The Weiner Component #104 – Obama & the New Republican Congress

English: U.S. President Barack Obama meets wit...

The day after the 2014 Midterm Elections President Obama and the two Republican leaders of Congress were sitting down together, smiling at each other, and discussing how they could get along and get necessary legislation passed. This era of good feeling lasted for one day.

On the subject of climate change both the United States and China are the two greatest polluters in the world today. It is estimated that these two nations produce the bulk of the carbon emissions of all the countries that pollute the atmosphere. During a recent visit to China both President Obama and China’s President Xi Jinping agreed to lower CO2 emissions by 2025 for the first time and also to reduce carbon emissions by 2030. Will the respective countries succeed in doing that? Obviously we’ll have to wait and see. But this brings pressure on other industrial nations like India to act in a similar way.

Almost immediately after the announcement was made both Republican members of the current two Houses of the U.S. Congress and those who will become members in January came out with irate announcements denouncing Obama for daring to use what they consider the false promise of Climate Change to justify limiting business growth in the United States. Some apparently threatened to shut down the government rather than let this happen. It should be interesting to see what happens. Fox news in its non-intellectual fashion suggested possible impeachment. I hadn’t realized that this act by President Obama constituted “high crimes and misdemeanors.”

On the subject of immigration, President Obama is at the point has issued executive orders attempting, as much as he can, without the aid of Congress, to reform the system.

He returned Sunday, November 16, from his eight day trip to China, Myanmar, and Australia. His declaration with China’s president has upset the Republicans. President Obama has promised to take action on immigration before the end of 2014. This he has now done.  Just prior to the trip his senior aides gave him a list of all the potential actions he could order in regards to immigration without congressional approval. He will receive their final recommendation on Tuesday, November 18 and will unveil his executive order any time after that.

One probable reform would be to allow the parents of children born in the United States who are citizens to have some sort of legal status rather than being subject to deportation while their children stay in the U.S. This, I understand, will affect about three and a half million people of the estimated ten million illegal aliens in the country. There are numerous other possibilities of what the President might do.

It should be interesting because the House Speaker has stated that “We’re going to fight the president tooth and nail if he continues down this path. This is the wrong way to govern.” Other Republicans have come out with more vicious messages about what they will do. Senator Jeff Sessions (Republican, Alabama) has threatened to defund any executive action of immigration. Sessions will be the new head of the Senate Budget Committee in January of 2015.

President Obama’s comment to the Republicans in Congress is that if they don’t like his actions then they should pass an immigration bill to supersede them. Approximately a year and a half ago the Senate passed an immigration bill. The Speaker of the House of Representatives, John Boehner, has refused to bring this bill up for debate and to be voted on. It is believed that both Democrats and enough Republicans would vote for this bill and pass it. The Far Right or extremist Republicans are against this bill and apparently they have been able to force Boehner to not act on it. The immigration crisis exists because of the will of a minority within the Republican controlled House.

On Wednesday, November 12, 2014 the House of Representatives by largely a strict party vote again passed the Keystone XL Pipeline bill allowing Canadian Oil Companies to ship oil slag from Canada south through the central United States to the Gulf of Mexico where it will be sent overseas to be processed. The bill came up the following week in the Senate where the Democrats currently have the majority until the end of December. It did not pass.  What will happen there in January is unknown. However the Republicans will be able to pass it in both Houses of Congress next year, when they have a majority there but the President will probably veto it.

The pipeline opens up all sorts of possibilities that can contaminate the water table in the areas under it. President Obama has stated that the United States will not benefit from the pipeline because the oil-muck will be processed overseas where the gasoline will be used. What happens should be interesting. Particularly the President probably will veto the bill causing inordinate levels of rage among the Tea Party Republicans as well as those who have already installed parts of the pipeline.

As I understand it the major problem with the Keystone Pipeline is leaks. Even in Canada where there are short stretches of pipeline there have been innumerable leaks and the oil containing muck that flows through these pipes is highly toxic, virtually contaminating the land upon which it leaks, poisoning the water table if it gets into it. The pipeline through the U.S. has been built by assorted entrepreneurs who see a quick profit if it is used and a loss if it is not used. It has been built as cheaply as possible with few, if any shut off valves in case of leaks. These people have contributed to the Republican Party campaigns and expect a return for the investments.

