Sometimes people and investors just seem to get lost in the hype and spin. Amazon specializes in hype and not profits! When the stock of a company that earns no profit trades above $350 a share we are there. The combination of a market disconnected with Main Street coupled with a Federal Reserve that is afraid to taper because it will show just how weak the economy is plays a massive role in this story. Like Tesla Motors the stock of Amazon defies logic, but has been propelled forward by an environment of cheap and easy money. Add to this blowing shorts out of the market and momentum trading and you arrive at a bubble ready to burst.
For years Wal-Mart took the heat for being a monster that raced across America destroying small businesses and our way of life. Wal-Mart sold cheap China make goods that lowered the cost of living with the hidden cost of ending thousands of jobs at distribution companies and manufactures that were unable to compete. Now Amazon comes at us with a image packaged as much friendlier and sporting a logo on their boxes that comes across almost as a smiley face with claims they are a kinder disruption. Great self-promotion can only mask the truth for so long. Beware Amazon is far from transparent.
It is hard to see why Amazon has any fans when you consider how they
abuse and exploit the brick and mortar stores that line streets
throughout America. These are the stores that employ our family members,
support little league teams in the community, and add value to our
lives. These stores build or lease space, buy supplies from the other
local businesses, and pay both sales and real-estate taxes. While Amazon sends out the signal that their customers are smart, forward thinking, and upscale they exploit America and have an evil side, this is a side we should and must recognize.
Putting the spin and hype aside more signs continue to revel that Amazon is not your friend but still the Juggernaut rolls on. Three more signs that Amazon is not your friend occurred in October 2013. First more labor problems continue in Germany. The other two highlighted with a positive spin in a press conference where Bezos talked about 1,382 newly deployed Kiva robots, in Amazon’s warehouses
a sign of future intentions to limit "job creation"? Add to this Bezos referring to Amazon's victory over IBM in a legal battle to service the cloud computing needs of the
Central Intelligence Agency. We can only assume this has to be in relationship to Amazon's role in collecting more data and spying on the American people.
Words like "evolving" are used to describe Amazon's business model, a better word might be undefined. Regardless Amazon rolls on. Pointing towards gaining synergy as they continue to buy companies, some unproven. The revenues from these companies add to their growth but still no profits exist. Does this growth mask a weakness at their core? If they are indeed a distribution company their stock should be trading at around 18 times earnings. When you look for a P/E ratio on Amazon you find NA because the company makes no money. Another key weakness is that new competition can now cheaply and easily replicate the most profitable parts of Amazon and cherry pick much of their future potential. The bigger they are, the harder they fall, it is only a question of time.
Footnote; Other related articles may be
found in my blog archive, thanks for reading, your comments are
encouraged. Below are links to a few articles related to this subject,
http://brucewilds.blogspot.com/2013/05/tesla-motors-and-elon-musk.html
http://brucewilds.blogspot.com/2013/11/usps-and-amazon-another-unholy-alliance.html
The following MarketWatch article may also be of interest,
http://www.marketwatch.com/story/10-things-amazon-wont-tell-you-2012-06-26
Sunday, October 27, 2013
Food Stamps and SNAP to get squeezed?
An article in the Huffington Post told how next month food stamp benefits will
automatically shrink for all 47 million Americans enrolled in the
Supplemental Nutrition Assistance Program. It went on about how Pamela Gwynn of Crawfordsville, Indiana, heard about the cut in a letter
from the Indiana Family and Social Services Administration. The letter
explained that a federal law called the American Recovery and
Reinvestment Act, commonly known as the "stimulus package," had given
food stamp recipients a temporary boost in 2009. I suspect most Americans did not know this.
"The increased benefits provided by this law are expected to expire on November 1, 2013," the letter said. "Most families will see their benefits decrease in November due to the end of the extra benefits provided by the 2009 law." Gwynn, 63, said a series of brain surgeries in the late 1990s left her partially deaf and reliant on $731 per month in disability benefits from the Social Security Administration. Her monthly food stamp benefit will go down from $91 to $80. That would leave her 88 cents per meal. "Eighty-eight cents won't buy anything except a cup of ramen noodles," she said.
