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Mark's Market Blog

2-17-12 Long Term Disability

By Mark Lawrence

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Markets took an yet another anemic step upwards this week. Everyone now believes that Greece can now default on or about March 20 with no particular ramifications outside of Greece. Isn't that kewl? You can kick 11 million people to the curb, roughly Ohio, and no one will notice.

S&P 500 August 27 2011 to February 17,2012

What's next for Iran? For the last four years, Iran has been digging tunnels and moving their nuclear research underground; for example their "nuclear research station" at Qom is under 295 meters of rock. The Pentagon has requested and received $81 million in reallocated funds from Congress to get their Massive Ordnance Penetrator, a 30,000-pound bunker buster bomb, ready for use. This bomb has demonstrated the ability to blast through 200 meters of rock. And as promised, President Ahmadinejad announced his "big nuclear" news Wednesday and says his country will load its own domestically produced nuclear fuel rods (enriched to 5%) into its Tehran Research Reactor. As I pointed out in a previous blog, getting to fuel rods is the hard part, the next step to bomb grade is relatively simple. When you see two heavy-weight fighters punching the air and talking trash, it's not hard to think that what follows is something other than a pinochle tournament.

The red dots are the good stuff.

Election 2012 early predictions: We're 9 months away from elections, and that's an eternity in politics. None the less, based on an economic model the following prediction has been made: Obama wins with 303 electoral votes to Romney's 235. If Romney wants to win this, the battle ground states are Virginia, Ohio, and New Hampshire. If you count those states as toss-ups and the remaining states where the odds come out as 2 out of 3 or better, then right now it's Obama 268, Romney 235, undecided 35. If Romney were to win all three, it would be Romney 270, Obama 268. Given that Obama has Bernanke and the European Central Bank effectively behind him, I think Romney's chances are slim. In the chart below left-leaning states are on the left, and right-leaning states are on the right. A quick glance will show you that relatively few states are in play - we live in an extremely geographically and politically polarized country. Even changing the "lock" odds to 3 in 4 only brings seven more states into play - Maine, Nevada, Pennsylvania, Iowa, Colorado, Florida, Missouri, Indiana.

Electoral Projections for November 2012

Global Warming: The earth has been cooling since 1998, that's pretty well established now. This winter we're seeing mild conditions in the US, but in Europe they're having record snows and cold. Rivers are freezing over for the first time in a century, including the Danube. On the positive side, we can now ice skate on the Danube to the sounds of the famous waltz. Hypothermia cases are doubled in Britain. Snowfall in Tuscany (Northern Italy, think San Francisco) has collapsed barns and left at least one million animals in danger of running out of food. Snowfalls in Turkey (think Los Angeles) have blocked over 2,000 roads. The most interesting part is that reporting on this is nearly completely absent in the US press, and in Europe it's being reported as a "cold snap." What's up with this weather? 1) The arctic was substantially ice-free far later in the year than normal, putting a lot more water vapor into the air, and 2) the sun is cooling down. The UN - European sponsored Global Warming hoax used to be simply disgusting, but now twenty years in we find that Europe is desperately low on power due to closing coal plants and replacing them with inadequate wind farms. What's next? NASA has already forecast a mini-ice age comparable to 1500 to 1900; however history tells us that for the last 5 million years the earth has been in a repeating cycle of about 100,000 years in an ice age, followed by about 10,000 years of the climate we've been living in. The last ice age? 11,500 years ago. Is it safe where you live? A map of the last ice age glaciation is below.

Glaciation from Previous Ice Age. Avoid Chicago, New England, Germany, Scandinavia, Moscow.

