Counterfeiting is a Very Serious Crime…Unless the Fed Does It??

Thursday, June 20, 2013

Ignorance is curable. Stupid is forever.©

We have been ringing the alarm bell about this in our posts and Matt has spoken of it on the radio.  We are getting more and more questions about it as the likelihood of slowing the current bond buying program (Q.E. whatever) looms.

Ask anyone, including market “experts” if it’s a good idea or bad idea for the government to “kick the can down the road” and they’ll say it’s a bad idea.  Then ask if they want the Fed to slow the bond buying program and they’ll exclaim “NO” in a panicked voice!  What this betrays is a complete lack of understanding of what “Quantitative Easing” actually is.

First of all, it should be of great concern to anyone with money in the markets that government action, even contemplated government action, has become more important than economic fundamentals.  Think of how absurd it is for the markets to panic at the thought of improving economic conditions that would lead to LESS government interference.  Ya get that?  THE MARKETS SELL OFF WHEN THE ECONOMY SHOWS SIGNS OF IMPROVING!!  That is absolutely terrifying.  When reality catches up, and it always will eventually, the results for those in the markets unprotected will be potentially catastrophic. 

So, what is “Quantitative Easing” in actual practice?  As with most things it is very simple.  The Fed is buying short term debt (bonds) that are nearing expiration and refinancing the debt for a longer term.  It is the very definition of “kicking the can down the road.”  That is deplorably dangerous economic policy as it is, but never discount the government’s ability to take a bad idea and make it worse.  WE DON’T HAVE THE CASH TO PAY OFF THESE LOANS!  They are printing money out of thin air to pay off the loans and borrow the money for a longer period!  If you did that you’d be arrested for counterfeiting!  Does that help explain why you are hearing all this talk about the U.S. dollar no longer being the world’s reserve currency?  By printing more supply of money without the demand for it we dilute the value of the currency and that’s why counterfeiting is illegal.  There are two blog posts we did last year that explain this in more detail including an explanation of inflation and commodity impacts.  They are:

Some Inconvenient Truths can be Backed Up by Real Math and Science Parts 1 and 2

They can be found at:


We hope this helps answer some of the questions surrounding the market’s behavior these days.  Call or e-mail us with any others!

Thanks for reading and please stay tuned…

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed.  Referenced sources should be reviewed.  Any analysis represents the opinion of Blue World Asset Managers, Ltd. who does not warrant or guarantee predictions based on its analysis.

©Blue World Asset Managers, LTD Thursday, June 20, 2013

Blue World Employment Situation Report Analysis 12-07-2012

Release Date:  Usually the first Friday of each month

Release Site:

Market Sensitivity: VERY HIGH

Management Value: VERY HIGH

Friday, December 07, 2012

Brain surgery is not rocket science to a brain surgeon©

C’mon everybody.  Sing along.  You know the words to this song.  The economy added a net 146,000 jobs and the unemployment rate dropped to 7.7%.  I admit we were unable to be even cautiously optimistic about the headline numbers due to the details in some other reports out during the month, especially regional manufacturing data and the GDP estimate.  We had predicted that GDP would be revised lower but it was actually revised higher.  A glimmer of optimism was squelched immediately by the detail which showed the GDP increase coming on the inventory side while the demand side slid.  That indicates a data blip as opposed to the emergence of a sustainable upward trend.

November labor details tell a familiar story so here are the most illuminating.  We got 146,000 new jobs but the labor force suffered a huge 350,000 worker reduction.  The participation rate fell another .2% and the number of employed people fell by another 122,000.  The work week remained flat for all employees and the overtime hours in manufacturing are still unchanged at 3.2 hours per week.  There was some improvement in wages reported but still not enough to outpace inflation.  Additionally, pay readings have been volatile and given to significant revisions over the last couple of years so we can’t put too much stock in single-month changes.  College educated unemployment is still way too high but at least has been below 4% (3.8) for two months in a row.  That number needs to go below 2.5% in order for any real recovery to be underway.

On the news there was a vertical spike in the S&P 500 futures but it only got back to about even on last night’s close.  As the detail is digested and weak consumer sentiment numbers worked their way into the mix, the charts illustrated a retreat back toward the baseline and now (9:56a C) the S&P has gone fractionally negative while crude and corn retreat and gold is choppy and largely lateral.

