California Loses Its Mind, Hands Out Free Phones with Unlimited Talk, Text, and 2gb Data To Bums and Poor People

Several years ago California joined the deranged club of states that hands out free cell phones with unlimited talk and unlimited text and 2 gb of data.  Because nothing beats dropping your last selfie from your tent on Skid Row on Instagram.

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But now California wants to expand the program.  The only problem is it needs more money, and its “leaders” have proposed stealing more money out of the pockets of tax payers who have actual jobs to pay for bums to have a free cell phone and data for Facebooking.  Maybe Amazon will start taking food stamps next to complete the circle.

I understand giving poor folks a cell phone so they can make calls.  Why do they need unlimited talk?  Why do they need unlimited text?  Why, for fuck’s sake, do they need a data plan and a free android phone?  Life lines used to be about giving poor people a, you know, life line in the event of an emergency.

To pay for giving out more free phones to more bums, California wants to tax the text messages of people who actually have to work for a living to pay their cell phone bill:

California is considering implementing a text messaging tax to fund programs that make cell phone service accessible to low-income individuals, The Mercury News reported.

The fee would be a flat rate, rather than a per-text tax, The Hill noted. Opposition groups estimated that the tax would cost taxpayers $44.5 million each year.

Voters just approved an increase in the gas tax even though it is going to slap a hefty premium on the price at the pump.  We understand that the roads need to be improved and the money has to come from somewhere.  We also understand helping the less fortunate.  But handing out a free smartphone with free data so someone can Facebook and Snapchat is a freaking joke.  It’s not a necessity, it’s a luxury, and California should not be taxing working people so that poor people and bums can have a luxury item.

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American Economy Warning Lights Flashing

The collapse of American retail stores continues:

Mall and shopping center owners across the U.S. are preparing to be hit by more store closures, following a brutal year that included department store chains like Bon-Ton and Sears going bankrupt, Toys R Us liquidating and even Walmart shutting dozens of its club stores.

Now, a slew of specialty retailers like Gap and L Brands are getting serious about downsizing, which will leave more vacant storefronts within malls until landlords are able to replace tenants.

The Gap taking it in the gap:

The retailer announced Monday that it plans to shut down 175 North American speciality (i.e., non-outlet) stores in the coming years, with 140 to close before the end of January 2016. An unknown number of European stores will also close. In addition to the many employees who will be laid off at those stores, 250 roles are also being eliminated at the company’s headquarters in San Francisco.

Limited is about to completely go bust:

Limited Stores LLC is cutting jobs while facing a possible permanent shutdown.

The New Albany-based women’s apparel retailer filed a notice with the Ohio Department of Job and Family Services saying it could lay off up to all 248 employees at its home office and shutter that facility in the wake of disappointing sales.

Meanwhile, GM will layoff 15,000 workers in the US and Canada.  Who are these Trump supporter autoworkers blaming for losing their jobs?

“I think it all started when Trump repealed the [Corporate Average Fuel Economy standard],” she told the outlet. “When Trump repealed the CAFE standard, that gave GM more of an incentive to get rid of the Chevy Cruze and do this restructuring.”

“The CAFE standard meant that you could produce small cars that are energy-efficient and that would kind of balance out the building of big trucks and gas guzzlers,” Senters added. “Building the Cruze meant that GM could also build many big trucks and still meet fuel efficiency standards.”

So Trump kills a law that requires automakers to build high mileage cars.  When he kills that, GM kills its production of those high mileage cars.

Meanwhile, President Trump talks about how great the trade war is with China.  The only problem is China is shipping more of their garbage to us than ever, and accepting less of our products.  As a result, the trade deficit is the largest it has ever been in the history of the United States.

That’s how you win a trade war folks!!

Trump’s Failing Trade War With China

Over roughly the past year, Trump has been at economic war with China.  He says they import too much of their junk but refuse to take our junk exports back.  And so he has put a series of tarriffs on Chinese goods and claims that China will get hurt more than the U.S.

The longer the trade war drags on though, the funny thing is things have actually gotten better for Chinese exports to the U.S. and worse for U.S. exports to China.  In other words, China is very clearly winning Trump’s self inflicted trade war.

Consider the latest foreign trade data from U.S. Census:

Month Exports Imports Balance
January 2018 9,835.3 45,788.0 -35,952.8
February 2018 9,806.1 39,067.6 -29,261.5
March 2018 12,382.1 38,256.7 -25,874.6
April 2018 10,268.0 38,230.0 -27,962.0
May 2018 10,610.8 43,797.4 -33,186.6
June 2018 11,115.6 44,599.5 -33,483.8
July 2018 10,261.7 47,096.0 -36,834.3
August 2018 9,294.3 47,863.9 -38,569.6
September 2018 9,789.1 50,032.1 -40,243.0
TOTAL 2018 93,363.0 394,731.3 -301,368.2

Source: https://www.census.gov/foreign-trade/balance/c5700.html

Yes, you are reading those numbers right, as Trump has tried to put more pressure on China, the trade imbalance has grown to record numbers in China’s favor:

China’s trade surplus with the United States widened to a record in August even as the country’s export growth slowed slightly, an outcome that could push President Donald Trump to turn up the heat on Beijing in their cantankerous trade dispute.

