Tell Me Again How Things Are Getting Better

Again this morning I awoke to a market where stock futures soared ever higher even after important economic numbers came in at below expectations. As the stock market continues to remain at historic highs please tell me what is so good? What is so much better? As I see it the weight of carrying a large number of unemployed and people who have dropped out of the work force will wear down society through attrition. Often these people have little in the way of savings, this means the burden of caring for them will be transferred to society. If too many people shift into this category the fabric that holds us together as a nation and as a people will be shred to ruin.

Year after year America imports around five hundred billion dollars more from other countries than they export. This means we have a giant trade deficit, when we add this to our enormous government deficit it is easy to see that we are living far beyond our means. The Fed has been both complicit and superbly entrepreneurial when it comes to the Ponzi schemes or pseudo-economics hocus-pocus that has allowed the current situation to develop. The Fed  must at some point begin to ponder a real exit strategy and end the massive and corrosive stimulus that the economy has come to expect.

Fed policy has allowed Washington to sidestep addressing our structural problems to make America more competitive, this will massively thwart growth going forward. Many people have become disenchanted with Washington which has become viewed as both dysfunctional and corrupt. As of late I have heard little in the way of concern over our budget deficit instead many Americans are focused on the gridlock in our capital that while halting reform also keeps us from facing more misdirected and poorly crafted laws that will continue to carve away from our freedoms. The building resentment and angst evident across America is being taken by many as a sign of racism but I contend it is something more, people are pissed!

The seeds of a class war have been sown by a President as a weapon to divide us. The growth of inequality is not as many allege the 1% at the top stealing the icing off the cake, but the much smaller .1% or .01% that have been enriched by the crony capitalism and corruption in Washington. They have NSA spying on Americans and thanks to information leaked by  Edward Snowden we know the "black budget" last year was a massive 52 billion dollars. This money used in "secret" spy operations should send shivers down the back of those that have read about the totalitarian society described in George Orwell's novel Nineteen Eighty-Four.

So again as I look at a landscape of empty and under-leased buildings that once housed thriving businesses that provided Americans with good paying jobs I'm forced to ask, How are things getting better? When looking at new job formation details reveal a slew of low paying part-time jobs and people leaving the job market. A closer inspection of auto sales shows that 31% of those buying cars are taking out sub-prime loans. Student debt continues to grow at an alarming pace and will corral disposable income for years to come. And finally as I look at police forces across the nation gearing up for urban warfare and leaving their mission to "serve and protect" behind I must say that I'm far from convinced that all is well ahead.

Transgender Pregnant Man?

Write Your Own Caption!

This article was titled "Sexual Confusion On Steroids" after a piece on the changing design of clothing on the PBS Newshour left me confused. They started by going into how Facebook had added options other than male and female to give people more options. Carrying the thought forward I wondered if they would have a box for me such as megamale, allmale, or ultramale. While I was pondering this they hit me with how in today's world many people wanted to be outside the box, which I found unsettling.

The PBS news story delves into changing fashion and how Rachel Tutera says it wasn’t until she started wearing boy’s clothes as a pre-teen, that she started to feel like the most authentic version of herself. Yet the 29-year-old says shopping for clothes in the men’s department left her feeling insecure and self-conscious. Nothing ever fit her proportions. So she was resigned to thinking that’s just the way it was.

PBS continues about how the experience made Tutera want to pass that feeling on to others. So she approached the New York based made-to-order-men’s suit company, “Bindle and Keep” convincing the owner that he was overlooking an under-served market. Not only masculine women, but also transgender men and other gender non-conforming people who want well-fitting, men’s suits. She soon became the company’s LGBTQ liaison, serving hundreds of people all over the country who sometimes spend up to 1,500 dollars for their custom-made suits.

May I suggest that "over questioning" something might tend to just lead to more problems. My libertarian core endorses a path to freedom and choice but requires we do so in a responsible way and personally bear the cost of our journey. While not trying to hold back personal choice and freedom I do have a habit of coming back around to "cost" and who should have to pay for it. An example might be the cost of a sex change operation because nature happened to get it wrong. If you think society should pony up the money to turn me into a pretty girl should they also have to pay to change me back if I miss the old me?

