Do you want to know what is going on in Europe?
Nigel Farage explains the insanity going on in Europe in two minutes.
http://www.youtube.com/embed/TN_1mF-3JTI
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My High Dividend Stocks
This is my high dividend stocks site where I help site members find high dividend stocks with earning power and strong balance sheets.
Nigel Farage explains the insanity going on in Europe in two minutes.
http://www.youtube.com/embed/TN_1mF-3JTI
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I’m always looking for high dividend stocks with earning power and strong balance sheets. I consider a dividend yield above 6% to be a high dividend stock. To see why read this: http://bit.ly/6percentDIV. But don’t let that article distract you. The focus of this article is going to be on the balance sheet measure known as the current ratio.
There are many measurements of strong balance sheets. A company’s current ratio is one such measure of a strong balance sheet. The current ratio is the company’s current assets (usually cash, equivalents, and accounts receivable) divided by its current liabilities (those are liabilities due within one year such as accounts payable and the current portion of the long term debt, etc.).
One of my favorite companies is Safe Bulkers (SB). They are a dry bulk shipping company. Unfortunately their current ratio has dropped in the last few quarters. It currently stands a 0.73. The father of value investing, Benjamin Graham, consider a current ratio of 2.0 the minimum for investment. He wrote that back in his book Security Analysis in the 1930’s. Safe Bulkers current ratio seems really low. That made me wonder how all the other shipping companies compare. Here is what I found: (Note - The size of the bubbles represent the company’s market capitalization in millions of dollars. For example, Knightsbridge Tankers has a market cap of $303 million.)
Here is a table with most of the largest publicly traded shipping companies used in the graphic above:
Company | Ticker | Market Capitalization (Millions of dollars) | Current Ratio | Dividend Yield |
Kirby Corp. | (KEX) | $ 3,710 | 1.48 | 0.00% |
Golar LNG Limited | (GLNG) | $ 2,920 | 0.41 | 3.13% |
Teekay LNG Partners | (TGP) | $ 2,700 | 0.58 | 6.44% |
Teekay Corp. | (TK) | $ 2,490 | 1.00 | 3.51% |
Alexander & Baldwin | (ALEX) | $ 2,230 | 0.99 | 2.44% |
Seacor Hldgs. | (CKH) | $ 1,960 | 2.59 | 0.00% |
Golar LNG Partners | (GMLP) | $ 1,350 | 0.49 | 4.85% |
DryShips | (DRYS) | $ 1,310 | 0.78 | 0.00% |
Ship Finance Intl. | (SFL) | $ 1,060 | 1.11 | 8.85% |
Seaspan Corp. | (SSW) | $ 1,030 | 2.74 | 4.30% |
Navios Maritime Partners | (NMM) | $ 901 | 1.12 | 10.60% |
Costamare Inc. | (CMRE) | $ 832 | 0.61 | 10.64% |
Diana Shipping | (DSX) | $ 650 | 9.00 | 0.00% |
Frontline Ltd. | (FRO) | $ 488 | 2.45 | 3.38% |
Safe Bulkers | (SB) | $ 475 | 0.73 | 8.65% |
Danaos Corp. | (DAC) | $ 444 | 0.40 | 0.00% |
Navios Maritime | (NM) | $ 384 | 1.47 | 6.38% |
Overseas Shipholding | (OSG) | $ 359 | 2.44 | 0.00% |
Knightsbridge Tankers | (VLCCF) | $ 303 | 7.30 | 16.09% |
Intl. Shipping Corp. | (ISH) | $ 150 | 1.30 | 4.88% |
Box Ships | (TEU) | $ 147 | 0.96 | 13.17% |
Star Bulk Carriers | (SBLK) | $ 53 | 0.62 | 6.26% |
The average current ratio of the shipping industry is 1.84. If you throw out the highest and lowest current ratios, then you get 1.56. So the average of the industry by either measure is below what Graham considered acceptable. That is interesting. What was the ratio of the shipping industry in Graham’s day? Fortunately for use he produced a gem of a table in his 1937 book Interpretation of Financial Statements which I’ve included here: The 8 companies in shipping had an average current ratio of 3.7.
