Must read – Examples of how government health care fails

This is the way I see it. The people in my condo complex, living in the unit below me are on disability and smoke two packs a day and I think drink too. The lady down the street is also is taking money from he government and has free government medical. She has 1/2 million in the bank, a house paid off worth 350,000 dollars and out in her yard gardening. Explain to me how, I working my tail off and using my creativity has to pay for their health and benefits, when I have a family to support?

• More people than you can imagine, cheat the system a little and it is unfair and unjust

I beg someone to explain that do me?

When I prepared taxes this season for extra money, I saw repeatedly the same type of thing. People who were in better health than me, collecting from the government and benefits connected to medical. I have health issues and I pay insurance, would go to the free clinic or pay cash. I do think medical care needs reform, but man, enter government and you enter abuse like I mentioned above. Not a little but a lot.

Instead of a blanket plan from Washington, it would be better if people including state or government agencies supported and helped medical clinics for the poor. This is a free medical clinic in my town of St. Augustine, Florida. It covers everything except surgery of course.

A personal lesson in health care and cost

I have had a brain lesion, just bleeding in my pons, nothing serious. It has caused me great pain and suffering. But the truth is nothing in conventional medical care helped, except in the diagnosis. I will not die from it just a pain in the neck so to speak. On the other hand, the natural things I have tried have helped a lot. I had to try natural healing for savings of cost. I take things like anti-oxidants and exercise and do yoga and breathing for pain. I go to the doctor when needed, but change in diet and lifestyle worked magic in reducing the symptoms.

In contrast, my friend who has something similar has more money and is taking the VIP route, takes high-powered medications and considering a gamma knife. He is addicted to the medication and waiting for his doctor to heal him. I think after several years now I am healing he is not. Explain this to me? Throwing money at an issue does not solve problems.

Think of all the people who got spinal fusion twenty years ago,  and now the conventional wisdom is to exercise,  unless you are crawling into the doctor’s office.

My point is, when people take more responsiblity for their own personal health, it is better for them and for the system.

My experience in a socialist country with medical care

I lived in socialist Europe and I admit, I like some level of healthcare for the poor and children, but it was horrible care. Silver filings for teeth and high radiation x-rays for the brain instead of safe MRIs. It was poor medical care in almost all cases, with exceptions. The people were rude and the care was all procedures and documents. I felt lost in the maze.

In contrast private health care was clean and cheap. The US needs reform, in terms of market reforms not government reforms. The more free market it can be the better as the cost will be less.  Think of perception contact lenses and how the price has fallen with less government, as has phone charges. Remember the old days?

How much does medical care cost if you shop arround?

I had ten staples in my head from a fall, and it cost be 35 dollars to get it removed.  That is not a lot of money, from a doctor who spent 45 minutes examining me and from a good clinic, I paid cash.

I mean explain to me how these people get away with it when I have health issues and I work my butt off?  Because when the government gets involved it is not good for the health of the individual or the nation. I try to do natural healing and take care of myself, while the people on government health smoke their lives away and never leave the house except to get more cans of brew-haha. It is unfair I pay and support their actions.

I did just get a 1,300 dollar bill from the hopsital and will have to think how the heck I can pay that.

Government regulation slows or stops healing

Another example is, I can not get medicine from Europe I might need because of the FDA. The drug I need works and is effective, but the FDA for some reason keeps it out. The neurologist in Europe that prescribed it really saved me.  He was an Army doctor who treated veterans with injuries from shells in Iraq.  He was an amazing doctor. He was a very old doctor, by the way and worked out of his living room. A guy like that would be retired in the USA or could not do business in his house. Dr. Grzgorz Gardela is a genius and in less regulated Europe in the private sector, he really helped people.

I went also to the best University government supported hospital and they did nothing.

If I need to get that drug again, I need to jump though a lot of hoops in the USA because of the government, I called  a score of government offices until I gave up. In Europe in th private sector, it is a lot easier for whatever reason. I think it is politics. I know it is politics.

National health and personal health free market solution

Nothing beats taking care of yourself for health care. Yes we can have a safety net for the real poor and children, via a negative income tax or something.  I mean of course if someone has something horrible, help them. But also promote free medical clinics. There is one down my street and they do dental also. But treating illness the old fashion way with regulation, and government payments, is not optimal for your health or the health of the nation.

If we introduce social medical care, think of all the people who will milk the system and in a sense hurt themselves. It will happen.

Obama is modeling the USA on the common good as mandated by a central government, a European ideal; while American consciousness is about protection of individual liberties from government. The latter will maximizes the common good through unintended consequences of individual action. The 2012 Presidential election in the end is an ideological battle over the future of the USA.

What were the issues in the past two Presidential elections

In 2004 the election issue was giving Americans security from terror and continued economic stability. The 2008 presidential election was about the crisis and won by the blame game and  how the new Keynesians  sold to many swing voters by a media blitz on how capitalism failed.

What is the 2012 election about?

• Government out of control: This includes spending, debt, entitlements, controlling personal liberties,  but also dictating morality, military globalism. It has never been like this before.
• Is the American dream officially dead? What is the unemployment rate, what is the growth rate, are people in debt and what are jobs paying now? Basically the older generation has something called a Pension (remember those) to retire on and a house, the early boomers have fat 401ks and did well enough.  The late boomers and the Xers and younger are a little lost on finding their way though all this, with the prospect of slow growth for years to come. A lot of my foreign friends do not dream of coming to the USA like in the golden and gilded age of America. The reasons are clear.
• Price of Oil – Oil gets out of control now and then, but if it does not and prices go up, it will not fair well for Obama as it will add to everyone’s misery index around voting time. It will be a mild irritation to pay 70 dollars to fill a tank of gas so you can commute to your job.

The below post explain these ideas.

• Why Obama will lose the 2012 presidential election
• Most important election prediction factor

The unspoken election 2012 issue is ideological and will swing the election from the Democrats to the Republicans

Americans are aware at some level the battlefield of the election is common good as determined by government vs. individuals creating the common good through freedom and liberty.

An example of this conflict is are the religious issues and freedom. I do not like mixing religious and politics. I find it very distasteful. I do not like when politicians do it.  However, the Catholic church which tends to be somewhat Democrat because of the social issues, is now leaning more towards the Republicans because how mandates on contraceptives which clearly violate freedom of religion. On one level it seems such a side issue, but it is more about how ones sees politics.

