Giant Day

Some days nothing happens.  Many for that matter. Or it’s the drip drip drip of attrition of small events one tries to blow up as huge cataclysms… as in portraying it as the Earthquake of the year…

THEN, there are days everything changes.

Right now, we have the WEIC bills shuffled into a different committee in the Senate, creating speculation they may be shelved, never to see the light of day.  They passed the House. This is important for all of Wilmington.  I was telling some school kids what it was about, and their eyes got HUGE!  (They had no idea)…   But it is the first change in New Castle’s School Districts boundaries since the famous Court desegregation settlement.  It has great impact on property values in Christina District… Woo Hoo!  No more thugs! That becomes the place to raise your kids. Red Clay’s housing prices begin their grand longterm slide… Pike Creek is a great neighborhood, but we now got thugs from Wilmington in our schools.

Secondly, we have the Democratic sit-in for common sense gun legislation… Going on 24 hours, this is amazing stuff.  We’ve had sit ins before, and the same outrages being social media’d regarding Paul Ryan, also took place when it was Republicans protesting and Democrats controlled the House… The Democrats even turned off the lights; the Republicans have not gone so far yet…. But this is destroying the Republican Party… Seriously, it is a wonder if it will be around November 11th.  We have Democrats demanding a vote on gun laws that will save lives… They may not win the vote, (there are a lot of Republicans) but they are demanding a vote… Obviously the Republicans don’t want a vote which will cause them to get attacked by both sides… I mean,… who wants to be attacked by both sides?

But unfortunately, I wasn’t able to pay attention to either of these… Today (yesterday) was the Brexit Vote.  Most of you don’t know what that is or what any implications of that might be…  Let us say:  global economic collapse.  Remember it was the collapse of Lehmann Brothers, one single firm, that triggered the Depression (falsely called a Recession) of 2008.

If that was a rogue wave, this is a tidal wave… While you slept, Britain lost 120 billion pounds sterling of net worth. most of it in a minute.  Their banks are down on the stock markets by 25%… You may wake up to the resignation of their Prime Minister.  Housing rentals stocks are now down 40%… Overall at this writing, the FTSE  is down 5%.. The German exchange is down 5%.. American futures are down 5%…

No one knows how it will end.  It could be the end and wipe out all wealth which means we are in for a long bitter and hopeless recovery.  Or we may, pull a save and people will relax. The answer depends on where the fear line lies, and that is something no one can know…. That is the line over which if collapse passes, emotions take over decision making and a free for all occurs…

So before you go in to work today, pour yourself a glass and raise it to “Yesterday”:  a normal day that may be the last normal day you’ll remember for the rest of your life.

Cheers. 🙂

 

It Is Time To Pull Support For Prevailing Wage

Delaware’s Unions, particularly the Building and Trades, have over-stepped.  In a world where the one percent owns 45% of America’s assets, where billions are being spent to destroy unions in every capacity, where the middle class has succumbed to its worst level since 1880, the rat-demon that the Building and Trades chose to blacken, was Delaware’s biggest friend of labor, John Kowalko.

There is something very sick in Delaware’s unions…  That this was ever allowed shows complicity with the 1%.

The only people hurt by not putting the power plant inside the University of Delaware, were those investors who spent $800,000 and got nothing.  It would be safe to say none of them were of the 99%.   When something else goes in, those jobs will be there as well.  Labor did not lose one job…

Instead, we just got further proof that in Delaware, labor has been coerced, infiltrated, and is being run by the 1%… No normal working man would want to poison 30,000 people into cancer by his efforts.  We all know the 1% have no qualms with killing people as long as they make over 5%…..

Organized labor is no longer working for its members.  Whether it is the DSEA, AFSCME, or the Building Trades, the lack of new jobs here in Delaware is due to only one thing.  Their coziness with those with money… the big 5 developers and their friend, the governor.

I know the details of why there is a history behind it this coziness.. But there was also a history behind Colonial America and Great Britain… But at some point a split had to occur.

