Rob Cheng’s Blog

Somewhere in the 80′s or perhaps the early 90′s, the American dream changed. The American dream became to own a house. Before that time, it had been about the future. I was raised to believe that if you were smart and worked hard, you could build a better future for yourself. Also, I have always wanted to believe that whatever future I could build, my children would have a brighter future than me. I no longer believe this.

Many of my friends and relatives childrens are becoming of age to go to college or enter the work force. It makes me sad because they do not have anywhere near the opportunities I had when leaving college. There were literally a line of companies that wanted to interview me. I was 20 years old flying throughout the entire country for free trying to select the best company for me. It made me feel great about myself and my future. Today’s college graduates are lucky to get a job at all much less get wined and dined by the most attractive companies in the country.

So how did we get here? How did such a bright future turn so bleak in the course of one generation? It has taken me a while but I have figured out the answer. It is the Fed. The Fed has ruined the future. Let me explain how.

The core of the issue is ZERO percent interest rates. What are interest rates? What does that mean? Interest rates are generally thought to be the time value of money. So therefore, if you want to borrow $100 today and interest rates are 10%, you must pay back $110 one year from now. More importantly, if you pay back in two years, you now owe $121. Basically, the longer you wait to pay, the more you owe which in general is not good.

How are interest rates determined? Interest rates historically have been considered a price between the supply and demand of money. Back in the gold old days, if a lot of people were saving money in their bank accounts, this would drive interest rates down. Conversely, if a lot of people wanted to borrow money, that would drive interest rates up. This entire equation has been broken in the last 10 years but one retard named Alan Greenspan who was the chairman of the Fed under Ronald Reagan, George H. Bush, Bill Clinton, and George W. Bush. More »

November 22nd, 2011 | Category: Financial Crisis, Politics | Leave a comment

I just finished watching the Republican debate the other night and frankly I am scared for my country just like the people at Occupy Wall Street. Here is my analysis on why all of us should be scared for the future of the country.

Barack Obama

To give the guy a break, the entire financial crisis began before he was elected to office. But on the other hand, he had ample time to think through his plan to fix the economy. He also knew that if he didn’t, that he would not be reelected. He ran on a platform of hope and change. He has delivered neither. He has trusted the same people that have gotten us into this financial mess, and we are still in two wars that defy logic. He won the Nobel Prize despite the fact that he continues to drop drone bombs on innocent people. Most of the time now, he spends his time whining about the Republicans being obstinate. Like he just figured that out yesterday.

Still today, Obama has the most powerful job in the entire world. Worse yet, Obama had the country and the entire world at his feet. No president during my life time had such popularity at home and throughout the world. He had both houses of Congress and extraordinary public support. It is now lost, and he used none of that political capital for any good. It is such a damn shame because the potential was there for Obama to be a great president. We all can agree is that he has fallen far short of the potential.

The Republicans whine (that’s what they do), that Obama has transformed the country into a socialist elite state. Nothing could be further from the truth. Obama in reality hasn’t got jack shit done during his term as president. If you throw out the death of Osama Bin Laden, then you really don’t have jack. His health care bill is really weak and does little to fix a severely broken health care industry. The Dodd Frank financial reform is inadequate to even make a small dent into the reckless behaviour of our massive blood sucking financial industry.

At the end of the day, I believe that Obama’s chances of getting reelected are poor because his record is so bad. So it was my hope that there is an intelligent person in the Republican field. I looked hard but I really can’t find one. Here’s my analysis of the rest of the field. More »

October 13th, 2011 | Category: Financial Crisis, Politics | Leave a comment

It is close to 10 years since the horrible terrorist attacks on the United States. At the 10 year anniversary, many politicians and mass media will try to drum up patriotism and unity by forcing our nation to remember the reality of these brutal attacks. All of this will make me quite sad, because in my view, we have not learned the right lessons from this tragic event. Here are my views.

Box Cutters

As we all know 19 men boarded 4 different planes in Boston, MA, and then successfully hijacked all 4 planes with nothing more than box cutters. Basically way back in 2001, it was possible for 4 guys to hijack a plane with box cutters. The worst part was the plane that made it all the way to the Pentagon, which is somewhere around a 2 hour flight. The 4 hijackers were able to subdue the entire crew and all the passengers on the plane for more than 2 hours with the threat of paper cuts. The only bright spot (if you can call it that) was the plane that crashed somewhere in the Pennsylvania country side. The passengers were able to over take the plane so that it was not able to carry out the last part of its mission. Little attention or tribute is paid to the flight that crashed in Pennsylvania, but in my view, these are the true heroes of 9/11. They stood up to the box cutters.

The only true hope was for the crew of the planes to unite with the passengers, and overwhelm through sheer force the hijackers. I honestly believe that the Pentagon disaster could have been averted if everyone united. After all, we are the United States.

TSA

But instead of learning the true lesson, which is that we will unite against terrorism, our government under George W Bush decided an entirely different tact. They decided that Americans were not following enough rules. If all Americans follow enough rules then somehow we will be safer. If we take off our shoes at the airport, we are safer. If we throw away a 12 oz bottle of saline solution, we are safer. And if we turn off our iPod, we are safer. This is the wrong message to send to Americans. When faced with a threat such as the 9/11 terrorists, we as Americans need to unite and use our survival instincts and we will survive.

It gets worse, since unemployment in 2001 was rather low. So Bush had to quickly cobble together this new TSA rule-enforcing monster behemoth. I think it is safe to say that the TSA recruits at the time, were not representive of the American work force as a whole. They were the ones that could be hired quickly. That is the people that were unemployed during an economic boom. Or worse yet, working at TSA was a step up on their career ladder. More »

September 6th, 2011 | Category: Politics | Leave a comment

I have traveled outside of the United States my entire life. Every passport that I have ever had, has required additional pages for entry stamps and visas. I have also lived twice outside in the United States. First I lived in Dublin, Ireland in 1997, and then I moved to Rio de Janeiro, Brazil in 2003. As I have traveled throughout the world, I meet with many other world travelers and all of us agree. The dollar has gone in the toilet.

