Archive for July, 2007

The big rise in prices is half way in the door

I don’t know what you see when you go to the supermarket, but I have seen a trail of prices going up.  Food, oil, metals, and most other commodities have moved up.   A lot.  Less than one year ago I paid $.79 for orange juice concentrate.  It is now $1.39.  The price of ice cream is up about 25-30% (which hurts even more).  Everything in the produce department also seems to have taken an oil induced bounce upwards.

Houses have stabilized, but the payment for a basic house still eats up a very large portion of the paycheck of your average American.  Even with the house of prices stagnating or staying steady, most house payments move up as the cost to borrow is moving up.  The price of various building materials have gone up because of the cost of the underlying commodities.  The prices of metals is extremely pronounced, especially copper.  Because my wife and I plan on building a house in a few years, I invested in FCX to protect me against the high price of copper.   The price of some building materials has gone down since the housing bubble has been popped, but demand from the developing world, especially China, has supported higher prices for most metals.  It is just a matter of time until the prices of these materials trickle through the system and result in higher manufactured product prices.  Wages seem to lag other indicators.  That will kill the people who have adjustable rate loans, (inflation brings higher interest rates).   House builders (there will be a ton of excess on the market because of forclosures, and buidling costs will be high), and low income people (they spend a greater proportion of their income on food and lodging) will also help trickle down an economic downturn.

The big question is who wins?  People who have large amounts of fixed interest debt with a steady income will have the real value of their debts quickly decline, but you better make sure you are not one of those who has their income interrupted.   Commodities will also help carry people through, because they have intrinsic value.  Stock markets will be hit, but will try to rise a little more than inflation, although the economic situation will make it difficult.  The biggest winner is the biggest debtor, the good old government.  Then can reduce debts to a fraction of their initial value through inflating the currency, and at the same time, have more of the printed money they can distribute, using the greatest tax ever devised, inflation.

Who loses?  Those who put their faith in the fiat money of a government on a ride to bankruptcy.  Stock markets will be hit, but will try to rise a little more than inflation, although the economic situation will make it difficult.  Those who have bonds will see rates rise, and will be in a race to see whether their interest out paces inflation.  It will be interesting to see what the government does with TIPS (inflation protected bonds).   Grandma and Grandpa will wonder what they should do as the value of their annuity payments keep dropping.

What can we do to get ready?  In my humble opinion, get assets that have some true worth.  A house will keep you warm.  Stocks are partial ownership in a company.  Make sure that company produces things that people need and is well run.    If you have any variable rate debt, get rid of it.  That includes pretty much anything besides a fixed rate mortgage.  If anyone has any good ideas on picking up wreckage from the storm, let me know.  Everyone should invest in commodities.   I am long a case of beans, 15 cans of tuna, a bunch of spaghetti sauce, and some sausage.  When something is on sale at a significant discount, buy more than one weeks supply.  Right now I am making sure I will be prepared to weather it while not reducing my chances of eventual retirement.

The Islamic threat- Demographics and a look at German History

I recently read a blog called “The sophistry” on the facts that Islamic people are demographically overcoming Europe. It was really interesting and had some good points. There are a few huge similarities with the Nazi threat in the 30’s and the Islamic threat today.

First of all, they aren’t exactly fans of people who are different. I don’t agree religiously with homosexuality. On the other hand, I am friends with some gay people and we don’t throw rocks at each other, and I don’t want to gas them. I am not exactly Jewish, but I don’t recall having firebombed any of their synagogues, and enjoy the company of the few that I know from work. The Nazis and Islamists tend to take their beliefs to extreme measures, and the people they don’t like with tend to end up in not so fun positions, such as horizontal.

Demographically, the Islamic nation has a swelling population. Before WW2, according to http://www.worldwar-2.net, the population of Germany was 73,000,000(1938) and the population of France was 40,800,000 (1939). The gap was widening due to much higher birthrates in Germany. Currently, Muslims make up 21% of the world while Christians make of 33%, with the Christian population as a trend getting older and the Muslim population full of young people. The practice of polygamy frees up young men while ensuring that population growth isn’t limited.

Many Muslim people are afraid to criticize people of their own faith, and seem to let their violent wings run a muck. The best evidence I see of this is Iraq. The US forces have screwed some things up, but it is not policy to indiscriminately kill women and children with massive bombs. The terrorists wipe out civilians and a large enough portion of the Iraqi population assist them that they remain an effective guerrilla force. In Nazi Germany, the Brownshirts caused massive disturbances and did things to the Jews that caused unease, but there was not enough unease to rebuke them and make them cease their violent actions.

The fascist party leadership used simple means to prepare their youth for a larger effort later. They included pre-military training (banning the boy scouts and replacing it with Hitlers Youth), and put out powerful propaganda about the desirability of destroying all enemies of the people and the state by whatever means necessary. They exaggerated differences, and villanized those darned Zionists. Palestinian cartoons, which are open to the world’s view, glorified killing infidels. The ignorance, bias, and violence that is handed down in private must rival the racism that is handed down by Neo-Nazi gangs in back rooms in America.