When you have Quisling leaders telling their members that “yeah, they are doing everything they can”, and at the same time telling the Delaware Way that they “got their people handled”, it is their members who are getting royally screwed…..

It is past time to scrap old leaders.  It is past time for new aggressive leadership, someone in their 30’s..  It is time for work stoppages again.  It is time for muscle…  When you have our ex-heroes, “organized labor”, those who built the America we had (at least up through 2000),  attacking their most ardent legislative supporter in the General Assembly because he wouldn’t go along and maliciously kill 30,000 of his constituents with cancer, you have a corrupt and poorly lead organization…. They are not working for their members; they are working for Charlie Copeland!

I hereby pull my support for prevailing wage….  and urge John Kowalko and every legislator elected from the Greater Newark Area up through Hockessin to do so as well. … 

Until unions get new aggressive leadership who will daringly take on the Delaware Way and grind it up and crush it, forget it, I won’t reconsider. 

 

Lasting Republican Legacy…..

A quarter of U.S. families feel they are under economic stress due to the aftershock of the Great Recession and most do not expect their wages to increase in the next year….

42 percent of respondents said they had delayed major purchases due to the Republicans creating havoc.

18 percent saying they put off a major life decision, including buying a home or getting married, due to the crisis.

Thirty-six percent said they now planned to retire later

Three-fourths of households said they expected their incomes to be the same or lower over the next year.

A third said they were “somewhat worse off or much worse off financially than they had been five years ago.

Graphs Home Made/ Figures from Reports on Economic Well Being of American Households as reported by Reuters.

This economic demise was all brought about by unregulated derivatives. a Republican creation which was purposefully excluded from any regulation whatsoever… It was caused by making government smaller, by cutting watchdog agencies, by passing laws excluding certain shady practices from being under the scope of the law, and of course, by giving the very wealthy huge tax cuts which were spent on everything other than creating jobs here in America.

You must vote this November. You must not vote for a Republican…. These dismal graphs would all be positive now, if the bipartisan bills passed by the Senate, had simply been allowed to come to a vote in the Tea Party House…. Draw your own conclusions, but the only one smart people can come up with, is that driving the car with the emergency brake always on full, gets America nowhere….

When Monopoly Stops Being Fun

I’m sure most of you have played Monopoly. With several people playing it is fun for a while.. After a point it stops being fun, and you just hang in. After another point, those people who have left the game seem to be having more fun than you and your competitor. Finally one of you goes bankrupt….

The American economy is the same way. While people think they have an opportunity to get better, the playing is fun. As long as they believe everyone can win, the play by play is mesmerizing.

Hope is missing from today’s economy. Most Americans have been shut out of the game… They are on the sidelines binge watching Netflicks’ episodes… Fewer and fewer players are left making riskier and riskier moves.

What is needed is to get a majority of Americans back into the game. If we were discussing the Monopoly board, changing the reward for landing on “GO” from a palty $200 dollars to $200,000 would be a step in that direction. That way if you land on Park Place you can have a chance at starting over and continuing…

And that is what has to happen to America. We need a chance to make a change and get compensated well for doing so. It takes a catalyst. That catalyst would be to change the tax rates to where money now, not used, could then be returned to the economy for investment. Money now being arbitrarily thrown into additional hotels and houses, just on the hope someone may one day land there and be forced to pay, should instead be put back into players’ hands, who can also buy hotels and houses and get money back when the rich guy lands on their property…

There is only one winner in Monopoly. Monopoly is a game, played with no consequence in a shortened time span. It does not work in real life. Therefore, we need to change the player’s rules of our current system. We need a system with more than one winner. That can only happen when We, the People, elect representatives who stand up against ALL corporations, instead of kowtowing to their every wishes…

Basically, eliminate Republicans, and the game is fun, again.

