America is Lost

Lost

One of the biggest frauds perpetrated against the American people is the idea that the U.S. is a “free country.”  According to the right leaning Heritage Foundation, the United States is not even on the top 10 of the 2015 List of Economic Freedom.  The U.S. is #12 behind countries like Canada, Ireland and Denmark.  It’s not uncommon for advocates of big government to cite these nations as successful examples of a nanny state.  What these same folks never admit though is that the U.S. is even less economically free than these welfare states.  To get a better idea of just how far America’s star has fallen, let’s take a look at the most competitive countries in the world:

Hong Kong

Honk Kong is #1 on the list of economic freedom, and it’s no surprise given the country’s loyalty to property rights, low regulations and adherence to the rule of law.  According to the index report,  “As the economic and financial gateway to China, and with an efficient regulatory framework, low and simple taxation, and sophisticated capital markets, the territory continues to offer the most convenient platform for international companies doing business on the mainland.”

Singapore

Singapore comes in at #2 on the Heritage list, and that’s why I’m investing there.  One of the reasons that Singapore ranks at the top is due to its world class legal system. Unlike the U.S., “Singaporean society has a low tolerance for corruption, and the effective rule of law strongly undergirds all aspects of economic development.”

New Zealand

Coming in at #3 is a small but economically mighty country.  Although an island nation, New Zealand is a beacon of economic hope to the rest of the world.  Heritage reports, “Reforms in the 1980s opened the economy to imports, reduced the size of government, and lowered the tax burden.”  New Zealand is proof that the socialist plan for the U.S. economy is precisely the wrong prescription.

Australia

Although Australia fell by a small margin from its prior year ranking, this continent is still the fourth best economy in the world.  “Regulatory efficiency remains firmly institutionalized, and well-established open-market policies sustain flexibility, competitiveness, and large flows of trade and investment.  In 2014, Australia became the first developed country to repeal a carbon-emissions tax.”

Switzerland

World renowned for its financial security and independence, Switzerland comes up at #5 of the world’s freest economies.  Heritage reports, “With an economy that benefits from sound fundamentals that include monetary stability, low public debt, and a vibrant employment market, the Swiss economy has weathered the global economic uncertainty well.”

Unites States

I would be remiss to not include information about this former bastion of economic freedom.  American products and way of life used to be the envy of the world, but these are becoming distant memories in our country’s rear view mirror.  Like a bickering married couple that is lost from bad directions, Americans are not sure when they will find their way again.  Heritage reports, “The anemic post-recession recovery has been characterized by slow growth, high unemployment, a decrease in the number of Americans seeking work, and great uncertainty that has held back investment.  Increased tax and regulatory burdens, aggravated by favoritism toward entrenched interests, have undercut America’s historically dynamic entrepreneurial growth.”

I couldn’t have written it better myself.  For those of you who disagree with all my positions but have somehow made it this far into this blog post, I will make a concession.  There are few places I would rather live than the U.S, but it is undeniable that we are on the wrong track.  And with the future generation that we have coming from college campuses, I’m pessimistic that we will get back on the right path anytime soon.

“Money without financial intelligence is money soon gone.”

Sallie Mar

I work with a divorced mother of two who is eligible to retire, but she continues to show up to her job every day.  “Why don’t you retire,” I’ve asked her on several occasions.  “Because my kids need me to pay for college,” she retorts.  This obligation for baby boomers seems to be pervasive.  My colleague usually goes on to explain that she would rather pay for her kids now than when they are drop-outs living at home.  What she doesn’t realize though is this may happen anyway because there are plenty of graduates living with Mom and Dad.  According to Zero Hedge, “Back in 1999, a quarter of all 25-year-olds lived with their parents.  By 2013 this number doubled, and currently half of young adults live in their parents’ home.”

I’ve said it many times but apparently not enough.  This was once a time when a young person could work their way through college and graduate without any loans.  Now parents and students are both working only to be encumbered with a student loan once junior moves back home.  According to  Anthony P. Carnevale, director of the Georgetown University Center on Education and the Workforce, “Today, almost every college student works, but you can’t work your way through college anymore.  Even if you work, you have to take out loans and take on debt.”  This is the typical result of a government that sets out to make college “more affordable.”

