Comment

Comment by JL Gawlik on April 5, 2011 at 10:51am

Roma, i never said that about the Bush administration. They had their baggage also. IF the Bush years had gone by the Constitution, we would probably be in less of a mess. The Progressive Liberals have accelerated our country towards insolvency at a fast rate, I just hope i live to see the reason WHY they are doing this.

 

Look at the taxes coming down the pike by President Obama's budget, Personally my family has been hit by many higher taxes, fees, mandates, since 2009 by federal, state, county and city.

 

Insurance costs have sky rocketed since 2009 on health, home, and auto. I am like J.R. for a smaller, learner, fiscal conservative government from the federal level on down to the local level.

 

Look at what the union's involvement with government employees have wrought. Why isn't everyone responsible for paying into their health insurance, benefits, retirement like the average person does in the private sector? 

 

It is outrageous to read about the larger debt facing our country if this spending continues and President Obama's budget gets passed. I think DeMint, Rand, Ryan, Cantor, Chaffetz, and all the conservatives stepping forward are confronting the problem head on honestly and that is what we need in this country. A open and honest discussion about our economy, budget etc., with no promises of more entitlements. 

 

We keep hearing that Social Security is fine, is not fine. I find it disturbing that 2.5 trillion in Social Security is in paper, i.o.u.'s , that should of never happened. We have had a unchecked federal government for decades. The party's over.

 

We need to get back to our founding fathers' principles and values and our U.S. Constitution.

 

Ryan's plan at least is more predictable about spending than what is going on, at least his plan keeps it to a predictable percentage of the GNP. Our country greatly needs predictability.

 

We need to repeal all the massive mandates and regulations passed in the past few years also and give more power back to the states.

 

Thank you all for all the urls.

 

DeMint's email is posted here: http://www.fctpcommunity.org/profiles/blogs/message-from-senator

Comment by J.R. on April 5, 2011 at 9:57am

Below is a link to an article by Byron York today, titled

"Jihadis Who Killed Americans Get U.S. Support in Libya."

http://townhall.com/columnists/byronyork/2011/04/05/jihadis_who_kil...

Comment by J.R. on April 5, 2011 at 9:35am

Below is a link to an excellent analysis, by the Heritage Foundation, of Rep. Paul Ryan's outstanding and revolutionary budget:

http://links.heritage.org/hostedemail/email.htm?h=fd4ace5a0aa776ac6...

Comment by J.R. on April 5, 2011 at 9:21am

Roma and Tom:  I don't believe there is any implication of that in anything that J.L. and I wrote.  I am completely in favor of smaller government, a fixed debt ceiling, and a balanced budget.  I'm also for strict adherence to the Constitution and preservation of its mandated balance of power among the three branches of government.  There were a number of things that bothered me about both Bush administrations, and some of them have been mentioned in my blogs. I am also definitely in favor of the new Balanced Budget Amendment to the U.S. Constitution originating in the U.S. Senate.  If it passes in both chambers of Congress, it will be sent to all the states for ratification. This is something Obama cannot veto, for it doesn't require his approval. 

This is what the Amendment includes, according to Jim DeMint who, along with other Senators, sponsored it:

"If passed by the House and Senate and ratified by the states, the new Balanced Budget Amendment will:

Force Congress to balance the federal budget each year;

Limit federal spending to no more than 18 percent of GDP; and

Prevent tax increases...

Furthermore, the only way for Congress to get around these limitations is with a 2/3 super-majority vote in the House and Senate to waive them..."

I received this information in an e-mail from U.S. Sen. Jim DeMint yesterday.  He probably has information about it posted on his website.

Comment by Joe Story on April 4, 2011 at 11:30pm

Follow the money as they say.

 

Good article on Fed policy driving wall street profits.

 

 

                                                                        April 01, 2011                                                                 The market looks great… Where the profits are really coming from… How the Fed and the banks manufactured a bull market… A bull market in government… The real April Fools' Day joke…

 Since the market bottom of March 2009, U.S. stocks (as defined by the S&P 500 index) have nearly doubled – up 95%. Soaring stock prices translates into a $28 trillion increase in U.S. equity market capitalization. This is the biggest two-year increase in stock prices since 1955. The march higher has been nearly straight up – stocks have risen 18 of the last 24 months. Without a doubt, stocks have been the place to be for the last two years. If you'd put $1,000 into a global stock index fund (MSCI All-Country World Index) two years ago, you would have a little more than $2,000 today. Making the same investment in commodities would have left you with $1,593… Global corporate bonds would have left you with $1,277… and U.S. Treasurys would have only gotten you $1,044. And the rally probably isn't over yet, either…

 There are good reasons to expect stock prices will continue to move higher. Stocks really aren't that expensive, when compared to earnings. The S&P 500 is trading at 15.5 times reported earnings, compared to average bull market peak valuations of 19.7. Earnings will almost surely continue to grow rapidly. Bloomberg reports consensus estimates of Wall Street analysts showing average earnings growth of 17% in the next 12 months. Stocks are also cheap relative to interest rates. The earnings yield of the S&P 500 (6.4%) is still substantially above the yield of benchmark (10-year) U.S. Treasury bonds (3.5%).