Who are these many people, or this growing segment of the population? Could I be the one who is confused about my sexuality and be so closed mind that I have failed to grasp all the options before me? As I read this question aloud the person sitting behind me just muttered in a quiet tone "Oh god". When it comes to the "newfangled" fashions you might expect me to say wow, but instead  I'm more surprised than amazed. Call me unenlightened but after finding this all a bit humorous it then began to feel unsettling. It appears that I'm still comfortable in the same old box of the unpandering politically incorrect who is still trying to understand why the PBS Newshour felt this was news worth covering.


Footnote; If you have read this far I concede this is not an area that I often write about and most likely will not revisit soon. As always other related articles may be found in my blog archive. Thanks for reading, your comments are encouraged.

I See Dead Businesses!

Businesses Are Dying Throughout America

I did not sleep well last night because I was afraid. I was haunted by fear and I found all the reassurances by Janet Yellen and the Federal Reserve could not help. Like the young boy in the movie years ago the spirits of those who once filled the world with life will not let me rest, in this case I'm haunted by dead businesses and not people. As a person who owns, leases, and manages commercial property I have my finger on the pulse of business. Just this week a tenant who leases a 15,000 sq. ft. space threw in the towel. Throughout my city and area buildings continue to come empty.

Too often over the last two years I have had tenants contact me to arrange a face to face meeting and saying "we have to talk". It usually starts out by them saying, "its not you, its me, and I want you to know I appreciate everything you have done in trying to work with me but I have decided I'm going to have to close." This talk sometimes comes as a complete surprise but more often than not it take place after a tenant has struggled and fallen behind in paying rent. Yesterday, as I came across the city after visiting a multi-tenant building that I own, I saw building after building for lease, for sale, or just sitting vacant.

Commercial real estate is an illiquid market that solidly reflects the state of the economy, it is slow moving and requires deep pockets. This market does not turn on a dime. When a building goes empty it may remain vacant for years. In a world when the numbers usually require a minimum of 75 to 80 percent occupancy to break even.  The market must be deemed broken when occupancy on entire streets and large areas fall below 50 percent as they have in many areas today. The law of supply and demand has raised its ugly head and new construction of commercial office and retail space is weak with little prospect of picking up soon.

It is ironic that when I pulled up to a stop light I found myself behind a new pickup truck with temporary license plates. It was just purchased by a company whose business is booming, the company is the largest demolition company in the area. The company has been busy tearing down buildings to remove them from the tax roles and give relief to property owners who have given up hope. A few businesses have remodeled empty buildings and moved into them but this leaves their old location empty and shifts the problem around. This vacancy problem will linger for years and is exacerbated by government policies tilted to benefit big business.

The cost of new construction has risen and loans in an over built market are difficult to get. When you see a new building being erected odds are it is being done by a company using money from Wall Street. Only time will resolve this supply and demand problem. Janet Yellen and those in Washington should get out of their ivory towers and visit the real world. Here in the Midwest the new tenants of today are nail salons, tattoo parlors, staffing agencies, bankruptcy and disability attorneys. It takes a lot of these to fill up a large 50,000 square foot building. The growing number of empty buildings and failing businesses represents slowing job growth and a hollowing out of the American economy. Small business is being killed by the policies flowing from Washington. Yes, these policies are adding to inequality, expect things to get worse before it gets better.



Footnote;  While many people would consider what I have written as proof we are entering a period of deflation I feel what we have been going through is the "major deflationary period" and inflation is about to raise its ugly head. Thanks for reading, your comments are encouraged. This post dovetails with several other recent writings. Related  articles may be found in my blog archive. Below are two articles that may be of interest. One deals with the cost to the economy when a small business fails and the other as to when inflation may strike.

 http://brucewilds.blogspot.com/2013/03/small-business-failures.html
 http://brucewilds.blogspot.com/2014/02/when-will-inflation-strike_1.html

Global Economic Malaise Due To Debt

The Euro-zone is in a far bigger mess than recent headlines and figures suggest. Most of the growth in the Euro-zone over recent years has been in Germany and that bright spot is now under pressure. Italy has been in recession for two years; France’s economy has been stagnant for months. Now that Germany is in trouble, many economist think the chances of a Japan-style deflationary spiral have risen sharply. Blame is being cast upon German policymakers that remain pigheadedly opposed to the stimulus the euro area needs. Bottom-line and what it all boils down to is Germany can’t keep buying Greek bonds with German taxpayer money until the end of time.

