Friday, May 25, 2012

Ode to Chuck Bluth and Nevada Entrepreneurs With Political Courage

Silver Senator Note:

This is a longfellow, with a few good ideas and opportunities for every Nevada voter:

If you can keep your head when all about you
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or, being lied about, don't deal in lies,
Or, being hated, don't give way to hating,
And yet don't look too good, nor talk too wise;

If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim;
If you can meet with triumph and disaster
And treat those two imposters just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to broken,
And stoop and build 'em up with wornout tools;

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on";

If you can talk with crowds and keep your virtue,
Or walk with kings - nor lose the common touch;
If neither foes nor loving friends can hurt you;
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run -
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man my son! 

If, by Rudyard Kipling

Yesterday was one of those life-affirming days we love and seem to be having more of, as the 12 June 2012 Primary approaches..

By kismet on a trip to Incline Village, we turned on the radio and caught the Jon Sanchez Financial Show earlier than usual at Five PM on KOH AM 780, with Chuck Bluth and his business partner Max Haynes:

Between them, they have a list of successful entrepreneurial companies that could make grown adults blush:

Mr Bluth owned and sold Cal Neva Stateline Casino, Resort and Spa, the former property of Frank Sinatra and hangout of Sammy Davis Jr, Judy Garland, Howard Hughes, the Kennedy boys, Dean Martin, Marilyn Monroe, Will Rogers, George Whittell Jr of Thunderbird Lodge with his Lion Bill making trips in the darkness on the yacht and The Rat Pack, local Lake Tahoe Colour at its best. (Select Lodge and Yacht.)

One of the largest owners of NV Residential Rentals, Private Equity (Hard Money) Loans from 8 to 11% for those that cannot qualify for FHA Conventional Loans, an Auto Loan company, and two Tahoe Lakefront Trophy Properties, one of which brought Mr Bluth in conflict with TRPA, who said he owed them $200,000 and $5000 a day for not getting their permits, while spending $200,000 remodeling his home. If memory serves well, a jury trial acquitted him. Mr Bluth also had run-ins with TRPA refusing to let him fully renovate the Cal Neva Property, so he sold it near top dollar in 2005, having bought it as a fixer upper in 1985.

After the completion of his Logan Shoals Marina Home on the South East side of the Lake between Cave Rock and Glenwood, Mr Bluth put his 9520 square foot custom materials North Shore home, Chateau Soleil, on the market in 2011 for just under $16 Million. 

In the marketing piece by Chase Intl, it was stated:

Bluth specifically chose to establish his business and residency in Nevada where there are no capital gains, personal income or corporate taxes. He believes that entrepreneurs would do well to follow suit with widely expected federal and state tax increases on the horizon. 

Businesses and entrepreneurs need to evaluate and implement proactive financial planning strategies," says Kerry Donovan, of Chase International. "It makes perfect sense for businesses in California, and other high-tax states, to consider moving their corporate headquarters to Nevada. Business owners are realizing this, and as a result, we're seeing an increasing demand for properties... 

Any of these tax breaks might bode well for Nevada in 2013, when the lowest Federal Income Tax Bracket is increased 50% from 10% to 15% and payroll taxes revert and increase, despite copious lip-service about protecting the middle-class and our economy:

With thirty-two years in licensed Insurance, Real Estate or Securities, if not dispensing tax advice, I related to Mr Bluth's entrepreneurial stories of real estate cycles, stating in the Jon Sanchez interview that the one in the Seventies was much worse than now. 

(The Eighties, when I was named Co-Executor and Trustee of a Portfolio of Tahoe Income Properties in 1979, was tough decade too for middle range properties.)   

Mr Bluth founded a medical device company in 1978, about the same time I found funding and helped write the business plan for a medical device company, the second fastest growing Inc 100 company IPO in 1983, acquired in 1987 and take private in 2007 for $11.4 Billion.

Thus Mr Bluth had my full attention talking about the residential real estate cycle (that officially peaked in 2006, according to Case Shiller):

I received my share of blame, doubt and scorn telling family, friends, classmates and former clients the Real Estate market was topping at that time and earlier, just as I had told them we were going into a secular (long-term) bear market in stocks in the Jubilee year of 2000.

I had sold my home with a nice capital gain, put things in storage in Nevada, and was sitting in cash and silver for a rainy day to buy. It was tough to be homeless without income.

When I heard Mr Bluth saying he thought the real estate market had bottomed, something I have been saying this year, with this chart, I perked up:

(Martin Armstrong, the very successful proprietor of Princeton Economics, was a Grimm Once Upon A Time style political prisoner for 12 years by a Manhattan Judge related to the Bush Family, who locked him up 7 years without a trial for contempt of court.