Why Ted Cruz, John Boehner, Eric Cantor and THE TEA PARTY Shut Down Your Government

It’s been six months since the greatest debacle ever experienced by a civilized human being, has taken place…. The Republican Party of the United States of America,fully endorsed by Charlie Copeland here in good old Delaware, shut down the Federal government over the repeal of Obamacare .  Only those close to the story knew over what they were protesting….

Here is why the Republicans closed down your government, put 700,000 government workers on furlough, and cost the economy $24 billion dollars….  They did it because:

A.   They didn’t want 315 million Americans to get free preventative care… No co-pay for flu shots, HIV screenings, prostate exams, colonoscopies, mammograms……

B.   They didn’t want 315 million Americans to benefit from new requirements forcing insurance companies tospend at least 80% of our premium dollars on our health care , or refund us back our money…..

C.  They didn’t want 315 million Americans to benefit from new requirements that insurance companies publicly justify their actions if they want to raise premiums by 10% or more…

D.  They didn’t want 315 million Americans to benefit from knowing that our insurance can now never be capped or canceled at the whim of insurance companies.

E.   They didn’t want 105 million Americans to no longer have lifetime expense caps, either through chronic disease, or corporate restrictions.

F.   They didn’t want depending on which survey you read, 50 to 129 million Americans to benefit from the Obamacare provision that eliminates all bars for coverage based on pre-existing conditions..

G.   They didn’t want those 49.4 million American current Medicare enrollees to under Obamacare now feel secure knowing that existing Medicare benefits can neither be reduced nor taken away.

H.   They didn’t want 6.1 million Americans with Medicare Part D to no longer have to go through the “doughnut hole” coverage gap.

I.     They didn’t want 4.4 million low-income adults to now have access to health insurance thanks to states implementing the expansion of Medicaid under Obamacare….

J.    .They didn’t want 3.2 million main street American small businesses to be eligible for tax credits for providing health insurance to their 19.3 million employees nationwide…

K.    They didn’t want 3.1 million of America’s  young adults to get coverage because of the provision in Obamacare that allows them to stay on their parents’ insurance plans until age 26….

They wanted none of the above… When like a terrible two year old,  they couldn’t get their way,  they furloughed 700,000 Americans for  a combined total of 6.6 million days,  shut down the National Parks and Monuments thereby damaging local communities, closed down the NIH and CDC, stymied essential permits and necessary reviews, stopped import and export licenses thereby freezing trade,  froze all Federal money earmarked for small businesses, homeowners, and families in rural communities,  disrupted loans because banks and lenders could not access the Federal database, delayed $4 billion in tax refunds to American consumers, prevented all food and water from being inspected, prevented all train and plane accidents from being inspected,  stopped critical defense and other non defense research, and cost 120,000 jobs from being created those two weeks in October….. It was just 6 months ago….

All of that…. just so you would not receive any of the  above benefits from Obamacare….Oh, my, tsk, tsk.

This is election year… Still not fired up?  So what’s your real reason?  Got rocks in your head?

How Much The Republican Refusal To Fund Long Term Unemployment Affects The Gainfully Employed

Last December I’d stumbled across this interactive map put up by the PEW foundation,  which had accumulated each state’s research of how many people were unemployed long termed back then, and how many were slipping off the roles this upcoming year… What I want to show, is the economic consequences of not continuing unemployment benefits, and to show it on a state by state basis.   The economic cost is nothing to ignore….As you may remember, Walmart is reeling from the food stamps (SNAP) cutbacks last November.  Their figures for this quarter come out early April.  But having some of their biggest clients drop out of society’s economics, jolted them last quarter..

The numbers for my state were estimated lower than reality.. PEW underestimated in December what Delaware actually reported in January by about 10%… Therefore these numbers should be considered baseline conservative estimates only, and very believable..  If they shock you, the reality is probably much worse….