‘Them’, the Obama team, sees it as a small matter. But for ‘US’ it is not. That is because Obama’s team does not care about such things like the first Amendment to the end, and more focused on a humanism that does not need faith per say. A government which determines morality rather than the free will of the individual. Further, encroaching laws that will mandate this government ordained morality.

So when people get in the voting booth many are in their hearts one issue voters. There is nothing wrong with this, it is just that the weight of a little more social money in contrast with respect for the idea of the constitution, personal liberties including religion, really hits home with a lot of people, even if they do not voice it outloud.

Even me, I get on my pulpit and rant on about free money and capitalism etc, but at the core if there is a moral issue or constitutional issue like life or freedom; monetary issues take second place for me, even if I do not talk about it too much, but come Tuesday, November 6, 2012 it is a core issue for me.

I mean if the President does not respect certain ideals including the US constitution, I will vote the other way, regardless of the way  the media has painted the issues.

So be honest with yourself. What matters most in politics to you?

The swing states today

This could tip the balance in swing states like Florida or New Mexico and Nevada (doubt it on this one), which has large Hispanic populations. A state like California is too far gone to come back to the GOP.

However key swing states really determine the election

The states of North Carolina and Virginia are two swing states that although they are not catholic, but they have a large percentage of religious conservatives.  My undergraduate education was in North Carolina and I can attest to that fact.  They tend to be freedom minded.

And although Northern Virginia, which has large population centers connected to Washington, does not fall into this category, the voting in this area tends to be a Republican because of the Pentagon, which is the biggest special interest on the budget.

So if the GOP can win these states it could mean victory. However, I think they need one more key state and that is Pennsylvania.

I believe swing states like Michigan and Illinois will go to the Democrats.  This is because the president pumped so much money into these areas.

I believe Ohio will go to the Democrats also for this reason, the auto bailouts etc.

Pennsylvania is a very key swing state that remains a question mark.  So the election like come down to the states of Florida and North Carolina Virginia and Pennsylvania, as these have large electorial college votes, that do not are not a sure victory for either party.

• I predict a Republican victory in 2012 for the Presidential election.

Are there no other business that want to advertise then legal services?

Now I am not opposed to lawyers as much as I used to be, all lawyers are not bad. Further, having working for a few insurance companies I am not to enthusiastic about Tort reform either. It is not that insurance companies are so rich, it is that when someone is injured, almost no money can replace a physical loss. I mean come on what will $20,000 do for you if you have back problems for all the days of your life.

So my critique is not against lawyers, nor against insurance companies who want to contain costs and keep your premiums affordable, which I understand.

The first thing I would do is hang all the lawyers – Shakespeare

I am just asking the questions – here are some of my theories:

• Lawyers have disposable income  -Are accident lawyers the most profitable game in town based on advertising in the area or at least have the most disposable income to throw around?
• Service economy – Is the domination of personal injury law advertising the ultimate symptom of we are all pressing each others pants in a service economy?
• ROI for law suits are high – Or does it mean the profit margin is the highest and they can afford the expense luxury billboards?
• A cost of business – For lawyers, a service they have to invest in marketing to maintain a pipeline of clients?
• Target market – Or does it mean that the target market for personal injury claims are people in their cars or sitting at home watching TV?

I am not sure, but coming back to the USA after about ten years abroad, this is one thing I noticed, lawyer announcements everywhere, even business cards left at fast food restaurants. Again maybe it is the area I live in now.  From Boston to Europe to St. Augustine.

• My strongest theory is, the personal injury law suit business has a high Return on Investment but also need to invest to get any return. Their investment is marketing, rather than intellectual capital or time on a case.

A typical  law firm has green lawyers from law school and legal secretaries or para legal doing all the leg work while they collect fees. These fees are paid by the insurance company as a percentage of the settlement, typically 1/3. I imagine both the insurance company and the lawyers avoid court, all know each other and would rather settle for a modest claim out of court. It is all part of the game they play.

So objectively speaking with little work put forth, just knowing a little bit of legal procedure with a few hours of collecting data and organizing a case file the law firm can net a reasonable amount of money for the amount of billable hours and time invested.

They typically have quick screening phone hotlines to determine, not if your case is valid but if it is profitable. They also weed out or control needy, time or energy draining clients and just focus on simple cases with medically documented injuries insurance companies will pay on.

Can you image getting 10,000 dollars on a stock in a short time?

To support theory is the number of super stores of a more sensual nature billboards I see on the highway also. I do taxes on the side and talked to a former owner of one of those stores and he said it has one of the highest market ups of any business on their products. It is not a necessary good like bread but he was selling value added luxury items so to speak.

So companies with money can afford advertising and marketing. Companies that are trying to grow and expand.

The problem personal injury lawyers have is getting a steady pipeline of new clients. Clients that have medically documented injuries and walk though their front door. This is one of the reasons people do not like personal injury lawyers, it is they are making money off of someone else’s injury. But I guess they are a necessity and that  is another conversation.

So as long as they have a pipeline of new clients personal injury attorneys make a lot of money. In contrast, if you are selling facial tissue in Boston, there will always be a market as long as it is cold there. All companies have to do is create product differentiation and the customer will buy. But personal injury lawyers need to actively seek out new clients. It has a little big different supply and demand dynamic as well as margins on products and service sold.

However, I also think it is a symptom of the economy. If there were more business, say a value added, productive creative businesses then they would be advertising if the marginal benefit exceeds the marginal cost of adverting. But they are not. So clearly something is wrong not only with the economy, but the whole legal medical profession cost structure. This is because health is a priceless commonly that is difficult to ration.

If anyone else has any insight about if this is, the place I live, the US economy, or just the nature of the lawyering business?

• In one clear, crisp concise statement ‘Romney is free market but uses economic incentives to encourage productivity and keep a safety net for the disenfranchised in our society’. If you like that view of political Economy than Romney is your man. Please read on for more interesting elaboration.

Romney does support economic common sense, and not give aways to the fat cats on Wall Street, contrary to what his opponents try to represent.

Mitt Romney’s economic plan is free market but not to the end. The purpose of this post is to look in a summary form at the pros and cons of Romney’s economic vision for the USA. Since I was a kid, I remember the neighbor fathers talk about we need a businessman to be President of the United States. Well at this juncture, it looks like it is going to happen. So it is important to get a clear understanding of his economic ideas, right from his book, not the media or political ads.