The Rogue Judge forced a confession plea bargain under duress in solitary confinement and a near-fatal attack without proper medical treatment by a violent inmate deliberately placed in his cell.

The Judge sentenced him without credit for time served, to another five years in Federal prison, without Constitutional due process, before he was finally removed from the case after a media uproar.

The Judge's thin claim was Mr Armstrong did not cough up his life's work of financial software and gold relics for an alleged Ponzi scheme leading to the loss of Japanese Republic Bank Client Funds.

This was yet another parallel to our Innovest Software with Stanford Capital which earned us a going-over by Merrill Lynch's Compliance Department after almost ten years as a loyal employee before Wall Street Firms started converting client funds and keeping them.

The interesting Martin Armstrong questions were why Hong Kong Shanghai Bank paid off all the Republic Bank claims when it took the bank over, why the founder of Republic Bank died in a mysterious Monoco Penthouse fire shortly thereafter, and why the charges against Mr Armstrong were not dropped after full HSB restitution): 

Mr Armstrong was released from prison on good behaviour, only after we and a member of US Congress got involved.

It is worth noting a current Supreme Court member reviewed the Kangeroo Court Armstrong case as an Appellate Panel Judge and upheld it: 

"This imprisonment without trial is one of the most aggregious (sic) acts any court has administered against one of its citizens." 

For a fascinating first-person instructive narrative of what actually occurred:

Fast forward back to Mr Bluth's RE experience: 

Diane Sawyer carried the story on National News last night (24 May 2012) that national mortgage rates hit a forty-one-year record low at 3.78%. 

Of course, this was not the first time National News announced record mortgage rate lows, that may go lower with another global stock market crash and debt defaults in an election year like 2008: 2:27

Mr Bluth said he began selling his large portfolio of real estate when his tenants could not pay their rent, but qualified for Nothing Down loans on homes they could not afford, thanks to the Home Ownership Society legislated and promoted by previous Congresses and Administrations.

Mr Bluth or his business partner specifically cited Barney Frank and Lenders forced by political regulators to make home [liar] loans to unqualified borrowers without documentation. 

Of course the Wall Street Subprime Mortgage scandal heard 'round the world did not hit for another four years in 2008,  but Mr Bluth was at least one Rudyard Kipling Man who had the courage of his convictions to sell when most were buying.

Now, eight years after he began selling real estate, Mr Bluth is again buying real estate, putting his money where his mouth is.

Mr Bluth bought in bulk. 

He bought 52 lots listed at prices up to $125,000 for an average price of  $16,346, plus other parcels of properties, totaling over 100 lots. He has put them on the market for development by contractors, including 2 lots he is donating to Disabled Vets and their families, with brand new state of the art homes built at costs by builders and suppliers. 

This last bit reminded us of founding Aquarius House Inc Crisis Intervention and Emergency Housing during graduate school. It feels good to give.

I am the first to admit forecasting is a hazardous occupation, and past successes guarantee nothing for the future. I admire Mr Bluth putting his money where his mouth is, suggesting Nevada real estate prices are recovering. 

We have nothing to fear but fear itself.

Conversely, at least one former associate of Mr Bluth whose lender sold their mortgage to a company that returned mortgage payments so they could collect a government payment, believes real estate is headed down for years, if not decades, as shadow upside-down equity foreclosures and short sales come to market. 

Mr Armstrong sees a decline in Real Estate until 2033, after three good years from 2012 to 2015.

Who really knows for sure? 

Three good years from 2012 to 2015 may be baked into the mortgage cake after three years from 2008 to 2011 that more than tripled the monetary base that fuels the money supply and bank lending. 

If employment and interest rates go up for any period of time, banks may be more willing to sell their Municipals and Treasury Bonds to lend mortgages with their cash:

I got so enthused by Mr Bluth's hour-long conversation with Jon Sanchez and Max Haynes, I grabbed an exhausted Brooke after work. 

We headed from North Stateline Tahoe to South Shore Stateline for a late dinner at Mr Bluth's South Shore Stateline Lanza's Italian Restaurant (named for the recipes at North Shore). 

Mr Bluth's South Stateline Lanza's added popular menu items and is now renamed Sul Lago Ristorante, Restaurant on the Lake. It was complete with a Litho of the Chairman of the Board, Frank Sinatra, on the wall by a nice Bar with the Baseball Game on TV.

There was another parallel: helping start the Greenhouse near Harvey's Nevada South Shore Stateline in 1976. 

