Archive

Posts Tagged ‘chicago’

America Under Siege By A Growing Wave of Crime

August 7th, 2013

crimeEven though the United States has the highest incarceration rate and the largest total prison population in the world by a very wide margin, hundreds of communities all over America are being overwhelmed by crime and violence.  Read more…

Economy, Government

America The Fallen: 24 Signs That Our Once Proud Cities Are Turning Into Poverty-Stricken Hellholes

April 23rd, 2013

economyWhat is happening to you America?  Once upon a time, the United States was a place where free enterprise thrived and the greatest cities that the world had ever seen sprouted up from coast to coast.  Good jobs were plentiful and a manufacturing boom helped Read more…

Economy, Government, World News

Chicago Mobs and the Case For High Capacity Magazines

April 8th, 2013

gun salesMac Slavo: Over the weekend, hundreds of teens joined forces to harass, mug and beat peaceful residents of the disarmed city of Chicago. Read more…

Economy, Government

Large Cities All Over America Are Degenerating Into Gang-Infested War Zones

January 7th, 2013

detroit cityMichael Snyder: Large U.S. cities that the rest of the world used to look at in envy are now being transformed into gang-infested hellholes with skyrocketing crime rates.  Cities such as Chicago, Detroit, Camden, Read more…

Economy, Government

Time to Deploy the Hedges; Search for Values!

June 11th, 2011
Bryan Rich

I’m off with the family for a few days. So I asked Don Lucek to fill in for me and reveal how he plans to play the market “aggressively defensive.” — Bryan

Don LucekThere’s no denying that some recent negative economic reports are giving the market trouble.

For instance …

* The industrial economy staggered under temporary supply chain disruptions, with the Chicago Purchasing Managers Index (PMI) and the Institute for Supply Managers (ISM) releases missing expectations by a country mile.

* Housing continued to slide, with the release of a worse than expected decline in prevailing home prices from S&P Case-Shiller.

* And the releases of several jobs reports — culminating on Friday with the all-important non-farm payrolls survey — gave the market nothing to be hopeful about for the near term.

In short, these reports are telling us that:

* The U.S. industrial economy is not yet back in fighting shape, but more distressing, that we don’t know when it will reveal stronger recovery.

* The risk of weakness showing up in 2nd quarter company earnings or company guidance has increased.

* Consumers are still a wild card in helping confirm any improvement in the economic outlook.

I’ve been following the volume patterns associated with moves in stocks of different market sectors, and have found that this most recent move down did not seem to be a normal sector rotation into defensive stocks.

Voices of reason will rightly tell you that a smart near-term strategy against this backdrop is to exercise extreme caution — do not fight the tape; take money off the table. But what do you do if you’re already defensive, and want to actually profit during periods of market turmoil?

My suggestion …

Play the downside, and look for even better entry prices for stocks you want to buy — after the storm is over.

Everything I’ve monitored lately tells me that negative sentiment is still gathering steam. But I think the rough patch we’re experiencing right now is transitory, and that after the dust settles we’ll be back to a more bullish tilt. However, I don’t know when that will happen.

So this could be the time to become aggressively defensive. I’ll be hedging some of my long positions, but looking for spots to purchase great stocks at a discount over the next couple of months.

The worst numbers seem to be coming from the global industrial sphere, so I plan to pay special attention to international issues for proper analysis. I’ve been able to get a good read on situations on the ground, in business, and in finance in Europe, which give me additional confidence in the medium-term prospects for a global economic recovery.

It's going to take consumers to get the economy rolling.
It’s going to take consumers to get the economy rolling.

Before that can happen, though, we need a rejuvenated consumer to help support economic growth. But while we’ve seen some glimmers of strength at the high-end, it’s not yet present at large, which will continue to provide a drag on growth. Amid slumping housing prices, weak job growth, and high gas prices, a great resurgence seems unlikely for now.

Not all of this is bad news, if you have the right hedges in place, and dry powder — in the form of a good-sized cash position — at your disposal. Also you should keep in mind that the non-stop flow of data from around the world can mislead the market, especially given the extraordinary issues affecting it right now — such as natural disasters and big picture issues like a potential financial crisis in a huge economic bloc.