As you know, all those already  on long termed unemployment  stopped receiving benefits on December 28th of last year.  Subsequently each week, every state has some members on its state’s unemployment roles who expire, and normally would get dumped into the federal program and continue being able to contribute to our economy while they look for work…That number gets bigger each week…

The idea occurred to me (and I did a piece on my own state),  that we could figure the economic damage relatively easily by finding the number of unemployed, calculating their economic worth by extending the average check amount, and applying a multiplier to account for the increase economic activity that unemployment creates. These multipliers are all over the map. The Dept of Labor predicts a 2.0 multiplier. and Moody’s predicts a 1.55 multiplier… Every dollar given through unemployment, creates $2.00 (1.55) in overall economic benefit as it continues to filter up the economic ladder to the top….

So I took it upon myself to show  how many people were initially cut, how many more increased the totals weekly, how much economic loss this costs each state,  and where the states will be at the end of this week, the beginning of March… The next step, since I won’t have the time, would be for someone to compare these estimates of people getting booted off an income, with each individual’ states data on weekly new hires. simply to prove whether or not unemployment was due to laziness and not the lack of good full-time paying jobs…  It would be easy to determine,.  If one would find that 10,000 are getting the boot, and if the state is showing no new hires, that we are creating a large class of people who will soon be creating large problems, stemming from simply the necessity of survival…. Call it our Third World Quotient. (I used this source for each states unemployment benefit)

===

Alabama   12.100 lost benefits on Dec. 28th.  925 added each week. Total off roles as of March 1st =20,425 @ $265 Alabama benefit = now hitting with impact of $5.4 million per week.  March 1st -Dec.28th Cumulative Lost Income Damage.= $43.9 million. Times 1.55 Multiplier effect, $68,045,000 dollars…

Alaska    23,300 lost benefits on Dec. 28th.  448 added each week.  Total off roles as of March 1st =27,332 @ $442 Alaska benefit = now hitting with impact of $24.1 million per week.  March 1st -Dec.28th cumulative Lost Income Damage = $111.9 million  Times 1.55 Multiplier effect, $ 173,439,916 dollars

Arizona   17,100 lost benefits on Dec. 28th.  1288 added each week.  Total off roles as of March 1st = 28,962 @ $240 Arizona benefit = now hitting with impact of $6.9 million per week.  March 1st -Dec.28th cumulative Lost Income Damage = $55 million  Times 1.55 Multiplier effect. $ 85,173,120 dollars

Arkansas  9,300 lost benefits on Dec 28th.  775 added each week.  Total off roles as of March 1st = 16,275 @ $ 451 Arkansas benefit = now hitting with an impact of $ 7.3 million per week.. March 1st -Dec.28th cumulative Lost Income Damage = $57.6 million times 1.55 Multiplier effect $89,39,018 dollars.

California   214,800  lost benefits on Dec 28th.    16,078 added each week.  Total off roles as of March 1st = 359,502  @ $ 450   California benefit = now hitting with an impact of $161  million per week.. March 1st -Dec.28th cumulative Lost Income Damage =  $1.29 billion times 1.55 Multiplier effect $ 2,002,878,225 dollars.

Colorado   17,900 lost benefits on Dec 28th.  1400  added each week.  Total off roles as of March 1st =  30,500 @ $ 466  Colorado benefit = now hitting with an impact of $14.2   million per week.. March 1st -Dec.28th cumulative Lost Income Damage =  $37.7 million times 1.55 Multiplier effect $ 58,434,070  dollars.

Connecticut  26,000 lost benefits on Dec 28th.   1636  added each week.  Total off roles as of March 1st =   35816 @ $ 665 Connecticut benefit = now hitting with an impact of $23.8  million per week.. March 1st -Dec.28th cumulative Lost Income Damage = $221.8 million times 1.55 Multiplier effect $ 343,878,815  dollars.

Poverty Is Killing Education

In 2012,…. 21.8% of all people under 18, lived in poverty, that is defined as a family of 4’s income under $23,050 (total yearly income)..That comes to under $443 per week. …

One in 5 children across America or 21.8%, live like that.   (More than a majority of Americans (58.5%) will spend at least one year below the poverty line at some point between ages 25 and 75.)..