Over the weekend, Italian authorities broke up a group that was training at a mosque using information that had been obtained through the internet. The nature of the training and its ease would lead you to believe that many more of these schools are spread throughout the world. Meanwhile, instead of studying history, math, science, or even philosophy, we are teaching our kids that they are entitled to feel good. If there is a fight, who will be prepared? The unprepared will have to surrender without a blow.

These are just some thoughts that I have had. The most dangerous thing about Islam is that the moderate elements will not criticize the violent elements, often supporting them, and at best, looking the other way. These moderate elements have to stand up for what is right. Unless they stop this apathy about other’s lives and rights, they will find themselves riding the same runaway train that the German moderates were on in 1939, with their brainwashed children riding in the dangerous, bullet ridden front seats, with Old Europe (figuratively and literally) sitting on the tracks.

Making Bunkbeds for my kids.

My kids are 3.5 and 2 years old and I have another on the way. The boys are going to be sleeping in one room so I need to get them a bunkbed. I looked at buying and I think that I will just build. A bunch of 2×6’s aren’t that expensive, and I figure I will finish it in tung oil. The bunk beds on craigslist seem to be very overpriced. I will take pictures to let you you how it goes, in case you ever need to do something like it.  Updating-  Plans with pictures here.

On another note, we had sunrocket, which pooped itself out. We are now going with a calling card, tel3advantage. We will let you know how it goes. So far it seems to work. They charge 1.9 cents a minute with no fees, and the connection was clearer then sunrocket. More to come.

Plattitudes that you hear that are dead wrong.

I was at church today and I heard someone say ” If you aren’t out of your comfort zone, you aren’t progressing”.

That sounded good to me at first glance, but the more I thought about it the more it became retarded. The things that I need to do more than anything else to progress at this point are well within my comfort zone.

I need to help my wife with dishes a little more. Helping your wife with stuff can get well into your comfort zone. (yeah)
I should spend more time reading to my children and less time watching brain suckers (tv, computer, video games).

I should spend more time meditating and planning my day instead of getting up literally 10 minutes before I have to leave and showering, shaving and dressing in a panic. You can’t tell me that that would not make me more comfortable and help in my progress. I need to read more good books and less fluff (right after I read the last Harry Potter book).

You see the point. People are waiting for these big experiences that will shape their lives. Speaking in front of people is out of most peoples comfort zones, and I think a big part of that is they don’t have anything useful to say.

I teach and I have all these students claiming test taking anxiety. After talking with them for a few minutes I realize that the problem in 95% of the cases is they don’t have a clue what they are talking about. They failed because they should have, and the test accurately assessed their knowledge. It’s ok, Jesus still loves you, you just don’t know jack about chemistry.

The speaker today was painfully boring. I zoned out and looked at my watch and recognized that he had gone over the time alotted. HEY BUDDY!! IF YOU WERE WORTH LISTENING TO FOR 40 MINUTES THEY WOULD HAVE GIVEN YOU THAT MUCH TIME TO SPEAK!! I know I should be humbly listing but this guy was painfully boring and thought he was Demosthenes. Prepare for the talk and don’t wing it. Do your little progression in your special little comfort zone and your sermon won’t induce blogs.

If you budget in your comfort zone, when a salesman comes by it is easy to say no. We had your customary alarm system salesman come by yesterday (just 9 bucks a week) and I told him it wasn’t in our budget. ” Well what about your protection?” ” I have a gun.” “What about your wife?” “She’s as good of a shot as I am.”

The last example I will give is this blog. This is my second entry and you can bet that I don’t think that I am Mark Twain. I am writing for free to a non trapped audience (thank you for reading) to develop some skill so if I want to write later, I can put out a better product after some practice. Have a good one.

Hello world!

I have long wanted to get into blogging and here is my first attempt. Please be gentle, and it will improve

I guess the major point I have to express is that we live in total excess in the USA. Nothing is wrong with being surrounded by all sorts of fantastic things. If I could afford to have an original Van Gogh in my house, I would. The point is that our houses are full of unused crap that we paid large prices for.

Advertising is more effective then any of us realize. I find myself wanting to buy tools that I will use once and then have collect dust on my shelf because I apparently don’t feel secure about the size of my stuff. I least I buy a miter saw for 300 bucks instead of a useless car for $50,000.

Here is some math-

$50,000 How much you made

-$15,000 Taxes

– $2000 One year of beans and rice for food

– $7200 Rent at $600 a month (Utilities Included)

-$600 Phone at $50 a month

-$200 The bike you used to get around since you couldn’t afford a car.

=$25,000 a year.

Who in their right mind would trade two years of their life under those conditions for a beamer. That same $50,000, if invested in the S&P500 for 40 years (25-65) would end up as $5.37 million. Now that is a really freaking expensive car.

Anyway, best of luck with your finances.