Back in April, I acknowledged that the market could be in for a rough patch as we contended with Wall of Worry issues like jobs, the industrial economy, and potential financial system stress should we have deeper trouble in Europe.

That’s why I suggested keeping a large cash position, picking only high-quality stocks — ones that could weather near-term economic potholes, provide dividend income while we waited for real recovery, or to take advantage of other factors not yet present in financial reports.

But at the same time, I cannot deny that …

The Domestic and Global
Economies Are Growing!

Not at the pace we’d like to see, but growing nonetheless. With the way our domestic economy is evolving, we need to take a more global view in our analysis of profit expectations.

We’ve seen global effects like the job outsourcing trend, and increased international trade, which affect firms in ways that do not fit the old models. Jobless recoveries have been a more-common sight over the last few recoveries, and probably need to be factored into this one too.

We also have an important disconnect in the way that publicly-traded firms’ earnings beat estimates so soundly while smaller business saw a drop in profits and fewer opportunities to expand their operations or workforces. My read on this: We are going into an election cycle, bank credit is still tight, and small business will feel the pressure from macro concerns.

Many small businesses are holding back until politicians settle their differences.
Many small businesses are holding back until politicians settle their differences.

Once politicians’ positions on issues like health care reform and taxation become clearer, I think small business owners will be able to forecast their needs more accurately, which could unleash a positive trend from this main engine of job growth. That same political debate will help accentuate the choppy market in the near term, though.

The type of market we’re seeing right now is frequently referred to as a stock-picker’s market, but also seems to be developing a negative bias. I think it will remain so for at least the next 6-12 months. The only exception I could see would be some of the more classic defensive moves into particular sectors by institutional investors. And that will only occur if we get a downturn that lasts well into the summer or beyond.

Advertisement

That’s because many of these investors — who have been contributing far more than their share of the market’s volume during the entire run-up since March 2010 — must stay invested, so support for some stocks will be there.

My Game Plan — Deploy the Hedges,
Search for Values

I remain a bull on the markets and on the economy, but realize the headwinds are too strong to ignore. The S&P 500 has closed below an important support level. And I think we’ll see some violent rallies over the very near term, as the market fights to the upside and to the downside. So I don’t want to have too much inverse exposure while we watch for a trend to either develop, or not.

Best wishes,

Don

Read more here:
Time to Deploy the Hedges; Search for Values!

Commodities, ETF, Mutual Fund, Uncategorized

Railway Revolution Builds China’s Consumer Culture

June 5th, 2011

Frequent readers of my “Frank Talk” blog and the weekly Investor Alert should be familiar with the story of China’s high speed rails. We’ve previously discussed how China is building the world’s largest network of high speed rails at an incredible speed.

Since opening the first high speed line between Beijing and Tianjin in 2008, the country has laid down more than 4,600 miles of new tracks. This is three times more than Japan, where the bullet train was invented, and this is just the start. Once completed near the end of this decade, the high speed rail system will connect more than 250 Chinese cities, span 18,641 miles and reach roughly 700 million people.

Currently, the high speed rail network connects about one-third of China’s cities. That figure is set to nearly double over the next two years. If current forecasts hold true, 100 percent of the China’s cities will be connected through high speed rails by 2019.

While linking megacities such as Beijing and Shanghai carries significance, connecting the urban East with rural areas of West and Central China is equally as important. This data from Morgan Stanley shows that the West and Central regions of China lag considerably in terms of GDP per capita, urbanization rate and property prices.

Many, including our investment team, believe that connecting these areas of the country could have a similar effect to what took place in the United States when Eisenhower’s interstate highway system linked cities such as Chicago and Philadelphia with their counterparts on the West Coast including Seattle and San Francisco.

The effect this massive buildout can have on commodities is evident: thousands of miles of new track, hundreds of new stations and dozens of new trains will certainly boost demand for steel. But there’s also a corollary effect that can expedite the transformation of China’s economy. More people traveling across the country means there will need to be more places for them to eat, sleep and shop.

Take hotel rooms for example. Currently, the U.S. has just fewer than 5 million hotel rooms spread across the country; China has about half that amount. However, Morgan Stanley forecasts that the two are set to switch places near 2025 as China pushes to offer more than 9 million hotel rooms by 2039. Familiar names such as Wyndham, Starwood and Hilton are planning major additions to their pipelines in China.