CNBC quotes a Chinese economist who wants you, Americans, to believe that China’s surplus is growing against the U.S. because the U.S. economy is “strong” while the Chinese economy is growing “weak.”  Having a record trade surplus with your biggest export market is a strange way to argue that actually your economy isn’t doing so well.

Whatever the realities of the Chinese economy are, the trade war’s devastating impact on the U.S. economy is clear.  The Democrats just won back the House of Representatives by an astounding 7% vote differential, a differential bigger than the tea bagger “revolution” of 2010.  Farmers are seeing their large soy bean crops pile up and are worrying about rot:

Mr. Karel, the general manager of the Arthur Companies, which operates six grain elevators in eastern North Dakota, has started to pile one million bushels of soybeans on a clear patch of ground behind some of his grain silos. The big mound of yellowish-white beans, already one of the taller hills in this flat part of the world, will then be covered with tarps.

The hope is that prices will rise before the beans rot.

We’re sitting on the edge of our seat,” Mr. Karel said.

Keep dreaming buddy!

Meanwhile, farmers in Brazil are living high on the hog.

The Bella Vita luxury condominium tower rises 20 stories over the boomtown of Luís Eduardo Magalhães in northeastern Brazil. Its private movie theater and helipad are symbols of how far this dusty farming community has come since it was founded just 18 years ago.

Local soybean producers shell out upwards of a half-million U.S.dollars to live in the complex. Nearby farm equipment sellers, car dealerships and construction supply stores are bustling too.

Meanwhile, nearly 5,000 miles to the north in Boone, Iowa, farmers are hunkering down. At a recent agriculture trade show here, Iowa corn and soybean grower Steve Sheppard reflected the cautious mood.

Do you think the farming business that has left the U.S. for Brazil will ever return?

Auto and Housing Stocks Get Destroyed

The last few days have been days of reckoning for the stock market.  The question only remains: is this a small, short term stock market correction, or is this the beginning of a bear market that will take out much of the value that has been generated over the last ten years since the 2008 crisis.

HOUSING STOCKS GET HAMMERED

During the post 2008 “recovery” people were screaming hysterically about a housing market that was never going to go back down and that would continue to see prices grow year after year, forever.  But as home sales and prices began to slide and interest rates crept up over the last 60 days, another very serious trend has emerged without much attention: housing company stocks have been getting absolutely destroyed.  That said, most of the delusional “economist” commentators continue to insist that the “fundamentals” of the housing economy are strong.

“I think fundamentals are strong out there, but I think buyers are going to continue to be involved in the market particularly at the low end,”

How very 2008.

These “experts” seem to conclude that everything is ok–it’s just that rising interest rates are making a home purchase a little more difficult.  People for decades were purchasing homes at double-digit interest rates, in fact in 2008, the interest rate was around 6%.  But this time around we see the housing market beginning to look very shaky as interest rates hit 5%.  Throw on top of that Trump’s insane tax cut financed with $1.5 trillion in debt and that will eliminate deductions for many home owners, tumbling housing stocks and weak wage growth and there is no way for the would-be home buyer to keep up.  This is not healthy and interest rates can’t be the only thing we blame.  This is a massive failure of leadership.

More challenges to home builders:

“On the other side, homebuilders are facing massive increases in cost, they’re really having problems with finding skilled construction workers; they’re also having higher material costs as commodity prices go up. So you’ve got higher costs in building, higher prices from a consumer perspective, and that’s just really making the earnings growth tank,” Gibbs said Friday on CNBC’s “Trading Nation.”

In what world are these “fundamentals” strong?

AMERICAN AUTO COMPANIES GET WRECKED

The “big three” American auto companies have also been taking a lot of damage in this supposed “very healthy” and “best” economy in the “history of the world.” As has been discussed repeatedly on this blog, the insanely high prices, of even a pickup truck, these days is making it very difficult for the American consumer.  But instead of looking at why income isn’t keeping up with inflation or why costs are going way beyond what people can afford, the auto industry “expert” economists once again bring out the interest rate boogeyman and blame him for all of the auto companies’ problems:

So, why are Ford shares plummeting?

In the short-term, auto stocks are falling because interest rates are rising.

Actually, how about the fact that it now costs $50,000 for a fairly average pick up truck, which is basically the entire annual salary (before taxes) for the average American worker.  In what world is it a good business model to offer a product that nobody can afford absent a eight year financing loan?  When your entire business relies on your customers taking on a huge amount of debt in order to buy your product, perhaps the question should be about how to cut costs while still being able to make a profit instead of figuring out ways to just get your American chump to take on more debt and pay more interest.

Others now claim that auto stocks are “irrelevant,” but the reality is auto stocks usually take the biggest dump right before the economy.  They are the canaries in the coal mine:

“We all know before the whole economy goes south, autos do,” said Jon Gabrielsen, CEO of Cabo San Lucas, Mexico-based J.T. Gabrielsen Consulting LLC. “That’s why I think they’re dropping off on all the autos.”