Debt Does Matter And Will Hinder Growth

To make things worse the ECB continues to subsidize several other countries that cannot handle their debt service by keeping bond yields well below free market rates. Even as their own economy has stalled, Germany is still determined to balance the budget in 2015. They also want to force France to cut its deficit and see more in the way of reform from Italy. Currently Germany is showing little interest in a euro-wide investment scheme, and their opposition is the main reason as to why the ECB is going so slowly with a bond-buying scheme to address deflation. It appears the quantitative easing that markets want and expect is months off, if it happens at all.

A debate exist as to whether Japan or the Euro-zone sports the grimmest prospects going forward. Japan is facing a wall of debt that can only be addressed by printing more money. By debasing their currency they can pay off their debt with worthless yen where possible and in other cases they will simply default on promises made. Japan's public debt, which stands at around 230% of its GDP is the highest in the industrialized world. They are past the point where they can return to a "free and fair market" interest rate and still be able to pay the service on their debt. The moment the Japaneses stock market fails to rise enough to offset inflation and the people of Japan realize that a weaker yen will not help we will see a tsunami of wealth fleeing Japan. This will mark the end of the line for those left holding both JGBs and the yen.

The news from China is also bleak. The government of China is doing everything it can to keep the economy from slowing too much as it struggles with debts created during its boom era. Fast growth often brings with it a great deal of baggage such as poor investments and bubbles. China is now being forced to deal with its demons. China finds itself in a credit trap. For years the people of China have had the habit of saving much of what they earn but the low interest rates paid at banks has not rewarded savers. With few investment options much of this money has drifted towards housing and driven housing prices sky high. The economic efficiency of credit is beginning to collapse in China and the unwinding of bad loans in its shadow banking system will be very painful.

As commodity prices fall  and China slows it is hard to see how other emerging economies will accelerate, even if America is growing as many claim. Some optimists see the stronger dollar as a simple means to export America’s recovery elsewhere, but that too is more complicated than it might seem. If the dollar continues to strengthen fueled by faster growth and the hopes that the Fed will tighten monetary policy it would be good news for some countries that export a lot of goods because their products will get more competitive but at the same time it might allow them to put off needed reforms.

The big problem for many countries is that they remain mired in debt.and if they borrowed in dollars their debt service will rise. Currency trends tend to overshoot expected targets and as the dollar surges the trend may take on a life of its own lasting for several years causing a great deal of financial pain to those who can bear it the least. All this proves it is easier to borrow and take on debt then to repay it and I find it very troubling that debt levels have continued to grow even under today's artificially low interest rates.The Central Banks have painted economies into a corner in their attempts to paper over reality and across the world economies are being forced to pay the price. Debt does matter and do not be surprised if it hinders growth for as long as the eye can see.

Fed Concerned That Strong Dollar Creating Stability Issue

Are Currencies Unstable?

Recently released minutes from the last Federal Reserve meeting confirmed growing concern about the pressure a stronger dollar is putting on other currencies around the world. Bottom-line is other currencies are under assault because both economies are weak and countries are buried in debt they can never repay at real market interest rates. This adds a great deal of validity to an article I recently penned concerning a somewhat unnoticed shift in the currency markets. In an article on Sept. 20th titled "Caution Alert, Currencies May Get Wild" I outlined how for months the major world currencies had traded in a narrow range as if held in limbo by some great force. But, that may be changing and using history as a guide markets show no mercy when this shift occurs.

A Bloomberg article by Rachel Evans, October 8th delves into how the dollar fell from almost a four-year high after Federal Reserve minutes were released last week. They showed officials are concerned that the global slowdown and a stronger currency also pose risks to the U.S. economic outlook. Afterwards, the greenback weakened  as futures traders lowered bets the Fed will lift interest rates. “It kind of looks like the Fed will take any excuse not to normalize rates in the near term,” Lennon Sweeting, a San Francisco-based dealer at the broker and payment provider USForex Inc., said in a phone interview. “What we’re seeing is consolidation and probably a brief period of stability. Overall, the bull rally on the dollar is still intact.