I might seem critical of Romney,  but on a whole, I think he is a good man and his economic ideas would help the USA more than Obama’s. Romney is generally free market and has positioned himself as someone who can appeal to Democrats economically because he is not about ripping apart safety nets but rather encouraging jobs in the free market and yet retaining a safety net for the poor and displaced.

Endeavor t0 provide the dignity of work in every safety-net program where that is possible, evn if it costs the government more money to do so.

Mitt Romney’s economic – political ideas

Romney like Obama sincerely wants to help the lower and middle class American.  I have never doubted their sincerity, just their understanding of markets. I will use Mitt Romney’s book No Apology as a guide to understanding Mitt Romney’s view of economics and quote from it. It is not economic theory but more the ideas of a politician who understand economics to some extend.

Productivity

An economy  is a function of the number of people in the workforce and the productivity of that workforce.

Romney’s view is focus on productivity as the central idea for generating wealth in the USA. This comes from his business background. That is if you have ever worked in an office you know a lot is about increasing efficiency and productivity. It is about showing efficiency gains on a micro unit level that gets you as a middle manager your bonus.

For example, lets imagine a micro nation, has one hundred people raising the food, while 100 built houses. Then one day, an innovation like the plow comes a long. Wow this is a breakthrough and now this micro nation only needs 50 people to raise food. Would fifty people be unemployed?  Romney’s answer is not really. They would use their talents and brainpower in other ways to increase the well-being of society instead of manual labor intensive processes. Some of these displaced workers will be better off and some will be worse off, but no one would argue for the return to agriculture before the plow. Life for all would be harder.  Productivity gains are almost synonymous with economic progress.

Romney is correct that productivity is an important component of economic growth.

Two books discuss similar issues if you wan to examine this in more detail and different points of view are:

• The Power of Productivity: Wealth, Poverty, and the Threat to Global Stability – William W. Lewis
• Cities and the Wealth of Nations by Jane Jacobs

• I think it Romney needs to make his message clearer, that economic freedom accelerates innovation, not that innovation gives us prosperity and hence economic freedom. Further, not government economic plans or recovery initiative to jump-start the economy.  The economy is not an engine that starts and stops, it is me and you taking individual action. Romney needs to champion this point even more if he understands it.

Innovation is the engine of productivity gains

In the 1980s it took ten hours to produce a ton of steel, today only one hour. This was because of innovation in the process of production. It is not that people are working harder, maybe they are, but it is more about technology and the process. It is not just some earth shattering breakthrough in science but also process improvement and work flow.

A key component of getting the economy to function better as well as the government sector is free markets so innovation can lead the growth. This includes outsourcing government functions to the private sector.

It has been my experience that almost always government is far less productive than enterprises in the private sector. That’s why private companies build roads for governments and make equipment for the military. It’s also the reason why FedEx and UPS can make a profit shipping and delving packages while the U.S. Postal service loses money, even with its inherent competitive advantages.

• We can conclude Mitt Romney is free market in the general sense. So where does he fail in his economic understanding?

1. Increasing the military – the biggest waste in the world.  This is an economic issue. We have been fighting wars since I was a kid in the 1960s and that is not going to change. Romney argues for an increase in soldiers (he says we need at least 100,000 more) in the military because the percent of GDP is not that large. I tend to disagree, I will not go in detail on this but let you do your own research. However, I personally know a lot of military and ex military guys doing nothing in the USA, nor can I see them ever integrating into the economy in a meaningful way. I think the military has a profound psychological impact on the most productive years of your life and many times hurts those young people from finding their way in a complex post industrial economy (in contrast to the post WWII economy which was easier).  Remember we are not defending US soil but playing a political chess game and using brave Americans as pawns in Middle Eastern politics. Most people know this by now. I say a smaller military for home defense not micro managing the Middle East. The impact of having a bloated military is huge. For example, did you know the cost of the wars in the Middle East exceeds the revenue collected in individual income taxes. Yep, the income tax is not where the US government gets the majority of its income. We could have eliminated the income tax instead of fighting those Middle Eastern wars with the grande army. So why does Romney want to increase military spending and overseas influence?
2. Quasi free market but not really - Supported the bail out of the auto industry with managing restructuring. This is better than Obama’s cash infusion method. I would say the auto industry could have fallen and restructured without the cost to US tax payers. Maybe I am wrong on this, but I have always said let the markets work or the cost is higher prices, less innovation and lower consumer satisfaction.  I still think cars are expensive as anything and thanks to your tax payer dollars it looks like it will stay that way. Supported the bank bailouts. Banks now sit on a huge inventory of foreclosed homes and the prices are still high in my opinion. If you want affordable housing, let the reckless banks fall and deflation correct the market, then you would see the haves loose and have nots gain because the market would work naturally. Supported the Federal reserves anti-deflation monetization. Big mistake, we should let he markets work.
3. Barack Romney or Mitt Obama – they are more similar than different, despite the political noise. Obama focuses on social programs and Romney military build up, but besides that basically the same. Ron Paul would like to eliminate the income tax and the Federal reserve and balance the budget by cutting real spending not growth like Romney’s cut the rate of increase. Now that is free market and that is different. Mitt Romney is more a bit free market and a better choice economically than Barack Obama, I guess, however, I would have to see more  understanding of money and markets to be totally impressed. I think at this point I will vote for him, maybe. Obama did the opposite of what should have been done in many cases because accident economists advised him wrong and he did not have the understanding to go against them.
4. Mitt still thinks in a corporate way, that the economy is a big machine

Having grown up in Detroit, I tend to think in automotive terms. If we imagine that the economy is an engine, then capital is its fuel.  – Romney

The economy is not an engine. It is you and I. It is not fueled just by balance sheet capital but by intellectual capital like the people who started Microsoft or Google.  They are usually innovative individuals, not large companies to start. Romney supports a decrease in corporate taxes to increase company balance sheet retained earnings for research and development and innovation. I guess, but don’t you think a lot of that will be just paid out to someone instead of allocated to R&D? It is trickle down economics.  What about eliminating the income tax so people, who are the ones who often create the best innovation in the basements (I have known many people who start companies in their garage that have done brilliant things like one of my former employers SS&C, an Investment Accounting software company, it was started by Bill Stone in his garage). So Romney is good, but thinking in terms of his experience in the corporate world. In contrast, I tend to think from an ideological standpoint of maximizes individual liberties, including economic and markets in aggregate will take off. This is Adam Smith.