Morgan Stanley also says that the high speed rail expansion presents opportunities in areas such as consumer staples, car rentals and tourism. The latter is especially important because the average Chinese citizen is going to be able to explore culturally rich areas of the country that were previously too difficult or expensive to visit. A poll from CLSA’s China Reality Research last year showed that travel remained a top aspiration.

Rail passenger traffic has a strong correlation with instant noodle consumption (79 percent positive correlation) and soft drink volume (86 positive correlation), according to Morgan Stanley. This means that chains such as McDonald’s (1,300 stores in China) and KFC (4,000 stores in China), both of which are largely concentrated in the eastern third of the country, will likely follow the high speed tracks into Central and Western China.

These are all examples of how the dynamics of the Chinese consumer are forever changing. As investors, it’s important to understand these intermarket relationships and how a development in one area of an economy can dramatically affect another seemingly unrelated area of the economy. Being able to spot these trends and developments before they bubble up to the surface is how active money managers can create alpha for their shareholders.

Regards,

Frank Holmes,
for The Daily Reckoning

P.S. For more updates on global investing from me and the U.S. Global Investors team, visit my investment blog, Frank Talk.

Railway Revolution Builds China’s Consumer Culture originally appeared in the Daily Reckoning. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas.

Read more here:
Railway Revolution Builds China’s Consumer Culture




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Commodities, Uncategorized

Leadership Gone off the Chain

May 20th, 2011

Earlier this week, the “Gang of Six” hit a big road bump as Senator Tom Coburn (R-OK), “began pressing for sharper cuts to Social Security than had been previously agreed to” and “demanded deep and immediate cuts to Medicare that went beyond anything previously proposed.” Clear “cut” signs he was being uncooperative and had to go.

More recently, he announced that he’s cooking up “his own plan to reduce the deficit by $9 trillion over ten years.” Best of luck to him, though, as it looks unlikely that the US Congress has “teeth” do any real cutting. Much like the chainsaw below, the Congressional tools the nation has on hand don’t appear up to the job it’s been designed to perform.

See the cartoon below, which came to our attention via a Chicago Tribune opinion cartoon on the US’ budget chainsaw.

Leadership Gone off the Chain originally appeared in the Daily Reckoning. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas.

Read more here:
Leadership Gone off the Chain




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Leadership Gone off the Chain

May 20th, 2011

Earlier this week, the “Gang of Six” hit a big road bump as Senator Tom Coburn (R-OK), “began pressing for sharper cuts to Social Security than had been previously agreed to” and “demanded deep and immediate cuts to Medicare that went beyond anything previously proposed.” Clear “cut” signs he was being uncooperative and had to go.

More recently, he announced that he’s cooking up “his own plan to reduce the deficit by $9 trillion over ten years.” Best of luck to him, though, as it looks unlikely that the US Congress has “teeth” do any real cutting. Much like the chainsaw below, the Congressional tools the nation has on hand don’t appear up to the job it’s been designed to perform.

See the cartoon below, which came to our attention via a Chicago Tribune opinion cartoon on the US’ budget chainsaw.

Leadership Gone off the Chain originally appeared in the Daily Reckoning. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas.

Read more here:
Leadership Gone off the Chain




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Why Long-Term Silver Bulls Are in Good Shape

May 4th, 2011

Following record highs set Friday gold, silver and a host of other metals are taking a dive this morning. From Friday’s record close, gold is down $63 to $1,514.

Silver is down over $10… nearly 20%.

More than a third of silver’s tumble came yesterday when it gave back $3.50 an ounce, to $41 and change. Yesterday was the worst one-day drubbing since the grey metal’s epic fall from $50 in 1980.

Silver’s given back a couple more bucks this morning…

The correction coincides with the Chicago Mercantile Exchange’s third move in a week to increase margin requirements for traders.

“The heightened requirement is to ensure all trading parties are adequately capitalized for any price change,” explains our resident pit trader Alan Knuckman, “The ones that get forced out by the new greater deposit mandates are typically on the wrong side of the market and hoping things change to make up losses.