The ratio is one in five.  In a class of 10, two students will be attending from a home under poverty.  In a class of 20, four students will come from families living in poverty.

Below is childhood poverty tracked across 53 years starting in 1959.

Whatever we did from 1965 to 1979, we need to do again… See the low dip on the chart?  Our current high level of poverty is very near the record, with one major exception.  Unlike all other peaks we have plateaued at this bubble’s highest amount.  Notice how in 1993 and 1983, the same levels were reached under those two presidents, but quickly descended thereafter?  Since the election of the Tea Party Republicans to Congress, for the first time, poverty has stayed steady at the high water mark, for over 3 years in a row..

As soon as President’s Lyndon Baines Johnson’s War on Poverty took effect (50 years ago) child poverty declined until Reagan cut taxes in 1981… After he raised them back in a now famous agreement with Tip O’Neil, as the economy grew, childhood poverty fell.  Again after Clinton raised taxes in 1993, the poverty level dropped over the rest of his term, until George Bush and the Republicnas cut taxes again… Since those taxes were cut, the childhood poverty level has risen to the record levels it is near today….

Tax Cuts have repercussions that extend far beyond the wealthy getting more money back in taxes.  Higher tax rates boost the working economy; lower tax rates shred it…….

It is imperative that tax rates get raised as quickly as possible so this current plateau, the first 3 year one ever, the one created by the inaction of Congress because Republicans put the Tea party iin control of hte House…begins to drop down the other side.

Time is running out.  like global warming there will be a critical point we know is coming but where it comes we can’t predict.  The same urgency and fear need applied to childhood poverty and education’s role in helping end it…

2013

As with every year there are lost opportunities and lost grievences…  Some things that have bothered us, disappear.  Somethings that have bothered us, don’t….

This year was no different, and yet, it was very different…. If one asks oneself what was the greatest factor involving the entire year, then pulls back layer after layer until he gets the full perspective,  I think he comes to a surprising conclusion….

This year, 2013 was the tipping point.  We realized we are a third world nation when it comes to the proportion of wealth across our population….   Like global warming, this disparity was first proposed long ago.  Like global warming it was argued by the power brokers that such a proposal was only a crackpot’s theory;  it gradually gained momentum….

2013, brought that home…. In 2013, we had the party of the Teas, vote against giving New Jersey relief for Hurricane Sandy, and vote themselves relief when a little hail landed in their district…. In 2013, we had government shut itself down to stop Obamacare, then open itself without creating any change at all.   In 2013, we had unemployment benefits cut, then reinstated, and now cut again… We had food stamps cut.  We had a sequester go into effect to save $85 billion dollars….

We had the news media lead fake scandals… when the biggest scandal should be, how is Fox and CNN and CBS still able to call themselves news organizations?  We had the IRS scandal… despite that they dealt evenhandedly with groups of both political persuasions.  We had the Benghazi hearings… Much ado over absolutely nothing… For when it came down to why those four died, all fingers point to that very Congressional committee led by Republican Darrell Issa, which cut well over $100 million in funds that were specifically designated to secure advanced unsecured places of that type.

But when we had a real scandal, which was illuminated by Snowden, all the media shied away.  Calling him a traitor for releasing the documents…  As more came out, Americans began to really fully grasp the totalitarian phase our nation’s government was just on the threshold of achieving….

In 2013 we had civil right voting laws thrown out by the Supreme Court, and instantly all those dark ugly human traits those laws previously regulated, took over and sprang out into the open…

We had a rational push for gun control, that bumped into the irrational group against it.  We did not win the first battle… WE did make considerable ground and showed the NRA was led by psychotic bloodthirsty killers, both nationally and locally….

And the unions… are all bought out… from the top down.   Only those on the very bottom in our service industries, the Wal*marts, McDonalds, and retail outlets, who have nothing to lose, are bravely carrying the fight forward… They are on the right track…

Our sole problem in America is that out of every dollar that trades hands in our economy…. 50 cents of it gets sucked out by the top 1%….  The rest of America is economically playing with a half deck…50 cents on the dollar.  No wonder job growth is slower than it should be?

