Economy – Really Right

The “Fed” Lowers Interest Rates…. Stupidly

So, the Federal Reserve Board of Governors agreed to lower interest rates yesterday for the third time this year. If you are wondering what this is about or how it affects you, congrats you are in the right place.

In cliff note terms what this means is the following: Banks borrow money from the Federal Reserve; they pay the rate the “fed” sets as interest. Then the bank turns around and loans it to “you” in the form of a car loan, home loan, line of credit etc. You pay higher terms then the bank and they make money on the “spread.” So, for example, when rates were zero about 10 years ago, I got a home loan (mortgage) my interest rate is 4%. So, the bank borrowed the money for zero from the government and loaned it to me for 4% so they make 4% on the money I borrowed.

As a result, mortgage rates will drop as will vehicle loans etc.

Why is this stupid?

Fed Chair Jerome Powell didn’t do this on his own volition, President Trump has been saying he will fire and replace him with someone who will lower interest rates all year. The fed is independent of the presidency, but this president doesn’t adhere to that. Simply put, Trump wants what he wants and will stop at nothing to get there. He wants interest rates to go back to zero, basically where they were during his first term. The fed controls interest rates as a check to keep inflation in order, most would agree inflation is still very high. We also have economic uncertainty, layoffs are up, and consumer spending (credit cards) is at never-before-seen levels.

Again, why is this stupid?

It helps out very few people actually. Sure, if you have a mortgage that started about 7 years ago or less, you likely can refinance to a lower rate, that’s a good thing. Ditto for auto loans and home equity credit lines. If you are a saver, you get whacked as your bank will lower interest rates paid on your savings account. To be fair no big bank pays much as far as savings, but my online bank has gone from 4% to 3.3% in the span of 3 months. Don’t cry for me, listen to my point in the following paragraph.

Trump wants corporations and the government to refinance their debt, not pay it off. Trump’s corporation has billions in debt. Look it up, as it comes due corporations do not pay it off; instead, they simply “recast” it and refinance at the going rate at the time. For the last 7 years or so, it meant much higher interest rates. Lowering interest expense means more to borrow, more to expand that hotel, or build that casino, or buy a competitor. It benefits corporations, not you the individual. Large corporations have popped up in the last 10 years buying up single-family homes and renting them out. Avalon Bay, and Invitation Homes are two of them. Very low-cost debt allows them to pay over asking price, and there are no contingencies. It’s hard for a person to buy a starter house when these corporations exist largely to buy up entire communities of homes. Sure, you could get approved for a lower interest rate to try to buy a home, but good luck.

If you are a saver, aka you follow the Dave Ramsey, Caleb Hammer, FIRE etc. movements, you lose purchasing power as the interest you earn in the bank will be a rate far lower than inflation. The destruction of the savings rate is exactly what Donald Trump wants. It’s a way to discourage this behavior. There is no benefit to the economy of me having $85,000 in the bank earning what will eventually be about 1% a year.

So, what is my point here?

Trump’s big thing is the stock market. He, like many others who are addicted to the TV, thinks the stock market is the economy. When it goes up, its great, when it goes down bad. 90-day guy believes stocks only go up, and Republican administrations are the best for the stock market. Think again, it’s the opposite. You’re better off in a Democrat presidency, Republican congress time. The problem is the only place to get a return of any kind when interest rates are that low is the stock market. This is dangerous because in most circles, folks believe the market has major external forces that dictate returns for those in the know. Why do you think people like Marjorie Taylor Greene go to congress flat broke and emerge as millionaires several times over? If you think they have good luck, God bless you! Just to add, for every Marjorie Taylor Greene or Nancy Pelosi, there are quite a few big losers in the market. Buyer beware… pun intended. I strongly oppose investing every dollar into the market, always keep money in a savings account, but to each is own.

In closing, please consider this word of warning. What about Donald John Trump screams he has your best interests in mind when it comes to money and budgeting? Think about it, I’ve mentioned his corporate debt, how about the spending while he was/is president? Doesn’t inspire much confidence huh? He loves debt, and cheap debt at that. You do not have as much money as he or his family does, rates will eventually go up again. Ask Rite Aid or any other corporation that went bankrupt. Nothing is forever and you don’t have the knowledge or insider status to compete in the stock market with these folks. Look at the number of billionaires in Trump’s cabinet, or any cabinet of past presidents for that matter. They know more than you and have more connections than me and you. In the long run this “great bull market” will run out of gas.

Beware of the prophet seeking profits. Also, know that a fool and his money are soon parted, don’t risk more than you can afford to lose.

PS. Anyone think it’s odd that folks you don’t know to be financially literate are now speaking about investing in crypto and other whacky things like meme coins? These are folks who never spoke about investing in the past. There are several in my circle. It has me worried. I understand the 90-day types being happy. They consume so much TV they live in a self-induced echo chamber. But what worries me is the folks who are not investor types starting to get into the game, especially some of the folks I know who are not exactly smart.

The Chief

Fifty Year Mortgages do not help Affordability

The fifty-year mortgage idea was floated by the Trump administration as a way to make home buying more affordable for the younger generations. While this may sound good on paper, it’s yet another way the older generation wants to saddle the younger ones with insurmountable debt. This is called “financial engineering” it’s the latest go to from the Baby Boomer generation that is entering the later stages of life… I mean power on this earthly plane.

