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How often do you sit down and think about this?

If you're a W2 employee, it should be every payday, but it probably isn't.  Indeed, you probably only think about it once a year, when you file your taxes, and then you get it exactly backward when the IRS sends back your money that you foolishly overpaid and let them have free for the entire rest of the year.

If you're an independent (such as myself) then you probably think about it four times a year, because you're making estimated payments.  But in that case most of you probably don't think about it the right way either, because in your quest to not get penalized you intentionally overpay to remain in the "safe harbor" instead of taking your best guess (which can be wrong and if it is will result in a penalty for underpayment.)  You then wind up with either an overpayment that is "refunded" (again, you let the government have the money without paying for its time value) or you let them keep it for two years (applying it against the next year's tax liability.)

Have you ever considered exactly how insane it is that we allow either situation to exist?  In what sort of other environment do we have a circumstance where you are expected to overpay for a good or service -- without being compensated for the other party having free use of your money?

Never would we allow this in auto repairs, new roofs, water heaters or air conditioners.  But we not only tolerate it when it comes to our taxes we actively celebrate when the overpayment is returned to us without interest!

And that's just the first bit of stupidity.

The second is found here, in the GDP tables -- and that materially understates the truth.

Federal government is claimed to be $1,224.7 billion (that is, just over $1.2 trillion) on an annualized basis.  This is an outright fraud; Federal spending alone for FY 2014 will be $3,650 billion or three times the claimed rate from the GDP tables!

That is more than one dollar in five.  Yet that one dollar in five of every dollar spent in America is doled out by 536 people who quite-clearly believe they're better than God himself, to the point that they then employ legions of individuals who are tasked with making sure they can continue to collect those funds -- at gunpoint, should you not willingly turn them over.

Now let's think about exactly what we get for our money.

First and foremost, we get a group of people in DC who believe they don't have to follow the same laws the rest of us do.  They can (and do) drive drunk, hit their spouses, bounce checks ("postal bank" anyone?) and grossly cheat on their taxes.  All of these offenses and more would (and do) land common people like you or I in jail or prison.  Oh sure, not all the time to be certain, but often enough.  When was the last time you saw a Congressperson or Senator wind up actually go to jail for any of the above?  Has it happened?  Well, yeah, once or twice (e.g. Jackson) but the better question is how often does it not happen (that would be "nearly always.")  Further, in what other profession is using your former job as a means of extracting favors from others after you quit legal?  In most professions this would be considered bribery and prosecuted.  In Washington DC it's called lobbying and is not only legal it's arguably the largest "industry" in the city!

Next, we get a group that passes laws and then intentionally and blatantly refuses to enforce them.  Obamacare is just one example that has been in the news of late; arguably the worst is in fact The Federal Reserve Act, a law that specifically lays forth a duty to regulate both money and credit supply so as to prohibit inflation.  This law is in fact exactly correct in that it identifies both money and credit as fungible and imposes the correct duty upon the FOMC.

Congress and the Executive have, however, factually not only permitted but egged on the willful and intentional violation of that law for over 100 years serially by our banks, allegedly regulated by The Fed, and not once has that law been enforced against the banks nor has sanction been applied to The Fed for their willful and intentional refusal to enforce the law despite the fact that they publicly and loudly proclaim their willful and intentional violation of same.

This is why a dollar earned when you're 20 only buys 26 cents worth of product in constant terms when you turn 65.  This is not an accident, it is in fact a stated policy of The Fed in direct and blatant violation of the very statute that enables The Fed to exist.

We, the people of this nation, deserve what we get from our government.  It would be one thing if these abuses were hidden and not blatantly in your face, as one could claim ignorance.  But over the years these rank violations of law and refusal to enforce them equally, including against Congress and the Executive itself, have become so openly brazen that we factually allowed an entire county (Jefferson County, Alabama to be precise) to be robbed through hinky derivative deals that were proved in a court of law to be undertaken in part as a consequence of outright bribery and yet the entities that were beneficiaries of the outcome of those bribes were not prosecuted and the people who live there, totaling roughly a million citizens, are still being forced to pay, in perpetuity, for the outcome of that corruption!