The November reduction will be the second federal cutback affecting Gwynn's food resources this year. In the spring, across-the-board budget reductions known as "sequestration" trimmed funding for senior nutrition programs. Gwynn said she used to receive a hot lunch every weekday. "They took my lunches away because the sequester cut their budget so much they couldn't afford to pay the driver and they cut back to a once-a-week delivery," Gwynn said. The local agency on aging offered to bring seven frozen meals once a week, but Gwynn said no thanks. "When you live in an apartment you do not have a freezer large enough to hold what you already have in there and seven meals."
The government had not planned for the Recovery Act's food stamp boost to disappear so abruptly. The plan had been to leave the increase in place until inflation caught up through annual adjustments to SNAP benefit levels, which had been expected to happen in 2015. But congressional Democrats essentially raided the cookie jar, using the future planned spending to offset the cost of priority legislation in 2010. They said at the time that they would put the money back before any decrease could take effect, but they have not kept their promise.
A family of four receiving full benefits will get $36 less, while single households will get $11 less. Nationally, the reduction amounts to $5 billion next year, according to the Center on Budget and Policy Priorities. It's the first month-to-month food stamp benefit drop ever. The decrease is automatic and completely separate from an ongoing debate in Congress over how much SNAP spending should be cut starting next year. Republicans in the House want to cut the program by 5 percent, which would result in 3.8 million fewer Americans receiving benefits in 2014. But Senate Democrats are unlikely to go along and benefits will probably continue with no additional cuts.
I highlight this article to make several points. The SNAP program or food stamps have grown at an amazing rate. Using Gwynn as the example placed before us by the Huffington Post she appears in no real danger of going hungry, only in America would a person starving and with no money moan that their refrigerator was too small or full to take seven frozen meals that they could eat over two or three days if need be. I would also like to point out that this free meal delivery was more proof of the added layers of government supported programs upon government support programs society has put in place.
If you qualify for one program additional assistance is most likely be available. People receiving help or aid often double or triple dip, a plethora of "additional help" options exists. From food stamps, free phones, and internet, help paying for utilities, Medicaid and medical assistance, Pell Grants, and more. If people learn to make better choices in how they spend the money given to them by the government and learn to stretch their food budget they will be fine. You do not need a great deal of money to have a reasonable diet in America. The irony of this is that those that will suffer the most is the grocery stores as their profits drop. This will also hurt the GDP and slow the false growth fueled by massive government spending.
Footnote; This post dovetails with many of my recent writings, for more I might suggest reading the article below. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged,
http://brucewilds.blogspot.com/2013/06/living-on-dole.html
http://brucewilds.blogspot.com/2012/01/food-stamp-reform-needed.html
"The increased benefits provided by this law are expected to expire on November 1, 2013," the letter said. "Most families will see their benefits decrease in November due to the end of the extra benefits provided by the 2009 law." Gwynn, 63, said a series of brain surgeries in the late 1990s left her partially deaf and reliant on $731 per month in disability benefits from the Social Security Administration. Her monthly food stamp benefit will go down from $91 to $80. That would leave her 88 cents per meal. "Eighty-eight cents won't buy anything except a cup of ramen noodles," she said.
The November reduction will be the second federal cutback affecting Gwynn's food resources this year. In the spring, across-the-board budget reductions known as "sequestration" trimmed funding for senior nutrition programs. Gwynn said she used to receive a hot lunch every weekday. "They took my lunches away because the sequester cut their budget so much they couldn't afford to pay the driver and they cut back to a once-a-week delivery," Gwynn said. The local agency on aging offered to bring seven frozen meals once a week, but Gwynn said no thanks. "When you live in an apartment you do not have a freezer large enough to hold what you already have in there and seven meals."