There is also the question of responsibility if or when a leak occurs. Is it the company in Canada that is shipping this toxic muck with the consistency of toothpaste or is it the owner of that particular section of pipeline that is responsible for the damage caused by the leak? I have the feeling that everyone will be blaming everyone else and that the local or federal government will end up being responsible for whatever possible repairs that can be applied. It could take years for the courts to determine responsibility and by then the person or group will apply for bankruptcy. Certainly no one who is adamantly arguing for the pipeline will take responsibility for their decision. It could take years for the courts to determine responsibility and by then the person or group will have disappeared. Certainly no one who is adamantly arguing for the pipeline will take any responsibility for their decision. Or to put it more simply it is the taxpayer who will in the last analysis foot the bill for whatever can be done to bring conditions back to where they were before the leaks.

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What I visualize from all this is a basic feeling of spite that a goodly section of the Republican Party has for Barak Obama. It and the rage that accompanies it is a bit psychotic. They blindly hate the President and strongly feel that anything he does or wants is wrong for no other reason than he desires it. Their opposition is based upon hate. How dare a black man oppose them since they now control the Congress! It will be fascinating watching the next two years unfold. Unfortunately a goodly percentage of the population will suffer needlessly.

There will be other issues over the next two years. The Republicans mostly will meet them with fury and frustration. In fact if they get incensed enough they may again shut the government down by refusing to fund it or they may actively try to impeach the President.

By November of 2016 I’m sure the general public will have had a stomach full of Republican gridlock. The 2010 Congress passed the least legislation in the entire history of the existence of the United States Congress. Even far less than when the Congress used to meet in the 19th Century for three or four months a year. The 2012 Congress, not only shut down the government costing the Federal Government several billion dollars but they also passed a fraction of the legislation that the 2010 Congress passed. How much legislation will the new Congress pass. From some of the statements made by Republican congressmen the implication is that the Congress will spend the next two years investigating actions by the Democrats to ascertain if they have broken the law. We would seem to be in for two years of investigating committees all chaired by Republicans.

There is also the issue of the Internet: President Obama backs rules that would force broadband providers to treat all Internet Data the same, regardless of who produces it. The Republicans favor the opposite position. The President also in terms of immigration has agreed with the Chinese president to extend the length of current visas for businessmen, students, and tourists currently in the U.S.

Obama returned to the United States on Monday, November 17. To quote former President Harry S. Truman, “The manure will hit the fan” at that time and continue for the next two years. It should be interesting or horrible to watch.

The Weiner Component #86 – Retirement & Budgeting Through Life

Many people put themselves in an uncomfortable position when they retire, if they retire. They can no longer afford their former cost of living. Their retirement, be it social security or a private fund or a combination of the two that they have contributed to throughout their working lives makes up their retirement; they have no other source of money. By maintaining what they consider their proper standard of living these individuals have not been able to save; they have essentially spent all they have ever earned. They have never applied any basic lessons of economics to themselves; seeing money throughout their lives only as a basic means of satisfying their needs and wants.

Money, income, can be divided into two categories: something to be used for living, pleasure and fulfillment of needs and desires or it can be used as a commodity, a means of earning more money.

To the upper 20% of the population, who have a surplus income, more money than they can reasonably spend, it is used in both ways. To most of the remaining 80% it tends to be utilized for the process of living. In fact, most of them will spend 110% of their incomes to maintain what they consider their proper standard of living. As a result they will always be carrying a certain amount of debt throughout their lives and never be able to find themselves getting financially ahead. Of course to the bottom rungs of society, the unskilled and homeless, they earn so little that what there is, is needed to just survive.

The United States is basically divided into classes; many of which can be divided into subclasses. There is the very rich, the upper 1%, who earn far more that they can possibly spend with incomes in the multimillions of dollars. Then there is the remaining 19% of the upper class with incomes in the low millions to the high hundreds of thousands. These people have no problem using money as both a commodity and for daily living.

Economically below is the middle class which consists of three categories. The upper middle class, the comfortable middle class; these are usually the college graduates; generally they consist of company management with salaries in the low hundreds of thousands of dollars. These are also the professionals: doctors, engineers, college professors and the like with specific occupations. The middle, middle class would be made up of college and non-college graduates, “the white collar” employees who have lower management positions and earn from over one hundred thousand dollars down. This group also includes successful “blue-collar” workers. Then comes the lower middle class which would be made up of a group similar to the above class but with lower salaries.