You see, as things are currently, you have two options for a mortgage on a home, 15- and 30-year terms. Folks like Dave Ramsey and others rail against a 30-year loan, and he isn’t totally wrong. The problem is, we have a massive affordability crisis, as far as buying “your first home” is concerned. I say buy the place, if you can afford it, and you can always make extra payments toward your mortgage to build equity and own it quicker. Case in point, 10 years ago, I bought my first home, for $325,000. As of today, Zillow has it valued at $600,000. As you can see, starter homes are very expensive.

Enter the older generation. Having learned nothing from the financial crisis circa 2008, they now are floating a 50-year mortgage. This is the same group that floated and sold; interest only mortgages, negative amortization mortgages, NINJA (no income, no job, no asset) mortgages, and no down payment loans. This sunk the financial and credit markets so badly that banks needed federal government bailouts to stay in business. Foreclosures ran rampant and destroyed neighborhoods and cities. 15-17 years later we are not students of history, we just look for a new means to get to an end.

To be fair, this generation has been at it for a while now in regard to affordability. One thing William will tell you, I railed on the new 84-month car loan that replaced the 60-month car loan. This also had nothing to do with affordability. It was just a financial tool to get “you into that car you love so much.” It became not can you afford it, but how much can you pay monthly? We will adjust the dials in the finance department and make the numbers work. I do not know too many people who think it’s a smart idea to finance a vehicle for 7 years. Oh, check out what interest rate you will be paying, news flash it won’t be 0%.

Back to the 50-year mortgage, I ran some numbers, and it amounts to about a $300-400 savings per month in terms of a lower payment. This is based on a 30-year mortgage running about $2,600 which is common now. As you can see, the savings might help, but it comes with drawbacks. First, the interest rate will not be cheap as the bank will be holding the note for 50 years. Also, the age of the house will come into play. Buying that home built in 1960, it’ll be over 100 years old before the mortgage is 2/3 paid off! This carries significant risk for the bank as the asset could be falling into a state of disrepair. Also, you do not and will not build much equity over the life of that mortgage, so when you are looking to buy your bigger house, you won’t have much for a down payment. Just look at the amortization schedule. You will see the first 7-8 years is virtually all interest, not much toward principal.

The last thing to remember, the man pushing these mortgage ideas is none other than President Donald John Trump, a man who loves debt. Look it up, his corporation owes billions in loans. This is no shot at him, he made a ton of money in real estate, but he did it with the corporation holding the paper not himself. In this case, he is making you hold the debt personally. He has made zero attempts to cut the debt or deficit as President (this term or last), and a budget will never be a thing under him. He see’s things through the eyes of “as long as you can make the payment you are fine.” It’s the way his generation feels.

In closing, please think long and hard before you fall for these shenanigans put out by the older generation. The only thing they care about is wealth generation. The 90-day calendar types love it because this means home builders can sell more homes, banks can write more loans, and profits will go higher. They could care less about affordability; they prefer you locked into loan terms that won’t seem like a good move in a decade. This will not end well. I am happy there has been push-back on these mortgages. The truth is that some people will not be able to afford a home. You may not be able to afford that sports car, getting another credit card will not solve your problem. A class/seminar on budgeting/credit should be required.

Stop fleecing the younger generations. Be a student of history. We are entering a rough cycle in terms of affordability. Adding more years to the term is pointless. It’s time we grow-up as a country.

SNAP/EBT Benefit/Fraud/Use Explained

During the government shutdown you heard a lot about SNAP/EBT/CAL Fresh benefits. I will explain the propaganda both sides were using. 90% of it is not true, 100% of it was deplorable. I will explain the program and the amount of “fraud” taking place. If you are reasonable, you will learn something, if you are far right or left, you will not; feel free to quite reading if you fit into the latter categories.

Understanding what SNAP is. It is a supplement. People on SNAP are what I refer to as the “working poor.” They are folks working 12-15 hour days, possibly even 7 days a week, because the jobs they have pay minimum wage. They do this because their primary job doesn’t give them 8 hours a day or 30 hours a week to be eligible for benefits. These folks have their money run out around the 20^th or so of each month. Sure, there are disabled folks on here to who cannot work.
What you can use SNAP on. It’s essentially groceries and fast food. It will not work on alcohol and some prepared foods.As a result, you see the person in line having to swipe the card numerous times, and likely remove items that aren’t eligible for SNAP from their cart because the system will not take payment.
How much is the benefit? It’s about $188 a month. Again, the point of this program is a “supplement” not a living benefit, think of it as “something extra.” Look at that figure again. Folks, it’s $188. Recipients getting this aren’t going out to dinner at Ruth’s Chris Steakhouse. If you live in the real world, the folks on SNAP, as Dave Ramsey says “are only seeing the inside of a restaurant if they are working there.”

As you can see above, this program isn’t one that folks are getting rich off of, it’s just a way to put food on the table during the latter part of the month. No one is living high on the hog here.

I will now refute the criticisms the uninformed on both sides of the aisle spew about this program.