If you invested, you love this year….  The year’s DJIA started at 13,000 and is now at 16,500….  25% yield….   For every $100,000 you had in stocks… you just made $25,000….

We now realize this was at the expense of the QE 3.  The Federal Government is lending the large brokerage houses all the money they wanted at zero interest, and instead of creating jobs, it went right into the stock market, chasing prices and making them higher….  When that free money begins costing the brokerage houses… those investments are going to deflate.

Most of America no longer has money in the market.  The market is primarily owned by those at the top.

And education?  We had corporate America exposed for trying their hand at teaching little children and failing miserably.   Just as Corporate enterprises have now destroyed Facebook,  television news, and are now destroying Twitter, the same forces demolished education.   An attack on the public school system aimed to demolish it and install a privately owned system, is well underway….   It was all just theoretical until 2013.

The prime problem  behind all of these?

It took a new Pope to make it mainstream… To tie all these individual threads into one rope.  As he spoke, people turned to look at each other and said, ” Wow, why didn’t we see it before?”

When one homeless person dies on the streets it  is not news.  But the DOW drops two points, it is THE news….

What 2013 did, was bring to light that we were not a nation beset by little battles…  Loss of labor unions, stymieing of minimum wage, fierce lobbying against Obamacare, a court controlled by corporate interests, lobbyists writing all our nation’s bills,  What 2013 did was bring to light that all our “think tank” research, was pure propaganda, not research.   What 2013 did, was show us just how much power and wealth lie in the hands of very few people…. roughly 100,000…… with most of that being held by a core of 1000 individuals…. Meaning 314,899,999 of the rest of us are out in the cold…

2013 showed us that the happiest people in the world, are those where wealth is more equally shared…  to be happy, one has to tax heavily…  A sharper sense of wealth is gleaned from looking at happy societies…  Where there is enough wealth to be shared, it is…  It makes little sense to pursue the opposite  tack.  To let those with money have it at no cost, and charge the masses heavily for their use of it…

2013, is the turning of the tide… Now when someone says low taxes are job creators they are viciously humiliated and never dare mention such again. Now when someone says trickle down economics work, we now know they are secretly praising how well it works for those at the top.

2013….  We know.

2014…. No Tea Party.  No Republicans.  No Third Way.   Only by mandating that the wealthy who got rich over nothing, pay their fair share and everyone else’s fair share too, can we again create an economy and a nation that thrives from the bottom up…

2014 is the battle year.  This is where those few at the top will throw billions into protecting the trillions they’ve made from our assets…  But… they only have 1% of the population… The question is whether they can mobilize their toadies to vote and suppress the rest as they have successfully done in the past… when in truth, we were still half asleep….

The rallying cry for the 99% needs to be this:  the 1% needs to do more for our nation!.  We should not be ashamed to mention marginal income (including capital gains) tax rates over 50%, 60%, 70%… at least for the short term, until our economic war is over!  That is not too much! Most livable nations have such.  and the USA itself had such during our grandparent’s time, back when it was easy to go out and find a job….  we had more demand for jobs than we had people….

Income equality is the lens with which all items need to be viewed….  What that means is that with every question, every line item, every debate, this question gets asked…. “What does this proposal do to reverse income equality?”  If it does nothing, it is not good…

What does controlling guns do for income equality?  What do charter schools do for income equality?  What does cutting taxes on Delaware’s 1% do for income equality?  What does making the Port of Wilmington non-union do for economic equality?  What does creating NO-prevailing wage zones in Delaware, do for economic equality?  What does opening Beaver Valley to development do for income equality?  What does raising minimum wage do for economic equality?  What does Common Core do for income equality?  What does opening Family Court to the public do for income equality?  What does building a power plant that runs 24/7 on the brown fields of Newark, do for income equality?  What does building a new Wawa in Newark, do for income equality?