The 2008 crisis came about because bad loans were being written to people who had no business getting them.  This time, loans are being offered to people who have no business getting them other than at the low rates that the loans were offered.  In other words, we went from an underwriting problem–where shitty loans were being offered to shitty people (in terms of creditworthiness)–to issuing loans to people who looked like they could afford them because the interest rates were so low.

As interest rates now begin to rise to reasonable and responsible levels, levels that in the history of finance are still low but closer to reality.  The problem is the entire recovery has been built artificially on the back of cheap money.  If not for the low interest rates, the recovery would not have happened the way it happened.  All these people are waking up and realizing that they can’t make the payment on their adjustable rate loans, that they did not save any money during the supposed “boom times” because they were too busy taking on more debt.  They realize they failed to get any meaningful wage growth (especially when inflation is factored in) over the last ten years, and that  they have been footing the bill for increasing healthcare costs.

Meanwhile, the greed at the top continues.  Their incomes grows and their tax burden falls while the rest of us eat cake.

The boom times are when you are supposed to put away money for a rainy day.  Average Americans on an individual level and their government at the group level did not do that.  The storm is coming and there is nothing in the piggy bank.

But hey, blame the Fed.  Blame the interest rates.  Blame anything other than your own  crappy financial decisions.

Trump Destroyed The Economy, Now Blames Others For Being a Failure

Before the election, Trump repeatedly called the economy a bubble.  Of course, that was when the black guy was president:

But then as soon as he became president, suddenly it was the BEST ECONOMY IN THE HISTORY OF THE WORLD!!  the BEST STOCK MARKET IN THE HISTORY OF THE WORLD!!

The reality is when Trump took office he inherited an economy that has been propped up in the years since the financial crash by low interest rates which have created cheap money.  With that cheap money, people have taken on mountains of debt and purchased homes that they never could have afforded if-not for the low interest rates (cheap money).

And what did Trump do in the middle of what he used to call a “big fat bubble?” He decided to pass 1.5 trillion in tax cuts that he funded with debt (because we don’t have anything else left to pay for it with).

So during this “booming” economy, Trump continued along the Obama path of pumping up massive debt, and is upset that unlike Obama he will not have extremely low interest rates to keep everything propped up.  Naturally, he blames the Fed.  In reality, this is his own damn fault along with Obama’s.

The national debt is the alcoholic and Obama and Trump were the enablers and co-dependents.  The alcoholic needs to be allowed to hit rock bottom before the real recovery starts.  The co-dependent enablers, Obama and Trump, have never let that happen.  Can this country take rock bottom?

America’s Exploding Debt, Comparisons to the Pre-Great Depression Boom Times

One of the top economists in the United States, Robert Shiller, just compared the current economy to the insane boom times that preceded the Great Depression.  With the Dow blowing past its all time high today, the question seems more relevant  than ever.

“The 1920s is quite a legend that people are often thinking about,” Shiller said Friday on CNBC’s “Trading Nation.” “I look at 1929 particularly as the end of the roaring ’20s and it ended in a bout of speculation. Between May and September of ’29 the stock market went up over 30 percent in just a few months.”

Why the comparison?

“At that time it seemed like it was a kind of gambling. The word gambling was used a lot to describe the market at that time so it became vulnerable. We’re not exactly in that circumstance but we do have the market that has surged since 2009 so there is something of that spirit today,” he said.

The S&P 500 hit its market bottom in March 2009. Since those lows, the S&P 500 has rallied 334 percent in the longest stretch on record since World War II without dipping into a bear market.

In boom times, you save money and get everything in order to prepare for the bad times — winter is coming and you should be ready for it.  During this latest boom cycle, however, Americans are saving next to nothing, taking on more household debt than ever, while experiencing almost no wage growth.  Meantime, American corporations have also taken on record debt and have seen stock prices divorced from the actual value of their companies.

The American government has spent recklessly, passing a massive tax cut financed with debt, and blowing through trillions of dollars in spending with ease.  For fiscal year 2018, the gross national debt increased by $1.27 trillion dollars to a new high of $21.52 trillion in national debt.  And the debt is growing at a break-neck pace.

While we can push off questions about the sustainability of our national debt or ignore the issue during the good times, what happens when the economy tanks?  How will we be able to stimulate an economy if we are broke?  Will other countries continue to have faith in the U.S. economy (and thus U.S. currency) if the market crashes and a recession hits?  Will we be able to service this massive debt if interest rates continue to rise?  What happens if unemployment spikes and tax revenues dramatically increase?  What do we do about all these tax cuts we can’t afford?  What do we do about all the aging baby boomers and their exploding Medicare and Social Security costs?

We shall see.

Debt

Picture from the Surface of a Comet

This is a real picture from comet 67P.

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These photos were released today by ESA.  The photos come from the 2014 Rosetta Philae mission landing a probe on comet 67P.

Canadian astronaut, Chris Hadfield tweeted the picture:

A cliff approximately 430 feet high is visible in the picture, but a part of the cliff has since collapsed.  The bright spots in the picture are reflections from sunlight.

More photos from the mission are available here.

And some perspective on the size of the comet here.

More photos and animations:

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