It’s rampant with fraud. This is flat-out, not true. First the benefit is so small that it’s barely worth the time to apply if you are doing it for nefarious reasons. I am sure your household income is verified, either via the IRS or State Tax Board so it would be pretty easy to catch the liars. If someone is working for cash or under the table, I am not sure how to catch those types, but it’s a small number. Now in regard to the folks selling their benefit card for cash to purchase drugs or alcohol, I am not sure how you stop that, but again that isn’t a large part of the program. Again, I just do not see a lot of people fraudulently being on this government program.
These people did it to themselves. In some cases, yes, I will concede that point, having a felony on your record severely limits the jobs you can have. Not finishing high school also will limit you, as is the case with having children out of wedlock. However those people are the exception, the rule is what I am talking about. Most of these recipients are working multiple jobs and are barely able to tread water. This is due to C-suite types not wanting to pay a living wage to folks and cutting hours to not allow benefits to be offered.
All they buy is junk food with it. This is mostly true unfortunately. Again, what we are dealing with here are folks with very little work skills, working for very little pay. Also, due to their schedule, they may not be able to cook or know how to cook. In that case buying, chips, cookies, cereal, frozen dinners, and soda is what they do. They can stretch these items out, I guess. Yes, this food is bad for you healthwise, but it does no one any good giving people who can’t cook; beans, rice and flour. It’s a deeply systemic problem that has been allowed to grow out of control.
Illegals are getting benefits in large numbers. This isn’t true. Why would you sign up for a program and call attention to yourself, especially with the current group in the White House. Let’s all agree on something, it isn’t illegals pulling off the fraud.
Not paying them during the shutdown will teach them a lesson. I heard this from a couple Republicans. Anyone else need proof that taking God out of our lives was a bad thing? Starving people to teach them a lesson? What is the matter with you. This is actually worse because the true “hunter/gatherer” mentality comes out and folks start doing drastic things to feed their families.
Can’t food banks take care of it? Nope. The truth is they can barely handle their current caseload; this just made the issue worse.

As you can see from the above, I am making light of the fraud, and what these folks buy. The questions being asked and statements made are a problem. We should be asking how are 42 million Americans on this program? That’s a ton! How DID this happen? We can talk about fixing this but I feel we are too far gone. Where do you start when 42 million people are on it? RFK Jr., for all his faults, is onto something about limiting the types of foods folks can buy with these benefit cards. I do not think they should be accepted at fast food places either but again the bulk of these folks can’t cook, or their schedule doesn’t allow them the time. It’s a chicken or the egg type argument.

If we want to be real about the program, I think those of us that are reasonable would agree, 7/10 of these folks do have a need to be on the program and receive the benefits. They as stated work multiple jobs, weird hours, and just cannot get ahead. 1/10 are likely fraudsters, but how do you catch them? As detailed above, it’s pretty hard to catch the person selling their card for cash at the local park/street corner. This is also likely a number higher than is reality. The remaining 2/10 are where the real problem lies. These are folks who are clueless as opposed to the 7/10 who are helpless. These people put themselves into this situation by having a deserved criminal record, having kids when they cannot afford them, and other poor choices. These are the folks we need to stop assisting. They likely spend countless hours watching the tv on the couch and intentionally not picking up more hours at their job because they are lazy. Frankly put, we help out way too many clueless folks in this country, we are bankrupting ourselves as a result. This is the group DOGE should have targeted.

Chief

PS now back to your regularly scheduled programming of tossing out far right and left ideas about this issue.

Editor’s Note: One issue that is not refuted in the above is stolen identities and organized crime. I suspect the bulk of fraud is via this mechanism. In my experience, government is ill equipped to deal with fraud as the presumption of any government program is that the applicant is eligible.

Ford CEO Jim Farley Sums up his Generations Failures

The CEO of Ford recently held a conference where he made remarks to his employees about a future with Ford. He revealed he had a personal “epiphany” about “essential economy.”

Most people I know that have an “epiphany” either found God, their soul mate, or came to a realization of something later in life they wish they knew. In the case of Farley, it was this half-baked nonsense below.

Speaking with Bloomberg’s David Westin at Michigan Central Station, Farley said he came to this realization during the United Auto Workers strike of 2023, when he was especially struck by stories from young factory employees. Many of them said they could not support themselves by working at Ford alone. “When I met with my entry factory workers, they were saying [they] had to have three jobs.” He said they would also work at places like Walmart and an Amazon fulfillment center: “‘You know, I get six hours of sleep, and I got three jobs.’”

This would be a surprise to no one who is a millennial and below, but to those like Farley and the older generations, it’s a foreign concept. Working multiple jobs just to eke out a living is very common now, it shouldn’t have to be this way. Its neither a Democrat or Republican issue, it’s a bipartisan one.

To further enhance my point about Farley’s generation, check out this verbal diarrhea.

In the short term, Farley said, Ford’s signature element in its new labor agreement was to get full wages to entry-level workers. But beyond that, he began looking at the labor shortage in trade work, starting with technicians. Farley described a revelation about the erosion of what blue-collar work used to represent—stability, pride, and a single income that could support a family.

A signature element! There you have it folks, he wants full wages to entry level workers! My goodness, stop the presses. He now cares about the labor shortage for trade jobs? Interesting, I’ll address this a little later.

Farley was blunt about the nationwide labor shortage. He estimated the U.S. is short roughly 400,000 technicians and a similar number of factory workers, repeating talking points he has been citing in his push on the essential economy. He warned that millions of well-paid jobs are going unfilled because they require specialized skills. Putting the salaries for these jobs at $100,000 and above, Farley argued that they require training. “You can’t work on a diesel F-150 if you haven’t been trained for five years, at a minimum five years,” Farley noted. It’s not a demand problem—there’s plenty of work—but a dire shortage of young people choosing and staying in the trades.

More verbal diarrhea. This Farley dude must have the worst breath in history. Those jobs start at 100k? I highly doubt it. Sure, they require skills but why would it take 5 years to be trained on this? Why not start out with an easy area, and progressively build up to more difficult specialized work? This is something Farley cannot compute.

As for a solution, Farley offered a nothing burger.