The government had not planned for the Recovery Act's food stamp boost to disappear so abruptly. The plan had been to leave the increase in place until inflation caught up through annual adjustments to SNAP benefit levels, which had been expected to happen in 2015. But congressional Democrats essentially raided the cookie jar, using the future planned spending to offset the cost of priority legislation in 2010. They said at the time that they would put the money back before any decrease could take effect, but they have not kept their promise.
A family of four receiving full benefits will get $36 less, while single households will get $11 less. Nationally, the reduction amounts to $5 billion next year, according to the Center on Budget and Policy Priorities. It's the first month-to-month food stamp benefit drop ever. The decrease is automatic and completely separate from an ongoing debate in Congress over how much SNAP spending should be cut starting next year. Republicans in the House want to cut the program by 5 percent, which would result in 3.8 million fewer Americans receiving benefits in 2014. But Senate Democrats are unlikely to go along and benefits will probably continue with no additional cuts.
I highlight this article to make several points. The SNAP program or food stamps have grown at an amazing rate. Using Gwynn as the example placed before us by the Huffington Post she appears in no real danger of going hungry, only in America would a person starving and with no money moan that their refrigerator was too small or full to take seven frozen meals that they could eat over two or three days if need be. I would also like to point out that this free meal delivery was more proof of the added layers of government supported programs upon government support programs society has put in place.
If you qualify for one program additional assistance is most likely be available. People receiving help or aid often double or triple dip, a plethora of "additional help" options exists. From food stamps, free phones, and internet, help paying for utilities, Medicaid and medical assistance, Pell Grants, and more. If people learn to make better choices in how they spend the money given to them by the government and learn to stretch their food budget they will be fine. You do not need a great deal of money to have a reasonable diet in America. The irony of this is that those that will suffer the most is the grocery stores as their profits drop. This will also hurt the GDP and slow the false growth fueled by massive government spending.
Footnote; This post dovetails with many of my recent writings, for more I might suggest reading the article below. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged,
http://brucewilds.blogspot.com/2013/06/living-on-dole.html
http://brucewilds.blogspot.com/2012/01/food-stamp-reform-needed.html
Tuesday, October 15, 2013
Myth Of An Economic Recovery
The economic recovery that the media and talking heads have been bantering around does not exist and is just a myth. A manipulated stock market distorted by recent economic policy hides and mask the real truth, in many ways it is ground zero in the war to convince us all is well. The American people and Main Street will tell you they are far from convinced that it is smooth sailing ahead. Huge weakness in the economy has been shown by numbers that barely get by even after record amounts of stimulus. Fact is if QE or the massive government deficit spending that props up our economy is removed it will fold like a cheap umbrella.
Recent changes in how the GDP is figured , which boosted growth thus reducing the debt to growth ratio, and attempts to spin poor numbers regarding employment have been met with skepticism. Auto and new home sales have recovered a bit from the levels hit during the crises mainly as a result of QE and massive government deficits coupled with low interest rates that make both mush less expensive to finance, but we are still in an economic morass. Poor job creation and stagnate wages have left millions in a protracted state of financial weakness. We are not in recovery we are dead n the water.
The American government has been running one and a half trillion dollar deficits the last several years. This represents a staggering $4,500 per person and $15,300 per family in America each year, these huge deficits add up very fast! Sadly, this is what is propelling the economy forward, and it is not sustainable. Massively compounding the problem is the realization that many people such as infants, children, the disabled, and the unemployed could not repay their share of this debt if their life depended on it, this transfers the burden to the remainder of society.
Those in power have cast a bum rap upon austerity as they continue to steer us towards what they hope is a controllable inflation ramp. It seems the goal is to move inflation up enough that it is still acceptable but at the same time give people the illusion of economic growth. This would support pension funds and others in the stock markets thus fostering the golden "wealth effect" that encourages people to borrow money and go out and spend. If these funds fall in value it will bring into question the whole economic system and a collapse that will bring down the pension system.
