Gary,

I used to enjoy W&G when it was about investing. Sadly it seems to have morphed into Fox and Whiskey News. The health care bill gives back to people who need it a tiny bit of our tax dollars. It passed. Please get over it.

Really, I keep wanting to renew the several newsletters I have paid for and used to enjoy but I (sic) every time I start to write a check I ask myself “do I really want to support an organization that hates American government, hates the fed, hates that minorities may actually get something for their taxes?” and put it away.

Please tell me this is just a phase!

Sorry, Writer, political forces have always had profound socioeconomic effects, which means that only a genuine free market in the absence of governmental pressures would allow us to analyze investment possibilities without considering what King John and the Sheriff of Nottingham are doing and whether Richard would be any better if he returned. If you want to reduce investment to sheer statistics and luck, divorced from what goes on in the real world, I suggest you play the slots, buy lottery tickets, or frequent Bingo parlors.

This “phase” will last as long as market forces are skewed by “I won!” and the politics of envy and robbing us, Chiun, and Matsumi to pay Pablo, Abdullah, those who are “entitled” to eat without working, the unions, the Greenies, lawyers, and other voting blocks. This is not racism or prejudice, it is a grasp of budgeting, cause and effect, and how we choose profitable investments.

Gary, does this person really subscribe to any of our newsletters? How could anyone who read Morning Whiskey conclude that we regard ourselves as entertainers or followers of others, that we “hate” the government and the Fed (in the sense the Writer meant that) or that we regard the health “care” bill as intended to give “minority taxpayers” something in return for their tax dollars? I read every word I don’t write published on W&G and during a year of articles and comments on what is wrong with the legislation we have never phrased them in any way other than the deleterious financial effects which will ensue, Constitutional issues, and mention of hardships which will accrue to “ordinary families” and businesses which have to make profits of some sort or cut jobs or go belly up, as all too many have already, including Circuit City, Linens ‘n’ Things, Block Buster, and just a bank or two. Recent disclosures, per regulations, reveal precisely how “little” corporate wealth will be redistributed to the government for the poor dears who don’t know about many ways to get health care for free, including just clogging emergency rooms, citizens or not.

Actions have consequences. If I employed 53 workers at present I would fire at least four of them immediately and decide whether it made more sense to automate or move my operation overseas. The Laws of Thermodynamics do not work precisely in the financial arena. Expect not “an equal and opposite reaction” but an expanded reaction to the massive tax hikes and increase in costs, bureaucracies, and regulations which will cause harm to family budgets, small firms, and even large corporations out of all proportion to the putative good expanded insurance coverage could produce. Those, in turn, will avalanche across the financial landscape resulting in more businesses closing, higher prices, and fewer goods and services purchased, which leads to fewer taxes collected, and higher and more taxes levied. What an odd world when trillions of dollars that must come out of working capital and widespread misery are touted as “giving back a tiny bit of our tax dollars,” even if we will all be covered for sex change operations. It would be interesting to know how much Obamacare will end up costing the Writer, along with the whack coming from Cap and Trade, the Food “Safety” Bill, and the drive towards “amnesty” for tens of millions of illegal aliens–in direct increases, that is, not in the ultimate causation. My personal concern stops well short of tripling my mandatory insurance costs for less adequate care.

The challenge is “to get over it” and return to analyzing business and financial, economic, sociological, resource, and foreign issues in the pragmatic lights of “this is now” and “this is what is coming from the folks who brought us Obamacare,” so I shall try. We can start with what Hank Reardon said, wearily: “We’ll just have to work a little harder.” Okay, a lot harder and smarter.

In order to choose good investments we must attempt to foresee future needs, desires, trends, and actions and the effects of behavior and legislation. Our bets must factor in the probability of inflation, the effects of taxation and proposed new legislation, and what is going on in BRIC, OPEC, and the EU, along with how much further it is “safe” to attempt to back Israel into dangerous corners and topple Netanyahu’s government. Writer, this is a process that deserves one of those warnings, “Closed course, professional driver, do not attempt this at home.” As the wise old gunslinger said to the wannabe, “Go to pitchin’ hay, son. You’ve got the hands for it.”