“At present levels, a silver contract has a cash value of over $200,000 that is controlled by a deposit of typically only 10% or so. When prices have a 6-cent move, like we have seen, that translates into $30,000 between the daily high and low based on one standardized 5,000-ounce-size silver contract.”

Silver topped at $50 in 1980. Today, adjusted for inflation, that would be $143.

Of course, that figure grants the Bureau of Labor Statistics the right to geometrically weight, hedonically fudge and substitute all kinds of skewed figures to get their numbers. If you used the consumer index, as the old school wonks did back in 1980 — and as our friend and contemporary wonk John Williams at Shadow Stats still does — you’d be looking at a silver price of $490.

Heh. Seriously.

We’d be surprised to see silver reach $490, wouldn’t you?

Still, there’s ample headroom between the current silver price and the inflation-adjusted record. Long term, if you’re a silver bull, the odds are on your side, even if it pulls back some more in the short term.

Addison Wiggin
for The Daily Reckoning

Why Long-Term Silver Bulls Are in Good Shape originally appeared in the Daily Reckoning. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. Bill Bonner, the founder of the the Daily Reckoning released his latest book Dice Have No Memory: Big Bets & Bad Economics From Paris to the Pampas in April 2011.

Read more here:
Why Long-Term Silver Bulls Are in Good Shape




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

This "Fear Trade" Could Bring You 87% Gains

April 26th, 2011

This

With a slew of bad news recently hitting the streets, it appears fear is on the rise.

OPTIONS, Uncategorized

About Currency Trading

April 10th, 2011

I don’t know about you, but I am a beginner when it comes to currency trading. The potential to make money trading currencies seems great, but if you’ve never done it before, there are probably some things you should know.

First, I was surprised to learn that foreign exchange (FX) trading does not take place on a regulated exchange like the New York Stock Exchange (NYSE), the National Association of Securities Dealers Automated Quotations (NASDQ) or the Chicago Board of Options Exchange (CBOE) that we are all familiar with. Instead, currencies are traded based on credit agreements between the parties.

“Hmm,” you say: “What if I have a problem with a transaction? Who can I turn to for help?” And those are certainly, very good questions. There must be some mechanism that individual investors can rely on, and there is. Reputable U.S. retail dealers in foreign exchange belong to the National Futures Association (NFA). As NFA members, the dealers are required to agree to binding arbitration in the event of a dispute. And now, with new legislation passed in 2008, the U.S. Commodities Futures Trading Commission (CFTC) has jurisdiction to enforce rules. So, if you make sure to trade through an NFA member firm, you’ll have some recourse if you run into a problem.   

Before the internet, foreign exchange was primarily traded by financial institutions, large companies and sophisticated investors. Multi-national corporations still comprise a large part of the market as they move funds between currencies to cover payroll, and buy raw materials and services globally. 

Today, the foreign exchange market is one of the most liquid markets in the world and many individual investors are finding profitable opportunities. Trades are made 24 hours a day, from Sunday at 5 p.m. Eastern Standard Time through to 4 p.m. Eastern Standard time on Friday.

I’ve looked at foreign exchange quotes and I wasn’t quite sure what I was looking at. I found out that foreign exchange prices are generally quoted to the fourth decimal point (1 euro=$1.4291). The exception is the Japanese Yen which is quoted to the second decimal point (1 dollar=84.99 yen). All trades are settled on a net basis, and most retail brokers will automatically translate any foreign currency profit or loss resulting from trades into the denomination of your account. So, if you’re like me and have a U.S. dollar account, you’re going to see dollar profits or losses applied to your account.

And here’s something else you need to know: Currencies trade in pairs. Trades consist of the simultaneous purchase of one currency with the sale of another. It’s a lot different than trading stock because you have to think about both sides of the transaction in relation to each other. For instance, you would buy a currency only if you expect it to increase in value compared to its paired currency.  Once you’ve made a trade purchasing or selling a currency pair, you have an open position until you complete an equivalent opposite transaction to close the position. You will not lock in your profit or loss until the position is closed. 