 This all sounds like good news, doesn't it? But here's one fact you probably won't see reported anywhere else: The entire rise in U.S. corporate profits came from the financial sector. That is, the earnings growth driving our current bull market in stocks is coming exclusively from the financial sector. The nonfinancial sector of our economy actually saw profits fall in last year's fourth quarter. Today, financial sector profits make up more than 30% of total domestic corporate profits. That's the same level we saw in 2006 and 2007… just before the financial crisis.

 What's behind the surge in financial sector profits? You already know, dear subscriber…

You already know the Federal Reserve has been shoveling out as much money as the banks want and charging nothing for it… You already know the Fed has lowered interest rates for member banks to almost nothing. But how does this impact the real world of finance? Let's look at Annaly Capital Management (NLY) to find out.

 We like to use Annaly as our window into the secret world of the big banks, because we're familiar with the company (having watched closely for the last decade) and its business model is Banking 101: Annaly borrows money at a privileged rate and lends it safely via the government-guaranteed mortgage market. At both ends of every deal, Annaly enjoys the warm, loving embrace of our sovereign nation. It takes advantage of the Fed's interest-rate manipulation at the short end of the curve (where it borrows) and the Treasury's backing of Fannie and Freddie at the long end of the curve (where it invests). Playing the government's game is unbelievably profitable…

 At the end of 2010 (the most recently reported quarter), Annaly paid only 1.8% to borrow money – and it could have as much as it wanted. It turned around and "lent" those same dollars out at an average rate of 3.65% via investment in Fannie- and Freddie-backed mortgage securities (which are guaranteed against any credit loss). In this way, Annaly earned a "risk-free" profit of 1.85% on each dollar it touched. Annaly's total portfolio grew to $75 billion – meaning its net interest income was almost $400 million in the fourth quarter alone.

 Now, let me ask you a few simple questions about all this… Does it seem reasonable that a banking institution with only 114 employees and no branches should earn a risk-free $400 million in one quarter? That implies annual profits of much more than $1 billion. What did it do to earn these profits? Nothing more than pose as a buyer. I say "pose" because Annaly borrowed nearly all the money it used in these purchases and never assumed any risk whatsoever on the things it "owned." Does this make sense? Does it make sense that we, as a society, should trade $1 billion or more for this "service"?

 I admire the men who built Annaly and run it today. They found a simple – and wildly lucrative – way to take advantage of the absurdity of our banking system. Annaly's roughly $400 million in profits make up a tiny fraction of the $400 billion-plus profit generated by the financial sector last quarter. But they represent perfectly how these dollars were "earned." In almost every case, the money wasn't earned at all – it was simply manufactured by a charade just complex enough to fool the press and the average debtor.

But what about the parts of the economy where profits can't simply be manufactured with fiat money? How's that part of the economy growing? It's not. Whoops.

 Given these facts, I would suggest investors pay close attention to the government's ability to maintain its paper charade. The prices of gold, silver, oil, and most other major commodities would seem to indicate this process of printing money and paying bankers $400 billion a quarter to move it around isn't productive. Instead of producing wealth, we're only producing debt… which is getting much harder to afford, thanks to inflation… which is a terrible side effect of using monopoly money and allowing the government to play the game's "banker."

 Here's another interesting fact… Stephen Moore in the Wall Street Journal today writes:

More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees.

 Forgive me for being cynical… but it seems the only sector of our economy that's growing is the banking sector, which manufactures profits via a paper currency regime that's stoking a massive inflation and remains threatened by a growing banking crisis in every developed country. Meanwhile, the banking system is being held together by our government, an institution that's bankrupt on any conceivable scale – to the point that the world's largest bond investor (PIMCO's Bill Gross) has sold every single U.S. Treasury bond and is publicly calling Congress a house full of "skunks." The government has also become the largest employer, the largest source of union members, and the single largest customer of almost every company in the United States.

 The question I pose to you, dear subscriber, is this: If this isn't socialism, what is? And when in the entire history of humanity has socialism ever created a sustainable bull market or any real prosperity?