The goal is to increase our working capital/provide for our old ages in inflation-adjusted terms, to put it very simply, indeed. W&G experts specialize in gold, energy, emerging technologies, and commodities because the first necessity is to lock in current worth by investing in items with intrinsic value, which are also the ones we expect to hold and increase in value. We do not roll the dice casually and hope for the best. One method–which I sure wouldn’t try–is to “just get over it” and go with the political flow. You want investment advice, Writer? Short coal and go long LNG because the big money is behind destroying the coal industry in favor of LNG. Mercury is probably a good long term hold, against the fast-approaching day when it will be forbidden to manufacture or import far superior and safer incandescent light bulbs. That might be a method much to the Writer’s taste, because he appears to understand the politics of economics. Darn those profiteers selling the gullible wheel chairs and prosthetic devices…but consider buying a chair before the big tax hits.

When divorced from the politics of governmental greed and envy there can be excellent reasons for investments such as our own Byron King’s recommendation of uranium to fuel the vast number of nuclear power plants in China and elsewhere, although not, of course, in the USA.

The best courses for the foreseeable future are seeking cover or getting out from under before more of the Statists’ legislation and regulation are implemented, and analyzing which resources will be more in demand and/or in lessening supply. Concern over the growing insolvency of virtually every country on earth and the likelihood of more bubbles bursting in the coming eighteen months and placing additional stresses on other factors of the economy require that we protect our assets from what is, what we know will come to be, what we infer to be probable, and various combinations and permutations of those. Two lengthy, excellent articles I read this week covered the coming restrictions prognosticated to be placed on capital- and even human flight from the USA. A small blurb mentioned legislation being talked up in Congress at present concerning those, and Reality Check weighed in on this issue today. (Yes, Adam, I’m sure!) Most of my life there have been limits on how much physical cash could be taken out of countries. My conclusion is that anyone considering a move to Argentina, Belize, Panama, or a nation ending in -guay should decide one way or the other fairly soon, since there are reasons to suppose that such immigration will be subject to as much as a forty per cent. penalty in times to come. Some potential host nations are considering the possibility that potential immigrants may find their pension funds cease or will be withheld, rendering new citizens unable to support themselves. We are very close to proscriptions against overseas banking accounts.

More and more one factor needing our most scrupulous attention is taxes, particularly with reference to rising costs which will be the inevitable result of Obamacare, Cap and Trade, bailing out states and more bankers, and frantic attempts to deal with the sharp fall of tax revenue which results from raising rates and in part from giveaways to those who are jobless and not paying taxes. (Los Angeles will be out of money on 5 May and asked for a mere ninety million to tide itself over.) Another is the increasing conflict fomented deliberately by the “post-racial” president and his group. There are things which are far better left unsaid, such as referring to anyone who isn’t an Obamamaniac as a fascist, racist, homophobic, mean-spirited, rednecked, Bible-thumping potential terrorist, thereby raising the suspicions and hatreds of a great many groups against those of us who think we’re kind, hard-working, sensible, good Americans living the principles we were taught sixty and seventy years ago.

The author of the letter above expressed himself as politely as can be done when accusing us of being hate-filled, irrational, immature, elitist scum, but the fact remains that he insulted Gary, W&G, and even me directly and deliberately. It is my opinion, formed over many decades, that we just think the Statists are wrong and frequently very funny, but that they genuinely hate us and seek the destruction of the middle class, in particular that portion of it which creates jobs and enjoys fruits formerly reserved to the ruling, priestly, and warrior classes. They do it for a variety of reasons, but they all work together towards that common goal. The current legislation being pushed has nothing to do with bettering the lot of “the little people” or saving an “endangered” planet. All of it is concerned with increasing the scope and power of government at the cost of intellectual, economic, and uniquely American ideas of freedom. Wry laughter; I suppose that is sour grapes; “it’s immoral, it’s illegal, and I ain’t gettin’ any.”

“Please get over it.” One might as easily expect results from talking to Nancy Pelosi or attempting to explain corporate income tax to a grapefruit as to show this writer why it is irrational to endeavor to “get over it.” Wipe it out of our minds, do not consider the consequences, accept that we have no power to stop the destruction of our nation and a way of life that lead to increasing prosperity for all who worked for a hundred and seventy-five years? Discard our principles and stop being poor sports?`

The ways of the market are ineluctable, Writer, and the reactions of humans predictable. The “compassion” of Roosevelt, Marshall, LBJ, and Obama cost more than any nation can pay, something Cyrus of Persia demonstrated a couple of thousand years ago and King Saud is learning. A very expensive ruling class and bread and circuses plus fiat currency are always a recipe for disaster. The mortgage the House ran up is so far under water it cannot be paid off, period. Ours is the story of Detroit, writ large. During its heyday Detroit was the fourth largest city in the USA, the pride of American manufacturing. Today the population is 400,000 Hispanics, 300,000 Muslims, and a couple of hundred thousand who are also on the dole or running Mom & Pop stores. There is not one single chain grocery store left, and even WalMart has given up, there. Those who created jobs and had jobs left, driven away by unbearable rates of taxation and over-regulation and rising crime. The streets belong to gangs while City Hall yaps for higher taxes and demands even more aid from the state Capitol and the Feds. Sorry; they’re tapped out, too. Pampered union workers discovered that running a fork lift doesn’t pay $85K in the real world but commands little more than minimum wage elsewhere.