Farley called out declining investment in skilled trades, poor productivity, and bureaucratic hurdles as key obstacles facing the essential economy. He challenged large employers and community leaders to act, advocating for more robust apprenticeship and vocational education programs, and lamented the lack of progress at federal levels despite President Trump’s push to de-emphasize four-year degrees in favor of trade schools.

“I see a lot of momentum with mayors, county leaders,” Farley said. “They get it. But they’re in the same boat we are. They don’t have a lot of resources. They’re struggling to get these projects done.” He said there’s a general attitude of frustration, a sense of “How the hell do we fix this?”

More bunk. Community leaders do not wish to act. If they did, why not get rid of needless and useless red tape, environmental reviews, committee hearings, permitting, community meetings, and NIMBYism prevents investment by communities. No one wants a factory near them. Worse yet, the process in certain states takes years to even be close to shovel ready!

As far as large employers, well Farley, fat cats like you have eaten up all free cash flow by mandating “dividends and share buybacks” as ways to juice returns for yourself and shareholders. Simply put, you have no capital to deploy so you count on a city or municipality to do so!

As far as vocational school, apprenticeships, and trade schools; your generation is the reason for these jobs going unfilled. For years in High School, 20 years ago for me, I heard your generation telling us if we didn’t go to college that we were failures. Turning a wrench or working in a factory was for screw ups. What did we get? A generation with 6-figure student loan debt and worthless job prospects. We all work in government jobs as paper pushers. Hence permitting takes forever. We told our kids “learn how to code” now those jobs are going away.

Even if you work in a factory, you are not viewed as an asset, you are a liability. If you are actually a worker not a contractor or vendor, you do not make 100K, I guarantee it. Your healthcare is likely watered down garbage, and you are likely pressured about working harder and faster constantly. When the economy slows down you get “laid off” or the plant might be idled. Worse yet, due to zero investment by the company in the factory you work in, one bad quarter means it could be shut down, and your job shipped 3 states over or to a whole other country. Gotta keep the investors happy! While the county or city suffers due to a loss of working-class jobs. But hey, Amazon is hiring at $20 an hour plus benefits!

Farley and his generation have screwed this country up so badly and now they are trying to quickly cover their tracks. Ha! What a joke! This will be part of a series that I will dive deeper into. The 90-day calendar is killing us. We are suffocating our own future generations for nothing but higher bonuses and salaries for Farley and his ilk. If you work at a factory, do not believe Farley for a minute, they will shut the plant down if it saves money, they could care less about you having to work 3 jobs to get by.

Trump is/was Wrong on his Tariff Approach

Just for those who are doubting my political allegiance I do support President Trump’s attempt but he is doing it all wrong. Sadly, this isn’t totally on him, it’s his generation and they are out of step with today’s Americans.

His “all or nothing” day of liberation approach backfired tremendously. It’s been said to me, “it’s not hard to herd a couple cats, but herding 10 is challenging, herding 300 is impossible”. Trump went after literally every country in his bizarre press conference. The best approach would have been to get our closest allies on board first, then work out from there. South Korea, Japan, and Mexico would have been my starting point. South Korea needs our military backing, ditto for Japan (tourism as well), Mexico is a little different but if they don’t want to negotiate add a 3% transaction fee to every US Citizen sending money via wire to Mexico and believe me, they would come to the table quickly.

I left Canada off that list as relations with them are low, he stupidly keeps saying he is going to annex Canada and is calling them the 51^st state. Saying Wayne Gretsky should be their next governor is equally stupid. Canada, as a result, has been reaching out to other countries and offering to help make up the difference if the US stops trading with them.

I would have gone after Vietnam, Philippines, Malayasia, and other southeast Asian countries next. These countries have a low skilled workforce (for the most part), are typically poor, and like China, rely on slave labor to manufacture goods on the cheap. I wouldn’t threaten a tariff, I would say we want to invest American dollars in modernization of your production, warehouses, supply chain etc. with the goal being China seeing this and reacting. China does not want to lose its monopoly on most manufacturing of things, and their close proximity to China, and USA support causes a threat. Instead, Trump got into a d**k measuring contest and now China is lobbying those countries not to listen to us. Again, it’s the way he did it, not why he is doing it.

The European Union should have been the second easiest sell, it backfired as well. Some of this is due to his picking fights with NATO as most countries in the EU double as NATO countries. The EU has also turned to Canada and China to help fill the void. In this case I do heavily blame Trump, the EU is very similar to the US in that it has a very aging population not interested in working in factories, this should have been an easy deal to close.

In closing Trump may think he is the greatest deal maker of all time, his problem is his bullying persona rubs people the wrong way. He showed his hand in his first term and now other countries are prepared for it. The bully does his best work picking on the smallest and most vulnerable and moving on from there, it creates fear and apprehension. When you try to pick on everyone at once, if someone(s) stands up to you, most of the rest will follow suit and then you are stuck. His tit for tat with Canada looks really foolish now, and while warranted, his comments regarding NATO and the Ukraine/Russia war are doing him no favors. He has been reduced to begging Xi Jinping to call him to get a deal done just to save face.

He got played because he never realized he didn’t have a card hand to bluff with. Other countries know America is a deeply divided nation we tend to go back and forth between which party controls the White House/Congress nothing is forever here. In the current climate of Executive Orders, if the other party takes the White House, the predecessor’s orders are erased before lunch is served on Inauguration Day! Most politicians only desire to be re-elected, not pass legislation, company executives only care about cutting expenses and stock prices, and no one in America wants to work in a factory! Also, our employment/wage laws are arcane compared to other countries. Look at CA alone, $20-hour minimum wage in fast food, mandatory overtime after 8 hours in a day, double time after 12, anything over 40 hours a week is overtime, mandatory breaks and lunchtime. Compared to slave wages and labor in other countries, the input price won’t get lower here. Also check out our environmental laws compared to most countries we are trying to barter with? It’s a lose/lose proposition.