So far the outcome of the election has done little to quell any of the uncertainty that has hung over the economy for the last few years.  Aggression in the Middle East, continued turmoil in Europe, fiscal cliff worries, unresolved tax policy and anxiety over the implementation of Obama Care in the face of what appear to be developing new legal challenges to the Affordable Care Act maintain their grip on those we rely on to spend, invest and hire.

The markets continue their upward trend.  While we have been happy to participate in the run we continue to be very cautious and we’re bringing the safety net up tighter and tighter.  We have significant concerns about what seems to drive the markets these days.  Government commentary, be it from our Fed or European leaders, have greater impact on market sentiment than economic and corporate fundamentals.  We believe this as a driver is unsustainable and at some point market fundamentals will have to trump. When will that happen?  If you had told us in 1995 that U.S. Ambassadors were being raped and murdered, Palestine had been admitted to the U.N., Iran was close to nukes, Israel was engaged in missile play, Syria was readying chemical weapons to use on its own people, North Korea was rattling its saber, the government owned private car companies, one sixth of the economy was being nationalized, there were only three banks left, GDP was under 3%, unemployment was over 7.5%, corporate profits were mixed as revenues begin to slip across the board and the markets are UP, we’d have recommended you seek professional intervention from a qualified mental health provider.  Historically these conditions would drive the markets to extreme lows.  Today, however, they continue to climb.  We’ll ride the wave, too, but the defense is still on the field and ready to play when reality and perception align.  Whatever defensive strategy you/your financial advisor employ, we think it prudent to keep it executable at very short notice.

This is our final jobs analysis to post for 2012.  Thanks so much for reading and commenting.  God bless you and your families.  Have a very Merry Christmas and a Happy New Year.  We’ll see ya on the other side.


Release Site:

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed.  The official release site should be cross referenced.  The analysis represents the opinion of Blue World Asset Managers, Ltd. who does not warrant or guarantee predictions based on its analysis.

©Blue World Asset Managers, LTD Friday, December 07, 2012

Roads and Bridges…Government Didn’t Build That – He’s Wrong Either Way

Tuesday, August 21, 2012

Ignorance is curable. Stupid is forever.©

The quotes used in this post come from a transcript of the subject speech found at:

Roads and Bridges…Government Didn’t Build That – He’s Wrong Either Way

Our esteemed president recently made remarks on the campaign trail that sparked a bit of an uproar from those who have or support those who have built successful businesses.  The quote is, of course,

 “If you’ve got a business — you didn’t build that. Somebody else made that happen.”

We should start by answering the defensive claims that Mr. President wasn’t referring to the businesses but rather to the roads and bridges that allow commerce to occur for the business.  That claim is made by expanding the offending quote to include its prequel:

“Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen.”

Even if we expand the quote as suggested the defense is still, uh, indefensible.  That’s because there are so many other quotes in the speech that validate that his intent was to say exactly what he is accused of saying.  For example:

“— look, if you’ve been successful, you didn’t get there on your own.”

“You didn’t get there on your own.”

“I’m always struck by people who think, well, it must be because I was just so smart.”

“It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there.”

“If you were successful, somebody along the line gave you some help.”

“There was a great teacher somewhere in your life.”

“The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.”

The last two make clear that the “someone” he keeps referring to is government.  Public school teachers are government employees.  It also shows he and Al Gore read the same history of the internet.  Government research is NOT responsible for the internet.  That’s a whole different blog post so, please, look it up.

When the speech is taken in total, the message is unmistakably clear.  Successful businesses and the people who founded them are a minor component in the success of the enterprise.  Without luck, being in the right place at the right time, and taking advantage of the other smart, hard workers plus government help in the form of public education, and the liberal sweethearts of roads and bridges there would be no success.  This is completely consistent with the socialistic belief that the only way one becomes successful is to take unfair advantage of the system and the people in it.  For example, another quote from the speech:

“There are a lot of wealthy, successful Americans who agree with me — because they want to give something back.”