There comes a time when one must concede that a people abused are in fact masochists, for they are openly and notoriously consenting to the gross and outrageous acts that are perpetrated against them.

As we pass Tax Day perhaps it's time to reflect and ask that singular question: Are we there yet?

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It's over folks.

Samsung quite-clearly has soft sales on their new GS-5.  How do I know?  Because Verizon is giving away one with a purchase (on contract.)  That is, "buy one, get one."  That's unprecedented for a new flagship device.

Apple has seen soft demand as well against their expectations.

And now there are rumors that Amazon wants "in" that market.  Oh yeah, that'll work out well.  Facebook's venture into phones anyone?

If you have an angle -- something unique -- then you might be able to make it stick.  But in the main handsets are a commodity, and one that is now going to undergo rapid depreciation in price as everyone races toward the bottom of the margin barrel.

This same process happened with personal computers, and indeed it eventually happens with all technology.  You start with an "exclusive" on something "new", but eventually the "panache" fades with the teens, the tweenies and twenty-somethings waving around their latest bling, leaving you with a business that becomes increasingly cut-throat.

T-Mobile is in trouble in this regard too.  Many look at their recent "hidden" $200 offer to upgrade people out of BlackBerry handsets and into Samsung's 5 as yet another attack on BlackBerry.  Nope.  It's yet more evidence of soft demand; why would you otherwise double the previous offer on the newest "hot" device?  Note too that his offer is not open-ended either; it only applies to people on contracted plans who are still "upgrade eligible", which tells me quite a lot about motivation.  Someone fears being stuck with a lot of high-priced "zero day" launch inventory, and that inventory doesn't say "BlackBerry" on its face.

T-Mobile's petulant child Lagere is headed for some fun of the difficult sort.  He may think that there's something magical about the size of his manhood, matched only by the volume of his mouth, but he's wrong.  The simple fact is that he's trying to play margin games in a business where service quality has deteriorated to the point that people will accept cheap but not cheap and crappy.  Oh sure, the "underdog" and "scrappy gamester" motif looks good up front, but under the covers T-Mobile is actually raising prices and cutting feature set as their customer acquisition strategy "at all costs" hasn't done a thing for the red ink they're generating.  That's bad, by the way.

One of the bigger problems with US carriers is the lack of interoperability of hardware and the tying arrangements that result -- and that is bad for customers.  We put up with it in the US pretty much because we have to; it's been the legacy of the business in this nation.  That doesn't mean it makes sense; it simply means that monopoly behavior going back to the "A" and "B" carriers in the AMPS world has been the order of the day for so long that there literally was never a different model here in the US.

Legere is trying to claim he's "different" but that's horsecrap; all he is really doing is trying to buy share in a mature market by raiding other people.  Unfortunately he's up against the same reality as is everyone else -- hardware has transitioned to a commodity business, service expansion is expensive and trying to drive sales through various gimmicks and raids on other players (along with petulant displays of hubris) is all you have left in a market where everyone over the age of 10 already has a cellphone.

Add to this the "must make the quarter" Wall Street focus and you have a recipe for much hilarity in the upcoming months and years.  While AT&T and Verizon have sort of "responded" the key here is "sort of"; neither has mounted a clean response as of yet but you can bet they will, and when they do Lagere is going to look like the mouse that tried to roar but the sound you heard was the squeak of being crushed underfoot.  The market seems to sense this is coming too; after a clean double from the spin-off IPO last year the firm's stock is down over 10% thus far in 2014.

The problem, in the end, is that you need profits in business and I've yet to see a concise plan for how Lagere intends to achieve those aims.

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Oh oh.....

Braman vs CME

The CME has categorically denied that this "enhanced" or "first look" data feed exists.  Further, there have been multiple statements made by the media and various participants on the floor of these exchanges in which the claim has been made that these venues are not polluted by the sort of "HFT direct connection" cancer that appears to be all over the stock exchanges.