I hope this works, but even if he negotiates a better deal, I just don’t think we will see the benefits.

Sadly, NAFTA and environmental/labor laws killed any chance of the jobs coming back.

MSN Lies and Distortions About Social Security

I wish to take issue with some of the statements in an article on the Microsoft Network news site. As usual, their content is from other websites. Anyway, this article is by a person named Andrew Lisa.

First, here’s part of the article.

In 2024, before he was elected for a second term as president, Donald Trump declared on Truth Social, “SENIORS SHOULD NOT PAY TAX ON SOCIAL SECURITY!”

That might sound like a blessing for retirees on fixed incomes — who happen to be one of the country’s biggest and most reliable voting blocs — but how much would seniors really benefit if Trump were to succeed in eliminating the tax on Social Security benefits?

It turns out that what appears to be a proposal to help the most vulnerable populations would actually benefit wealthy retirees the most — and the cost in lost revenue could threaten the program’s future and lead to reduced benefits for all.

Trump Wants To Eliminate Social Security Taxes: Here’s How Much the Average Retiree Would Save

The assertion that eliminating federal income tax on Social Security will bankrupt the system is nuts. Supposedly, the money paid out to Social Security recipients was withheld from their checks during their working years. If it accrued interest at market rates, it would be enough to last old folks for many years. The truth is that there is no segregated fund of money invested for Social Security. The claim that there is a coffee can buried on the White House grounds with an I.O.U. inside instead of money is basically true. Congress has been syphoning off the money for decades and spending it as it comes in. Taxing it is just a gimmick to gin-up class envy. Thanks Bill Clinton.

William Jefferson Blythe Clinton 42nd President of the US

Let’s look further at the claim that wealthy retirees would benefit the most.

The article then claims that eliminating Social Security taxes will only benefit the rich making over $5,000,000 per year.

According to the Tax Policy Center, “The biggest winners would be those in the top 0.1% of income, who make nearly $5 million or more. They’d get an average tax cut of nearly $2,500 in 2025.”

However, elsewhere in the article it says,

“Right now, up to 85% of Social Security benefits can be subject to taxes, which feels like an extra burden when you’re already managing a fixed income,” she explained. “For instance, if you’re receiving $30,000 in Social Security benefits and are currently taxed on half of that at a 12% rate, you could potentially save $1,800 if these taxes are removed — a relief that could go a long way in your budget.”

So, in one spot this article says you need to make five million dollars to benefit $2,500 from this tax cut but two paragraphs prior it says someone making $30K could benefit $1,800.

Both statements can’t be true, but both are treated as equally valid and factual.

Folks, there is another issue related to retirement that this article doesn’t touch. My wife and I get a modest pension and last year I started on Social Security. We did our taxes last week for 2024. We walked out the door with the largest tax bill we have ever had in our lives and yes, last year we did have tax withholding equal to our tax bill for 2023.

Our tax bill breaks down into three buckets.

State tax was five times higher than last year.
Social security was taxed.
Obamacare tax. Yep, did you know that if you’re on Obamacare that you get to pay healthcare premiums every month and then get an additional tax bill for April 15^th?

Obamacare

We are too young to be on Medicare which by law you must be on at age 65—even Warren Buffett and Bill Gates are on it too!

Since we retired from work in California and live in another state, we can’t get health insurance directly from our old employers. Thus, we must buy our own policy. Since we are retired, the best deal we can get is being stuck with Obamacare. Obamacare requires that you estimate your income for the coming year, and they then use that estimate to calculate a monthly premium. Well, we guessed wrong, so we got hit with what amounts to an Obamacare penalty. In our case $4,500. The penalty is added onto your tax bill with the federal government. Failure to pay by April 15^th gets you penalties and interest from the IRS.

Most of this tax mess is the result of taking some money out of my wife’s IRA. The effective tax rate of this withdrawal was about 35 percent including the money withheld by the fund manager.

So, with less than three weeks until the tax deadline, we are struggling to pay a five-digit tax bill on a fixed income. Meanwhile, my wife is dealing with stage 4 cancer and its related medical expenses. She is not getting any better. Talk about piling on.

Bottom line: eliminating the Social Security tax will benefit many people. Obamacare punishes those on fixed income that are honest about their circumstances.

Lastly, please note that this article on Social Security mentioned nothing about the people that benefit from the bill Biden signed in January which allows teachers, firefighters, and others to get more money from Social Security. Biden’s increasing the benefit to others seemingly has no consequences to the long-term health of the program but Trump cutting a tax is going to bankrupt the system. WTF?

The First Cuts are the Deepest (DOGE)

The Department of Education buildings in DC and some other regions will be closed for security reasons 3/12. They will re-open on Thursday. The security reasons are mass layoff notices are going out tonight, as much as 50% of the department will be cut. This marks a sharp departure from the earliest cuts at DOGE which focused on USAID.

Things are now going to get extremely real.