For those lucky enough to have parents who properly saved for their college education, disaster can still strike.  Kim, a college student from Atlanta, gained national prominence when she admitted to liquidating her $90,000 college fund before reaching her senior year. “It’s not my fault.  Maybe [my parents] should have taught me to budget or something. They never sat me down and had a real serious talk about it.”  When the host suggested that Kim get a part-time job, Kim replied, “That’s embarrassing.  I know [my parents are] trying to teach me a lesson and blah blah blah and character building but, like, I hope they realize [working part-time] could have such a negative effect on my grades and as a person.” I’m not making this up dear reader!

As Robert Kiyosaki wrote in his acclaimed book Rich Dad, Poor Dad, “Money without financial intelligence is money soon gone.”

Spinning Gold into String

Rumpel

Freddie Mac CEO Donald Layton recently told an audience at the Mortgage Bankers Association annual convention in San Diego that loans with down payments as low as 3% are a net positive and that more low down payment products could be on their way.  Layton lauded the programs because they have boosted homeownership, but why is homeownership still at its lowest level since 1967?  Well that’s easy.  Housing is too expensive, and it’s thanks to these very loan products that Layton praises!

If were allowed to have a real market in housing, maybe housing could come down to prices that wouldn’t require these phony products to begin with.  Let me explain.  Suppose we had real prices that weren’t propped up by the government and artificially low interest rates.  Interest rates would increase to 1990 levels, and most of these housing prices would be cut by at least half.  A $200,000 house would drop to $100,000 or less.  The down payment, property taxes, and mortgage insurance would all become more affordable.  Rents for properties would drop, so Americans saving to buy a house could do so faster.  They wouldn’t have to live in a place they don’t own while coughing of up a sizable portion of their net income each month.  But none of this is allowed to happen because government has set out to make housing more “affordable.”

Just like health care, college and everything else the government touches, prices skyrockets leaving the poor and middle class with a lower standard of living.  Government is like a reverse Rumpelstiltskin spinning gold into string, and it’s the the youngest working generation who will pay the price.  Due to all the big government Americans now love, many millennials will be working well into their 70s before retirement is an option.  Don’t get me wrong.  I think work is great as long as you’re doing what you love.  The fact is that most millenials will be working not because they want to, but rather because the have to.  According to Landon Dowdy, “A new report predicts that young workers will need to work until they’re 75 on average to save enough for retirement.  Researchers at Nerdwallet, the financial site that published the report Wednesday, blamed rising rents and student debt levels.”

That’s just half the problem.  Millennials will also be expected to support the social security, health care and housing Ponzi schemes that their parents voted for.  Thanks Mom and Dad.  Of the three frauds mentioned, social security is probably the worst.  Money is stolen from you over the course of a 30 or 40 year career with the promise that good ‘ol Uncle Sam will support you during your golden years.  But even ordinary Americans are beginning to question Sam’s creditworthiness.  Nick Giambruno reports, “Recently, the government announced that there would be no Social Security benefit increase next year. That’s only happened twice before in the past 40 years.  You see, the government links Social Security benefit increases to their own measure of inflation. If the government says “no inflation” then there are no benefit increases. It’s like letting a student grade his own paper.”

We can only hope that this government flunks out of school soon enough to give millennials a real chance at retirement.

Millennials are in Trouble

Millennials
Today, Jessica Dickler asked the question “Are millennials financially doomed?”   Unfortunately, the answer is yes.  Many millennials are underemployed, paying massive student loans and some are trying to support a parent at the same time.  As a result of the poor job market and burdensome financial obligations, many millennials are postponing major life decisions like marriage, kids and a house.

When it comes to retirement, millennials feel even more unprepared.  According to Dickler, “Nearly two-thirds of millennials surveyed by T. Rowe Price earlier this year said they believe they’re more likely to win the lottery than to receive any money from Social Security.”  Millennials know they can’t depend on the social security Ponzi scheme, but that doesn’t mean they’re actually saving for retirement.  According to a survey conducted by Bankrate in January of this year, Eighteen percent of adults between the ages of 18 and 29 report that they have too much student loan debt to consider saving for retirement.

When it comes to finding a job to pay for anything, millennials are not too optimistic.  A January 2015 Monster.com study found, “…the recession made it difficult for younger workers to find full-time work, and as a result, the majority of them are feeling pessimistic or uncertain about their employment future. Only 45 percent of young workers say they feel optimistic about their future employment. The report also found that young workers have been settling for contract, part-time or temporary work while they search for full-time jobs.”

Before you go to bed tonight, say a prayer for the millennials.  They’re going to have a tough time in the Greater Depression ahead.