I have a sickening feeling that almost every industry nowadays will have an average current ratio below 2.0. My hypothesis is that decades of Keynesian MBA finance grads have abandoned saving money to ensure financial resilience in a bad economy (like 2008-2009). Keynesians hate savings because they believe that it causes consumer spending to go down and therefore the economy goes down. If you want to learn more about this, then read Henry Hazlitt’s The Failure of the New Economics available free from www.mises.org. He’s got a whole section on the faulty logic of Keynes’ “Paradox of Thrift”.
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That’s all for now.
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The Keynesian economists that make up the Federal Reserve Board of Governors are clueless and blind. They did not see the Panic of 2008 coming, yet they claim that they see recovery and good times ahead now. Don't believe them unless you belive this.
You will have ample opportunities to buy high dividend stocks with earning power and strong balance sheets cheaply in the next two years.
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Bloomberg Businessweek ran this online article today about SF FED President, John Williams, comments on the need for more dollar counterfeiting.
My comments to the article are in red below.
Federal Reserve Bank of San Francisco President John Williams said the central bank must continue to act “vigorously” to boost the economy and sustain labor market gains.
Let me translate, “Tenured technocrat with a lifetime pension who didn’t predict the financial crisis of 2008 now knows what to do. The Fed should create a lot of money out of thin air.”
“We are far below maximum employment and are likely to remain there for some time,” Williams said in the text of remarks given today in San Diego. “Under these circumstances, it’s essential that we keep strong monetary stimulus in place. The recovery has been sluggish.”
The US is comprised of individuals. There is no “we”. That is collectivist commie-speak. Immoral, unconstitutional minimum wage laws prevent employers from hiring labor at market rates. Socialist unemployment welfare provides a incentive not to work for some individuals. He’s right since no legislators are proposing abolishing minimum wage laws and they aren’t trying to abolish unemployment welfare.
Monetary stimulus is code word for creating trillions of dollars out of thin air and giving it to large banks who will buy some government bonds or store it at the Federal Reserve as excess reserves (earning 0.25% interest from the FED). They will not loan it into the economy, so the so-called recovery will remain sluggish.
The policy-setting Federal Open Market Committee on March 13 maintained its pledge to keep interest rates low through at least late 2014, noting improvements in employment while also saying “significant downside risks” remain. Still, policy makers saw no need to roll out new easing measures unless growth faltered, minutes of last month’s meeting showed today.
The FOMC is not keeping interest rates low. The commercial bankers are keeping interest rates low. Normally the FED controls the FED Funds Rate which is the rate that commercial banks charge each other for overnight loans to meet legal reserve requirements. But these aren’t normal times. The commercial bankers have $1.6 trillion in EXCESS reserves. They aren’t lending to each other overnight because they are to the stratosphere will extra reserves above the legal limit. This make the FED Funds rate drop to near zero. The FOMC is pretending that they are in control of that interest rate.
The significant downside risks include European recession brought on the the sovereign debt crisis. The other risk is a Chinese recession brought on by Keynesian, mercantilist policies of “stimulus”. The Chinese government has been printing yuans to keep up with the Federal Reserve stimulus. This keeps the exchange rate between the yuan and the dollar near constant, but it also creates price inflation and discontent inside China. Chinese banks have been lending the newly created money into their economy which expands the money supply even more due to the fractional reserve banking process. So they have to slow down or they will experience hyperinflation. The decrease in the rate of monetary expansion will show many so-called investments (think about their real estate and constrution boom) to be malinvestments. A recession will ensue.
Recent data signal a strengthening U.S. recovery, with an improving labor market encouraging consumers to spend more in the world’s largest economy. The unemployment rate has fallen to 8.3 percent, its lowest in three years.