Next comes the lower class. This group is split into two parts: those earning an adequate income to more or less comfortably survive and the group living in the area of the minimum wage. The latter group generally needs government aid in the form of food stamps and rent controlled housing in order to properly survive. Finally there is the underclass, the people living in the streets, the homeless. A small percentage of these live in their cars; they do not earn enough, if they are employed, to pay for housing.

From the bottom up, through most of the middle class, these people spend everything they earn. In fact, most of them spend more than they earn; the society allows life to be lived on credit which can be paid off monthly or extended infinitely with interest. Consequently a lot of these people are in a position that will never allow them to retire. They will work until they are no longer able to do so. Also a goodly percentage of the bottom groups are either unmarried or divorced women with young children.

The major problem that most of these people face is budgeting. They have no idea how to do this and, as has been indicated, the overall society is oriented toward getting people to spend, to consume the goods and services produced and readily available.

Money is the means through which everything functions. It has no real value other than what is assigned to it by the society and this value is flexible, ever gradually changing. Its distribution to the population is determined by the various occupations its people have or through inheritance and ownership of the means of living and of production. People use it both to live and earn more money.

The society is geared to have people spend their money, even to a point of spending more than they have or are earning. Many big ticket items like automobiles or houses require installment purchasing. This includes not only necessary items but also adult toys like boats, and traveling mobile homes. Buy now and pay later is even carried to food and clothing purchases with credit cards. By and large a whole segment of the society’s lives are based upon credit purchasing. This has been carried in many cases to the point where the level of credit has been maxed out and the people are paying 18 to 21% interest virtually forever on five or ten or twenty thousand dollars’ worth of credit that they never seem able to reduce.

However a goodly part of the middle class by a conscious effort can put away a small percentage of their income which, over their working lifetime, can give them a fair to excellent increase in their retirement. It is just as easy to spend $900 a week as it is to spend $1,000, $600 as $550. A hundred dollars saved a week equals $5,200 a year. Fifty dollars saved a week is $2,600 a year. While these amounts may not seem like significant amounts that changes when thirty working years is added to each of them. Add either interest or growth from a safe investment and the individual has put away in excess of $156,000 or $78,000. At 3% interest add another $54,200 to the first sum and $26,100 to the second amount. This is probably the most conservative investment anyone can make on a long term savings account.

If the individual feels that he or she cannot afford this much in savings then skipping two fast food luncheons a week would provide ten dollars; that’s $40 a month or $2,080 for a 52 week year. This equals $62,400 for 30 working years with no interest. At 3% interest it would approximate $63,092. All of this is straight savings bank or credit union savings.

Probably most people, who want a decent retirement, have no self-control and use insurance. This is a popular means used by those who have no self-control; they do not have the ability to save or invest. Money to these people is only used to supply needs and pleasures. Whatever they have they spend.

The insurance industry is based upon gambling and for the people who own and control it, it is safer and more profitable than Los Vegas casinos are for their owners.

There are several types of insurance policies. One kind is term insurance. The individual is betting a small amount each month that he or she will die and the insurance company is betting that he or she will not die. The insurance company will pay out to the individual’s family $100,000 if he or she passes on. It keeps the small payment if they continue to live. The amount is usually set by a person’s age and the insurance company has actuaries that figure out how many people in that age group will die. For every $100,000 the insurance company pays out it keeps millions of dollars. This is term insurance.

Then there is life insurance. Here the individual pays in so much a month for the rest of their lives or until they are 65; and upon their death their family gets 15, 30, 50, 100, or whatever, thousand dollars. The premium of these policies also include term insurance which would cover the policy if the individual dies early.

There is also the life insurance annuity policy where there is life insurance and upon reaching the age of 65 the individual receives a monthly payment of several hundred dollars a month for the rest of his life. It doesn’t really matter how long he lives because the insurance company has made far more than they’ve paid out or will pay out from his payments. There are innumerable insurance plans or variations of plans but these are the major ones,

However a goodly number of the middle class, those with self-control, by a conscious effort can put away a small percentage of their incomes which, over their working lifetimes, can give them a fair to excellent increase in their retirement. It is just as easy to spend $900 a week as it is to spend $1,000 or $550 as it is to spend $600.