I contend that the central banks have made an effort to reinforce feelings of economic stability by keeping currencies trading in a "quiet" range. This has allowed people to think the global economy was on sound footing as central banks across the world continued to print and pump out money chasing the "ever elusive growth" that always appears to be just around the corner. Because of weak demand for goods little reason has existed to pump this money into investments in buildings and equipment thus much of it has flowed into intangible investments. This is the reason inflation has not been a major problem and explains the surge of stock prices to all time highs. Yes, this is a bubble manipulated higher by those with money chasing returns and taking on risk in a low interest rate environment. Have no doubt the seeds for inflation in the future have been planted everywhere.

When investors become unwilling to buy the bonds of heavily indebted nations causing the bond bubble to burst the values of currencies in those countries will tumble. John Maynard Keynes said By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens. As the central banks print like crazy to control interest rates on bonds they devalue the currency. While there are not many Bond Vigilantes there are a slew of  Currency Vigilantes and they are ready to make their presence known. Recent weakness in the value of the Yen, Pound, and Euro must not go unnoticed. The Currency Vigilantes are acutely aware of when a currency is overvalued or ready to be re-pegged and pounce on the weak currency to tear it apart.

Today we live in an age when billions of dollars can be traded in just the blink of an eye, imagine how fast things could go to hell. Even the batch of recently created money will be used against the Central Banks that created it. The country most vulnerable to a currency collapse is Japan which faces a wall of debt that can only be addressed by printing more money and debasing their currency.  Often because of its size people forget that little Japan is the worlds third largest economy making it a huge economic power with a big shadow. The recent multi-year lows in the yen are very important. When Japan crumbles it will be felt across the world. I believe the cross-border flow of money leaving Japan is one reason many of the worlds stock markets have remained so resilient.

With the death of the Yen the myth that advanced Democratic countries are immune to hyperinflation will be destroyed. Soon after that people will realize that the Euro, Pound, and even the Dollar are not safe from hyperinflation.  Japan will be the first domino to fall, but not the last. This will bring much clarity to the debate of whether the next crisis will be of a deflationary or inflationary nature. The dollar is not immune, but I predict it will be the last to go. More and more often we seen Central Bankers forced to pull rabbits out of their hats knowing if people lose faith in the major currencies the system will come crashing down around our ears.  As we stand on the abyss central bankers will be forced to print so much worthless paper the money it will act as a cushion to our fall but not change the reality currencies are about to be debased.




Footnote; As always your comments are encouraged. World Central Banks have been on this murky path for a long time, please see the following posts. One deals with how this has detached from reality and other looks at how if a meltdown occurs many people will use it as a reason to adopt a new "world currency"

          http://brucewilds.blogspot.com/2012/06/fantasy-world-of-debt-and-more-liqidity.html
          http://brucewilds.blogspot.com/2014/02/contagion-may-lead-to-new-world-currency.html

Footnote #2; My apologies for again returning to the subject of "currencies" so soon but, I found the Federal Reserve minutes a compelling reason to do this article. 

An Ugly Math Primer On American Debt

At one time a billion dollars was a massive amount of money and it still is. Most people that have not thought about it might not think so considering how modern media and politicians throw the "B" word around. On several occasions, I have heard a billion dollars accidentally confused with its much smaller sister the million marker. This drives me crazy. When someone misspeaks and says " the cleanup effort for superstorm Sandy may run as much as 60 million dollars."  With a billion dollars being a thousand times larger this confusion is undefendable.


 Believe it or not, the little pile next to the man on top is $1 million dollars (100 packets of $10,000). You could stuff that into a grocery bag to walk around with it. Start talking about a $1 BILLION dollars... now we're really getting somewhere...

Internalizing the magnitude of the difference

A million is a large number. To put it in perspective think in terms of someone working every year from the age of 20 until they are 60 making $25,000 a year. Their total income over their life would be one million dollars. The magnitude of the difference between billion and million is important. Another way this difference can be illustrated is with the example below that uses time as a scale or measuring stick:

• A million seconds is 12 days.
• A billion seconds is 31 years.
• A trillion seconds is 31,688 years. 