USAID was the low hanging fruit to be cut. USAID traces back to around 1961 but I think it has roots even before that. USAID exists mostly to be a conduit to bribe other countries. We do this to police the world and have our way around the globe. You may have noticed when we bombed Iraq and Afghanistan that most other countries looked the other way. We bombed Doctors without Borders, Hospitals, even families but that was ok because we paid off the neighboring countries. Notice how when Israel attacks Gaza, or I guess “Palestine” for those who are living impaired that may be reading; Jordan and Egypt are silent? Bribery. Also, Trump in his executive order exempted those countries from the ban mind you. To be clear I had/have no issue cutting all USAID money… and I never want to hear about us paying to build a Sesame Street replica anywhere again.

The cuts he wants to do at Social Security and Medicare are a more difficult sell. He talks about fraud and I’m willing to give some credit here… some. In the Medicare part, yes, I believe it’s rampant, but mostly on the “billing side.” I remember watching an American Greed episode years ago that focused on this. Shell corporations existing only as a PO Box billing for services never rendered. The government pays since unless you can prove its fraudulent it’s hard to argue against paying a medical bill in court. Maybe changing billing laws helps here? I have never liked the idea of not being able to tell who owns a corporation, and some of these cheaters create layers and layers of LLCs to mask the entire identity of the entity.

On Social Security, he needs to be careful here. I like the idea of identifying fraud, but I do not think they will actually find much. I for one do not think people who are “345 years old” on paper are receiving a check each month…. trust me, if there were, folks like Senator Rand Paul, would be all over that. Hell, even Lyin’ Ted may have weighed in by now. Cutting the Social Security check to someone who is actually alive is not only a terrible look, but the political ads write themselves. Social Security is not like voter fraud… it’s all some people have got and quite a few older American’s aren’t getting 4 figure checks. Trust but verify, and use caution here.

In conclusion, I know I only touched on a couple of points here, but we as a society, have needed this to happen for a while. When we have the national debt at 36 trillion, we do not need any more Blue Ribbon Committees, or deficit committees. We do not need commissions, meeting groups or bi-partisan congressional groups… it’s too late. These groups, while putting together a valiant effort, have never produced anything deliverable at all. Kind of like a central committee meeting, we go to war with each other…. go in peace to serve the world, and reconvene next month for the next edition of the circular firing squad. I’ll give it to Musk, he is trying, and he is being attacked by everyone, which is good… there should be no sacred cows.

The United States must realize, we run our government the same way we run our lives, we may flip out the credit card, and as long as we make the minimum payment, we are good for one more month. I noticed each household’s share of the debt is about $105,000, could you write a check for your share? See us for who we really are, we are the morbidly obese patient about to go into cardiac arrest pleading with our doctor to approve us for a weight loss drug… we do not need a diet, we need a lifestyle change. Musk isn’t perfect…. he is trying.

How Panera Bread got exempted from $20 an hour wages

Ah, the People’s Democratic Republic of California was exposed again last night. You may remember a blog done here a few months ago about the $20 an hour minimum wage for fast food workers? You may also recall how we thought it was odd Panera Bread was excluded since “they bake bread on site that can be sold for sale?” Yep, the truth came out last night.

Bloomberg reported that the exemption is the result of the governor’s relationship with billionaire and Panera franchisee Greg Flynn, who was initially a major opponent of the bill. Multiple sources told KCRA 3 that the governor pushed for the exemption in the late stages of the bill’s negotiation in 2022 with Flynn’s influence.

Yes, fellow sheep living in this Republic, Flynn is a billionaire who owns quite a few Panera Bread stores in California. Flynn was able to get his way, and it didn’t really cost him that much….

According to state campaign finance data, Flynn donated $100,000 to Newsom’s campaign against the 2021 recall and $64,800 to his reelection campaign in 2022. He told Bloomberg he did not play a role in crafting the exemption. He did not respond to KCRA 3’s request for comment Wednesday night.
Report: California’s fast food law exempts Panera because of Gov. Newsom’s relationship with billionaire franchisee

I can understand why he wasn’t answering his calls that night.

At least the loyal opposition weighed in on the issue….

The California Assembly’s Republican Minority Leader James Gallagher called for an investigation Wednesday night. “Can any franchisee get an exemption from the $20 minimum wage law or do they need to donate more than $150k to Newsom first? This crooked deal needs to be investigated,” Gallagher said.

I wonder what will take longer folks, Troll getting Hope Hick’s phone number, or Gavin addressing this “leader” of a few folks in the opposition party. There will be no investigation, trust me on this one. Gavin will go on TV and try to explain this away, and his friends in the state-run media will talk it into existence…just wait.

Oh wait….

“This legislation was the result of countless hours of negotiations with dozens of stakeholders over two years,” said Newsom’s office spokesman Alex Stack in a statement on Wednesday. “Staff in the Governor’s Office met with dozens of business owners as well as union representatives, as is expected when policies of this consequence are moving through the Legislature.”

Alex Stack is this jabronis name? What an adorable last name…. Stack. Would be even funnier if he had a Ph.D. However, I wouldn’t refer to it as a doctorate, I would refer to it as…Piling it High and Deep.

The article also quoted this nugget from the two “leaders” of the Democrat Party in the Capital.

KCRA 3 reached out to the offices of Speaker of the Assembly Robert Rivas and Senate Pro Tem Mike McGuire for comment on Wednesday night. Neither responded.

The understanding I have is Rivas needs his staff to make up que cards on sturdy card stock, and McGuire was looking over blueprints for the “non-binary” bathrooms being constructed in the Capital renovation. Both have an acute fear of being “spayed and neutered” by Newsom and his staff I have been told.

Again, this goes back to when Newsom signed this trash into law…but no one asked the tough questions then, and they still aren’t now.