We crossed over a threshold this year: more than half of births to American women under 30 occur outside marriage. It's the new normal. 73% of black children are born outside marriage, 53% of Latinos and 29% of whites. About 92% of college-educated women are married when they give birth, compared with 62 percent of women with some college and 43 percent of women with a high school diploma or less. Why? Men are worth less than they used to be. Many unwed mothers noted that if they married their boyfriends, their official household income would rise, which could cost them government benefits like food stamps and child care. Children born to married couples, on average, experience better education, social, cognitive and behavioral outcomes - so this trend is certainly not about what's best for the children..How could we fix this? It's well known that when the man's income drops below 2/3 of the family income, the divorce rate skyrockets. Apparently we need more good paying jobs for men, like the union manufacturing and construction jobs that have disappeared in the last 30 years. Good paying apparently means paying twice what the average woman in her 20s makes. Of course anyone who attempted to institute such a policy would run afoul of women demanding equality in pay. There's no solution, marriage is going to disappear. It already has in the lower classes, it's happening in the middle classes right now, and the upper classes won't be far behind.

99 week unemployment benefits are running out for more and more people. What's happening to them? Fully a quarter of the long-term unemployed are moving over from unemployment benefits, which end at 99 weeks, to long term disability, which never ends. In the last two years, SSI disability roles have increased by 20%. Two years ago these people were gainfully employed; in the downturn they lost their construction and manufacturing jobs. Now we're to believe that a quarter of these people who can't find work need never look again. Personally, I've a 28 year old step son who just got onto disability. He's a strong kid who used to make a living in construction, but now that those jobs are no longer available he's been found to have schizoaffective disorder. That means he has frequent bouts of depression and distorted perceptions. What has disability done for him? He has a bit of pocket money now. He used to walk several miles a day looking for work or just getting out. Now he sits in my ex-wife's home all day and smokes, losing muscle tone and gaining weight. It's not good for him, and it's not good for the taxpayers. If I sat around all day smoking I'd be depressed too, and I think you would have no problem lining up people to testify that I have distorted perceptions.

Why do we care about long-term disability? 1) people on long-term disability are there for life. Last year less than 1% left disability, 99% just ride it into age 62 and retirement benefits. 2) This program costs $200 billion per year, more than the combined budgets of the departments of Commerce, Energy, Homeland Security, Interior, Justice, and State. Last week I noted that food stamps cost the taxpayers $1,000 per year per taxpayer. Disability is $2,500 per taxpayer per year. Without a doubt some, perhaps many of these people are truly disabled and need assistance. Without a doubt many more simply need to get a J-O-B. There aren't any jobs? Well, in my mind that's a separate problem. The answer to that is not long-term disability for the long-term unemployed. We have states like Alabama, which recently passed a bunch of laws aimed at illegal aliens. The result? Companies lose a third of their workers in some areas, and in a state where unemployment is 18% they can't find job applicants because no one wants to filet catfish or butcher chickens. Ok, I don't want to filet catfish or butcher chickens either, but what you have here is businessmen wanting to hire people, and they find they're in competition with the government who wants to pay people to sit home and smoke. I think we all agree that a rich society like ours needs to assist the truly downtrodden. I hope we can also agree that these programs are subject to abuse, and must, in the words of President Clinton, be "a hand up, not a hand out." As I noted in my bold predictions, as budget constraints tighten and it comes down to more taxes or less spending, all of these programs: food stamps, disability, Commerce, Energy, Interior and Homeland Security are going to come under increased scrutiny, and many are going to be found wanting.

Need to exercise more? Try high-intensity interval training, or HIIT, 1 minute of all-out effort at 100 percent of a personís maximum heart rate (subtracting your age from 220) followed by 1 minute of rest, repeat 10 times. After six weeks, HIIT sessions produced similar physiological changes in the leg muscles of young men as multiple, hour-long sessions per week of steady cycling, even though the HIIT workouts involved about 90 percent less exercise time. The training also improved the volunteersí insulin sensitivity and blood sugar regulation, lowering their risk of developing Type 2 diabetes, according to a study published last fall in Medicine & Science in Sports & Exercise.

Researchers found that those with a slower walking pace were 1.5 times more likely to develop dementia and those with a strong hand grip had a 42% lower risk of having a stroke over the age of 65. They came to their conclusion after conducting a series of tests on 2,400 men and women aged around 62, whose results were measured over 11 years. So to avoid senility, walk faster and have a firm handshake. Can you remember that?

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