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Benson's
Economic & Market Trends
Years ago we
were more entertained by our government’s actions because we were
younger then and not threatened so much by their policy decisions. But now as
we approach retirement age, we are becoming simply enraged and disgusted by
the decisions made in Washington.
First, there
is no question that older Americans on fixed income are having a hard time
finding the money to buy steak or live, as they say, “high on the
hog”, where you find the better cuts of meat. Now it turns out that the
US Department of Agriculture has approved a ‘pink slime’ additive
to ground beef. Pink slime which is a major ingredient of dog food is not
beef but a salvage product rendered from fat waste trimmings and intestines
still full of you know what. This rendered slime is treated with ammonia to
kill the bacteria one finds in fecal matter, and 70 percent of ground beef at
supermarkets contain it. It’s the new hamburger helper direct from the
US Department of Agriculture. We
checked some cookbooks including those of Julia Child, Emeril Lagasse, Martha
Stewart, Lydia, Rachael Ray, etc., and have yet to find one recipe calling
for “pouring in a cup of ammonia while adding two cups of pink
slime”……..
The purpose
of using this ingredient is to make big bucks for meat processors and to
lower the cost of hamburger. The government is delighted because it puts a
lid on the price of hamburger and helps to keep the consumer price index
down. Keeping the consumer price index suppressed is, of course, viewed as
critical to the national interest. Pink slime is big business and there is
just no way to police its use at restaurants where local operators are just
out to sell a burger and make a buck. Indeed, selling “yuck for
bucks” just seems to epitomize the American ethic today.
In addition
to helping to keep the supply of red meat up and the prices down, Congress
recently lifted a ban on funding horse meat inspectors, so now the USDA can
help turn race horses and ponies into horse burgers and sausage for gramps.
While it may sound disgusting to Americans, horse meat is sold as a delicacy
and devoured in foreign countries along with cats, dogs, chickens, ducks,
grasshoppers and lizards, which are all grilled and gobbled down. In Arab
countries, dogs are particularly scarce as they are on the menu. So, as
America becomes more international and less developed, in order to feed our
poor people and retirees, it may only be a matter of time before you need to
keep an eye on Rover, or he will end up as skewered shish-kabob on your
neighbor’s grill.
When it comes
to securities and investing, our government can be just as uncaring.
“The Jumpstart Our Business Startups ACT (the JOBS Act), which
proponents says will make it easier for small businesses to launch initial
public offerings, solicit new investors, and, eventually, hire more workers
is likely to pass the Senate, and will probably be signed by the President as
early as the end of March. This new law is designed to gut accounting
oversight on mid-sized IPOs and relax restrictions and allow both the sale
and advertising of unregistered securities so that new firms can raise
capital. The idea is that sales of Reg D
securities, now limited to $5 million dollars, should be lifted to $50
million dollars before requiring SEC registration. Skipping SEC registration
means that the nuisance of having corporations report honest audited
financial results can be dispensed with. The talking heads on TV keep telling
us that we need to unleash capitalism’s energy and animal spirits as
the economy has been held back by too much regulation and the horrible burden
of reporting fair and accurate financial data. But if this investment plan
goes through, we know what’s going to happen.
Based on
history, particularly the dot com disaster, and the mortgage and housing
bust, investors are about to be legally robbed. Securities sales
organizations will spring up hiring used car salesmen, recent sub-prime
mortgage salesmen, and new college grads that know nothing and will promise
anything in order to sell unregistered securities. Why? These offering will
pay the salesmen fat commissions of 10 to 15 percent of the money raised.
Having grown up in Wisconsin dairy country we know horse hockey when we smell
it, and slime when we see it. Having spent 30 years on Wall Street, we know
how this story plays out. Indeed, if Goldman Sachs and Citibank creating bad
mortgage securities to profit from by selling them to suckers is still fresh
in your memory you should know how this story ends: Pay a salesman a big fat
commission and they’ll say and sell anything to make a fast buck.
Those
targeted by these investment scammers selling slimy securities will certainly
be the older Americans who survived the last two bubbles, but are getting
zero interest at the bank. Retirees can’t live on zero interest so they
are ripe to be sold hope and Ponzi-style investments that pay them interest
with their own money until the principal is gone. They should consider
renaming the JOBS Act to “The Jokingly Obscene BS Securities ACT”
which I think describes it better.
The coming
flood of horse hockey investments sold by boiler rooms would make Bernie
Madoff proud because now they will be perfectly legal. Meanwhile, we have
decided not to get suckered in. We will keep some cash in the bank for a
rainy day and most of our real money in physical gold and silver. Gold
remains the one investment immune to pink slime disease. We would rather have
gold coins or a pile of silver than be faced with the sudden death of wealth
the greedy can suffer by buying heavily touted but hollow investments.
It’s a sad day when the American Congress sanctions securities that are
designed to rob investors and line the pockets of the promoters in an effort
to create the illusion of jobs to win an election.
Richard Benson
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