 As you surely know, today is April 1 – "April Fools' Day." We have traditionally published elaborate pranks on this day, taking advantage of our subscribers' trust to sell them absurd stories about oil wells refilling with crude and genetically engineered cells collecting gold from seawater. You're then instructed to call your broker and ask to buy shares of 'SUKR' or some other similarly fake symbol. It's all done in fun. Except for a few hurt feelings, nothing is lost. [You can find these tall tales (and others) in our Digest archive. Just search our past April 1 issues.]

We had another such prank mapped out for you today… But the truth is, I didn't think our prank was as unbelievable as the actual world in which we live. The real April Fools' joke is our monetary system and this bull market. Unfortunately, I promise you it will not end with a harmless laugh.

 Please feel free to pass today's Digest around to your friends. I think it's important that more people understand what's behind the big move higher in stocks. And if you're reading this because someone flipped it to you, please look at our website (www.stansberryresearch.com) for information about how to subscribe to our newsletters.

 New 52-week Highs (3/31/11): First Trust Dow Jones Select MicroCap (FDM), Westport Innovations (WPRT), Coca-Cola (KO), Automatic Data Processing (ADP), WD-40 (WDFC), Arch Coal (ACI), CARBO Ceramics (CRR), iShares Silver (SLV), Dorchester Minerals (DMLP), Magnum Hunter Resources (MHR), SandRidge Energy (SD), Tetra Technologies (TTI), Alexander & Baldwin (ALEX).

 As always, we welcome your comments, insights, and insults… especially the insults. Send your e-mail to feedback@stansberryresearch.com.

 "My name is Roger Pack. I am in several agriculture-related businesses, several of which are actual, 'hands-on' type operations. Not your typical Stansberry reader, I'm sure. I see so much everyday, the increases in my input costs to produce everything. I also have retail business, which seemingly every month I have wholesale costs increases, which fortunately, these I can pass on, unlike my production costs.

"The one thing that has changed in my purchasing, though, is vehicles. I have owned around 40 new vehicles in my life. The one I bought in '08 may have been my last, though. The type of units I buy, typically pick-up trucks or SUVs, have absolutely gotten to the point, I will not do it. $60K-plus for a way to get from the house to the farm to the store. No way.

"I tried to trade earlier in the year and was totally offended when they priced their new one and then priced my used one. Well,… excuse my Texas vernacular, but 'piss-on'em.' NO, I won't do it again. That's at least one new vehicle a year that someone won't sell. You wanted feedback. That's where I'm at." – Paid-up subscriber RP

Porter comment: What's the easiest way to increase government revenues? Expand the tax base. What's the easiest way to expand the tax base? Inflation. Who gets rich from inflation? Banks. Think about that every time you go shopping.

 "Do you take a position in your own recommendations? What is your policy regarding possible conflicts of interest?" – Paid-up subscriber Jim

Porter comment: No, I don't. I'm forbidden by the rules of my company from trading in the securities I recommend to my subscribers. I am allowed to buy the securities recommended by other Stansberry analysts… but only after a substantial delay, usually 72 hours. We have this rule in place to guarantee the advice we offer is free of any conflicts of interest.

And please note, this rule applies only to the securities we recommend, not to commodities (like gold and silver). I have been buying gold since it traded in the low-$400 range. I expect I will continue to buy gold from time to time for my entire life. I have never sold a single ounce of gold, nor would I… except in a financial emergency.

 "I'm a paid up subscriber. I'm a 49 year old, white woman. Full-time Mom to two teenage boys. We are starting to live in the dark at our house to save on electricity consumption. There are very few lights on at our home in the evening. I am seriously considering riding my bike to the grocery store, instead of taking the car, for the small purchases. I'm a mile from two grocery stores, so thank goodness for that. Food purchases have become very thoughtful." – Anonymous

Porter comment: Profits for banks don't translate into profits for the rest of us.

Regards,

Porter Stansberry
Baltimore, Maryland
April 1, 2011

Comment by JL Gawlik on April 4, 2011 at 11:07pm

What is funny J.R., i never in my wildest dreams thought something like this could happen when i was younger. I remember in a letter i wrote to JFK very upset about the possibility of communism coming to America, and he warned me that it was up to my generation to keep the vigilance and to pass our history down to the next generation, we always make it better then pass our oversight to the next generation a bit better. Gosh, i bet he would roll in his grave if he knew what Ed was all about. Why do people think that the government owes them anything? I just want them to protect my freedoms, liberties, the U.S. Constitution, from domestic and foreign enemies,  my state to protect it's sovereignty and to let us just live our lives and become the best we can be without the government. I never realized until about fifteen years ago how they took over the school system, i was too busy volunteering and picking up the slack for the school, all free on my time. It was worth it for the kids. I learn a lot and was told i would make a great teacher but i did not want to get involved in the school politics or with parents, the teachers and kids i LOVeD. I just never realized in my worst night mare how difficult it has been and is for many teachers, who just want to teach.