All of the methods of building a resource base shown so far are relatively safe. One can see their basic wealth slowly increase over one’s lifetime and have it eventually supplement their retirement income, whether it be social security, a government retirement plan, or a private retirement plan. This allows for comfortable unemployed years with a possible estate upon the demise of the individual.

There is another way to go. The more risk one takes the higher the possible rewards; but also the higher the risk of losing all or part of the money.

One method is the gradual purchase of properties. Usually property accrues in value over the years. If it is the purchase of a house for rental and there are continued tenants then they actually pay for increases in the owners’ equity. The problem is that in order for the property to be profitable the owner has to be a landlord with all the responsibilities of a landlord. Also if the house is not continually rented out the owner is still responsible for the monthly payment. Another advantage would be yearly tax benefits. And, of course, the house can always be sold.

How does this come about? One has to save his money until he have enough for a down payment on a property plus an emergency amount for unexpected occurrences.

One can build ownership in a large number of houses over a period of time in this fashion.

Another method to save for retirement would be the stock market. Here the risk increases considerably but with conservative long term purchases can be fairly safe.

A stock is one share of ownership in a company that has probably issued millions of shares of its stock in order to raise money. If the company makes a profit they may pay a dividend, usually quarterly. Many companies allow the recipients of their dividends to automatically reinvest their dividends into additional shares and will also allow them to invest small amounts in additional shares.

Perhaps one of the safest areas in which to invest is in utilities, gas and electric. These items are necessary for comfortable living; the companies have been around for a long time and will continue to be needed infinitely into the future. If anything they will be gradually expanding as populations expand. Also these stocks pay a reasonable dividend. The stock for these companies generally runs from $25 a share up to around $60. Just about all of them allow the owner to reinvest their dividends and buy additional shares with no fees. There is very little chance of one of them going out of business. One can buy 25 to 100 shares and build their portfolio from there.

The Bank of America pays a dividend per quarter of one cent per share; yearly, that is four cents. The stock cost about $14 to $15 a share. Apple, which currently is over $90 a share, paid no dividend through most of its history, then in the last few years ago it has paid a fairly large dividend. Microsoft also paid no dividend originally, then at some point it was embarrassed by having a war chest of 55 billion dollars, and began paying a dividend. They were still embarrassed and issued a one-time special dividend of $3.00 per share. Microsoft currently goes for about $40 a share. The stock for Marvel Enterprises at one point sold for $1.50 a share. They at first licensed some of their characters for films like the Spiderman series then began producing their own films. The value of the stock rose significantly, then split into two for one share and finally the company was taken over by Disney, who paid $30 a share plus ¾ of a share of Disney stock, making the value of one share of that stock today about $90.

An example of a growing stock would be Tesla Motors which produces all electric luxury cars that sell from $70,000 to $100,000. According to Consumer’s Union they are the safest automobile on the road. When the company went public in 2010 the stock could be bought for around $30 a share. Today in mid-2014 it costs over $200 a share.

With a single battery charge the Tesla today can go a little over 300 miles. They are currently in the process of building the largest battery factory in the world. In 2015 they will begin producing and selling an all-electric SUV. About two years further in the future they will be making a smaller less expensive electric sedan that will sell at a much lower price. They are also planning to eventually open factories in China and Europe. The probability is that the stock will go up to $300 to $500 a share in the next three to five years. Unfortunately 100 shares of the stock today is over $20,000.

Another growth stock, which is much more affordable, is the Empire State Realty Trust that came onto the market in October of 2014 at $13 per share. There are four separate designations for this stock. They are all equal and pay the same dividend. The stock is presently between $15 and $16 per share and has paid 8 1/2 cents a share in the last quarter and will gradually rise. Within two or three years the stock value should double or triple as the real estate upon which it is based increases in value. Currently the cost is about $1,500 to buy 100 shares of this stock, $750 for 50 shares.

These are random examples. One can make or lose money quite easily in the stock market. The latter is easier if one does not know what they are doing.

Stock has to be purchased through a broker. Most banks and credit unions have a division that deals with this. They charge a fee for the service that is determined by the extent to which they advise you. There are also stock brokers many of whom go by formulas by which they advise their customers. These may or may not work. The broker will generally charge you more than the bank or credit union. These people make a living by buying and selling stock. Their primary interest is earning money, you come second.

Hopefully this blog has some value and will give some people ideas on how to have estates of at least five or six figures when they retire.