There are numerous currency pairs that are traded. The four most actively traded pairs are:

  • EUR/USD (Euro/U.S. Dollar)
  • GBP/USD (British Pound/U.S. Dollar)
  • USD/CHF (U.S. Dollar/Swiss Franc)

This is not as confusing as it looks. The first currency in the pair is the base currency and the second is called the counter currency (also called the quote currency). When U.S. Dollars are the base currency (i.e., USD/JPY), a price quote tells you what one U.S. Dollar is worth in the other currency.

And if you’re used to trading stock, you’re used to paying commissions to your broker. But in the FX market, foreign exchange firms are dealers (not brokers) and they act as principals in the transaction.  That means that instead of charging commission, dealers actually act as the counterparty in a trade. By doing that, the dealer is exposed to market risk and they make money on the difference between the bid price and the asking price which is called the spread. In other words, you can’t buy at the bid price or sell at the asking price; you have to transact above or below those levels so the dealer firm will pick up the price differential. That’s how they make money instead of charging commission. And for you, the investor, to make money, you first have to recover that cost. 

Now, I know a little bit more about currency trading, and I hope you do too. But what I know is definitely not enough to make me comfortable trading independently. I bet you feel the same way. I’ll continue to pass along information about currency trading as I learn. Unfortunately, I’m afraid I’ll miss some great opportunities in the market while I’m learning, and I don’t want to do that. 

There is an answer for folks like us. Bryan Rich, Weiss Research currency analyst, has a wealth of knowledge, great insight and he spends a lot of time doing in-depth analysis of the currency markets.  Moreover, he shows you ways to participate in currency moves with new, innovative exchange traded funds (ETFs). These ETFs track global currencies and trade just like a stock in your normal stock brokerage account.

I’m going to check out Bryan’s World Currency Trader so I can get in on the action, while I’m learning. You might want to consider that too!

Read more here:
About Currency Trading

Commodities, ETF, Mutual Fund, OPTIONS, Uncategorized

Bullish on Corn

April 5th, 2011

We’re really bullish on gold and silver, but those aren’t the only commodities heating up.  Take corn for example, it ended last week going up the absolute limit allowed by the Chicago Board of Trade.

Take a look at this chart and you’ll see what we mean …

You can see that corn has been spiking all this month.  And we think it has at least another 10% more upside potentially.

What’s driving this move?  The U.S. is the world’s biggest exporter of corn, and our inventories just slumped to a four-year low.  While U.S. exports of corn doubled in the last week.

What’s more, even though U.S. corn plantings are going to expand this year to cover the second-largest area since World War II, the supply/demand squeeze is merciless. 

On the supply side, a La Nina weather effect is imposing a drought on the Southern U.S., and that could hurt yields in corn crops already stressed by heat and lack of moisture.

On the demand side, 40% of the U.S. corn crop will be used to produce ethanol.  And, demand is continuing to ramp up in China, which not only has  1.3 billion people who want to eat more and better food, it is battling its own lingering drought.

Add it up, and it all looks bullish for corn.  The good news is there is a fund that lets you play the price of corn, the Teucrium Corn Fund, symbol C-O-R-N.  My Crisis Profit Hunter subscribers already own it, racking up sweet open gains.  I think there’s more to come.

Sean Brodrick is a natural resources expert and editor of Crisis Profit Hunter, a monthly newsletter with a primary mission to help you profit from crisis situations and other dynamic forces affecting the global economy. Commodities and dividend-paying stocks are central to his approach, and he also delivers practical advice for uncertain economic times. For more information on Crisis Profit Hunter, click here.

Sean is also the editor of Red-Hot Global Resources, a weekly newsletter that aims to help you rack up profits with commodity-focused exchange-traded funds (ETFs) and natural resource-sensitive stocks that operate around the world. For more information on Red-Hot Global Resources, click here.

Read more here:
Bullish on Corn

Commodities, ETF, Mutual Fund, Uncategorized

Broke in America: The Housing Meltdown Continues

March 30th, 2011

She likes the free, fresh wind in her hair
Life without care
She’s broke, and it’s “oke”
Hates California, it’s cold and it’s damp
That’s why the lady is a tramp

Well, it’s not cold and it’s not damp. Instead, LA is warm and sunny, with springtime flowers popping out all over.

And yesterday, the Dow rose 81 points, while the price of gold slipped a little.