The economic data is Keynesian by nature. The author is talking about the recent 2%-3% gross domestic product estimates for this year. The GDP is a bogus number because Keynesians think that government spending adds to the economy. It takes money away from savings, investments, and consumption in the form of taxes. The money that could have been used by consumers and investors is then wasted by pensioned bureaucrats and politicians to buy votes. The GDP is measured in dollars; therefore, FED money creation “stimulus” makes it go up even though there are fewer goods after the bureaucratic waste.
The real unemployment number is much larger somewhere in the range of 14% - 17% when you count people who want to work full time, are able to work, or are dropped from the unemployment rolls after their benefits run out.
“Unfortunately, the kind of moderate economic growth I expect won’t sustain such rapid progress” in the job market, Williams said. The time to begin tightening monetary policy is “still well off in the future,” he told students at the University of San Diego.
The real unemployment problem is not going away fast enough despite three rounds of so-called stimulus. So what is needed is more stimulus. Years and years of printing dollars will do the trick. It worked so well in 1920’s Germany, Hungary after WWII, South America, the former Yugoslavia, and most recently Zimbabwe.
Williams forecast economic growth of 2.5 percent this year and 2.75 percent in 2013. The unemployment rate will remain around 8 percent at the end of 2012, and is likely to be about 7 percent at the end of 2014, he predicted, according to the prepared remarks.
If the FED prints money, then GDP will rise. But individuals will be poorer because each dollar will have less purchasing power than before thanks to the inflation of the money supply. The problem will be worse if the banks decide to expand lending. More money will be created. GDP growth is a lie to make you think you are becoming more prosperous when you’re actually getting robbed.
The unemployment will drop because of all the reasons I gave above. Less people will be working in 2013 and 2014 than are working now in 2012.
‘Stronger Recovery’
“I’m encouraged by recent signs of a stronger, self- sustaining recovery,” Williams said. “I’m especially glad to see that the economy is adding jobs at a pretty decent clip. Still, we have a long way to go.”
The pretty decent clip is less than the number needed to keep up with population growth. He was clueless in 2008. He is clueless now. But he makes good money and has a FED pension. There are no negative sanctions awaiting him is his optimism is misplaced.
U.S. stocks extended losses today and Treasuries fell as minutes from the FOMC’s last meeting showed central bankers are holding off on increasing monetary accommodation unless the U.S. economic expansion falters. The Standard & Poor’s 500 Index of stocks lost 0.7 percent to 1,409.42 at 3:14 p.m. in New York, retreating from an almost four-year high.
Investors are disciples of Keynesian economics also. They are sad when the FED hints that they won’t print as much money as Wall Street investors estimated. They sell some stocks when they are sad.
Government bonds are in a bubble. They are not safe, but they are touted as safe by Keynesian educated financial advisors. Are Greek bonds safe? These people thought so two years ago. They continue to be wrong.
“A couple of members indicated that the initiation of additional stimulus could become necessary if the economy lost momentum or if inflation seemed likely to remain below” 2 percent, according to minutes of that meeting released today in Washington. “Most participants did not interpret the recent economic and financial information as pointing to a material revision to the outlook for 2013 and 2014.”
Keynesian central bankers believe in free lunches. There are no free lunches. The negative effect of their past and future money printing is ruinous price inflation followed by the Greater Depression. Plan accordingly.
Consumer spending in February grew 0.8 percent, marking the biggest gain in seven months, Commerce Department figures showed March 30. Manufacturing growth accelerated in March, according to the Institute for Supply Management’s index released April 2.
Individuals need to save more money. When you save you forego consumption. You accumulate capital that can be invested in producing capital goods. Capital goods product consumer goods. Capital goods increase the supply of consumer goods. A large supply of consumer goods usually leads to a drop in consumer goods prices. You get more goods for less dollars. Your standard of living goes up. Keynesians hate this. They think that there is a paradox of thrift.
The paradox of thrift goes something like this: saving is good unless everyone does it; if they do then the economy crashes. Keynesians can’t think straight. They don’t follow the money. Where do you usually put your savings. Answer: in a bank as savings or into the stock market. What does the bank normally do with your deposit. Answer: it loans it out to entrepreneurs trying to make profits producing and selling capital goods or providing consumer goods. So how exactly the saving prevent the creation of more capital goods and consumer goods in the economy? Keynesians don’t have an answer except, “Don’t save. Spend money now to help the GDP numbers. Even better spend money you don’t have now. Go into debt to spend now to help the GDP numbers.”