I acknowledge some of those are stretches but that is what having a prime filter does.  One looks at everything through that perspective….  It is one thing to bash the governor for a luckluster economy in his state…. Republicans do that too often, and offer neither specifics, or alternatives.   It is another to bash the governor for ignoring 99% of Delawareans’ needs, or  990,000 people, to the benefit of 10,000, or 1%…..  That is legitimate….

Hurting the 1% to the benefit of the 99% will cause 99 times more economic activity in this state.  99% of our citizens will buy more….  If those 1% continue to make more money off our localized spending, then at least they are earning their income honestly for a change….

Perhaps what is missing, is a retort, the kind that becomes a mantra……. When the Chamber of Commerce steps up to a microphone and says, …. “we pay most of the taxes in this state, we should not pay more…”.

The proper response hitherto missing, should be…. ” Then pay your employees more money, so they can help you share that burden…”

2013:  the arrow was released… 2014 is when it impacts its target,….

(This came out last spring. Most of you have seen this.  If by chance you haven’t, be prepared to have your mind blown. If you’ve become jaded since the last showing, prepare to have your mind blown again.)

Dow Cracks 16,000: Bubbles, Bubbles, Bubbles

Now, to answer why….

“‘Five years after excessive debt propelled a housing-market collapse into a financial crisis and recession, similar bets are being placed across the U.S”.

“Total corporate-bond debt has grown to nearly $6 trillion, up 59% since 2007, the year before the financial crisis. … Leverage by companies rated investment grade has risen 20% since 2010 … about 6% higher than in 2008…

In 2008, mutual funds held, on average, 17% of the bonds and 3% of the loans made to junk-grade companies, according to Bank of America. Today, they own about 26% of the bonds and 19% of the loans.

“Assets in mutual funds and exchange-traded funds that invest in junk bonds have grown to $285 billion in July from $92 billion at the end of 2008,”

“‘Many companies are repeating some of the mistakes of the past,’ by taking on too much debt,…”

“Overall corporate health was ‘no better than it was in 2007 and by some measures worse.”

(All quotes culled from Wall Street Journal)

For those that don’t do this all the time, here is how it works….

You buy $100 million dollars of stock X on margin…  You pay 50% of the cost or  $50 million, owing the remainder $50 million to your broker.  The stock value rises to $150 million and you sell it….   You get the $150 million minus the $50 million owed back to your broker… You pocket an extra $50 million on the $50 million you invested…   Your $50 million returned a 100% on your investment, congratulations….

If done in cash, you should have paid $100 million, and gained $50 million when sold at $150 million…  Wait … is that the same exact total?…  Yes, you are right, but your investment only gained 50%… not 100%

This is why borrowing for stocks is up…  Worse than it was in 2007-2008?…. Yes. Correct.  Despite the Dodd-Frank bill, it is worse now, than in 2007-2008…..

So then what happens if the price of stocks fall…..   ???

You bought $100 million of stocks putting $50 million down and borrowing $50 million from your broker… Rule number one:  you broker does not lose:  you do….

Stocks fall 2%….   Your value is dropped to $98 million.  You now owe the broker $2 million on top of the $50 you put down. Stocks fall again, 2%….  You value drops to $96 million.  You know owe your broker an additional $2 million you put down…  Getting scared?  Sell at $96 million and by the time it goes through, you only get $95 million.  Since you owed your broker $50 million and only get $45 million, you immediately cut him a check for $5 million dollars…. You originally put up $50 million so your investment cost you…. 10%….

If you paid cash and put  the full $100 million up front, your loss to your company would have only been 5%….

So let us imagine this on the volume of the New York Stock Exchange…  Where  last Friday on the NYSE, $30 billion traded hands (positively for most, fortunately)    … Assuming it was a bad day, and everyone was leveraged, on the minimal 5% drop outlined above, America would have to pay an minimal $1.5 billion to their brokers…  In other words… Americans who leveraged, would be $1.5 billion poorer just from the NYSE one day drop alone….

