STOCKS LOWER AFTER CUT ON DEBT WOES

U.S. stock markets ended lower today after Moody's downgraded Ireland's debt rating, while debt woes here at home continue to be a drag on stock performance. 

With not a lot of relief in site on debt worries, I tend to agree with Duke Energy (DUK) CEO, James Rogers, that the U.S. should pass incentives to bring U.S. profits home.  Our corporations have over $1 trillion in profits overseas and would be more likely to bring those profits home if U.S. tax laws were changed.  If companies had some incentive to bring this money home and invest in the U.S. modernizing and upgrading facilities, it would create jobs and provide more economic stimulus than the Obama taxpayer funded program.

On a personal note, I've added shares of Kraft Foods (KFT) to my IRA account and plan to continue an active stock purchase plan for the foreseeable future.  As long as the market lags and prices are down, I'll be looking to build on current positions and maybe add a few new ones to my taxable account as well as my IRA.     

IS GOVERNMENT PRICING ITSELF OUT OF THE MARKET?

I read an interesting article on cnbc.com (click on title for link) about California's tax increase not working as far as raising projected revenues.  During the "Great Recession", many local, state and federal politicians have been promoting the "need" for tax increases to meet record budget deficits.  Personally, I believe they should be upfront and say they need the money to buy votes by pandering to special interest groups, promoting pet projects and pork barrel spending.  Since we all know that's not likely to happen, there's no need for further debate on that issue.

What government in general should take away from the results of California's failure to raise revenues through tax increases is this:  They are pricing their services (government services) beyond what the market (or taxpayers) are willing to pay.  My guess is consumers are spending less, not only because of the recession, but also to avoid paying higher taxes.  Businesses as well as wealthy individuals are relocating to more tax friendly states or countries, which is what I've been predicting would happen when taxpayers reached the breaking point. 

Even people who are not quite so wealthy are deciding to relocate to foreign countries when they retire, because the taxes and cost of living are so much cheaper than many places here in the U.S..  They're taking with them their Social Security checks (aka U.S. tax dollars) and spending them elsewhere, creating a better standard of living in other countries, but creating no residual benefit for the economy here.  No one can really blame them, if you can live better in your golden years by relocating, then why not? 

At any rate, before our elected officials get in too big of hurry to add new taxes on top of old, they really should consider how much more the market will bear before taxpayers say no thanks.

TAX TIME!

I finally got the last 1099 form I was waiting on and sat down to do my taxes yesterday. It took about 5 hours to complete, but I was surprised to find I actually have a small refund coming. I'm already planning on putting that to work by investing it in additional shares of one of the limited partnerships I currently hold.

This year's taxes were a little more difficult than usual to prepare. I had several stock trades to report, dividend and partnership income and foreign taxes. Then I had unemployment compensation, which I had never collected before last year, so that was a first for me as well. I used an online tax preparation program and everything went smoothly. It really helps to have all your records together before you begin the process. Toward the end of each year, I always set up a file to collect all of my tax paperwork in, so when it comes time to prepare my taxes, it's all right there. Really simplifies the process.

I received an email notification that my return has been accepted by the IRS, so now it's just a matter of time before the refund rolls in. It's nice to actually get a refund for a change, instead of having to pay in. It will be even nicer to put the money to work and generate additional income for 2010 and beyond.

I COULDN'T HAVE SAID IT BETTER

"You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is the beginning of the end of any nation. You cannot multiply wealth by dividing it."

Adrian Rogers, 1931


We need to stop Cap and Trade, or Cap and Spend as I like to call it, forget about health care and any other programs we can't afford to pay for. Eliminate wasteful government spending and overburdening U.S. citizens with ever increasing taxes. Let people keep more of what they earn, not less. Then you have the incentive for prosperity.

Health Care Reform

I saw the report on the local news about Claire McCaskill's town hall meetings on health care reform. What amazes me about Senator McCaskill and the Democratic party as a whole is that they just don't get it. It's not that the people who are protesting don't want health care reform and reduced costs for health care, it's that the taxpayers are tired of governments runaway spending. If Ms. McCaskill and her party truly want to help with health care, they should concentrate their efforts on preventing wasted taxpayer dollars by reforming medicare and medicaid. It is no secret that both programs are rife with fraud and waste and have been for years. How many more people could be covered under these programs if our politicians concentrated their efforts on improving the programs that are already in place?