Williams, 49, is a voting member of the FOMC this year. He became the San Francisco Fed’s president in March 2011 after two years as its director of research.
You will not find any prediction by this man between 2005 and 2008 warning you of a financial crisis. His research was bought and paid by the FED to tout the FED. The FED is your enemy. He will vote to ruin your purchasing power. Buy some gold coins if you don’t have any yet.
To contact the reporters on this story: Aki Ito in San Francisco at aito16@bloomberg.net; Caroline Salas Gage in New York at csalas1@bloomberg.net
To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net
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Marketwatch ran this article yesterday. There are more like it on the internet today. Medical fascism is alive and well in America. My comments are in red below.
March 27, 2012, 1:39 p.m. EDT
Justices show split over health-insurance mandate
High court adopts ideological stances on purchase requirement
By Russ Britt, MarketWatch
LOS ANGELES (MarketWatch) — Supreme Court justices appeared to be split along ideological lines after hearing arguments over whether U.S. citizens should be made to buy insurance — the central issue in the health-care-reform debate — in a second day of hearings Tuesday.
Obamacare is medical fascism. Fascism occurs when government regulates corporations to such an extent that they are just arms of the government with the illusion of private property rights. Government is telling medical corporations and insurance companies how to run their business and it is forcing the individuals of society to buy it. This is sickening and tyrannical.
Blog reports from The Wall Street Journal and other sources, however, indicated that there may be two swing votes in Chief Justice John Roberts and the court’s perennial ideological straddler, Justice Anthony Kennedy.
President George W. Bush nominated Chief Justice John Roberts in 2005. He filled the vacancy left by the death of William Rehnquist. President Ronald Reagan appointed Justice Anthony Kennedy in 1988.
Reports showed that the court’s liberal bloc, Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan, were arguing in favor of the 2010 Affordable Care Act and its so-called individual mandate during the two-hour debate.
I wonder what portions of the US Constitution the liberal judges were using to support their arguments for the 2010 Medical Fascism Bill?
Meanwhile, conservative appointees to the high court were strongly challenging those who were supporting the requirement that all U.S. citizens be insured. Solicitor General Donald Verilli faced rapid-fire questioning from Justices Antonin Scalia and Samuel Alito in the latter half of the two-hour argument devoted to the question.
What were the Solicitor General’s arguments for forcing U.S. citizens to buy health insurance? What part of the US Constitution
Throughout the debate, the Journal’s blog indicated that Ginsburg, Kagan and Breyer came to Verrilli’s defense several times as the law faced skeptical questioning from the more conservative justices.
Ginsburg argued at one point that the decision by an individual not to buy insurance affects others. But Scalia and Alito questioned that. Alito contended that the law forces young, healthy people “to subsidize services that will be received by somebody else.”
Individuals make billions of decisions everyday not to buy millions of products or services marketed to them worldwide. Their decision not to buy affects others, but so what? Producers of goods and services must persuade individuals to buy their goods voluntarily. They must make them a better deal. They must serve customers desires or they will go bankrupt. Is everyone obligated by government force to buy goods and services that they don’t want just because the seller of the good or service might be affected? This is lunacy. Justice Ginsburg absolutely abhors a free market. Hasn’t she affected red robe makers by not buying their red judge robes and wearing a black robe instead. Should the government force her to buy red robes instead of black robes be she is affecting them. If they do, then now the black robe clothiers are affected. She is a Marxist in supreme court justice’s clothing.
If there is no individual mandate, Ginsburg also said, it would force the price of insurance higher. Scalia countered that’s no different than buying a car; if fewer people buy cars, that could force up prices.
