends, likes and dislikes can actually measure their financial stability.

Everything a person does publicly on their social-networking accounts can be found by market researchers if the user’s privacy settings allow it. Researchers are now looking at a person’s online conversations, the groups they join, products they look at and even who their friends are to determine loan-worthiness.

“The presumption is that if your friends are responsible credit cardholders and pay their bills on time, you could be a good credit customer,” reports WTOP News in Washington, DC.

This gives a whole new meaning to “Am I my brother’s keeper?”

By pure accident, I ended up on google news archives and discovered something very interesting.   I was searching for a list of companies that went bankrupt in 2009 and I came upon an odd little graph at the top of the google archive.   I’m not sure how the graph works but I’m assuming that the graph indexes the amount/volume of words used in News articles for the period in question.   Since news organization often give the readers “what they want” to read I can surmise that news articles are a reflection of societies’ needs, wants, likes and hopes.    So here are the graphs for a few key words.

The  graphs include economy & money related, recovery, depression, education, regulation, deregulation and gloom and doom famine, disease, death:

Just by looking at the graphs and the major spikes that occurred during major economic distresses such as the great depression and world war II,  I don’t think we are anywhere near the end of the current economic calamity but you can draw your own conclusions.

Just after a few short days of writing this post on governments cutting back on education, we now have cities with the audacity to tax poor students via tuition to server the interests of fat, old, pensioners.    What in the hell is the world coming to?

The mayor of Pittsburgh calls it the “Fair Share Tax.” But to officials at the city’s 10 colleges and universities and many of their 100,000 students, it is anything but.

Mayor Luke Ravenstahl said the universities rejected his request to pay $5 million a year to the city, and that he had no other option.

On Wednesday, the City Council is expected to give preliminary approval to Mayor Luke Ravenstahl’s proposal for a 1 percent tuition tax on students attending college in Pittsburgh, which he says will raise $16.2 million in annual revenue that is needed to pay pensions for retired city employees. Final Council action will be on Monday.

That’s right, when things get tough, the young get screwed in favor of the old, fat and useless.   Absolutely amazing.

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