The best–for at least the short term–job in America isn’t being a doctor or a lawyer; it is any sort of government position. Higher wages, much better benefits, and great job security…for perhaps another five years.

The facts are all too clear. We aren’t going to get over this “bump in the road.” Those who can will relocate in Latin America or Greek islands, and some of us will continue our efforts to become as self-sufficient as possible. Those with great fortunes and/or political clout are making similar preparations. The bulk of the population is in for times that will make 2010 seem like “the good old days.”

If there is Internet and you can pay your enormous power, telephone, tax, grocery, gasoline, and server bills Christmas of 2012, Writer, tell us then how successful you and the country are in your national socialistic paradise. I will reply, “Get over it.”

Regards,
Linda Brady Traynham
Whiskey & Gunpowder

April 8, 2010

Investing in a “Get Over It” World was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Time to Ride the Silver Bronco? was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Retirement plans are…helpless flounder!  I hardly know where to begin, so I’ll start with what I know best.  I, too, was taught a few basic formulae back in ’58, and two superb ones are virtually impossible now and have been for some twenty years, minimum.

The first was that one should allocate no more than 25%, preferably less, to housing.  In our early married years I always tried to make that twenty-five per cent. cover not only rent but utilities (power, water, telephone, etc.) as well.  Usually that involved quite a bit of searching to come up with a house we were willing to live in, but I always managed.  We never lived in less than comfort, but we were never “house poor.”  A good rule is never to be any kind of “poor,” including spending too much on cars, clothing, entertainment, or whatever your personal passion is.

I can imagine the stunned looks and hysterical laughter of today’s young workers when adjured to go and do likewise, because housing and accoutrements eat up half of their after-tax income.  They consider cable TV, Internet service, and cell ‘phones to be absolutely indispensable.  My brilliant son lives in what he describes frankly as “a tiny hovel,” and has a room mate to share expenses, but he lives in Washington state, one of the five most expensive areas in the US.  When I compare relative income by my quick and not all that dirty method (divide by ten; a decade or so ago it was “divide by five!”) Andrew is making $500/month in 1966 dollars, when his father made $325 and got shot at frequently.

In theory, ‘Drew is making half again as much as John did.  He drives a WRX-STI (whatever that may be, other than fast and sporty) four years old that was paid for completely when he entered the world of commerce full time two years ago after finishing his MBA.  He is a fast-rising star (Mothers can be so impartial!) at the corporation which values him very highly, and the kid is pulling down about 60K, which sounds pretty good at twenty-six.  I’m not bragging on my son (I will be glad to, of course), I’m pointing out that the increases in taxation and the costs of over-regulation make it virtually impossible for most people to live decently on what is left after the depredations of the Nanny State, and we haven’t gotten to massive inflation and the depths of Depression, which are coming.  Not only will Cap and Trade add $1500 to $3000 a year to the average family’s expenses, depending upon which figures we use, but  those are going to be “after tax” dollars.  That means we must add a third to the estimates in the actual impact C&T will have on expenses.  And remember that such estimates always turn out to be far less than projected.

My first summer jobs paid a dollar an hour, practically tax free, and I saved enough to pay half of the cost of my first car.  (Daddy was teaching me good habits, including saving half of what I made.  It helped that my beloved three-year-old Plymouth Cranbrook cost $225!  The summer before I started college he smiled at me lovingly and told me to go clean out the rest of the account and spend it on more new clothes than he had already given me money to buy.  THAT was a real lesson in the value of saving!)

I was employed as a secretary for a little while and made $225/month.  A department head at the local college made an unthinkable $800/month!  The difference was…I took home almost two hundred and twenty of that.  Social Security, these days, eats up over 15% of income, between deductions and what the boss isn’t paying you because he is giving it to the government on your behalf.