Romney on minor economic issues

Romney supports a moderate minimum wage (some people argue this hurts small business not large). And Romney supports unemployment insurance as a safety net (some people say this prolongs unemployment). I have no major problems with either of these ideas because they do not have a huge economic impact. I think both have a libertarian solution but this is not the source of our massive economic problems.

What is the real source of the economic problems?

The Federal reserve creates business cycles with easy credit and excess spending with Keynesian fiscal policy. This  displaces productive people from the private sector to the sluggish,  wasteful government sector. Not just a trade-off between one sector and another. Remember the post Keynesian model C+I+G=GDP? Wrong. Spending is a not an accounting equation, but one of crowding out and opportunity cost that is usually over looked.

For example, when someone is getting your income via taxes by being employed by the military in the desert as an artilleryman, does he have a job? Yes, but what if that young fertile brain was in the private sector using his 20s to create something innovative. A major displacement of intellectual capital.

Other economic quotes by Romney

The best way forward is not to erect trade barriers but instead to facilitate innovation and productivity that will sustain our global manufacturing competitiveness.

I agree. Trade protection will make every consumer good higher priced, I will not be afford a lot. Focus on innovation.

Our Standard of living are the highest of any other major economy

Questionable but I am glad I live in the USA.

In his capacity as chairman of the Federal Reserve, Alan Greenspan made a decision to hold down interest rates for an extended period that didn’t help either. He was motivated by a desire to avoid deflation – and in that respect it worked.

Did not help? That was the  root cause not a helper in all this. And deflation, nothing wrong with it, it is the market working. To not have deflation if needed is asking for long-term slow growth and deprives the have-nots the chance to have. People point to the deflation of the great depression, but that was a symptom of a deflating bubble created by the central bank.

The fact that both parties have come to accept deficits and ever-higher levels of public debt is deeply troubling.

Agreed, Romney is much more fiscally responsible than Obama. But why not just way number one probity is a balanced budget amendment?

Increase our investment in science and basic research

Not libertarian but I like it. I was talking to a military guy at the park the other day when our kids were in the playground. He told me every new immigrant should be required to serve in the military, even in combat zones before they come to the USA. Yeah right, we would turn away brilliant minds in research and science and replace then with jarheads. We should focus on intellectual strengths not old world ideas of blood and iron like Bismark believed. We do not need more industrial factories but high-tech centers offering solutions. I think investment in science can be encouraged with government and private business, although I think the latter does a better job. US innovation is on of our saving graces, we need to make sure it stays that way.

Romney on economics and the USA

1. A Strong Economy
2. A strong Military
3. A free and Strong people

Mark Biernat on economics and the USA

1. A free economy – only way to achieve a strong economy and real stability is maximizes economic freedom like delete the Federal reserve and let the markets work. People criticize free markets, do not realize we have not tried it yet.
2. Military for defending America – To illustrate the waste, what if we spend 1/3 to 1/2 of our budget on helping childhood diseases or making our cities safe instead of being the British empire of the 19th century; we would have a safer America.
3. A free people -  You achieve this largely by a free economy, but not just.

In summary economics and the election

Here is Mitt Romney’s economic plan in detail.

Will I vote for Romney in a Obama Vs Romney election in 2012? I have to think about it, but I suppose. Maybe I will vote libertarian as Obama and Romney are pretty similar despite all the noise. The bottom line both candidates want to cut the rate of growth, not the baseline. Both support a Federal reserve and income taxes with adjustments here and there. Both support bailouts, although Romney tends to be more free market with managed bailouts. But for me they are more similar economically, than different. He is more moderate and will appeal to cross party voters, therefore, have a good chance of winning in 2012. However, Romney does have a radically better of understanding economics than Barack Obama and can appeal to both parties.

Despite my affiliation with the Republican party, I don’t think of myself as highly partisan – Mitt Romney

Romney will get the Neo-con vote anyway, as what choice do they have, they will not vote for Obama. in the 2012 presidential election. So he would be wise to tone down the strong international military stance during the election. The election will be about a battle for the middle voters, not the extreme. What are your thoughts on Mitt Romney’s economic plan.

Are you investing your money on emotion or strategy? That is the question you have to ask yourself the next time some news and rumors are circulating.

I am a gutless trader

Maybe it is because I did not have the courage, or I am not a short-term trader but a chess playing strategist. Not that I am a better person than people who do such  short-term speculation, rather based on experience, it is very hard to buy or sell stocks on a day-to-day or week to week basis. It really is not investing or the kind of investing I am good at. If you are let me know.

If you can make money off of bounces, more power to you. Further, if are one of the guys that can jump out of the market, right at the right moment based on news, you are a better investor than I. However, news is rarely black or white.

I use to set up Bloomberg and Reuters financial news feeds

I use to set up news feeds for the Portfolio managers in NYC and use to tell them, do not read the news, it will do no good.  I have never rarely sold a stock at the exact moment I should have. Instead I make a profit or reduce my loss by a percentage. I think moving averages or a system of investing is better.

Again why not trade on news and rumours, is this not investing? Hey I like to make money. I do not want to get into whether it is investing or not, but, as unless you have real information that other people do not (yet not considered insider information), making money off news is just speculation.

Because of my economics background I guess I believe the market has fairly efficient information. In the words of Stan Weinstein,  the tape tells all. You can see the information coming out on the charts before you read it on the web. Again the problem is there are a lot of guys out there living and breathing every tick of the price and trying to react in the same way.

Therefore, I have seen stocks go either way. I have seen stock rumors and news that turn out to be true and I should have bailed out, and did not. In contrast I have seem stocks news to leave the shorts in the dust.

Buy on bad news sell on good news

• What I have learned is be more systematic in investing using quantitative investing and guidance from the charts, not reactionary.
• Message boards and news feeds mean little compared to numbers.  I still read them mind you, just do not make major buy and sell decision off of them. I have been burned more by reading such things than not.

I recently upgraded my lifestyle.  I went for many years without a car, TV and still do not have a cell phone. It is not that I am a Luddite, rather, I tend to be a minimalist. I like to read books from the library, play chess and do outdoorsy things like shoot baskets with my wife and bike everywhere, and recently a little surfing. But I am not Amish.