This lawsuit alleges otherwise, and further lays forth a very-specific statement of misconduct (read starting near the bottom of page 6.)

Either these folks are full of it or they're not.  

There is little middle ground possible.

This one bears watching folks.

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This is one of those stories that is very difficult to get anything approaching accurate full-scope information on, especially with everyone on all sides of the issue spinning like plates on sticks.  With that said, I'll take a crack at it.

Federal land managers say "escalating tensions" led them to release all 400 or so head of cattle rounded up on public land in southern Nevada from a rancher who has refused to recognize their authority.

Bureau of Land Management Chief Neil Kornze announced an abrupt halt to the weeklong roundup just hours before the release.

"Based on information about conditions on the ground and in consultation with law enforcement, we have made a decision to conclude the cattle gather because of our serious concerns about the safety of employees and members of the public," Kornze said in a statement.

The apparent beginning of this came when the BLM decided many years ago that a specific endangered tortoise meant it could seize land from Nevada and "protect" it -- land that historically (and the history is very, very long, apparently dating back to the 1870s!) had been used by Bundy's family to graze cattle.

There's an inherent problem here with Federalism that nobody appears to be taking on face-first, and that's no surprise.  First principles no longer seem to be principles at all when it comes to this nation.  Mr. Bundy's refusal to recognize what amounted to federalization of land his family had used in a non-destructive and renewable fashion, and to which he had made material improvements over the years without trying to claim exclusive rights, facially appears to be rather reasonable in light of the totality of the circumstances.

BLM claims that Bundy owes the government over $1 million in "grazing fees."  But BLM arguably owes Bundy for the appreciated value to the land that his improvements conferred and which they confiscated; the 5th Amendment prohibits this sort of "taking" without compensation.  How does this all pencil out?  I don't know -- we don't have an accurate accounting and nobody is looking at that angle of this dispute at all.

Then there is the attempted impoundment and impending destruction of the cattle that BLM tried to implement.  There were allegations that BLM intended to not just remove the cattle but steal and sell them into the commercial meat market, an act for which nobody has produced anything approaching judicially-valid process to back up.  An order to remove (which a judge allegedly issued) is not the same thing as an order to seize and dispose.  

Note carefully that cattle rustling has historically been an offense over which one can get shot.  And theft is theft no matter who commits the offense; absent a judicial order of seizure and disposal, which BLM has not produced, that is in fact exactly what they did.

Irrespective of all of this, and I'm still trying to get my arms around the full extent of where rationality would come down in light of it, the BLM was challenged by a modest but rapidly-growing group of citizens who simply said "No, you have gone too far and you're not going to do this.  End of discussion."  BLM then unilaterally decided that speech was not something to be respected either and tried to play "time, place and manner" games in the Nevada desert with an alleged "protest zone."  The people said nuts to that as well, and apparently were willing to defend themselves if accosted.

For now the BLM has capitulated and released the cattle they appear to have stolen, along with withdrawing their massed armed agents and equipment.  They have vowed to continue the fight in the courts, which of course they have the right to do.

Finally, as a backdrop to all of this mess, there are allegations that Harry Reid (yes, Mr. Senator) is involved in attempting to steal some of this land at a well-below-market-value price for some sort of solar energy project (run by one of his alleged pals) and that there are apparently mineral interests that would like to drill on it too, all of which would be incompatible with cattle grazing.  At this point I've been unable to validate the alleged corruption aspects of this to a degree that I'm comfortable with considering them driving forces behind this move, but they have been raised by multiple individuals and there does at least appear to be a facial appearance of impropriety.

I'm continuing to investigate this situation and, I will add, it looks a lot more complicated than many have made it appear at first blush.  I can't be certain how I'll come down on the facts when it is all "aired out", but for now it appears that an outbreak of violence is off the table, and that is an unquestionable good.