We had a nice dinner and service for $60, and enjoyed talking with Hostess Erica, Waiter Dayne and Chef Jimmy to get the rest of the story:

On the 45 minute drive home, Brooke, who works at the 5-Diamond 20,000 square foot Ritz Carlton Highlands Spa with saltwater pool, said Mr Bluth had given her a container of his Cal Neva Spa Mud made from a Nevada Salt Flat, after she worked on a family member. I tried it last night on some insect bites and it worked to stop the itching:

So what we are talking about here, with perhaps too much personal detail, is really the same issue Sophocles immortalized in Antigone, what Soviet emigre' Ayn Rand novelized in 1957 with Atlas Shrugged: 

We are talking about the on-going struggle for balance and growth between the State and the Individual for Justice, Life, Liberty, Peace and Prosperity, the dynamic battle between Government and the Productive Entrepreneur.

For the last generation, government grew faster than the economy and population, with lowered living standards the result. 

As Chef Jimmy at Sul Lago Ristorante put it, he began cooking for $10 an hour forty years ago, and still makes $10 an hour, despite much higher costs for living.

Mr Bluth's partial victories over an over-zealous Tahoe Regional Planning Authority showcased the eternal struggle between those that produce and those that take.

Francis Ford Coppola and Mario Puzo came at it from a slightly different angle and emphasis with The Godfather Trilogy, re clandestine mafia families that gradually took control of government: 

Most of us active registered voting citizens suffered government taking over our lives and fortunes so effectively, gradually and subtly, that many of us may not even realize today that far less than half of US citizens pay income taxes via coercive government red tape and taxes to support the rest.

Producers support far more than half of our population today, with ineffective unproductive government education, food stamps, health care, jobs, tax subsidy, welfare-bought votes for something for nothing to the population at large, including illegal aliens, 30 multinational corporations and foundations that paid no taxes, some corporations even getting refund checks.

It is worth remembering Article I, Section 8, Paragraph 1 of our Constitution, in prescribing the Power of Congress, (not the Courts or President) To lay and collect taxes, writes:

all Duties, Imposts and Excises shall be uniform throughout the United States;

Today, with more than $119 Trillion in unfunded government mandates for Medicare, Pensions, Prescription Drug Benefits, Social Security and Welfare, the upside down government budget situation may not last too long before blowing up: 

It is worth noting in 2012 under the President's budget, individuals pay $1.165 Trillion in income taxes, $841 B in payroll taxes that decrease take-home wages, and corporations pay $237 Billion in taxes:

Let us add on to taxes the invisible tax of inflation, really around 10%, according to ShadowStats:

No wonder de facto unemployment is 28.27%, with only 58.5% of the civilian population employed. So many people dropped off government income rolls:

Meantime, homes are the most affordable in years, with payments lower than renting.

It is worth recalling it takes 1.3 jobs to buy a house, while building and buying houses creates many new jobs for each house. 

We see the Nevada parking lots at Home Depot and Lowes are getting busier.  
Meantime, on a national scale, unfunded government unfunded liabilities of $119 Trillion dwarf current government revenues of some $2.24 Trillion, working out to $1,047,165 of unpaid government bills facing each taxpayer.

Doing simple division suggests it could take 53 years for taxpayers to pay those unfunded government mandates at present revenue rates.

53 years to pay government IOUs is true only if unfunded mandates do not grow as fast as they have for a generation and Federal Government stops spending the Social Security Payroll Tax funds faster than they come in.If not, then it takes longer on paper. 

Will the next generation stand for government destroying the economy with debt?

Taxing productive members of society 100% cannot pay the $3.5702 Trillion Federal Budget.

Here are the numbers and simple math ignored by media politicians: 

113,655,841 income taxpayers who earned a median income of $23,535, can contribute only $2.674 Trillion (113 Million x 23 Thousand) to government spending. 

In other words, taking 100% of taxpayers' income could run the government for only three quarters of the year or Nine Months. Just the facts m'am:

So where does the rest of the money come from to run government nowadays?

It comes from a unique arrangement the private Federal Reserve Bank shareholders receiving 6% dividends from the US Treasury at Taxpayer expense worked out at Kekyll Island behind closed doors and passed on the eve of 1913 Christmas Congressional Recess when Representatives and Senators had already left for home.

The Federal Reserve issues fiat dollars backed by interest-bearing debt created out of thin air. 

The debt service and repayment is charged to the US Treasury, which oversees the IRS, which charges taxpayers for that debt interest or repayment, despite being headed by a Secretary who cheated on his taxes.

The last time the Federal Debt was paid off was when Andrew Jackson was our 7th President and closed the National Bank:

(When Hamilton and other representatives of European Private Central Banks like the Bank of England tried to foist their usury scheme on the American People, it was repulsed by Washington, Jefferson, Jackson, Lincoln and other patriotic Presidents.

In 1914 a Princeton President named Woodrow Wilson signed it into law. 

