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Blame Bernanke on inequality in US January 28, 2014

Posted by hslu in Economics, Health Insurance, jobs, Obama, Obamacare, Politics, stocks, Taiwan.
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Bernanke’s QEs did little to stimulate the US economy. He added $3.2 trillion to Fed’s balance sheet which grew the US economy ~2.2% per annum since 2009; a little better than inflation. U6 dropped from ~17% to ~14%. Millions of people got out of the labor market. They moved from the unemployment line to the food stamp line.

So what happen to that $3.2 trillion? Some returned to the Fed and earned 0.25% risk free for the dealer banks. The rest of that hot money pumped up stock markets all over the world and housing markets in many cities in the US.

US stock market went up 175% since the 2009 low. It was up about 30% in 2013 alone.

Housing prices in Las Vegas, Phoenix, SF, San Jose, Miami, etc., have gone up by double digits for a few years in a row.

Let me ask you this:

Who benefited from the $3.2 trillion?

The rich guys. They owns most of the stocks.

Gates made $6 billion in 2013 alone and he was worth $67 billion in 2013. Buffett made $7.5 billion in 2013 and was worth $53.5 billion in 2013. Others such as hedge fund managers and Wall Street investment bankers also made millions of dollars since 2009.

Who got rich from the Booming housing markets?

The rich guys. Again.

Millions of former home owners are renters in 2013 and will remain so in 2014. The homes they used to own went back to banks. Banks sold these foreclosed homes to individual investors and hedge funds who borrowed from banks at ultra low interest rates thanks to Bernanke’s QEs.

This outcome doesn’t come from the left field. It was by design.

Bernanke engineered the largest wealth transfer in America’s history: he robbed from the poor and the middle class and handed them over to the rich; people who own most of the stocks and big  houses.

In other words, the gap between the rich and everyone elso got bigger thanks to Bernanke. And he is washing his hands and leave the mess, or 爛攤子, to the next chairman.

This is inequality that everyone from the US to Europe to Taiwan is talking about.

Bernanke wanted A trickle down economy. It didn’t happen. The poor got poorer and the rich got richer.

Everybody knows that the mostbdirect and efficient way to narrow the inequality gap is to engineer a crush of DJIA and bring down the runaway housing market.

That’s govrrnment’s job and Obama is good at it.

He started Obamacare. Health insurance companies will lose money because they canceled millions of policies because they didn’t meet Obamacare’s requirements. In return, they got the old and the sick instead. Unsurance companies are in trouble.

He raised salaries of millions of contract workers to the federal government. Companies which hired these people will make less. Companies who don’t work for the federal government will feel the wage pressure and wages will perk up in time. Companies will make kess.

He’ll probably use his pen to sign an executive order or some kind of  regulation (his words, not mine) to raise the minimum wage. Democrat controlled governments will follow Obama and some (DC) have done it already. Businesses all over the US will see their margin squeezed. Some will hire less. Few will close. Economy will suffer and stock market will come down because earnings will suffer.

What follows next will be the housing market because one who doesn’t have a job will not buy any house.

That’s wealth transfer in reverse direction.

Well, there we go again.

What government gives you, government will take it away. The rich can move their money to foreign countries, look for loopholes or change their investment to avoid IRS’s knife. They have wealth managers who do nothing but that.

The middle class is stuck. They will always be the loyal servants to the 47% until they become one of the 47%.

Minimum wage for Federal Government workers? July 11, 2010

Posted by hslu in Economics, Global Affair, Health Insurance, Obama, Politics.
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Arnold Schwarzenegger has won a court fight to cut the salary of 200,000 California state employees from an average $65,000/person/year to around $15,000/person/year; the equivalent of  $7.25/hour federal mandated minimum wage.

California is running a deficit of $19 billion and Arnold has run out of options to narrow that gap. Would you like a CA State IOU’s in lieu of cash?

Obama should cut federal employees’ salary to minimum wage too to pay for ObamaCare.

Inflation is coming June 17, 2010

Posted by hslu in China, Economics, Energy, Global Affair, Gold.
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For the past 20 years, China has exported deflation to the rest of the world and we have enjoyed very favorable prices on just about everything except commodity and energy.

Cheap labor and foreign direct investment enabled China manufactured many items dirt cheap for so long that we forgot what inflation was like. The terrible 15+% prime rate and nearly 18% mortgage rates of the late 70’s and early 80’s have became distant memories. The recent financial crisis has artificially kept the interest rate stuck in the range between 0 and 2%.

Well, this period of low inflation is about to end in the near future. A friend of mine who has worked for Wal-Mart for the past 9 years has told me that Wal-mart has increased their prices by a quarter to fifty cents on many items in recent weeks  to offset the high costs from China. The labor unrest has hit Honda and Toyota auto plants in Southern China. The largest iPhone and iPad manufacture in China 富士康 has to raise the salary of their workers by as much as 33% across the board to prevent more suicides from happening (13 so far this year from a single plant.) Just in the last two to three weeks, the minimum wage of young workers has gone up by ~20% in many cities all over China by order from the central government. It has become necessary in order to prevent social unrest in the midst of the young work force.

China’s workers have waken up and they learned quickly to unite and fight for better working condition and higher wages.

It is about time for them to share the profits with the management and party officials. They earned it the good old fashion way. And they deserved a fat raise.

Well, this wave of wage inflation will come to the United States and other parts of the world sooner rather than later.

Don’t forget that every developed and developing country have printed way too much money to keep inflation in the bag. It will rear its ugly head when we least expect it.

Just make sure that you don’t get caught with your pants down.

Buy some gold when it is still cheap.

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