Let's hope that whatever the final resolution things stay that way.

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All you have to do to ensure failure is refuse to tell the truth.

April is cruel for other reasons. It’s Financial Literacy Month, when well-meaning experts bear the bad news: many of us are financial fools.

The 30-day marketing blitz sweeps up Congress, banks, state capitols, pollsters and personal finance columnists in an annual lamentation--and scolding--that Americans, the kids especially, don’t know much about money. To help, Bank of America, for example, is sponsoring a workshop series to educate low-income people.


Moreover, a lot of the courses and nonprofits are sponsored for less-than-pure motives. "A lot of financial institutions supporting this are doing it to increase their customer base," Marri says.

No kidding?

We're never going to solve problems like this as long as the incentives to lie continue to be as powerful as they are.  And they are indeed very powerful.

Let's just take a couple of basic ones:

  • 2% inflation is the Fed target, and it's ok.  Really?  First, despite the Fed's "target" the realized inflation rate measured by the government's intentionally-flawed method (in which they "adjust" for all sorts of things) is closer to 3% than 2%.  But even if it wasn't -- over 45 years (the average working life -- age 20 to 65) this would mean that a saved dollar when you're 20 is worth only 41 cents!  At the realized rate it's worth 26 cents.  Why isn't this pointed out?  Because there would be a literal revolution by morning if it was; the very precept that the government and Federal Reserve, along with banks, have designed and implemented a policy to steal three quarters of your earnings power over your working life would likely result in literal hangings.  This, of course, is why they don't tell you that.

  • The very same compounding happens everywhere else too where a percentage rate per year is specified.  Whether it's GDP, price inflation or whatever, that's the result.  The very belief that it's ok to increase taxes (say, your property tax, for example) by a "mere" 3% a year means that over the 18 years your child lives in that house from birth to graduation your property taxes go up by 70%.  That's nearly a double!  Stay until retirement (again, 20 -> 65) and those property taxes rise to a staggering 378% of what they were when you bought the house.  Would you put up with that "mere" 3% rate if you understood this?  Oh hell no!

This is why debt is so damned destructive, by the way.  In addition to allowing you to "feel" wealthier than you really are it utterly trashes your forward planning because of these embedded costs that bite harder the longer they go on.  Yet you'll never see this honestly discussed among financial "professionals"; instead they natter about compounded "growth" in your portfolio or savings and describe it as some sort of "magic."

It is no such thing -- the very premise of unbridled compounded growth is a chimera.

The worst part is found here:

This is the growth of the economy (GDP) in dollars quarterly and the growth of debt quarterly.  Note that with the notable exception of the crash in 2008 debt has always expanded faster than GDP over the last 30 years.

Note carefully that the so-called "recovery" has now been marked (as of Q4/2013) with a new high in gross debt accumulation in a single quarter (over $750 billion, to be precise) while GDP added just $177 billion.  In other words we are now expanding debt at a rate 4.2 times economic output.

This means that we're not expanding the productivity -- that is, output -- of our economy as quickly as we are spending.  Instead we are spending more than we make continually -- and expecting that this will be just fine.  It is that expectation and behavior that has led to both of the two most-recent blow-ups in the markets and will continue to do so until we stop doing that.  Economic output is in fact contracting on a production and economic surplus basis -- the only basis that matters in terms of long-term economic health and prosperity!

How is this expressed to you?  Simple: Monetary (that is, credit) inflation .vs. personal income expansion, as you can see right here.

Or, if you prefer it in an easy-to-read format:

You are factually losing 5% of your purchasing power per year and have been on a more-or-less steady basis since 2011!  How are you surviving?  By taking on more and more debt which eventually must be paid.

So when is it going to stop?

Not today, not yesterday, and probably not tomorrow.

But until it does all this nattering about people doing "poorly" when it comes to financial literacy boils down to the fact that that the entire banking and financial industry is engaged in selling you Unicorns.

Unicorns are mythical creatures and do not actually exist.

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