I think it has something to do with the fact that I am sitting on the computer working all day, I write language learning software and various other online projects and trade stocks (not much money generated here recently as I moved across the world and have not had my focus in stock trading like I should).

If I am sitting using technology all day long and I really do not want to sit (I just started using the Kola hug for my back pain – another purchase)  and drive or channel surf on my flat screen TV.  Nothing wrong with it, just I think I would gain weight (more).  So I am not anti-technology, but I love to be frugal and like a little bit of an alternative lifestyle guy, as much as an unrepentant capitalist can be.

At the playground this morning with my car - something that has expanding my lifestyle exponentially.

I really have to confess I love having a car and a TV after so long without one. I question what will I get next, a boat? I think for now this is enough expansion of my home economy on the consumption side. I was at the park today and I was mentioning causally to various people little things about my car and parking and what was on TV last night. I felt normal for the first time in a long time.

We also got a bike trailer for my daughter, an upgrade from a bike seat. A couple of my two alternative reality fantasy lives when I was a kid, used to be owning a bike shop or a bookstore.

Ironically my bike trailer order arrive the same day I got a car.

Of course I could not get cable, but rather I use a digital antenna which gets about 20 stations. For me this is enough TV and I have no cable bill.

I am Lucky I live near a major metropolitan area, that is Jacksonville. I have to qualify this that about three of the stations are religious stations (Jax is a Baptist mecca) and one Latino station (I really have to improve or learn Spanish). However, the other dozen stations I could watch. I think there is still one analogue station.

Movies I use Netflix streaming and the library (I have advanced to position number 82 in the queue for the last Harry Potter movie).

Daytime TV, now I feel like my lifestyle has improved.

On the car I intend to use only now and then and with Liberty Mutual I pay 65 dollars a month insurance. Therefore, as long as I do not drive it too much my monthly fixed cost is under 1000 dollars.  Car insurance + rent + utilities+ medical insurance (We are Polish citizens and bought a cheap plan from there that we can use here)  + Netflix +  YMCA (I am typing this post from there, it is more about getting my daughter to use the discovery center).  To be honest, I think it might be a little more if I add it all up all my expenses and I think my 30 dollar electric bills will not last in the summer. Although my brother made a point that for 400 years in Florida they did not have A/C.

Food is our biggest variable costs, but my wife being from Poland cooks everything from scratch so it helps. I hope she does not become too American (both my sisters do not cook and but both my brothers do).

Anyway, I have no debt or credit and the last things we need to get is a house.  The issue here is we would like to pay mostly cash for a house (It is a European thing not a credit thing), but unless I turn up the dials on my income making machine or start trading more aggressively (with risk) this might be a pipe dream.

Most of my money now is through passive income from my websites. I need to start releasing products.

OK, So I got a TV and a car, I am guilty.  I can get off my high horse (a little) about  minimalism and try to be like many rich hippies say,’ living in the world but not attached to it’. I still do think you do not need a car, and the fact that I did not have one a good part of my life is a testament to this, but it will be nice for my wife and daughter as we are not living in a major city (St. Augustine beach).

This next year I do not intend to make too many major purchases. I have a wish list of course that includes a telescope, taking my daughter to the Space center and Disney, but now I really need to finish I have had on the back burner because of life issues came up. Then hopefully buy a house.

In the United States of America there is a Puritan ethic and a mythology of success. He who is successful is good. In Latin countries, in Catholic countries, a successful person is a sinner. – Umberto Eco

I have always said economic life is not want you earn or save but your lifestyle on a day-to-day basis. If you are in an hour and ten minute commute each way and with a stressful job, worrying you will lose your job or house, and you have stress at home, because you are always working, who needs it.  Life is what you do on a day-to-day basis. I know I could make more, and could afford more anyway, but I want to be a capitalist and entrepreneur, yet not base my lifestyle on too many material things. Kind of a Puritan work ethic type of idea, although I am Catholic.

I live on a semi-tropical island off the coast of Florida in St. Augustine. The island is called Anastasia island. It is tucked safely away in the Florida’s Northeast corner. It is an area that does not get hurricanes, nor major tropical storms. St. Augustine, the oldest city in North America has received one major storm in its history. In contrast NYC has had four.

Ocean front where I live

Therefore, you would think it would be a peaceful little island near this 450 year old town, it would be a safe bet to buy real estate on the ocean. Except for one thing. One little thing makes almost all beach real estate a deal breaker.  It is windy. Not the Wizard of Oz type wind, but just gusty.

My argument is it is not a deal breaker because of fear of home destruction or anything like that, rather it is more about lifestyle. Day-to-day lifestyle is more important than any abstract real estate valuation mind you. In theory they are should somehow correlate, but they do not. The unspoken nuisances no one talks about is wind. It makes life on the beach a bitch.

I love walking along the beach in the morning

My whole family lives on the coast

My brother and folks live in Jupiter in south Florida. They literally have beach front properties.  My family grew up not on the coast but near. They make the same comment, it is windy.

If you are considering beach front property I highly recommend you think again. The reason is the wind gets so strong that you can not enjoy your back yard.  Sure the ocean view is nice, however, that gets old fast. It would be better to be off the beach and have some protection of trees.  Then you could have lawn chairs and sit in the back. One a daily basis you want to relax in your back yard and read a book, not close yourself in some protected contract to shield from the wind.

Mr. Nautical does not recommend water front real estate

My brother who is Mr. Nautical and had a boat built from scratch based on historical designs sails up and down the eat coast and has a house on Cape cod and south Florida has said the same things. Do not buy beach front real estate. It is too windy to enjoy normal everyday life. He is looking to sell his mistake and move a bit inland. Even a 1/4 mile inland would be enough.

Better is to buy somewhere back from the water, and ride your bike to the beach.

Beach front properties and value

I have always thought beach front property is over priced disproportional for what it is worth.  Now more than ever I see  scores of empty units and homes in Florida now for good reason. They were over-valued and still are.

Beach front homes sell for over a million dollars where I live. Yet in the county not far away,  homes that have some land and reasonable size sell for 150,000 dollars. These are nice homes. People have gardens and play areas for their kids and drive to the beach. You really do not need to pay 1.5 million for a house because it is on the beach.

Some lady I know is selling her home for 1/2 million. I would personally pay 50,000 for it. It has been beaten down by the wind. I simply would not like to live there. Price is subjective. Do not simply take 15% of asking price, but ask yourself, what would you personally pay for this plot of land?