Now back to our topic and "debt math primer."  Making the ugly math simple so we can understand how it interrelates with our debt is no easy task, but let's have a go at it. In an effort to keep this simple I have chosen to focus on America. A similar formula can be created for almost any country. To make things easy lets us do a bit of rounding off and work with easier to manage numbers. Not lying about the numbers to arrive at a clear picture of reality is important.

We will start by placing the population of the United States at 333 million people, (this number is reasonably close) and includes every man women and child. What makes this important is that it includes infants, children, teenagers, the nonworking both self-sufficient and those on government assistance, the retired, and the elderly in nursing homes. How marvelously simple and convenient that this number goes into 1 Billion dollars roughly 3 times.

This means that every 1 billion dollars spent by our government represents an outlay of roughly $3 for every person in America!

Taking the number of people and placing them into other groups is more challenging. Those groups can include; households or families--- for ease we will call the average household  3.4 people. When we look at "workers" we are looking at according to government figures in 2008, 120 million people were employed out of an estimated 330 million citizens. However, unemployment increased after that date. Last but not least how many taxpayers exist in America? This is very complicated,  many taxpayers get back more in a refund than they pay in and there is a huge difference in the amount people pay, also do we consider a joint return as two payers? Bottom line, whatever it means,  nearly half of households do not pay taxes. This we must remember!

Back to simplicity: So $100 billion represents or equals $300 per person and $1,020 per family,

Unfortunately, we are not talking about only $100 billion. The American government has been running massive budget deficits for years. Recently we saw several years where the deficits far exceeded one trillion dollars. One trillion dollars is ten times the $100 billion multiplied out above. That would represent a staggering $3,000 per person and $10,200 per family being spent each year, year after year, it adds up very fast! Again we must remember nearly half of American households do not pay taxes, and if they don't this means someone else must pay their share for them.

Sadly, this massive deficit is what is propelling the economy forward, and it is not sustainable. Please note; Massively compounding the problem is the realization that most people such as infants, children, the disabled or unemployed could not pay their share if their life depended on it, this transfers the burden to the remainder of society. The bottom-line is that it is easier to spend or waste money than to pay it back and a billion dollars is a lot of money to repay. When you start talking about debt in multiples of thousands, tens of thousands, and even more the task becomes impossible.



Footnote; If you found this post about how much the American government is overspending interesting or informative please look at my recent post about an article written by Mort Zuckerman in early 2013, it is really shocking, you can find the link below. Also, nothing is as sobering as looking at the National Debt Clock, that link is also below. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged,

http://brucewilds.blogspot.com/2013/01/zuckerman-says-debt-avalanche.html
http://www.usdebtclock.org/

Currencies Are IOUs

Glorified And Pretty IOUs

Currencies are IOUs, glorified and pretty pieces of paper printed and handed out by governments. Whether because of modern printing options or in an effort to thwart counterfeiters most of us will admit countries have raised the bar concerning the appearance of their currency. This has almost become a full blown beauty contest and taken our minds off what is really behind these pretty little tokens. A piece of paper with great power, based only on faith, they are mere promises of stored value and wealth, and the value of these promises can change in an instant. According to IMF data the US dollar is the world's most widely held reserve currency and accounts for nearly 33 per cent of global foreign exchange holdings at the end of 2013.

That ratio or share of reserves held in the American currency has been declining since 2000, when 55 per cent of the world's reserves were denominated in US dollars. IMF data also shows emerging market countries' share of reserves in "other currencies" has increased by almost 400 per cent since 2003, while that of developed nations grew 200 per cent.  This shows and confirms that while the US dollar remains supreme an erosion is well underway to reduce its impact on world finance. Below is a run down of the four currencies that comprise the bulk of these IOUs and the source of their influence.

     * The US Dollar the current world reserve currency, but it represents a country with growing
        debt.
     * The Japanese Yen, currently falling, Japan has a massive amount of debt, its strength is a
        carryover from better days.
     * The Euro, a flawed currency backed by a union of mature countries with debt and failing
        banks.
     * The British Pound, its strength is that it was the former world currency, it has no other.