Supreme court justices have no concept of economics. Politicians enact laws prohibiting free and open competition amongst producers. The existing producers lobby the politicians to enact barriers to entry for new competition. This reduces the supply of healthcare while increasing the price of healthcare. Cartels are bad for consumers of healthcare. Consumers get high prices and crappy healthcare. What is needed is the elimination of government involvement in healthcare. Large profit margins will attract entrepreneurs to invade the existing healthcare market to provide better healthcare than is currently available from the healthcare cartel.
Roberts wondered whether the requirement to buy health insurance is the same as forcing individuals to prepare for other types of emergencies, according to Journal posts. Later, he said the requirement to buy insurance could open the doors for Congress to require the purchase of other types of goods in the future.
“All bets are off,” Roberts remarked.
It is immoral to force an individual to allocate his life, liberty, or property to the purchase of goods that he has already voluntarily decided not to purchase. How would the justices like being forced to cross train for a triathlon three hours per day so they can stay fit and not affect the healthcare systems’ costs which “affects others” who pay the taxes that pay for the healthcare system?
Verrilli has responded in most instances by framing the issue around market regulation, which is something that Congress can oversee under the Constitution’s interstate-commerce clause. The clause gives Congress the power to regulate markets. Virtually all individuals are or will become part of the health-care market, he has argued.
The interstate-commerce clause does not give the congress the power to regulate markets. It was supposed to prevent states from enacting tariffs that would keep commerce from being “regular”. See Judge Andrew Napolitano’s more eloquent explanations here: http://tinyurl.com/bp47ny3 . Statists of both parties had use this clause to justify regulation of everything and anything.
Kennedy said Verrilli needed to answer a “very heavy burden of justification” to show how the Constitution authorizes Congress to require that individuals buy insurance or pay a penalty. At one point, Kennedy commented that the mandate changes the relationship between citizens and the government “in a fundamental way.”
If you really want to see the legitimacy of the US Constitution or any constitution destroyed, then read Lysander Spooner’s “No Treason: The Constitution of No Authority” essay from the 19th century. Spooner was an abolitionist in the late 19th century. http://en.wikipedia.org/wiki/No_Treason
But both Kennedy and Roberts grilled Paul Clement, the attorney arguing to strike the mandate on behalf of 26 states.
The law is patently unconstitutional since providing healthcare is not an enumerated power of congress in Article I Section 8. Don’t these justices see the tyranny that is involved here?
Roberts noted that the government is simply trying to regulate the financing of health care, while Kennedy said all citizens are part of the health-care risk pool, according to the Journal’s blog.
During that portion of the session, Scalia and Alito reportedly did not challenge Clement, indicating they’re planning to support overturning the mandate.
Without the individual mandate, other provisions of the law could be struck down. The mandate places healthy people into the risk pool so that their costs can be shared with those of unhealthy persons.
But it is possible that the court will strike down only the individual mandate, leaving the requirement that insurance companies must offer coverage to any individual, regardless of his or her health history.
If you believe in voluntary exchange, free markets, and property rights; then you should see the immorality of forcing insurance companies to offer coverage to individuals that they would voluntarily choose not to insure. People that don’t think that is right or who would want it any different way are free to pool their capital to start their own insurance company that makes its unique service proposition to their customers “We insure anyone regardless of their health history!”. That company will be bankrupt in a short amount of time.
Insurers including UnitedHealth Group Inc. (NYSE:UNH) and WellPoint Inc. (NYSE:WLP) struggled on the day, down as much as 2%.
UnitedHealth Group (UNH) pays a paltry 1.17% dividend and WellPoint (WLP) pays a measly 1.64% dividend.
The court hearings took place as protesters from both sides of the health-care debate gathered outside the building. Among those calling for the overturning of the mandate was tea party-favorite Rep. Michele Bachmann, the conservative Republican from Minnesota who dropped out of this year’s presidential race.
Government pits people who would ordinary not interact or have conflict with one another against each other. This is the lesson in the book/movie The Hunger Games. Go see it or read it.
Separately, the nonpartisan Urban Institute issued a study Tuesday saying that 7% of all those under age 65 would be subject to the rule requiring the purchase of insurance.