I am against the proposed health care reform, because of the abuses of medicare and medicaid. If they are unable to monitor these programs effectively, then how do they expect to administer a new program? I believe Senator McCaskill, and most elected officials, are relatively intelligent people, so I can't imagine they truly believe a new bureaucracy is the answer to our nations' health care problems. So we have to ask ourselves, what is the motivation for passing such a program, that Warren Buffett, one of the worlds greatest investors says could lead to "banana republic type inflation?" Is it possibly a political move? Perhaps they think it will make the Democratic party appear to be champions of the poor? Well the poor have been speaking at the town hall meetings and no one seems to be listening. We didn't want government health care when Hilary Clinton was promoting it and we don't want it now. Not at the cost of higher taxes and inflation.

So, Senator McCaskill, as a citizen of the great State of Missouri and of the United States of America, let me spell it out for you and the rest of the people who are promoting the Obama administrations health care reform. Stop the madness of unbridled spending! NO NEW TAXES! NO MORE GOVERNMENT PROGRAMS THAT INVOLVE INCREASED SPENDING! ENOUGH IS ENOUGH AND WE'RE WAY PAST THAT POINT! Let's concentrate on fixing the health care programs we have and paying down government debt!

Senator McCaskill, on the subject of credit card reform, you yourself said that you thought consumers should be responsible when it came to managing their spending and debt, shouldn't your constituents expect the same from their elected officials?

Healthcare Reform a Move Towards Socialism?

The town hall meeting this past week in St. Louis MO got a little ugly. On the one hand you had people who were pushing for health care reform and on the other side were people protesting government spending, higher taxes and the present U.S. governments' increasing drift towards a socialistic society.

I think it is ridiculous to think that the government should solve all our problems. Yes we have a definite problem with health care in the U.S., but it is wishful thinking to believe that increased government involvement is the answer. As someone who has worked in health care, I can attest to the fact that current government programs are ineffective. I have personally seen cases of government programs being billed for services that were not performed. So why would anyone think that more government involvement would lead to better care? I believe it would only lead to more corruption and fraud and bigger burdens on the American taxpayer.

This is the point so many politicians and mainstream media seem to be missing about the "tea party" protests. This grassroots movement is an expressions of the average taxpayers disgust over ever increasing taxes. At some point we have to draw the line and say no more taxes! Obama is now backpedaling on his campaign promise of not increasing taxes for the poor and middle class. If they continue to pass spending bills, including health care reform, tax increases are inevitable. Some experts are projecting top tax rates as high as 55 to 60%. I don't know about anybody else, but I don't think I'd be too motivated to go out and work hard only to hand over 50 to 60% of my paycheck to the government.

I believe the government needs to manage the current health care programs more effectively and leave the rest to the private sector and charitable organizations. Over taxation is NOT the answer. The Soviets had to give up on a socialistic society because it did not work. Why our political leaders think it would work here is beyond me. Even Jesus said "The poor will always be with you."

INFLATION The Ugly Side of Obama's Spending

With all the hoopla and manufactured sense of urgency from the Obama administration, main street seems to be forgetting the ugly side effect of massive government spending programs. INFLATION! While the Democrats are so busy patting each other on the back over their bank, auto and insurance bailouts, their greenhouse gas reduction plans and the looming health care reform, what will they really have accomplished. If you make peoples lives better through health care reform and, at the same time, create skyrocketing inflation on everything else, in my opinion you've accomplished nothing. As soon as government spending kicks in, demand for oil and other commodities will see major increases leading to higher prices. At the same time, new debt to fund these programs will lead to a weakening dollar causing prices to go up even more. If they are truly interested in helping the poor and middle class, how can they possibly justify passing legislation that will ultimately lead to more taxes and higher prices? The only conclusion I can draw from what I've seen so far is, the current administration could care less about the people of main street.

I'm sure they'd argue, we needed to save the banks, the major auto manufacturers and AIG. As far as global warming goes, I'm still not convinced that it isn't a naturally occurring phenomena, nature's way of re-balancing the planet. Even if I'm wrong, which is entirely possible, scientists have already stated that unilateral implementation of green house gas controls by the United States may have marginal to no effect on global warming. Don't get me wrong, I'm all for solar and wind energy and reducing pollutants in our atmosphere, I just don't think we need to destroy our economy to do it. I think more can be accomplished by grass roots programs. Getting people to think more about recycling, cutting back on energy usage, switching to more efficient appliances and lighting would make a tremendous difference in our carbon footprint as a nation. We don't need ever expanding government to implement more control over our lives or to burden us with more taxes.

