Meeting Minutes

We had an absolutely wonderful meeting at Romano's Macaroni and Grill - in fact, we were enjoying our meeting so much that we were there for over 4 hours and it felt like only 2 - time passed us by so quickly.  We even got our server, John, involved in our conversations (more on that below).  We had 3 attendees: (from left to right) Tommy Schultze, VJ Arjan, and Ry Zamora. 

The Affordable Care Act (aka Obamacare)

As the healthcare exchanges for Obamacare went live on October 1st, we all asked the ramifications that will entail such a huge program going into effect.

Tommy Schultze had several key insights:

- 1/5th will lose 1/4th - in other words 1/5th of the population will lose 1/4th of their income.  This is not referring to the economic classes above the middle class, but rather that rung of the ladder which is below the middle class and above the poverty line.  As a result, it may effect the lower-income classes more harshly.

- Contract labor - According to the ACA act, businesses with more than 50 employees have to offer insuranace to their employees who are considered "full-time".  The ACA defines "full-time" as any person working a minimum of 30 hours per week.  He believes that the corporate worker model is being replaced by a contract laborer model.  The industries that will be affected the hardest, in his estimation, are the food service and retail sectors.  He also mentioned that any industry that has a cyclical economic cycle will be affected similarly.

- Renters shortage - Due to the increase in the cost of healthcare across the board for most people, several renters who are already stretched will find it difficult to pay rent to their tenants and will therefore move to apartments.  Tommy said that this should be very good for companies like Rent-A-Center, storage facilities and pawn shops.

Although the long-term impact will only be known in the future, it is clear that the short-term impact will negatively affect the vast majority of citizens.  If the costs for healthcare skyrockets, so will the premiums under the ACA act.  The question is whether or not the increases in healthcare costs will be lower under the ACA act. 

VJ Arjan brought up the fact that our current healthcare costs are, in his opinion, outrageous compared to several countries around the world.  For instance, according to the International Federation of Health Plans, the United States is paying sometimes quadruple or quintuple the amount for the same services.  These are several graphs below that illustrate the point -  there are even more graphs at http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/26/21-graphs-that-show-americas-health-care-prices-are-ludicrous/.

These comparisons, however, are just to illustrate an issue, not whether the ACA act can actually address them.  The problem, VJ went on, that needs to be addressed is healthcare reform regarding the actual cost of healthcare.  The ACA act may end up redistributing the cost of healthcare without addressing the critical reform needed.

For a good calculator to estimate your premiums and potential subsidies under the ACA act, go to the Kaiser Foundation website at http://kff.org/interactive/subsidy-calculator/.  For more information regarding the ACA act, visit www.healthcare.gov. 

U.S. Debt Default

We all addressed the question regarding what would actually happen if the U.S. defaulted on its debt? 

Ry Zamora had some key insights:

The strongest reaction would come from the holders of U.S. sovereign debt, especially other countries like China.  Should they realize that their investment is going to default, it could go a long way in shifting their past and current policies with the U.S. completely. 

It is true, he explained, that China and the U.S. share a symbiotic relationship, but many have mentioned that China needs the U.S. more than the reverse as China does not have a developed domestic economy to consume the things which they produce. 

Ry mentioned that, interest rates, which are the mark of risk/reward, would shoot up across the board.  The rapidly increasing money supply would therefore watering down the U.S. dollar even further.  This depreciation would be good for, however, for the U.S. export market as they can sell their goods for much less relative to other sounder currencies. 

For example, VJ explained that it is common practice for Europeans to go to Disney World in Orlando, Florida even though there is a Disney Land in Paris, France due to the affordability provided by the Dollar-Euro/Pound/Swiss Franc exchange rate.  This advantage would be spread across the board to all markets should the U.S. dollar depreciate much further against these basket of currencies. 

Tommy mentioned that in times where the value of fiat currency is uncertain, it is best to buy tangible assets.  One can always go back to the bartering system, should the fiat currency fail to hold.  He mentioned that the word "cash cow" actually comes from the practice of using cows as the first form of currency, at least that has been documented historically. While he is not suggesting that we all buy cows and turn into farmers, he did mention that it would be very dangerous to own dollar bills that are worthless, given that the value of greenbacks are in the trust that people afford to it. 

There is no inherent value in the paper bills, besides the full faith and credit of the United States Treasury.  Even on the front of every dollar bill which is issued by the Federal Reserve to the United States Treasury, there is a clause which states that "this note is legal tender".  Interestingly enough, the U.S. Treasury (and the U.S. citizens by extension) is a debtor to the Federal Reserve.  The people, therefore, must trust that the note that the Federal Reserve prints is backed by some value.  If not, it is worth perhaps the paper the note is printed on.  So fragile is this relationship between trust and value.