All the above currencies appear to be issued by countries waning in economic power. Never, believe that a country cannot lower the value of its currency, this can be done by a bad investment, a currency swap, printing more money, and several other ways. This leaves little wonder as to why currencies are so open to manipulation. A country often benefits from a weak currency as it helps exports and often imposes a bit of austerity on its people by raising the cost of imports. The games central bankers are playing in supporting their own currency and the currencies of their partners, has reached a dangerous level, and may be undermining confidence in the whole system.  

While currencies are important chips in the commerce of government and the business of running a country a study of history has shown that in the past both leaders and governments have fallen with the demise of their coin. If people lose faith in this system it could just come crashing down around our ears. At a time when billions of dollars can be traded in just the blink of an eye imagine how fast things could go to hell. Unstable currency markets can be a precursor to massive shifts in value and a sudden drop in confidence. It is logical to think that in such a situation insiders would be the big winners.

Over the last several decades barriers between countries have fallen and economic systems have become more intertwined and co-dependent on one another. Sadly, since 2008 many of the really big earners are those who have benefited from the surging stock prices with much of their income coming from financial markets and gains in equities. The financial sector or what could be called the "intangible goods" part of our economy has flourished since a union of mutual need was strengthened after the crisis six years ago.

Those in power have joined with the banks to create the "Financial-Political Complex" that promotes the current financial policy and supports banks that are "too big to fail".  This is culminating in a massive growth in these IOUs and promises never before witnessed in the modern world. It has been pegged by many people in the real world and outside its control as a giant Ponzi scheme just waiting to collapse and I'm forced to agree with that assessment. When looking at the assets of the rich and many well to do people we find that much of the wealth people own is in paper and this is full of risk.

Many countries have accumulated massive debts that can only be paid off or addressed by printing more money and devaluing their currencies. This is unsustainable and little comfort should be garnered from assets or pensions being pegged to future inflation because promises can be broken and rules rewritten for what is called the greater good. The collapse of any of these currencies would most likely start with the weakest, the Yen or Euro temporary forcing wealth into the others. This would open the door for a domino reaction. A word to the wise and a word of caution, a person should not feel secure in this system based totally on confidence that has strayed into uncharted waters.


 Footnote; As always your comments are encouraged. World Central Banks have been on this murky path for a long time, please see the following posts. They deals with subjects like, when the system might start this shift, how Modern Monetary Theory has detached from reality, and how if a meltdown occurs many people will use it as a reason to adopt a new "world currency"

          http://brucewilds.blogspot.com/2014/09/caution-alert-currencies-may-get-wild.html
          http://brucewilds.blogspot.com/2012/06/fantasy-world-of-debt-and-more-liqidity.html
          http://brucewilds.blogspot.com/2014/02/contagion-may-lead-to-new-world-currency.html

 Footnote #2  I plan to be moving away from the topic of currencies for the next several post because I have a backlog of about two hundred partially finished articles in the works. My recent pounding away at the vulnerability of  this stalwart of modern life is because I consider currencies as the "Trojan horse" of government weapons to fleece the average citizen of his wealth.

The Obama Phone Helping The Poor One Call At A Time

Just over a year ago I wrote an article that outlined a government program supplying free phones to people with low incomes or that have been declared needy. These phones have become known as "Obama Phones." Below I give some of the details about the program including who qualifies. If you want to be popular with the voters give them free stuff and let them know that they should not bite the hand that feeds them.

The Obama phone is not a myth as a online search rapidly confirms. This popular government program explains why we see so many people that would appear to not have a dime in their pockets walking along or driving down the street talking on a cell phone. What exactly is the free Obama phone? It is a program that is meant to help the financially unstable who cannot afford access to a cell phone. It seems that communication should not be limited to people in relation to what they can afford. The Lifeline program started decades ago to help low income families have access to land lines has been expanded. Over the years the cost of cell phones and cellular service has decreased and the program has been extended to cover cell phones.

So who qualifies? It seems that if you, or members in your household are, receiving the following benefits you automatically qualify for the Lifeline program. The best way to know if you qualify is by filling out an application for a Lifeline provider in your state. Those interested in the program must have an income of less than 135% of the Federal Poverty Guidelines or about $22,350 per year for a family of four.

