Archive for September, 2007

Jury Duty and Taxes

Published at September 19, 2007 in Jury Duty. 0 Comments

One month ago I had the honor of going to Jury duty-the one obligation we as citizens all have. I got to the courthouse at 9am and sat down with the other jurors.

The room was a big open space and must have filled with 300 other juror’s littered form all different walks of life. From bikers to bankers, everyone was represented.

The problem started when I got there- I sat down and waited and waited and waited… up until 10:30 am when they announced the first group that had to go to the courtroom to hear a case.

In total about 65 people were summoned with the rest left to wait. This procedure took about 5 minutes with the majority of people still left for the next call, which never came.

By 11:30- the crowd in the pen area got restless and we were let go to have an extended lunch. Remember lunch is sacred in any government building - so the government employees would rather cut the work short then rather risk having it cut into lunch hour.

By the time I came back at 1:00- the area was filled back with all the jurors where we proceeded to wait again until our names got called, the next time being 3:00pm.

Finally I made it! I had been called only to go to another room to wait some more. We entered a courtroom and were met by the court reporter and the Judge who proceeded to give us our standing orders. The primary one being if there were any potential conflicts of time for serving on the case, these potential jurors should approach the bench. This elicited about 60% of our group who wanted to get out of jury duty.

The jurors approached the bench one by one and pleaded their case. This time consuming event took up the rest of the day and by 4:45 the judge let the rest of the group go. Feeling that we were so close to 5:00 pm anyway we should all be sent home only to return the next day.

In the next post- I will tell you what happened on day 2 and 3.

There are a couple of thing to take away from this little experience.

First off -when you walk into one of these court houses I noticed that they are filled with Police Officers, Judges, Clerks, Office Workers, etc. There are a lot of people working that are all being paid by taxpayers.

I can guarantee you if this was a private company, there would be 1/2 the people doing twice the work and it would run on time.

In addition these people all will have short careers because after 20 years these government employees will have enough time in to retire- and the taxpayer will be footing the bill over the life of all these employees.

The scary thing is that is just one city in one state. This is taking place all over the country. So the next time you hear that the government wants to raise your taxes begin to realize where your money is being spent.

Be aware some percentage of your money is being spent on people who never had to work that hard in the first place.

Libor and your Wallet

Published at September 10, 2007 in Inflation. 0 Comments

The Libor rate is the rate in which banks will lend to each other. The rate is set through an auction process so it is much better barometer of the banks willingness to lend. 6 month USD libor today was trading at over 5.47.

In contrast the Fed sets the price through its open market operations. (The effective rate, currently, is 4.86%, suggesting a cut from the target rate of 5.25% will be made at the next Federal Reserve Board meeting.)

The difference between the two is this- Libor is set where banks want to lend while the Fed is set through government policy.

As it stands, the banks are telling you that they are more concerned about lending money than the FED. Because the Fed is responsible for providing a stable market and because there is a large diffence between the two rates 5.47 and 4.86, the Fed is going to have to lend more money into the financial system to stabilize prices.

In a nutshell: Libor is where the Banks have come to an agreement to lend money- and the numbers point to them being more nervous than the governemnt.

Lower rates is not necessarily a good thing- as the Fed continues to lower rates and add an ever increasing amounts of liquidity the value of the US Dollar will continue to go down. If you ever look around and wonder why things have gotten so expensive, it’s because they have. As more dollars circulate- prices of goods go up. Your dollar is now worth less. The government by providing more dollars to the banking system is making everybody’s dollar worth less.

If you don’t think this is true just take a look at the price of Gold which now sits above 700$ an ounce or for that matter your food bill. The best way to protect your wallet is buy owning some Gold.

The Problem With Installment Plans

Published at September 7, 2007 in Money. 0 Comments

Since the late 1960’s and the onset of credit, Americans no longer concern themselves with what things are worth. If you don’t believe me take a look at any car ad. You will no loner see what the price of the car is but what the price of the monthly payment will be. The car industry has been able to refocus the American consumer on only the monthly payment. The car industry has been able to de-sensitize people to longer terms; from a norm of 2 to 3 yrs to about 5 yrs.

America now lives by payments, and has been conditioned to think about the payment amount-rather than the purchase amount. By doing so, car companies can charge much more for the car. Think about the following: a car that sells for 30,000- costs 30,000 pretty simple right. Well the same car that sells for 30,000 on a 5 year plan @ 10% now costs you 637$ a month for get this- a total price of 38,220. The car company has just made 8,220 on finace charges through the consumers ignorance.

The insidiousness of this practice has permeated all of Americas consumer transactions. As that happens we tend to lose sense of what things are worth. The credit card companies, banks and housing industry understand this and the American consumer does not. They have enslaved the American consumer to debt. Hence many Americans live paycheck to paycheck to pay off that monthly obligation.

This inability to see the value of things and the cost of financing these purchases has grave consequences. If you don’t believe me take a look at the following documentary called Maxed Out and see some real disasters of people not knowing the value of things.

If so may people are enslaved by debt- what is the solution to this problem. Just do the opposite of what they do.. Pay in cash and live within your means. There is a great skit on Saturday Night Live that sheds some humor into the consumer problem

The Fed Cut?

Published at September 6, 2007 in Inflation. 0 Comments

The market is nervously expecting the next rate cut to come on September 18th. (Fed funds currently stand at 5.25%)The futures market has assigned it a probability of 172% that the fed will cut rates-with a lot of the market participants expecting a 50 basis point cut. The credit markets have remained under pressure for quite some time and they are looking for the Fed for relief. The credit markets have grown enormously over the last few years primarily through the use of leverage and the pains the market is feeling is due to the contraction of credit. The market is contracting for a healthy reason- there was too much free money out there. Why would the Fed go into the market and provide more liquidity- it would be like adding gasoline to the fire.