The study says 87.4 million nonelderly Americans would be exempt from the individual mandate because of their low-income or undocumented status. Of the remaining 181 million Americans under age 65, an estimated 86% have insurance, the study says.
Develop a relationship with doctors and nurses in your local area who will be willing to work in the grey market of healing before the full force of medical fascism takes effect.
http://www.creators.com/opinion/john-stossel/i-tried-to-open-a-lemonade-stand.html
Politicians add 79,000 – 80,000 three column fine print regulations to the Federal Register every year. You think you are free – whoever told you that is a liar or clueless or both.
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The Federal Reserve Is Not Holding Down the FED Funds Rate, But I Know Who Is.
Jason Brizic
February 10th, 2011
The Federal Reserve pretends to control interest rates through the use the FED funds rate. http://www.federalreserve.gov/monetarypolicy/openmarket.htm
I see this all the time in financial articles. Pick any of these articles (http://tinyurl.com/7vurwdx) and you will see moronic language like this:
“Federal Reserve officials said they expect short-term interest rates to stay close to zero "at least through late 2014." The Fed has been trying to give more explicit guidance on what it expects in the future as part of a broader move to greater transparency.”
The FED claims that it is holding this key interest rate low until at least 2014 using the federal funds target rate. Here is the definition of the FED funds rate from its Wikipedia entry:
In the United States, the federal funds rate is the interest rate at which depository institutions actively trade balances held at the Federal Reserve, called federal funds, with each other, usually overnight, on an uncollateralized basis. Institutions with surplus balances in their accounts lend those balances to institutions in need of larger balances. The federal funds rate is an important benchmark in financial markets.[1][2]
The interest rate that the borrowing bank pays to the lending bank to borrow the funds is negotiated between the two banks, and the weighted average of this rate across all such transactions is the federal funds effective rate.
The federal funds target rate is determined by a meeting of the members of the Federal Open Market Committee which normally occurs eight times a year about seven weeks apart. The committee may also hold additional meetings and implement target rate changes outside of its normal schedule.
The commercial bankers (aka depository institutions) have decided not to loan out all the money the FED created for them during the bailouts of 2008-2009. They are holding over $1.5 trillion dollars in excess reserves.
Therefore, they don’t need to make overnight loans to one another to satisfy the legal reserve requirements. These bankers are scared to make loans in this horrible economic environment. I don’t blame them for being scared. They have decided to park the money back at the FED and the FED is paying them 0.25% interest to store it for them. This has caused the federal funds effective rate to drop to 0%.
The FED could get the banks to lend the $1.5 trillion dollars into the economy by imposing a fee on excess reserves. But that would create hyperinflation in the money supply and prices would rise over 100% in a few months. The FED doesn’t want that to happen, so they pretend to be in control of the federal funds effective rate when the terrified bankers really are. The bottom line is that there will be no economic recovery until bankers increase their lending. That means we will experience a double-dip recession regardless of what happens in Europe or China. I’m waiting for much lower stock prices to buy high dividend stocks with earning power and strong balance sheets.
For more tips, go here:
http://www.myhighdividendstocks.com/category/tip-of-the-week
Are you paying too much money for stocks? I see many companies that fund their dividends through additional equity offerings. AGNC comes to mind. Where do you think the proceeds are going in some of these high dividend stock equity offerings? Here is a clue.
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Your retirement and trading (brokerage) money is not safe. Register your stocks in your own name. This means you need to get them out of “street name” registration from your broker.
The real scary aspects of the MF Global bankruptcy are becoming known to a wider group of people. Some people are smelling the first wiff of smoke in the theater and are tiptoeing to the exits. Don’t get trampled when the masses of individual investors see the flames and stampede in the rush to get out with some of their retirement money.
http://teapartyeconomist.com/2012/01/31/your-money-is-not-safe/
Even the congressional budget office (CBO) sees lower Keynesian growth rates coming. This means a double-dip recession.
http://www.zerohedge.com/contributed/cbo-report-omg
There will be opportunities to buy high dividend stocks at value prices during the lows of the upcoming recession.
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