• Food Stamps or Supplemental Nutrition Assistance Program (SNAP)
• Medicaid
• Supplemental Security Income – commonly known as SSI
• Health Benefit Coverage under Child Health Insurance Plan (CHIP)
• The National School Lunch Program’s Free Lunch Program.
• Low-Income Energy Assistance Program – LIHEAP
• Federal Public Housing Assistance ( Section 8 )
• If you are a low-income Eligible Resident of Tribal Lands
• Temporary Assistance to Needy Families – TANF

Lifeline is a government sponsored program, but who is paying for it. Some people claim that the government is using taxpayer’s money to run this program, however, the claim is false. Universal Service Fund (USF) which is administers by Federal Communication Commission along the Universal Service Administration Company (USAC), pays for the Lifeline phone assistance program.The Universal Service Fund (USF) was created back in 1997 by Federal Communication Commission in order to achieve the goals set by the Congress under the Telecommunication Act of 1996. According to the Act, service providers are obliged to contribute a portion of their interstate and international telecommunications revenues.  OK, SO IN EFFECT IT LOOKS LIKE THE SAME PEOPLE THAT PAY TAXES, ARE PAYING FOR IT, IN A BACK HANDED UNDER THE TABLE SORT OF WAY.

It is written that if you are one of those people who have lost their jobs due to recession, then probably you’re having hard time with your daily expenses. On top of that, paying telephone bills will add extra pressure on you. However, you can get rid of this extra burden if you apply for the Lifeline Assistance Program run by the government. With the turmoil in the economy, more and more people are being eligible for this program and around eight million people have already signed up with this program up to now. In order to avail this facility you need to contact with the provider of this service. Government has approved many companies at national and regional level to provide this service to the eligible people. Currently, the government is thinking of providing free wireless internet service to the people under this program instead of old-fashioned land phones. It’ll be a great effort if government includes this service in Lifeline program.

Just how much would one of these free government cell phones change your life?

• An employer can more easily reach you with a job offer if you have a free government cell phone.
• You can you stay in touch with your doctor and other emergency medical professionals more easily with a free government cell phone.
• A free government cell phone can help you keep in touch with family and other loved ones.

And the good news is that while a government-assisted cell phone provides you with up to 250 monthly minutes to go with your free cell phone. While that’s a generous contribution from the government, it’s really barely enough airtime to get by on for a month. But good news! You can easily buy more minutes for your phone from each of the major Lifeline cell phone companies. And if you use a promotion code, you can get some very good deals.

Abby Schachter has penned a post titled “Free cell phones are now a civil right.” Suffice it to say, she is none to happy about the free cell phones by the government program. She is particularly incensed that some are now calling a free cell phone a “civil right.” But who ever said it’s a civil right? Unfortunately, it was Gary Carter, manager of national partnerships for Assurance Wireless, whom she quoted in her blog post: “The program is about peace of mind,” Carter said. “It’s one less bill that someone has to pay, so they can pay their rent or for day care. … It is a right to have peace of mind.”

As expected this program has grown very fast and has nearly tripled in cost since 2008. With the only requirement being that recipients be on Medicaid, food stamps or another state or federal welfare program all those free minutes quickly add up. Last year, the government funneled $2.2 billion to the phone cartels to cover the cost of this Lifeline. But the Feds never required proof from cell carriers that their millions of Lifeline users were truly needy. Some 41% of Lifeline cell subscribers failed to show that they were eligible. Only last year did the FCC begin to "force" carriers to verify that Lifeline users needed aid after it found the program was riddled with "fraud and waste".

 With such a large percentage of many Americans having cell phones it is expected that carriers would be having a hard time finding new clients that actually pay their bills. By having the government cover the costs for millions of new customers the real face of corporate welfare is exposed. A lifeline to help poor Americans also helps companies like Sprint and AT&T. It should be added the government loves the program because it garners votes for those in power at the same time that it makes the economy appear better and stronger then it really is.  It is hard to say how much fraud and waste has been reduced within this program, but I suspect it is minimal.