At the 16,000 mark, a 5% drop means the DJIA would rest at 15,200….  or where it was back in the middle of this past October…. just 23 trading days ago…..  Because of leveraging,  that 5% drop means corporate America takes a 10% clip….

I don’t know if you’ve ever taken a loss of 10%, but if you haven’t… let me tell you… one does cut back on spending….

And that, is what makes this chart so scary……….

(Click image to enlarge)

Makes one understand now exactly why the market-rise continues despite the reality of our current economic situation, doesn’t it? Now…..remember what happened when Bernacke said… “Well, eventually this easing will someday have to end.”?

So….. what to do?

Quietly exit…  slowly get off the ice so no one notices….  Just be totally off before all the cracking starts….  and the scrambling begins.

How Badly SNAP Cutbacks Affect Delaware

Maybe you’ve heard, maybe you haven’t…  But Democrats have allowed a SNAP cutback agreed with the Republicans at some point in the past, to go into effect….

John Carney is in agreement.  Here is how that cutback will affect John Carney’s district, a district at large for the entire state of Delaware….

In Delaware there are 332,350 households.  Of those, 36,382 receive snap benefits.  Leaving 295,968 which do not.

Of those 36,382 households, 26,763 are families.  Of these families, 31% have two more more workers in the past 12 months.  50.1% of these families have one person working over the past 12 months.  Only 17.7% fall in the category commonly associated with food stamps.  people who are not working.

The benefits will be cut $11 dollars per month per single person, maxing out at $36 dollars per month for families four and over….  Using the figures above,  per month the 9619 individuals will cost Delaware $105,809 in less food purchased, and the 26,763 families will spend $963,468 less food dollars.  These are rough estimates using the averages provided here.

But these cuts mean that grocery stores across the state starting in November will receive $1 million less in sales for every month.  Of course a year means that 12 million will not be entering the Delawarean economy per year.

How does that affect the grocery business?

There are 326 Grocery stores listed in Delaware.   Although stores closer to areas that are less affluent will suffer worse, the average monthly loss to this slice of our economy per store is $3280 dollars.   Each store over the course of a month will lose $3280 dollars.  In a classic business structure, one expects to pay one third for product, one third for labor, and one third to everything else.  If one profits, it is because one has beaten the odds in any of those three categories…   Meaning that labor will be impacted by one third or $1100 each month….

Each of the grocery stores on average will need to cut $1100 each month…  because of John Carney’s support of this piece of legislation.

One can expect the entry positions to be cut first.  Entry levels are minimum wage, but just for our calculations, let us go with $10 per hour.   100 hours can be expected to be cut….  or if not spread across the staff, their loss will cost the removal of 2 and a half workers from each of the 326 grocery stores in Delaware…..

Across the state that carries to 815 jobs….

So the cutting of  SNAP benefits to appease Republicans appears to now cost Delaware an additional loss of 815 jobs….  According to August 2013’s  figures,  there are 51,200 Delawareans working in Delaware’s retail trade.  815 of those jobs disappearing is a 1.5% drop in that industry…. It is a small percentage of our total state workforce… 2 hundreths of one percent.

As of August 2013, there were 30,658 Delawareans out of work…  Add 815 and that new total, 31,473 jumps Delaware’s unemployment rate from its reported 6.9% up to our 7.1%…..

Now this does not account for 6 months later, when the impact of losing the cumulative of losing 1.1 million every month starts hitting farms.  Nationally the drop is $5 billion.  Simply put.  $5 billion less in food will be purchased over the course of a year….

Product will be scaled back, and most likely so will the payments to farm workers.  This too starts impacting the economy negatively…..

The giant agribusiness, will be most affected.  With fewer people buying their products, they must too cut back.

So, once again, we have cutting back on a Federal program that directly subsidized farm production, impacting the single common denominator of every single citizen… Food.

Like the floor of a skyscraper, once the first floor collapses onto the next, that one too gives out and drops downward as well, taking the next floor with it….

Most people don’t know how subsidies work; they never would complain about SNAP if they really knew.