So what else is new?

We never thought we liked LA. But we may change our mind. Daughter Maria took us around yesterday. We wandered around Venice Beach and then through Hollywood. The town is much nicer than we remembered it. Many of the houses, shops and apartment buildings are getting a makeover. They remind us of the Soho area of Buenos Aires – young, hip, and lively.

“This isn’t like the rest of America,” Maria explained. “Just drive an hour to the East and you’ll see what we mean. That’s the real America. Here, the town is full of immigrants…pretty girls who want to hit it big in Hollywood…Russians, French, English…all sorts of girls. And there are a lot of men…you know, men who take a little too much care of themselves. You see them at parties. They also have a project. They always have contacts. They always have a cell phone and spend a lot of time talking. But nothing ever happens.

“But I love LA. I don’t know if I could live anywhere else.”

There are a lot of girls with the fresh wind in their hair here…

And a lot of people who are broke. Whether it is “oke” or not…we don’t know.

But here’s the latest on America’s housing meltdown:

AP – Damage from the housing bust is spreading to areas once thought to be immune.

In at least 14 major US metro areas, prices have fallen to 2003 levels – when the housing bubble was just starting to inflate. Prices will likely drop further this year, making many people reluctant to buy or sell. That would push down sales and prices more.

The depressed housing industry is slowing an economy that has shown strength elsewhere. And it’s starting to hurt those who bought years before the housing boom began. In some cities, people who have paid their mortgages for a decade have little or no home equity.

Prices have tumbled in familiar troubled spots, such as Las Vegas, Cleveland and Detroit. But they’re also at or near 10-year lows in Denver, Atlanta, Chicago and Minneapolis – cities that weren’t as swept up in the housing boom and bust.

“It’s been tough on the lower class but it’s filtering up,” said Paul Dales, senior US economist with Capital Economics. “It may be only a matter of time before it hits the wealthy.”

Just about the only major market weathering the second wave of the housing downturn is Washington. Home prices there have risen 11 percent in the past two years.

A Daily Reckoning note: the zombies are doing just fine, thank you. It’s the rest of the nation that suffers. Money flows from the people who earn it to the protected financial sector…and to the feds themselves. Is it any wonder that profits in finance are back to their 2007 level? Or that, overall, debt is now even higher? Or that people in the zombie capital are actually richer today (thanks to automatic wage hikes in the federal government, plus property value increases)?

But people in LA? In Chicago? In Dubuque or Baton Rouge?

They’re broke.

Bill Bonner
for The Daily Reckoning

Broke in America: The Housing Meltdown Continues originally appeared in the Daily Reckoning. Daily Reckoning founder Bill Bonner recently wrote articles on stagflation and the great correction.

Read more here:
Broke in America: The Housing Meltdown Continues




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Weiss Ratings: The Bank of Commerce First Identified as “Weak” by Weiss in September 2008

March 28th, 2011

JUPITER, Florida (March 28, 2011) — On Friday, regulators closed one bank: The Bank of Commerce, Wood Dale, Illinois.

Commodities, ETF, Mutual Fund, Uncategorized

The Winner of This Year’s Daily Reckoning Dodo Derby

March 12th, 2011

It’s time, Fellow Reckoner…time to announce the winner of this year’s “The-name-of-the-guy-who-came-up-with-the-idea-of-evolution-but-who’s-name-we-cannot-use-due-to-trademark-infringement-constraints-Award!”

Or, for short…

The winner of our inaugural Daily Reckoning Dodo Derby.

Let’s start where all good evolutionary tales start: at the beginning…

This year, 44 of America’s united states will deliver a combined 2012 budget shortfall of approximately $125 billion. They are broke, in other words, and determinedly bureaucratizing themselves ever closer to outright insolvency…the financial equivalent of the dinosaurs’ tar pit.

By way of honoring their commitment to financial evolution – that is, by rendering themselves extinct so that newer, more adaptive and innovative concepts of trade and freedom can take their place – we featured a handful of these states during recent Daily Reckoning musings.

First, in last weekend’s edition, we narrowed the field to ten finalists – California, Connecticut, Illinois, Louisiana, Massachusetts, Mississippi, New Jersey, New York, Ohio and Wisconsin.