The liberals are always talking about the need of successful businesses and people to “give back.”  Think about the psychological implication of that.  The suggestion of the need to give back stems from the desired pre-conceived concept that something has been unjustly taken.  That is patently absurd.  Why is a business successful in the first place?  It is successful because there is a demand for the product or service provided by the business.  Nothing is taken!  The business exists and thrives based on voluntary trade.  Give back?  How about the jobs created by the business and with them the opportunity to learn, advance and improve?  How about all the jobs a private business supports well outside of its own workforce?  If it’s a private sector business, it depends on and is dependent on other private sector businesses for inventory, customers and supplies.  And oh, by the way, all these businesses, their owners and employees are the only source of cash the government has.  Please note, while it is commonplace to refer to tax receipts as “revenues”, they are not.  The government does not produce goods or provide services for voluntary purchase in exchange for legitimate revenue.  It simply taxes the proceeds from private trade and earnings then redistributes the wealth based on a selfish , arbitrary and period-convenient definition of fair.  So please, don’t talk to entrepreneurs, innovators and business owners about “giving back.”  Government should give back to us so we can pay our employees more, invest more, expand our businesses more, employ more people, grow the economy and, therefore, grow opportunity for everyone!

The United States is not a conglomeration of fixed underclasses as the liberals would have us believe.  No one has any guarantee of staying up or down.  No fortune is too big to lose or gain and multiple times in many cases.  Opportunity.  That’s the key.  For a much-expanded explanation of this concept please read what has been our most popular post to date.  It was written in April of 2011 and continues to be read internationally.

Progressives are not Progressive. Capitalists Are!

Class Envy in America – Square Peg and a Round Hole

He’s Wrong Either Way

Debunking the defensive claim of “that’s not what he meant” is no more difficult than reading the speech in total or even just the key quotes included here.

Now, let’s have a little fun and go a step further.  Let’s give the speech explainers the benefit of the doubt.  Let’s say we accept the two key clarification premises:

  1. He was referring to roads and bridges.
  2. The business would not be successful without roads and bridges.

OK, we’ll give you those…and you’re still wrong!  Why?  For three very important reasons.

First of all how do you Socialist-Obama-Warren-ites defend a notion that the business owner has contributed nothing to the very tax receipts used to build the roads and bridges when in fact they have borne the lion’s share of the burden by not only paying their own taxes but also providing for the taxes paid in by the employees who’ve contributed to and benefited from the businesses success???   Strike one.

Strike two is even more basic.  It’s based on the free market, capitalist, conservative sweethearts of supply and demand! Folks, roads and bridges did not come first.  There had to be an expectation of demand for access to the areas connected by the roads and bridges.  The expectation of need for those connections goes all the way back to ancient times and was always in response to expanding commerce.  The Great Silk Road across ancient Asia was not arbitrarily and benevolently built by government and then taken advantage of by business!!  Have you ever seen a road that did not fulfill the expectation of need or became unnecessary for commerce?  They revert back to fields pretty quickly, don’t they?  Many businesses have had to pay for their own access, first of all.  Second, no road or bridge has ever been built in response to a lack of expectation of the need for a road or bridge for commerce.  If it’s access to a business, it means the business had an expectation of the need for access by customers and employees.  If it is access to a residential area, it means there was an expectation that people would live there.  If people lived there, they would need a way to get to and from – wait for itWORK.  Ya see, that’s the best way to be able to keep living there.  Not through food stamps and government dependence.  Roads and bridges owe their existence to private commerce, not the other way around!

Government never “built” anything.  It used funds collected from everyone – successful business owners included – and compensated private companies pursuing profit and employing more people for the construction.  Guess what…the owners, managers and employees all contributed to the very tax receipts used to pay for the construction of the roads and bridges.  Strike three.

No matter how you cut it, the very idea that success has more to do with general societal and governmental support than it does with individual smarts, hard work and sacrifice is not defendable.  If it was, all of those other nations subscribing to that thinking would historically be as successful as the U.S.  They’re not.  Just ask Greece, Spain…

For the more simple socialist:

You may need an additional sports analogy to grasp these concepts.  O.K.

“Someone” had to build the sewers to capture the water that “someone” had to work in a facility to purify and pump to a faucet that could be used to fill a swimming pool.  Based on that set of facts are we going to discount (that means ignore) the superior competitive strategy (represents smart), sacrifice and training (represents hard work) and tell Mr. Phelps:

 “You didn’t swim that.  Someone else made that happen.”

Same argument.

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed.  Referenced sources should be reviewed.  Any analysis represents the opinion of Blue World Asset Managers, Ltd. who does not warrant or guarantee predictions based on its analysis.

©Blue World Asset Managers, LTD Tuesday, August 21, 2012