When Newsom finally signed the agreement into law in 2023 at a news conference in Los Angeles, KCRA 3 asked why the exemption was there in the first place and why Panera and other bakery counter service restaurant workers won’t have the same protections.

“That’s a part of the sausage making,” Newsom replied. “We went back and forth, and that was part of the negotiation, that’s the nature of negotiation. It’s not just Jack in the Box, it’s not just McDonald’s, there are a lot of different players, and this affects a lot of different franchises and different models as it relates to that and different conditions and environments. That was all part of the give and take and that was the collective wisdom of the Legislature and ultimately led to my signature.”

Final thoughts:

Folks if you live outside California and are wondering why there is no outrage, the reason is 90% of the voters here are low information voter types. They like being told what to do, and how to think. Google Gavin Newsom and Plump Jack Winery, or Gavin Newsom and French Laundry Restaurant. This fool lived the way he wanted too while destroying the lives of his own citizens during Covid. A governor in any reasonable thinking state would have been recalled…. but the sheep love this guy. I actually saw a vehicle this AM on my way to work, no one in the vehicle except the driver, driver was wearing a mask. She had a bumper sticker on her car saying something to the effect of “Thanks for keeping us safe from Covid Gavin!” Yep. The plandemic is long over yet these folks still are masked up. You even see folks walking in the public parks wearing masks…. again with no one around them! These are far more common than uncommon. The socially awkward introvert I know still refuses to touch the door know with his hands…. while still going to a casino. He claims to be a card-carrying conservative…. yep.

This is why the national media is pushing Gavin to replace Joe. Gavin has a very large personality disorder; he is a complete narcissist. He will quite literally lie through his teeth about any issue and have his state-run media friends speak it into reality. When he messes up it’s a mistake…likely by someone else…at French Laundry restaurant he blamed a staffer for leaking the photos. The deficit? Well, it’s not nearly as bad. Go watch the Newsom vs DeSantis debate…. Gavin literally lied the entire time, but he has said it so many times he believes it to be the truth.

The Chief

The bottom line, these political types are always looking after their donors. Get ready for your Big Mac, fries, and coke to run about $22.99. Good thing you can go to Panera and get a meal cheaper…because politics.

Oh, one last line from Gavin’s donor buddy about the state of his business…

“Our margins, our profits have gone down from 9% to 3.5%,” Flynn told KCRA 3 in an interview in 2022. “We’re barely hanging on. And when I think about the creation of a state council that is designed specifically to add more costs, I don’t know if we can make it.”

Yup, he can’t make money at $20 an hour for staff…but I guess other fast-food places can? I thought Democrats were the ones who took care of poor people? Fast food is likely the only choice for most of that demographic….I doubt this will be helping them much.

Barbara Lee: $50 an hour minimum wage

Barbara Lee, a current congressman from the New Orleans part of California (Oakland), is running for U.S. Senate. Barbara Lee is someone I do have a slight amount of respect for as she was the only member to vote against using force to invade Iraq after the 9/11 attacks. That is where my respect for her stops.

Lee is a total kook and is always good for a few completely wild ideas. Her latest is $50 an hour minimum wage. To her defense, she did cite most parts of California, specifically the Bay Area, is not considered affordable unless the combined household income is about $150k a year. She is not wrong, due to the tech companies that were hiring there, it did make that area drastically unaffordable. Increasing the minimum wage however will not change this, as resulting prices go up in proportion to the wage increase. Recently McDonalds went viral because a burger, fries and coke resulted in a $18 ticket for lunch! A radio show I listen to in the AM stated hash browns at McDonalds are running $3…. for a stupid potato cake patty! Trust me, at $50 an hour that meal will run about $32, and hash brown will run about $7. Things do not get cheaper when wages go up, the business just makes a choice; reduce quality, reduce employees, or raise prices. There is a limit to how much money can be saved, and a limit to how much labor can be eliminated, price is the hardest, at what point does fast food (a cheap, quick meal) become unaffordable and not worth it anymore? I guess minimum wage starter jobs are no longer starter jobs, they are a career in the eyes of the political elite. This doesn’t fix any problem.

Alright Troll, get her!!!!!

Her qualifications for Senator are as follows: She attended Mills College; an all-girls college and has a degree from University of California Berkeley. The latter degree makes her always the smartest person to enter any room. Berkeley is held in the highest regard by people who protest things, live in trees, shut down freeways, burn buildings, riot, and support crime. Lee was also involved in the New Black Panther Party making her a solid choice and dually qualified for any political office in California! Like most running for office, they always tout their experience. Lee has served as a State Assemblyman from 1990-1996, and then moved to State Senate from 1996-1998. She ran to replace Ron Dellums, the congressman who was retiring to become Mayor of Oakland. Anyone who wants to be Mayor of Oakland needs to agree to donate their brain to science upon their death if not before, but I digress. Lee has proudly served the most dangerous part of California ever since 1998 and somehow it has gotten worse. This is literally a situation where the bar keeps getting set lower and lower to the point that I think the bar is buried underground yet still Oakland exceeds expectations! Career politicians are the worst type of people, and Lee could have been congressman from Oakland forever!

I look forward to Lee playing the race card when two white males, Adam Schiff and Steve Garvey make the top 2 run off. Thanks for playing Barbara. One does wonder how many extra votes Lee could have gotten if Oakland didn’t do their nightly purge of voters on a daily basis (murders). Lee will be finding out a valuable lesson, the dead do vote Democrat but only for the establishment types like Schiff.

Also, as a side note, In N Out Burger, who has never closed a location, will be closing their Oakland store due to heavy crime in the parking lot. Citing the safety of their customers and associates as the reason… damn Barbara, those $50 an hour jobs do no good when the store closes down!