Beaches disappear

My brothers beach has disappeared. I think the Army corps of engineers will eventually rebuild it, or though some controversal funding. But just because you buy some notice water from property does not mean anything. In a few years the water might wash the beach away or be right up on your home or leave you with jagged rocks to trip over. Real estate agents love to sell property on the water but do not be sold.

Now my family has lake front property in New England. This is much more reasonable because it is not the ocean.

Just because I love the beach does not mean I have to live right on it

Traffic on the ocean and other considerations

The Entire coastline is often a tourist mecca. noisy bikers and drivers not looking where they are going driving up and down. Now I have no regrets about living on an Island but I am glad I am not right up on the ocean but a little further back were we can enjoy a little peace. We were living in Europe at the time and I did extensive research on the web for about six months for the optimal place to live. The best place is near but not on the ocean.

P&C insurance on beach front property

I worked for many years one of the larger P&C insurance companies in Boston. They charge a fortune for the VIP life of ocean front property. You have to factor in inflated insurance costs because of property and casualty home insurance. You have to factor in accelerated depreciation from the air eroding your home and things. Our bikes are new yet covered with rust because of the air. Beach properties are nothing but and expense and in this market a sinking asset.

Even if I was made out of money, which I am not I would not buy it unless I was trying to impress. I am not trying to impress. Life should be about lifestyle on a day-to-day basis and it would be a hard argument to tell me the windy stormy beach is worth the price.

When was beach front property worth it?

Here is an example. In Stonington, CT after WWII many Portuguese fishermen bought homes at cheap prices. In fact, the Portuguese in WASP blue blood New England were a bit of an odd lot. They were not accepted and people did not want to live around them. I grew up in New England and I remember this.

Then something happened. These poor fishermen got rich as the gold coast of NYC expand further out into CT and somewhere between Boston and NYC rich Yankees wanted a home by the sea. Homes bought for under 10,000 were selling for several million dollars. The opportunity cost of the land became too high to use as a fishing community. This was a specific time in this nations development. It was also a premium for a certain generation, but not as much for todays America. This type of opportunity does not exist today. If anything we are in a long-term reverse trend. Again I personally would recommend not buying beach front property, there are better values out there. There are better ideas for appreciation.

Thank you for reading such a long post on buying ocean front property, if you have any questions or comments let me know.

You could read my post on the 2012 election issues and about the Presidential election in general, but this post is more cut to the chase and non nonesense.

Will you vote for Obama or Gingrich or someone else?

What is Wrong with Barack Obama?

• He is Mr. Wall Street. He took large sums of money for campaign donations like from Goldman Sachs for example. Then when the crisis hit he used taxpayer money to help Wall Street. He is a hypocrite as he campaigned on helping the middle class. Obama needs to middle class by giving us more opportunities for us to help ourselves, by letting the markets work. Stop the culture of blame, that you perpetuate. I wrote a lot about it here: Who will win the 2012 election? and 101 reasons why Obama will not be reelected.
• Although Obama had no problem accepting the Nobel peace prize with a smile, he took the Bush-Obama doctrine of Empire building with undeclared wars to a new level. He is no different from Bush with Middle Eastern foreign policy.
• Not pro-life. I know we are all hip and cool in America and anything goes, but I can not image in a civilized nation like this we still do not protect the innocent.
• The debt exploded. Did he really have to do this to prove Keynesian economics wrong?
• Nothing special – lack of creativity.

What is good about Obama?

• Although I am a Libertarian and prefer small government, if we are going to blow cash, it might as well be on a domestic programs where the money is recycled and more or less redistributed. Many slow growth European countries do this. This is better than just firing rockets in the desert. Guns or butter which is better?

What is bad about Newt Gingrich?

• I do not like him. I think it has something to do with he is on his third or fourth wife and left his last one when she had cancer. For me that is heartless. He has spent 35 years in Washington taking millions as a ‘consultant’ which is really nothing than an insider lobbyist. I find a number of small things like this insincere about him.
• Newt Gingrich war monger Uber war monger. Endless wars and destruction.
• Is not for smaller government but for the decrease in the rate of increase. Does not cut the baseline. We need a balanced budget amendment and a decrease in the baseline.

What is good about Newt Gingrich

• Fiscally conservative by a small degree.
• Protects life. Many people are one issue voters and this is a big one.

Who to vote for in the 2012 election when we have a choice between a donkey and an elephant? I used to vote under the idea that you do not want to waste your voice and vote for an unelectable third-party candidate. But you know what, screw it. If you look at the above no-nonsense analysis is it really a wasted vote?

I am seriously thinking of voting for neither major party and voting for a candidate who I actually believe in rather than who everyone else is voting for. Anyone else have any ideas?

Looking back at history, countries from Spain in the 17th century to Germany in the 1930s, countries that spend a lot of their GDP on military and financed it with debt, dug their own graves. They lost both guns and butter. Countries that peacefully focus on their own problems like Switzerland or Sweden enjoy peace and prosperity.

• The GOP will replay the 2008  election, when John McCain said: “we will stay in Iraq 100 years if we have to” – this GOP Neocon arrogance does not inspire any warm feelings in me, I do not know about you?
• Interview on War or the economy by Ron Paul is well worth listening to on anti-war.com

It is actually quite simple, if you choose guns over butter you will have neither.

Military tends to be a wasteful special interest and the US government is not looking out for you personally

This post is about why I believe in homeland defense, not empire building.  It will  clarify the guns vs. butter argument. Why I believe patriotism is not about beating militarily drums of war, as much as defending the constitution, economic prosperity at home and encouraging free market innovation to keep our technological security edge. I am not against defense, I just think national defense is different from military expenditures, which is something inefficient, wasteful.

• Let me illustrate, my friend who is a computer contractor with the US Navy in Jacksonville, earns three times what the average American makes, does not even know how to open a zip file (sorry if you do not) and still uses Internet Explorer 7 (sorry if you do).
•  When I was attacked overseas, as an American citizen, I did not feel I got super support from the State Department.  Therefore, I am unconvinced that defense of US citizens is synonymous with large conventional armies in the Middle East or the government is watching out for you . They watch out for themselves.