The head of the International Monetary Fund, Christine Lagarde, has warned that the latest chink in our economic armor, a US default, could tip the world into recession. In a US television interview she said a default would result in "massive disruption the world over". She went on to say "If there is that degree of disruption, that lack of certainty, that lack of trust in the US signature, it would mean massive disruption the world over and we would be at risk of tipping yet again into recession." Her message, spend now and after things get better worry about the debt.
President Obama said, "It wouldn't be wise, as some suggest, to just kick the debt ceiling can down the road for a couple of months, and flirt with a first-ever intentional default right in the middle of the holiday shopping season." The political gridlock concerning government spending that has shutdown the US government will shave 0.25% off economic growth each week it continues is the estimate of US Treasury Secretary Jack Lew. Growth is already expected to be sluggish this quarter. The US Treasury has been using what it calls extraordinary measures to keep paying the bills, but those measures hit a wall on October 17.
Every week the Treasury has to refinance 100 billion dollars of debt in the form of US government bonds known as treasuries. The US also has to pay interest on its huge debt burden. An inability to pay that interest, or pay back debt if required, would put the US into default. On Saturday, Jamie Dimon, head of JP Morgan said the possible repercussions did not bear thinking about. "You don't want to know (what would happen)," he said. "It would ripple through the world economy in a way that you couldn't possibly understand."
There you have it, the big concern, keeping Americans spending. The policy based on it all being about confidence rather then reform continues. The economic recovery you hear about in the media is a myth generated by and directed by those in power. All the characters above have a vested interest in toting the recovery line, this should make us leery of anything they say. Whenever I see the likable Christine Lagarde I cannot help but think about her appearance with Jon Stewart on the Daily Show where the current head of the IMF admitted to lying to people during the 2008 financial crisis, it seems we can't handle the truth. This makes it clear that we should question the credibility of everything these people say.
Footnote; This post dovetails with many of my recent writings. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged. The below post lays out some of the thought presented by economist Allen Meltzer,
http://brucewilds.blogspot.com/2013/07/it-will-all-end-badly.html
Recent changes in how the GDP is figured , which boosted growth thus reducing the debt to growth ratio, and attempts to spin poor numbers regarding employment have been met with skepticism. Auto and new home sales have recovered a bit from the levels hit during the crises mainly as a result of QE and massive government deficits coupled with low interest rates that make both mush less expensive to finance, but we are still in an economic morass. Poor job creation and stagnate wages have left millions in a protracted state of financial weakness. We are not in recovery we are dead n the water.
The American government has been running one and a half trillion dollar deficits the last several years. This represents a staggering $4,500 per person and $15,300 per family in America each year, these huge deficits add up very fast! Sadly, this is what is propelling the economy forward, and it is not sustainable. Massively compounding the problem is the realization that many people such as infants, children, the disabled, and the unemployed could not repay their share of this debt if their life depended on it, this transfers the burden to the remainder of society.
Those in power have cast a bum rap upon austerity as they continue to steer us towards what they hope is a controllable inflation ramp. It seems the goal is to move inflation up enough that it is still acceptable but at the same time give people the illusion of economic growth. This would support pension funds and others in the stock markets thus fostering the golden "wealth effect" that encourages people to borrow money and go out and spend. If these funds fall in value it will bring into question the whole economic system and a collapse that will bring down the pension system.
The head of the International Monetary Fund, Christine Lagarde, has warned that the latest chink in our economic armor, a US default, could tip the world into recession. In a US television interview she said a default would result in "massive disruption the world over". She went on to say "If there is that degree of disruption, that lack of certainty, that lack of trust in the US signature, it would mean massive disruption the world over and we would be at risk of tipping yet again into recession." Her message, spend now and after things get better worry about the debt.
President Obama said, "It wouldn't be wise, as some suggest, to just kick the debt ceiling can down the road for a couple of months, and flirt with a first-ever intentional default right in the middle of the holiday shopping season." The political gridlock concerning government spending that has shutdown the US government will shave 0.25% off economic growth each week it continues is the estimate of US Treasury Secretary Jack Lew. Growth is already expected to be sluggish this quarter. The US Treasury has been using what it calls extraordinary measures to keep paying the bills, but those measures hit a wall on October 17.