Liberalism is a brain disease, and folks like Lee are the worst cases of it. There were a bunch of bumper stickers on cars when I was in college depicting “Barbara Lee Speaks for Me!” in regard to her politics. Let me wonder aloud, if your minimum wage job gets eliminated, does Barbara still speak for you? If California is too expensive you can always do what several hundred thousand have done recently and move! Or get a budget and cook at home? Who am I kidding? Credit card debt is at an all-time high. Wanna bet Lee will ask Biden to forgive credit card debt just like they did for student loans?

Chief & Troll

Here are photos of confirmed hottie and Troll favorite Carli Lloyd

Commercial Real Estate Will Sink Biden’s “Economy”

The jobs “report” was great Friday….it really was. We added 345,000 or so “jobs.” Why am I using air quotes you may ask? Well in the recent few weeks we have had layoffs from Meta (formerly Facebook), UPS, Microsoft, and Macy’s to name a few. My understanding is Alphabet aka Google is laying off folks too. The jobs at all of these are from management positions, not from closing stores or low-level employees. My point here is the jobs I see opening are in the fast food, gas station, retail, and government work. These are jobs at the very low end of the wage scale, even after factoring in California’s $20 an hour wage. If the economy was so healthy, why have we so many homeless in these parts? Why do they come here?

The truth is the economy is not well. But the danger is not lurking where you think it is. The danger is in commercial real estate and some sectors of the banking industry. Follow along I’ll tell you.

Commercial buildings and the loans they have are the problem. They differ from your mortgage in a few ways. On your mortgage, you pay principle and interest every month. (I’m leaving out insurance and taxes to prove my point since they are not relevant here). So, your outstanding balance goes down, the principle each month, maybe not by much but you are paying it off. On commercial loans you pay interest only…yup kind of like the financial crisis circa 2008 on home loans. You may ask what do they do when the loan comes due in 20, 30 years? Well, they simply “recast it.” That’s a finance term for re-financing and maybe pulling out the additional equity (remember folks, real estate only goes up LOL) and buying your next shopping center.

Truth be told, if the shopping center is about 80% capacity, the loan payments can be made each month without much issue. Sure, you may have a pizza place, burger place, clothing store, etc. go under but they are usually easy to re-constitute the property to suit the new tenant. The problem that arises is when the anchor tenant closes up shop. I will use the example of a shopping center located near my office; one this blog is familiar with. The anchor tenant is a Target store. There used to be a OSH (Orchard Supply Hardware) but it closed and was rebuilt into a Ross, Ulta!, and something else. When that happened, the food stores located near the OSH had about 3 turn overs into something else. No real loss because Target is the store that drives business in that center. There used to be a Save Mart grocer, it turned into a wine store, a baby store, and a surplus type store. A couple of those have since changed over but again, the center is pretty much full. The issue is what happens if the Target leaves? No chance you say. But what if it did? The car traffic would decrease by at least 50%. Other food stores would close. The boutique shops would re-locate. It will be hard to sell burgers at Smash Burger when the parking lot is empty. The mall would be a ghost town.

If you think this scenario is a fantasy land, tin foil hat idea, check this out.

Park Hotels own(ed) two very upscale hotels in San Francisco. In May, they decided to stop paying the loans and give the keys back to the lender. Yup they walked away. The hotels were not Motel 6 where Troll has told me you can pay by the minute or some “extended stay bull shoot” they were the Pac 55 and the Hilton Union Square. Think tourist areas. Combined, both hotels had about a 3,000 room capacity. These are very nice hotels, rooms are about $250 a night at a minimum. The parent company walked away. These were two crown jewel hotels. Now the lender is stuck because a hotel is not easily convertible into something else. San Francisco will likely house their illegals or criminals there since it makes sense to make them comfortable on the taxpayer’s dime. But I digress.

For Park Hotels, there is not much repercussion for them. They get out of a couple of underwater loans but have to give up the revenue (loss) each month of these properties. The ones holding the bag are the banks. You may ask why you should feel bad for a bank? They got a property, banked the interest all these years, and now they can sell it. The reason is banks do not use a mark to market accounting rule, they value the asset based on the appraisal from when the loan was issued/refinanced. That could be from a decade or so ago. A good example would be the Aon Center Tower in LA. In 2014 it was bought for 269 million, for a 1.1 million square foot building on Wilshire Blvd, an icon in LA. In 2023, it sold for 148 million. Over 100 million evaporated in 10 years. Sad! In these cases, the bank has to write off the loss on its balance sheet.

Just this past week, New York Community Bank, a highly respected conservative bank as far as lending goes, took a major loss and had a massive write off of bad commercial loans, such as the above. While you may not recognize the name, the regional banks will be the ones to suffer from this crisis. The reason being, regional banks have to take more risk, their larger peers, think Bank of America, Wells Fargo, JP Morgan Chase, etc., have large credit card portfolios, deposit accounts, and home lending to fall back on. The regional banks must take on risk, this comes with commercial loans which were typically very lucrative. New York Community bank is not the first and will not be the last. A tip to watch is this; when a bank fails, watch the price movement of Bitcoin, we do not endorse that here, but the price will shoot up as a hedge against the dollar/bank failures.

A word of advice “when you have a short-term loan (car loan) you are at the mercy of the bank, loan could be refused to be refinanced/underwater etc. If you have a large long-term loan (mortgage, commercial) the bank is at your mercy.”

Good luck

The Chief