What a mess. Progressives own the last four years and the next two years of the executive branch and senate. We need to remind them. I asked my husband today, he has been working almost 24/7, did he realize that the House had passed a budget, i probably told him when he was half asleep and he keeps really up to date on all, but he said no they have not, I told him yes they have about 45 days ago and Harry has been sitting on it. Lesson plan... ask how many people that you know tomorrow if they realize the House has passed three H.R.1 and the third was passed 45 days ago and the Senate is sitting on it. Can't wait to hear what others say... 

Comment by J.R. on April 4, 2011 at 10:49pm

They absolutely do own the entire last four years, J.L.  And their devious, un-orthodox actions will hang like stones around their necks in the 2012 elections. I can honestly say, I believe these progressive political ideologues have broken all faith with and betrayed the American people whom they were elected to represent and serve. They made a Mephistophelian bargain to sell out our freedoms for the evils of socialism. And the new robber barons, here and abroad, are already reaping the spoils of transferred wealth. 

 

Comment by JL Gawlik on April 4, 2011 at 8:28pm

Well put J.R..

Pelosi, Reid, President Obama and the progressive liberals all own the last four years in Congress. They ran the Legislative branch for four years and the Executive branch for the last two going on three.

I hope and pray the GOP holds fast on this. It's their turn. The Progressive Liberals gave up their chance to pass a budget in Sept 2010, six months ago.

Steve i suggest you read up on Net Neutrality, apparently you are clueless to what it means. That is the promise you are chirping from the Progressive Liberals, FreePress, Moveon.org and Media Matters, all who are funded and most founded by George Soros... oh wait he is just a kind financier, business man and notable philanthropist who kept his family name changed because he has great disdain for his fore fathers the Jewish people. He is a prominent international supporter of Democratic ideas and Open Societies. Unfortunately the old Democratic party is dead and the new one supports marxist ideologue. Do you reckon that is why the progressive liberals must lie constantly about their intent?

Go over to the heritage foundation dot org and look up Net Neutrality and see if you still like it.

Comment by J.R. on April 4, 2011 at 7:04pm

No, everyone is not to blame for what only Democrats do. They're responsible for their actions, just as you're responsible for yours. You're perfectly free to make excuses for them and try to justify what they did by saying everybody did it. But the everybody does it, or everybody did it excuse is very lame and is basically a copout.  The word, "everyone," is a broad generality, casts a wide net, and is often a catch-all when facts are absent. And Democrats will have a hard time skating on their deficit black hole... and many are already trying to run from it.

.

Comment by J.R. on April 4, 2011 at 5:42pm

If the Democrats had wanted a budget to be passed, they would have presented and passed one last year instead of insisting on one continuing resolution after another. They had control of both chambers of Congress and a Democrat in the presidency. Passing their own budget would have been a breeze. Instead, they passed continuing resolutions at existing budget levels up to this very week, in order to cover for the fact that if they presented a new budget, it would expose the necessity for a significantly increased budget to cover for all their deficit-producing legislation, culminating with socialist healthcare legislation, now passed and commonly referred to as Obamacare. By their unilateral actions, the Democrats have given us deficit spending that will financially burden many future generations, provided the government doesn't go bankrupt in the interim.

In other words, Democrats were cowering and shirking their mandated congressional budget responsibilities, in order to prevent the repercussions they knew would come when the American people finally got to see the actual costs of all legislation they had rapidly rammed through Congress, while shutting Republicans almost entirely out of the process.

Last year was the first year ever that no budget was introduced and passed for the coming fiscal year. Republicans finally did present a proposed budget for the remainder of 2011, and the Democrats balked at that. Another bill was passed today to cover continuance of present funding levels if the proposed 2011 Republican budget is not passed by April 6, 2011.

The budget Obama put forth was a farce. Sen. Paul Ryan's 2012 budget concentrates on reducing spending. So does the Republican budget proposed for the remainder of fiscal year 2011. That budget is also largely a Paul Ryan budget.

Democrats chose the dishonest path of hiding the negative impact they knew their own deceptive political actions and socialist agenda would bring in the form of runaway deficit spending far into the future. They forced it on the American people anyway... because they could. And they did it with the knowledge of what their rammed-through legislation is going to look like in dollars and cents and the impact it will have in terms of deficit spending.

Democrats' cowardice, deception, irresponsibility, and violation of their fiduciary duty to the American people should cost them dearly in the 2012 elections.

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