I also think the 15,000 people who die in crimes in the USA are more than those who die in domestic terror attacks. Maybe it would save more US lives to amp up the local police more than hunting people on the other side of the world? If they really cared about US citizens they would care about crime in the USA.  Further, one of the GOP nominees said something to the effect, we should stamp a green card to the passport of foreigners with Masters degrees if they wanted to come to the USA, so we could continue to attract the best and the brightest.  What about just focusing on the education of US citizens than attracting foreigners, if you cut the military in half you could fill the universities of young Americans with free tution.  I think if you analysis the guns or butter argument you have to ask yourself what evidence do you have that Washington has your best interests in mind?

The term ‘military intelligence’ or innovation at least, is a contradiction in terms. Currently we do use some cutting edge technology. However, to achieve that cutting edge it is coupled with ridiculous waste. My father was the Treasurer for a defense contractor ( United Technologies) when I was growing up and I in retrospect saw how much of a special interest that was. The problem is, the economy is different now then the 1960s, and I do not think the current economy can support that type of business as usual defense contractor special interest.

 Basis of US foreign policy

Our foreign policy is based on control the whole world by looking under ever stone for a terrorist. This can not be done, as there are too many people, and we will go bankrupt trying. Better focus on our own shores. Defend the USA, not try to make the whole would the USA.

Something that everyone knows but is afraid to say is, a lot of our foreign policy is based on Israel. I am for the defense of Israel if attacked and have good feelings toward the Jewish people. Very much so in fact. I just believe that Israel has proven time and time again they can take care of themselves. And us meddling and dictating in the micromanagment of the Middle East is not in your personal interst as a US citizen. Look at Egypt. We supported the last regime for 30 years and pumped them with arms and money, and now it is civil war.

We stir up bees nests in the Middle East and choose sides when we should be minding our own bees wax. When I was in Palestine most of the people were poor and friendly and welcoming. They did not impress me as ‘the enemy’. When I was in Israel I felt they were a little more heavy-handed.

People say we must support Israel at any cost, because they are a democracy. My reply is this:

• Why? Sure we can help them if attacked but like Ronald Regan realized when he pulled out of Lebanon, Middle East Politics is an endless quagmire we do not want to be sucked into.
• The Obama-Bush doctrine of preventative Middle eastern Wars – is nonsense, it stirs up trouble and anger more than helps Americans, does it help you personally?
• Israel has a questionable human rights record. – read up on it.
• Is the USA a democracy and is our mission to spread this to the world? I think the USA is a Republic. The word Democracy is not even mentioned in our Declaration of Independence, Bill of rights or US constitution, check this. The US was based on protecting the citizens from government, foreign wars and entangling alliances, if you read the original documents you will see this. Most Americans do not understand what this constitution is about, and they would gladly surrender their rights to usurpers of the law in the name of security. I would not say our manifest destiny is to spread ‘democracy to the world’. As an American citizen I am pledged to defend the US constitution, the highest law in the land, not a Middle Eastern country who has spied on us and even involved in a questionable accident like the USS Liberty. America should stand up for Americans.
• Ukraine is a democracy and ally but do we care they just put Yulia Tymoshenko in prison for ten years in a kangaroo court and human rights are violated? We the USA have a double standard.
• Is our view of the Arab nations like our view of Native Americans 150 years ago? How would you feel if foreign soldiers were in your backyard imposing their ideas of how you should live?

I the best way to be a patriot in the USA is to focus on homeland defense and economy, not Pax America, trying to be the British Empire of the 19^th century.

If we want security, defend the constitution and promote the free market and stay out of Middle Eastern politics and let science and technology lead us into battle rather than ground forces.

When I hear the Generals complain that we are at our weakest since WWII, that pure nonsense. They are barking not at cuts in military but a deceleration of the rate of growth.

Guns vs. Butter is an economic phrases that represents is a simplification of the economic tradeoff between prosperity at home, focus on the family vs. military expansionism. It is a choice that every empire has to make. The Soviet Union choose guns and the economy collapsed.

The great free market leader Margret Thatcher said:

 The Soviets put guns over butter, but we put almost everything over guns.

Look who won the arms race and why. Economics and innovation determine long run security.

There is also a trade-off between personal liberty, freedom,economic growth, prosperity and innovation at home or guns around the world. The result and my thesis is:

 Any civilization that falls behind economically and with innovation (which comes from the free market) will fall behind in terms of security and the ability to defend its citizens, then collapses or their national security is really at risk.

• The Mises foundation of economic ideas I think would back me up on this. Why expansion of military spending is counter productive to security.

What is happening to the USA now economically? Has there been any great innovation in the last ten years?

The spokes people representing the ‘Guns’ side (Many people in the GOP) use perpetual fear to keep people believing that we need a security that is a blank check for the military, your money.

Newt Gingrich promised the American people:

 All of Us Will Be In Danger for the Rest of Our Lives

He is a Orwellian Machiavellian. The GOP will lose as the Universe will not let that happen, to have such a war monger in office.

I think it is a bit more complicated than simply dismantle Obama’s social programs and replace it with military as the GOP has suggested. I think we need a strong economy and free market innovation that will keep us one step ahead of the enemy. The militarily as it exist today is a WWII mentality of ground troops and submarines with innovation because we still have some economic juice left. But the innovation comes because we have money. What if the money runs out?

• If the economy collapses I can tell you what will happen with innovation, it will slow down, if it has not already.

The GOP Noe-cons always says ‘ they will drop a nuke’ in one of our cities if we do not spend more. And if it happened deep down some of them would be saying ‘see I told you so’. They would feel hurt and pain of course, but another side would say ‘see I told you so’.

I say they will nuke a city if our economy collapses and we can not afford to stay cutting edge technology. They will drop a nuke if we are in 150 countries in the world and choose to play the dangerous game of Middle Eastern politics. We can not have a Camera in every person in the world’s house. Further, let’s be real, to construct a nuclear weapon and detonate it in an US city is next to impossible, a dirty bomb maybe or a biological weapon maybe, but a real nuke is hard to build and get the material for.

 Why the US should focus on butter over guns

Here is the reality. We need to maintain a strong economy so we can have a technological edge and prevent this from happening. Building more attack subs or trying to control the whole world is not the way we do it. It is a war based on technology and international intelligence and this is fueled by free market innovation.

Coupled with the fact that we should not be involved in Middle East politics like we are, that is the reason they want to attack us, because they see the US as invading their homeland. Shocking but true.

Why do the terrorists not attack Japan or Iceland or the Swiss or the Swedes? These are rich free countries? Maybe it has to do with the fact that we behave like and empire.