I know there are people who will read this and say "your no expert." That is entirely true, but you don't have to look to far to see what the experts are saying about coming inflation. The July issue of Smart Money magazine has an interesting article entitled "Stocks That Beat Inflation." In it, they quote George Schwartz, head of the Ave Maria Catholic Values fund, as saying, "You can't run the printing press and spend like drunken sailors without consequences." They also say in the article, "a small but growing number of investment pros are betting inflation will return much faster than the conventional wisdom anticipates, and when it does, it will be far more widespread and potent than we've seen in years."

Lastly, when Roosevelt's administration passed legislation, similar to the current administration, it did not end the Great Depression. The economy never fully recovered from the depression until World War II. So if it didn't work then, why should we expect it to work now.

Adding to Long Term Holdings

With the big drop in the market on Monday, I'm taking advantage of the lower prices to pick up some extra shares in AT&T and General Electric. Both stocks are part of my long term holdings. AT&T for their great dividend payout and General Electric for their long term prospects. GE does pay a dividend, but not near the amount they used to pay. Still, I think they have great, long term prospects.

Now the government is talking about taxing health care benefits in the workplace. Hey, Obama! What happened to, "95% of Americans would see their taxes reduced."???? Did you mean South or Central Americans, because I'm just not seeing it. I'm seeing increased taxes and not much stimulus from the "stimulus package." First it was a massive tax increase on tobacco products, affecting mostly poor and middle class taxpayers, then the talk of taxing sugary products (again affecting mostly poor and middle class), now health care benefits???? Have the people in Washington taken complete leave of their senses? I'm beginning to believe so. I'll spell it out so even they can understand: Increasing taxes, in ANY FORM, hurts the economy, the recovery and the U.S. taxpayer.

On a brighter note, today's market is expected to go higher, after Monday's big sell-off. Like I mentioned in an earlier post, I'm not expecting to see any more big moves with the market until the fall. We may have a few small rallies and some drops through the summer, but I'm not expecting anything big.

My Opinion of Legalizing Marijuana

I've been seeing a lot in the news lately about state governments wanting to legalize marijuana and other recreational drugs. They think by doing so, they will be able to generate tax revenue from sales of these drugs, as well as reduce spending for the battle against drug dealers. While I don't use any illegal drugs myself, I've always been for legalizing marijuana, for the same reasons politicians and others are now espousing. Additionally, I think it would stop a great deal of violence caused by the illicit drug market, by taking the profits away from drug dealers who fight with one another to control drug trade.

That being said, I do not see how our nations' politicians, state or federal, with any good conscience, can promote legalizing any type of illegal drugs, just to raise tax money. They have all but ruined the tobacco industry, through state lawsuits, extreme taxation, and most recently by putting them under the control of the FDA. I'm not arguing the case that any of these measures were bad, or unjustified. However, how could the same politicians argue for legalizing drugs, (many of which are much more harmful than tobacco products), just to raise money, when that is the very reason they vilified the tobacco industry. Basically what they are proposing to do is legalize several addictive drugs, whereby they would take advantage of the people who are addicted to them, to raise money to fund their pork barrel projects and promote their own political agendas. This is different from the tobacco companies, HOW?

The truth is, it is worse than what the tobacco companies did. The tobacco companies were run by business people trying to make a profit, not by elected "Public Servants." Take in to consideration too, that smoking one joint of marijuana has been compared to smoking a pack of cigarettes, as far as the damage it does to your lungs. If it were legalized and packaged like cigarettes, I have no doubts that some people would smoke a pack a day, which would roughly compare to a smoker smoking two cartons of cigarettes in one day. There are people now who will let their electricity be shut off, fail to pay rent or let their children go without basic necessities, just to buy their drugs. If they are legalized, how much worse will it be? Not to mention the long term health effects of over-indulgence in these type of recreational drugs.

While I do still support legalizing marijuana, to collect tax dollars, take the money away from drug dealers and to free up law enforcements time for more serious pursuits, I don't see any good way for this to happen. If the state or federal governments do pass such legislation, then in all good conscience, they should return all of the money they received from suing the major tobacco companies. If the government does not allow private business to take advantage of addicts and promote unhealthy or downright poisonous products, then why would they think it is O.K. for them to engage in such practices. Not to mention, who would they get to produce the stuff? Any company thinking about such a move would have to take in to consideration what has happened to big tobacco. They would surely be setting themselves up for major lawsuits, somewhere down the road. Doesn't sound like a very promising business going in.

So, before we jump in to legalizing a bunch of recreational drugs, to raise money to save our states, maybe we should look at the possibility of electing state and federal officials who are more responsible with the tax dollars they all ready collect.