The formula I want to get into now is far worse.  I was taught that a husband should endeavor to leave his widow 80% of his highest income.  Let me repeat that:  in order to provide security and continuity of the lifestyle they had achieved, eighty per cent. of his highest income will be required.  That is really pretty modest, because expenses go down only in the gasoline not used for him to go to work, food, and occasional wardrobes updates men need less frequently than ladies.

I realized in 1992 that every widow and those who wanted to retire eventually was in serious trouble, because the interest rate fell to 5%!  Oh, my, how young and naive we were back then.  Here’s a little mathematical exercise:  if you make $100,000, and the interest rate is five per cent., how much do you need in insurance and/or reliable investments to ensure that your beloved spouse is not going to end up in a cockroach-infested, cold water, walk-up flat eating Fancy Feast?  Don’t even bother to figure it out, because these days you have to multiply the figure by at least five, your stock market portfolio is down at least 50% (if you didn’t get out in time, and if you did…there wasn’t any place much safe to put the money), and worse times are ahead.  Do you have an insurance policy for ten million dollars?  I didn’t think so.  Neither did John.

As nearly as I can tell my mathematical genius, OR/SA husband had one of two plans for my old age.  (The private research corporation he worked for wanted him to work until he was at least seventy-two!)  The first was that he was going to out-live me, and the second (I’m guessing!) is that I am so utterly fabulous that I would surely find another husband before the insurance money ran out.   Passing lightly over his opinion of my manifold charms and perfections (not shared, oddly enough, by a great many), he failed to take into consideration that I would not be able to remarry!  If I do, I will forfeit my entire income!  Worse, my new spouse would have to live fifteen years, unless the rules have been changed recently, before he could “leave” me a share of his retirement income.  Awk.  Um.

The government is ruining the morals of sweet little old ladies because the pretty universal conclusion widows reach even when they find wonderful men is, “I love you dearly, but I just can’t afford to gamble my old age on the probability that you will live to be eighty-seven.”  Decent men don’t even ask to ladies they love to take a risk of that magnitude.  My darling Charles made the modern equivalent of a proposal amongst the older set, e-mailing me, “Hey, pretty lady, how’d you like to live in sin?!”  I burst into delighted laughter–never having been the sort of lady who gets propositioned by sexy sailors–picked up the telephone, and accepted.

He explained anxiously later why he had not shown up with a gorgeous ring and a bouquet of roses, gone down on one knee, and delivered a classical proposal imploring me to make him the happiest of men by bestowing my hand upon him in marriage.  He knew it would endanger me.  He was pretty sure I would have accepted, but darn it…it would cost a bare minimum of half a million dollars to change my name to his–as proud as I would be to bear it–and I have a perfectly good name I answer to every time I hear it…and it just isn’t safe.  I dislike being a scarlet woman, but there isn’t any other rational choice.

The sole feeble beam of hope I can see is that most women no more than sixty have probably qualified for Social “Security” in their own right.  I’ve done a lot of interesting things, but I haven’t “worked,” in the government’s eyes, forty quarters, not by a long shot.  Perhaps Donna Reed, if widowed a second time, could qualify for a sop of a few hundred in SS, but she sure couldn’t live on it.  Rueful chuckle…I always thought that failure in life was needing SS.  What’s the official “poverty” level, again?  Nah, I own my own home outright, and that will surely disqualify me from food stamps.

Please take Gary’s advice and check your hole card.  Even if things stabilized right where they are and get no worse, can you afford to retire?  What will your wife have to live on?  Will she be able to remarry if her experiences with you have caused her to think that she doesn’t want to end her days without the companionship and love you have provided?  Will she end up saying, “Welcome to Wal-Mart?”

I’ll leave you with a final superb rule:  “Never confuse what you can pay for with what you can afford.  If you do so frequently enough, eventually you will not be able to do either.”  That is the sin of those who lived on credit cards and pulling equity out of their houses every time they built up a little.

Paying for dead horses is very painful.  Three generations living under the same roof sounds very unpleasant, as much as I adore my children and they would love to have me live with them.  One of my favorite sayings is, “The worst that could happen is…” although I use that in the analytical sense of risk management, and the answer has to be “Nothing really serious!”  What is the worst that could happen to you if you do not do your best to secure your future now?  You’ve already started by reading what Agora has to say.

What is the worst that could happen to your wife?  What could you do to prevent it?

My apologies if I have ruined your weekend, but it is never too early to plan ahead, and even now we can all take steps to alleviate the grim future we envision.

Regards,
Linda Brady Traynham

May 29, 2009

Real Retirement Planning was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.