The 9/11 attack was not caused by lack of military spending, we had lots of submarines in the ocean, it was lack of awareness of who the enemy was and their motives.

 Know thy enemy Sun Tzu – The Art of War

Many people jumped on Ron Paul for saying this about 9/11, but he was not saying that the victims caused the attack, not at all! He said something to the effect the attack was partly motivated because we act like and empire, fight undeclared wars, support political assassinations etc. This is what the Terrorist themselves said.

 Know thy enemy Sun Tzu – The Art of War

Bin Laden stated that the objective was to wear down the USA in a war of attrition. Are we playing into their hands?

George Bush said ‘they attacked us because of our freedom’. What an idiotic statement.

 The term Guns Vs. Butter

The term Guns or Butter was first used by William Jennings Bryan in his resignation from secretary of state under Woodrow Wilson, however, it had another history.

Living in Poland many years and at my University studied a lot of history. What many people do not know is why War II started when it did. What was happening in Germany in the 1930s?

The truth is the Germany economy in 1939 was on the brink of collapse. While everyone was singing praises of the party that was keeping Germany safe from the ‘ Jewish threat’, the economy was on the brink of failure. The economy could not maintain its military expenditure. Yes it was a classic boom and bust cycle brought about by government and a crazy evil leader.

Germany’s militarization was causing a grand fiscal expansion in their industrial military complex. He was keeping people on the military payroll and paying benefits and the arms makers were profiting. But that leader knew this the economy could not go on like that forever and felt war was the only solution to keep his political machine going before the economy collapsed. It did not cause the war of course but, they needed the war to keep their economy from collapsing.

So the political spokes people for that nation started to make statements about security from the ‘Jewish threat’ and the Bolsheviks and anarchists.

We can do without butter, but, despite all our love of peace, not without arms. One cannot shoot with butter, but with guns. Guns will make us powerful; butter will only make us fat – Hermann Göring

For me, that is another politically manipulate simpleton speaking.

I prefer the philosophy of security through innovation and an economic strength. I do not believe in politically playing like Otto Von Bismark did with realpolitik , that is politics based on practical rather than moral considerations. In contrast, I believe in the US constitution.

Two last thoughts on the guns vs. butter argument

1. In your household do you spend 25 to 50% of your budget on security? What if a business did this, it would have little disposable income for R&D or anything else. This is not life it would be a basic existence and this is what many in the USA have, just go to Walmart and look at the people shopping there.
2. Although I think religion should be kept out of politics, and it is distasteful when people in politics use religious language,  I can not help thinking that the Bible says ‘he who lives by the sword will dies by the sword.’.
3. ‘What good is one gains the world but loses their soul in the process’.

For pennies you can have fun

At one level the investing theory is sound, and people who have interest in penny stocks at some level understand the idea of financial leverage. It is the idea of trying to amplify your returns with little capital applied.

Financial leverage is a way which many great investors got rich, like Warren Buffet. However, they did not do it with trading penny stocks. They did it with more sophisticated methods. Buffets did it with Insurance., you can read my article, how insurance companies make money.

Penny stock traders have the idea that, low price equities, under a dollar, have potential for large percentage gains with even a small movement in absolute price. For example, if a fifty cent stock goes to three dollars a share that is a 600% return on your money. Even if it goes to one dollar yo double your money. In theory this is correct.

The problem is statistically the rate of return on average does not match the normal equity market. Windfall profits are the exception rather than the rule. Even if you have some play money, expect to throw away more than you will get back. However, if you have 100,000 dollars in a portfolio and you want to risk a few thousand, go ahead, but I would active leverage with options, rather than penny stocks as I think this is closer to a zero sum game.

Why penny stocks do not yield a good return on average

• Penny stocks that are scraps in the junk heap – Stocks beaten down this far can come back but more likely they are only attractive to junk men searching through rubbish. I do not know too many rich junk men in the real world.
• Penny stocks that are the next artificial blood – When I was in Finance in Boston I would soften hear about these wizards working on the next big thing in technology or biotechnology. They had MIT or Harvard connections. Great ideas, even noble ideas, like artificial blood, that maybe someday will be a reality, but in a 12 month time horizon or even 36 month time frame, I personally never saw any of those great opportunities perform.
• Penny stocks that are selling air – These companies that really do not have much going on but the dreams of the eccentric behind them. I think you would better off selling air. Sure, get some fresh mountain air from the Rocky mountains and compress it and sell it to people in LA or NYC. You would make more money then 99% of the stocks I have seen trading at pennies a share. I had a tried selling stock for some home gym he designed. I never saw it come to fruition. Even I personally and working on a few products. When I have mine out the door and selling I will let you know, but I prefer not to tot my horn, until this time.

Why Penny stocks move up

• Pump and dump – the market builds excitement, often manipulated by some individuals then they are dumped. Micro cap fraud
• Stocks sold illegally under schedule S internationally – Chop stocks

I understand why investing in penny stocks is tempting, because earning money though working for a living is harder and harder. If you could just profit from two ten baggers, that is buy two stocks in a row, that go from one to ten dollars; with ten thousand dollars you would have a million dollars. It could be done in a year.

However, everyone wants to do that. But have such a good run with a cheap stock, is like making a hole in one on the golf course. You can not base your life on it. Better is to prefect your game in a more rounded fashion and if you do get a stock that rises to ten times for what you guy it for, be thankful. I have, but it was when I was younger and I made a fortune, only to lose most of it. It was a painful lesson.

If you want to play with a little of your risk capital I think Leaps or long-term equity options are better vehicles for leverage. The are also low.

Have I ever owned a penny stock? Sure in my 30 plus years of investing in the stock market I have owned a number, mostly at the start of my investing career. I did not buy them mind you, they were low price stocks that hit the pink sheets and went bankrupt, belly up. I was young and brash and thought buying low-priced stocks under 10 dollars would amplify my returns. I was always looking for something exotic and cutting edge.

What is the lesson we can learn from Penny stocks? – Leverage

Although most penny stock junkies will most likely never get rich they do teach a lesson. Leverage a key investing idea to amplify your returns. You can turn a small amount of investment capital into large returns. All you really need is a system of investing that does average, or even below average but consistently. Read my posts on quantitative investing and how to invest with logic.

• It is better to have a system that is consistent and below average, but leveraged than a system than going for a home run in the market with a hot stock.