Then, on Monday and Tuesday, we awarded special mentions to Connecticut and New Jersey for their commitment to wasteful state government spending. Next, we bestowed first and second runners-up honors on California and Massachusetts, respectively.

And now, today, it’s time to announce the winner of our shamelessly non-scientific, mostly tongue-in-cheek, change-the-name-halfway-through-the-competition competition.

But first, the stats…

Population: 12.88 million.
Unemployed: 603,000.
Food stamp recipients: 1.97 million.
Total debt: $143 billion.
Debt/GDP ratio: 22%…

And, here’s the kicker…

Total state debt per man woman and child – whether working or not: $11,138!

Yes, Fellow Reckoner, this year’s winning state, occasionally referred to as Land of Lincoln or The Prairie State, home of the president of the country with the largest total debt the world has ever seen, is…

Illinois.

Congratulations Illinois. Here are your residents:

“I think I’ll chime in,” begins our first Reckoner, kicking things off. “I live in Illinois and, like Wisconsin, our day of reckoning will be coming soon. Picking on the middle class will result in a mutiny of grand proportions.

“Start taking a look at the School Boards where they vote themselves raises and plum retirement benefits… The politicians and judges who get automatic raises each year or ever other year… The City Councils who bicker of not making enough… The special stipends these people get so they can hire family members… Raises and promotions for those who have contributed to the funds of those running for re-election… Get with the State Comptroller’s Office and investigate who gets what in payroll. Politicians SHOULD also increase their contribution to Health Care. Eliminate state positions that crossover and are duplicating waste and make sure that all building contracts come within budget. Reduce and/or eliminate nepotism within state offices.”

And here’s reckoner Bob, with a few specific tales of local waste…

“Here in Chicago IL, at Piotrowski Park, they demolished a nice playground area and replaced it with a greatly inferior playground. Then, in the field house, they installed an elevator that goes from the ground floor to the locker room one floor below, as if the stairs were not enough. Oh…and they tore out the field house reception area just so they could rebuild it. In the playing field, they tore out perfectly good water fountains just to replace them.”

Adds Reckoner Charles…

“I live in Illinois too, where instead of postponing two overpasses across the railroad tracks, they are going ahead with it. That would cut costs buy over $2,000,000 just by putting it off for a while. The overpasses are NOT needed. Just that some council person wants a few more votes.”

And this, from Reckoner John…

“Illinois has an interesting strategy for funding teacher salaries and retirement. Illinois schools and teacher salaries are funded by property taxes, but the taxes remain in the community where they are collected. There is no statewide distribution. The rich get richer…

“Then there are the pensions. The Illinois Taxpayers Union has lists of the top 100 educator pensions on a county-by-county basis. In Cook County, the top 100 pensions run from $238K to $146K annually. Pensions range from 60% to 120% of the average salary for the last four years of employment. These are for primary and secondary educators in suburban Cook County. An ‘educator’ from the National Education Association is #2 on the list at $235K.

“The top 100 Community College educator pensions in Cook County have a slightly lower range – $208K-$102K. Guess who picks up the tab for pensions?”

And finally, an appropriately named Reckoner “Cost” sounds off…

“They are now going after the residents for online purchases made from retailers located outside the state with no in-state presence, but used/consumed within the state, to the tune of a 6.25% tax rate. Ludicrous. And they are offering amnesty going back to 2004 along with the option of using the estimated tax table if you don’t have records. The tables are heavily skewed to the State’s favor (assuming, for example, that if your gross income was $75-100K, you would have spent $1,000 online for such purchases.) Keep in mind, though, that this is the State that also lets residents voluntarily pay cigarette taxes for purchases made outside the State. Go Illinois!”

Go Illinois, indeed.

Thanks again to the hundreds of readers who wrote in from around the nation will tales of waste and incompetence at their individual state levels. And congratulations again to our finalists and, of course, this year’s winner.

Joel Bowman
for The Daily Reckoning

The Winner of This Year’s Daily Reckoning Dodo Derby originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation.

Read more here:
The Winner of This Year’s Daily Reckoning Dodo Derby




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

OPTIONS, Uncategorized

Copyright 2009-2013 MarketDailyNews.COM

LOG