So the bottom line, Ry continued, is that should the U.S. default on its debt and the U.S. dollar be, in effect, rendered worthless over time, the net-net is that business will continue as usual using an alternative form of rendered currency, whether it be Euros, Chinese Yuan, Bitcoin, or even cows.  In Ry's estimatation, even shares in companies will be converted to alternative currency forms, because shares in a company are certificates of ownership on plant, property, equipment, etc. and those tangible assets can be traded for other commodities of value.

Silver Certificate issued in 1928

Only time will tell perhaps, if the United States shall follow down that Yellow Brick Road and the outcome may be quite different from what we at the Scarlet Kings have speculated.  But we would hope that is it prudent to have at least a backup plan or exit strategy, than to have none at all.

Handwriting Analysis

It has been a while since this blogger has wanted to write something upon this subject. 

Tommy Schultze has one amazing talent among his many other talents, and that is that he can analyze with almost fearful accuracy a person's tendencies, behaviors, and character just by a quick glance at his/her handwriting.  It could even be as much as a signature on a receipt.  It is a result of 8 or 9 years of intense study on the topic, by his own admission.

At Romano's, it is customary for the server to write his/her name on the paper table cloth.  It was so amusing for us to see that as soon as our server wrote his own name, Tommy would fire off point after point discussing this person's personality type, behavioral tendencies, etc. 

So astonished was our server, John, that he came back several times to our table just to go over just how in the world Tommy was able to deduce what he did.

Afterwards, he analyzed Ry's handwriting and gave him something to chew on as well.

The basis for how he is able to deduce what he can comes from his belief that handwriting and the alphabet in any language is an amalgamation of symbols, which stand for some behavior or emotion.  For instance, those whose signature appears like a harpoon, can have a quick or hot temper.

  
There are 3 zones to one's signature, the lower, middle, and upper.  For instance, those who have clearly defined letters in their middle zone have a penchant for being meticulous.  And each one tells him of something about the person's personality.

Ry added that the Chinese language is built upon this exact premise, in fact, it is much more straightforward.  He took for example the word in Chinese that means "good", or "hao" in Chinese.

The word "hao", however, is a combination of two letters that are the words for "woman" and "child". 

It is a fascinating study indeed, and it shows just how connected the psyche is, if unconsciously, in expressing itself through writing.

The Threat From Scotoma (an area of diminished vision, a blind spot)

Tommy and VJ discussed the prevalent attitude he sees in the United States today, particularly the youth.  Tommy mentioned that the youth today value independence over freedom.  It has become custom for one's children to leave the house after they have reached 18 or so, because they just can't wait to live freely, away from their parents. 

It is not this way in all cultures.  VJ mentioned that in India, it is perfectly normal for children to stay with their parents for several years after they become adults.  In fact, it is even normal for several to live with their parents in the same home after they are married.

Tommy mentioned that the youth today are so obsessed with this "freedom" even though they may kill themselves psychologically to support themselves through their job.  Many recently-graduated college students, who have a heavy burden of student loan debt, are perfectly happy to carry that debt for 10-15 years so long as they have a way to live on their own.  It is a perfect indication to him of people afflicted with the short-term mentality. 

It would make more sense, VJ added, if these recent grads stayed at home with their parents for a few years while this could be paid off, but, we suppose, common sense is not that common. 

Tommy added that this faulty and loose logic is a form of mental scotoma for many individuals today, who are willing to live their lives in a fashion that is deleterious to their well being, while believing it is going to add to it. 

He mentioned that the same mentality exists in the drug culture - taking psychedlic drugs can either separate one from its feelings or enhance them.  More often than not, especially those drugs which are considered heavy (cocaine, heroin, etc.), are a form of escapism, a way to separate you from all of your problems and issues, so to speak.  The trip is often so good, and the shirking of responsibility and accountability is so wonderful that it is no wonder that it is so easy to become addicted to these substances.

The Sacking of Rome

This mental scatoma and complacency was, according to the historian Edward Gibbon, the reason that the Roman Empire collapsed.  According to him, it was due to a gradual loss of "civic virtue" among its citizens.  The Romans had become so weak, that it eventually succumbed to barbarian invasions from the Goths (Northern Europe).

The next meeting will be on Sunday, November 3rd, 2013. 

For those who have not attended a meeting, but would like to attend, please email your wish to VJ Arjan at scarletkings@gmail.com

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