Every week the Treasury has to refinance 100 billion dollars of debt in the form of US government bonds known as treasuries. The US also has to pay interest on its huge debt burden. An inability to pay that interest, or pay back debt if required, would put the US into default. On Saturday, Jamie Dimon, head of JP Morgan said the possible repercussions did not bear thinking about. "You don't want to know (what would happen)," he said. "It would ripple through the world economy in a way that you couldn't possibly understand."
There you have it, the big concern, keeping Americans spending. The policy based on it all being about confidence rather then reform continues. The economic recovery you hear about in the media is a myth generated by and directed by those in power. All the characters above have a vested interest in toting the recovery line, this should make us leery of anything they say. Whenever I see the likable Christine Lagarde I cannot help but think about her appearance with Jon Stewart on the Daily Show where the current head of the IMF admitted to lying to people during the 2008 financial crisis, it seems we can't handle the truth. This makes it clear that we should question the credibility of everything these people say.
Footnote; This post dovetails with many of my recent writings. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged. The below post lays out some of the thought presented by economist Allen Meltzer,
http://brucewilds.blogspot.com/2013/07/it-will-all-end-badly.html
Friday, October 11, 2013
The Full Faith And Credit Of The United States
The phrase "full faith and credit of the United States" is one that I often hear and a phrase that has come to fill me with discuss. The phrase is suppose to inspire confidence but I find it hard to have much faith in a country that will not face the responsibilities of living within its means and balancing its budget. Year after year the uncontrollable spending continues. Making things even more bleak is that no real effort it being made to address the issue of budget deficits in coming years and the forthcoming growth of entitlements.
President Obama has taken the position that he wouldn’t negotiate on Republican demands on the budget or other issues until the government re-opened. Obama has urged Congress to pass a clean debt-limit increase and a so-called continuing resolution to reopen the federal government. He has indicated willingness to consider short-term agreements but this position avoids the big problem and is nothing more then political theater and fails to address any of the real issues.
President Obama has taken the position that he wouldn’t negotiate on Republican demands on the budget or other issues until the government re-opened. Obama has urged Congress to pass a clean debt-limit increase and a so-called continuing resolution to reopen the federal government. He has indicated willingness to consider short-term agreements but this position avoids the big problem and is nothing more then political theater and fails to address any of the real issues.
Treasury Secretary Jack Lew reiterated Thursday before the Senate Finance Committee that the deadline for
raising the borrowing limit is Oct. 17, this is when the government runs out of
borrowing authority. In his testimony, Lew harshly criticized the idea of “prioritizing”
payments the government makes. That idea would just be “default by
another name,” he said.
Lew pressed Congress for a long-term increase in the debt limit but also said
that Obama would accept a short-term extension.
An extension long or short term that raises the debt ceiling should not allow Washington to feel that the problem has been solved, all that does is kick the can down
the road. It is only because this mode of operation has become common by many countries across the world that it is acceptable, in effect we are no worse then our competition. Being called the cleanest dirty shirt in the closet is not a complement. Sadly from the reaction of the markets this is an acceptable solution.
Footnote; Your comments are welcome and encouraged. If you have time check out the archives for other post that may be of interest to you. The post below looks at math behind our current spending and the real cost to each of us.
http://brucewilds.blogspot.com/2013/01/ugly-math-made-simple.html
Footnote; Your comments are welcome and encouraged. If you have time check out the archives for other post that may be of interest to you. The post below looks at math behind our current spending and the real cost to each of us.
http://brucewilds.blogspot.com/2013/01/ugly-math-made-simple.html
Saturday, October 5, 2013
Government Shutdown!