Then he took the USA into World War I, which increased debts so much for the Americans and Germans that it led to Hitler, Hirohito, Mussolini, Stalin and World War II after FDR repudiated the Constitutional legal tender of Gold. 

As an important clue for today, Congressman Charles August Lindbergh, father of Garden City to Paris Aviator Charles August "Lucky" Lindy, the Lone Eagle, opposed the Federal Reserve Act and entry into World War I:

His aviator son Lindy, a US Army Reserve Officer Medal of Honor recipient, and inventor of the Heart Pump and Rocket Researcher, accepted with Henry Ford the Commander Cross of the Order of the German Eagle and provided the USA with military intelligence during his heroes tour of German and Soviet Aircraft factories. He told FDR Germany was gearing up for war, but advised him through British Ambassador Joe Kennedy to steer clear and let Germany attack communism in Asia and the Soviet Union:

After his infant son was kidnapped and murdered, he opposed the USA entering a European War. He and his family fled to England and Il Illiec off the coast of Brittany, France, until recalled as a Colonel in the Army Air Corps by the Chief of Staff.  In 1939 after Hitler violated the Munich Pact, the Lone Eagle wrote in a Reader's Digest article:

"Our civilization depends on peace among Western nations... and therefore on united strength, for Peace is a virgin who dare not show her face without Strength, her father, for protection."[8

Although FDR never restored his Colonel Commission, after Pearl Harbor Lindy helped Henry Ford manufacture the B-24 bomber and flew 50 unofficial combat missions against the Japanese and improved the performance of the Corsair and P-38 bomber/fighters and their pilots.)

The Silver Senator and Kennedy restored Silver as legal tender, but JFK was assassinated. Gold was not legal again until 1 January 1975 and Silver was not legal tender until 9 Jule 1985, with the first American Silver Eagles in 1986, but I digress and that is another account for our Silver Eagle business. )

Today, our largest six Federal Budget items are 

1) Medicare/Medicaid $829.8 Billion year to date, 
2) Social Security $742.9 Billion ytd, 
3) Wars $692 Billion ytd, 
4) Unemployment $381 Billion, 
5) Net Interest on Treasury Debt $225.8 Billion ytd, and 
6)Federal Pensions $213.8 Billion ytd. 

Our US trade deficit, year to date, is $796 Billion dollars, the result of decades of multinational corporations building plants and seeking cheaper labour overseas. But for the first time in a long time, multinational foreign corporations are locating plants and hiring in low-cost states like Alabama and South Carolina. 

Nevada has an able workforce and the US Senators from Nevada can certainly work to increase employment here.

In a few fast years, the interest on the Government Debt (often miscalled the Public Debt) may exceed all other budget categories, particularly if interest rates rise.

Clearly, the only realistic budget solution to save the day is to cut government spending, as households have to do.

This is something Federal politicians so far have been loathe to do. should be required reading for all candidates and elected officials.

Instead, politicians believed in a perpetual free money machine, driving up debts for their constituents.

Politicians pretended to fix the economy with borrowed money.

Politicians violated our Constitution with Patriot Act, Indefinite Detention, Federal Trespassing Legislation, while Executive Agnecies refused to enforce the laws and regulations for Life, Liberty, Peace and Prosperity.

We suffered Department of Homeland Security TSA Police State, DOJ Fast and Furious gun-running, Gitmo tap dances, greater temporary spending on "shovel-ready" infrastructure that was anything but, hidden taxes on healthcare with 20,000 new IRS agents, payroll tax cuts that further weakened Medicare, Prescriptions and Social Security and broken promises of the end of foreign depleted uranium wars disabling and killing our youth, the promise of tomorrow.

The $15.7 Trillion in debts piled up this last generation now exceeds the size of our economy. 

It amounts to $693,249 Federal Debt per American family:

It is past time to pay the Piper.

Yet Congress for the last three years violated our Constitution and refused to pass a budget, let alone a balanced budget with sound money. Congress has not passed a budget since 2009:

Why are they re-elected?

Lobbyist-owned politicians may think they can inflate their way out of the mess they created, with over $726 Trillion of Credit and Currency Derivatives that dwarf the $72 Trillion global economy ten times.

But most of us in Nevada and America with common sense know better.

Sul Lago Ristorante Chef Jimmy also described what is wrong with American politics in a cannelloni shell:

The D's are too far Left and the R's are too far right. Who is in the middle like Ronald Reagan and Tip ONeill, who worked with each other for different parties?   

We are. We continue to insist we are the Constitutional Candidate who intends to combine the best of both Parties and Independents for All Americans.

We appreciate your support and vote in the Republican Primary on or before 12 June 2012:

Registering to Vote:

Absentee Voting:

Early Voting:


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