When I was in Ireland in 1997, the dollar was the envy of the world. That was back before the Euro, but the dollar was significantly stronger than the Irish pound and the British sterling. As I recall, it was like 1.4 British sterling to the dollar, and 1.3 Irish pounds to the dollar.

Better yet, when I purchased my apartment in Rio de Janeiro, the dollar was close to 3 Brazilian reals to the dollar. It is a great great feeling when you are the owner of such a strong currency. When you travel internationally, everything seems cheaper. It made me feel very proud to be an American and all that it means.

But now, in such a short period of time, the dollar has gone from being the envy of the world to one of the weakest. To be clear, the dollar is now a lot weaker than the British Pound and the Euro. More importantly to me personally, the dollar has fallen close to 50% against the Brazilian real in the last 8 years.

The root of this problem is one and only one thing. The Federal Reserve. Just to be clear, the Federal Reserve is total bullshit because it is not federal nor is it reserve. It was invented in 1913, and given its name to give it an air of importance but let’s be clear. The Federal Reserve controls the American money supply and the dollar, but it has no direct reporting back to the federal government. Furthermore, they hold no reserves. In the past twenty years, there have been two retards running the Fed, Alan Greenspan and Ben Bernanke. In that time, they have managed to ruin the country and destroy the dollar.

More »

June 20th, 2011 | Category: Financial Crisis, Politics | Comments (1)

I watched Obama’s speech last week and frankly I was disappointed. It was a nice speech, but in my view, Obama missed the key issue that will fix our economy from a death spiral. That issue is Wall Street.

We all agree that Wall Street and the Fed are the underlying reason behind the greatest economic depression since the Great Depression. BTW. Why do people call our current crisis the worst since the Great Depression? They have been calling it that for years at this point. The Great Depression is over and it was bad. Our current crisis is not over, and so therefore, we cannot compare one against the other.

Back to Wall Street. So these guys are making record profits. They are making money hand over fist during this economic crisis. While unemployment remains high and the rest of America suffers, these guys are raking it in. Why is that? I think I know. More »

January 31st, 2011 | Category: Financial Crisis, Politics | Comments (2)

There is certainly no easy way to put it. You got your ass kicked in the mid term elections. Well, I got some good news now. As I already told you in 2008, your presidency is going to be about the economy. You did not choose these circumstances, but they are yours to manage. You did not make the economy your #1 priority. It is not clear that it was even your second priority. From the looks of your first two years, I would say that your first two priorities were health care and the war in Afghanistan. Whether I am right or wrong, jobs were certainly not your first priority.

On top of that, you trusted the wrong people. There is no dispute by anyone that Wall Street is the reason behind this economic crisis. Yet you continue to listen to them almost exclusively and unemployment still hangs at 10% even with interest rates stuck at 0% for the foreseeable future. You guys sit around now that interest rates are at a floor and figure out how to “stimulate” the economy. They call it quantitative easing and I call it bullshit. There is a saying that if all you have is a hammer, then every problem looks like a nail. If all you trust is Wall Street, then all you are going to get is the Fed printing more money and deficit spending. On the surface, I agree that borrowing money from the Chinese creates American jobs, but at what expense? Let’s just say that you have made a mess of it. It’s not too late, but you have to first realize that it is a mess and you’ve made it worse in your 2 years. You didn’t create it all, not even close, but it is your role to fix it, not make it worse. More »

November 7th, 2010 | Category: Financial Crisis, Politics | Leave a comment

It has been over 6 months, since George Bush went in front of the entire nation and told us all that we are all screwed. He succeeded in putting the nation into a panic setting the stage for an unprecedented flurry of government spending. After 1/2 a year of spending, none of the stimulus has had any impact whatsoever. Employment continues to rise, housing prices plummet, and GDP is still shrinking.

The underlying theory behind the “shop til you drop” stimulus plan is Keynesian economics which became popular during the last depression. Unfortunately, Keynesian economics will nor work this time. The primary reason is that the United States is broke. In the last 50 years, our great country has been transformed from the largest creditor nation to the largest debtor nation. We are broke, and we are addicted to spending more money than we have. Addicted is the only appropriate word, and like an addict, there is only one solution. We must wean ourselves from the addiction, rather than borrow more money. Obama and Bush have been feeding the addiction. More »

March 18th, 2009 | Category: Financial Crisis, Politics | Leave a comment

One of the greatest travesties to this bubble is the incredible American deficit under the Bush administration. The deficit has ballooned by over $5T in a scant 8 years. We can all agree that this is highly fiscally irresponsible, but the question remains, “Where did all this money go?”

After all, Bush is a Republican, and the funds certainly were not spent on liberal causes such as welfare and education. Given the record price at the gas pump, the funds were not spent on alternative energies, or more energy efficient cars. In fact, I think that we can look back at the success of the Humvee as a unique product of the Bush administration. More »

November 3rd, 2008 | Category: Financial Crisis, Politics | Leave a comment

The media is calling this bubble the worst since the Great Depression. That sure sounds scary, but where are the facts? What makes them believe this bubble is so severe relative to other bubbles? Are there any facts to feed the panic or just pure fear?

I decided to take a look at some of the facts to measure the bubble and finally set some expectations about the size of the bubble. First I looked at the average housing pricing for the last 45 years. I pulled all of the information from www.census.gov which is a terrific place to gather macro economic information. More »

October 27th, 2008 | Category: Financial Crisis, Politics | Comments (1)