Many Americans are disgusted by all of Washington and the failure of all politicians to get their act together. The Republicans big miscalculation may of been how much they should of tied the debate to Obamacare rather then to the budget. The focus should of been on reducing the deficit, and adjusting the most damaging parts of the sequestration that hinders shifting money to the most important areas of the budget. What is often hidden from us is that it appears the Senate version of funding government takes away the cuts made by sequester and restores the budget to an even higher level.
Regardless of what main stream media says not all Americans are sorry to see the government shutdown. A shutdown may be what is necessary to shock Washington back into reality. The total disregard for the people from a government that is dysfunctional and out of control can be seen in how the shutdown is being handled. The National Park workers spending money blocking off monuments that belong to the American people is a disgrace. The government can stay closed forever and a day if this is how they react. Efforts to punish tax payers for being concerned as to how their money is spent is disgusting.
Another area of contention for the average American in the private sector is that government workers are often better paid and get far better benefits. Those who work hard every day in jobs that may vanish at any time have just reason to be resentful at the disparity. For us in business the idea of being told to take time off from work and then getting "RETRO ACTIVE PAY" is a totally foreign and irrational concept that can only be conceived by GOVERNMENT. Meanwhile we are faced with a smug President who transfers the blame and refuses to negotiate till he gets his way. We have a right to be angry.
Government has been given the power to determine the policies that shape the world around us and form the core of how we live and interact. From taxation, to waging war, from education, to social fairness, and even including programs like the NSA, the decisions made in Washington effects us all. With many polls showing a clear majority of Americans feel the country is on the wrong path maybe it is time for Washington to get serious. The power of the people should be greater then the people in power.
Below is something sent to me this morning;
This is not the first time this tactic of punishing the tax payer has been used, see the post below,
http://brucewilds.blogspot.com/2013/04/whtie-house-tours-cut-speaks-volumes.html
Regardless of what main stream media says not all Americans are sorry to see the government shutdown. A shutdown may be what is necessary to shock Washington back into reality. The total disregard for the people from a government that is dysfunctional and out of control can be seen in how the shutdown is being handled. The National Park workers spending money blocking off monuments that belong to the American people is a disgrace. The government can stay closed forever and a day if this is how they react. Efforts to punish tax payers for being concerned as to how their money is spent is disgusting.
Another area of contention for the average American in the private sector is that government workers are often better paid and get far better benefits. Those who work hard every day in jobs that may vanish at any time have just reason to be resentful at the disparity. For us in business the idea of being told to take time off from work and then getting "RETRO ACTIVE PAY" is a totally foreign and irrational concept that can only be conceived by GOVERNMENT. Meanwhile we are faced with a smug President who transfers the blame and refuses to negotiate till he gets his way. We have a right to be angry.
Government has been given the power to determine the policies that shape the world around us and form the core of how we live and interact. From taxation, to waging war, from education, to social fairness, and even including programs like the NSA, the decisions made in Washington effects us all. With many polls showing a clear majority of Americans feel the country is on the wrong path maybe it is time for Washington to get serious. The power of the people should be greater then the people in power.
Below is something sent to me this morning;
Politician ·
Do
federal officials try to make government shutdowns as painful as
possible? Or are they just really stupid?...The Daily Caller compiled a
list of stupid things the government did for the shutdown that were not
only inconvenient and pointless, they cost more than doing nothing. Of
course, there was the shameful attempt
to barricade veterans from the World War II Memorial, which is just an
open-air plaza. That’s like dealing with a budget crisis by shutting
down the sidewalks. And why close bike trails, and remove all the pump
handles along the Chesapeake & Ohio Canal? Or shut down the parking
lot at Mt. Vernon? Washington’s estate is privately owned, but the
parking lot is on federal land, so it was closed off to save money…uh,
how? By inconveniencing visitors for no reason? They’d better watch
out. Americans might start thinking that if you have to go to that much
trouble to make a government shutdown painful, then there must be a
whole lot of government we could do without and not even notice.This is not the first time this tactic of punishing the tax payer has been used, see the post below,
http://brucewilds.blogspot.com/2013/04/whtie-house-tours-cut-speaks-volumes.html
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