THE WORLD OF APPRAISAL

In business, as elsewhere, we’re often involved in setting values . . . certainly the heart of human enterprise.  The appraisal is vital, and this is so whether you’re purchasing an ornamental clock from an antique store or foisting off Aunt Emma’s Christmas gift on an unsuspecting shopper at your yard sale.

Nowhere is establishing value more important than in real estate, where the numbers get big.  This deserves to be discussed.  The American Institute of Real Estate Appraisers, affiliated with the group known as "Realtors," has effectively promoted real estate appraisal over the years.  The techniques are well established and, on the whole, are valid and valuable when properly conducted and interpreted.

Though there are probably some incompetent appraisers around, the really bad property valuations that occur cannot normally be blamed on lack of appraisal talent.  The actual reasons go deeper.  Even though a well-established Code of Ethics stressing the highest standards of professional conduct exists in the appraisal industry, abuses are not only possible, but often guaranteed.  The reasons are not hard to understand.

Consider this example: The services of an appraiser are recommended by a real estate agent who receives a commission when the property sells.  There’s anticipation by the agent that the value placed will benefit the sale and, conversely, an expectation by the appraiser of future referrals.  Is it unreasonable that the final valuation may reflect factors other than the objective and unbiased conclusions called for by the Code of Ethics?  Is this not even more evident if the appraiser is selected by a developer seeking to market a number of properties or by a mortgage loan broker intent upon placing a group of loans with an investor?

It’s also common practice in the residential resale market for appraisers to rely upon local brokers to provide sales information to assist them with their work.  Consider the varied interests of these brokers.  Either to promote their own sales, or to undermine a competing agent's listing, badly chosen "comparable sales" are often passed to the appraiser, and it’s upon these values that the final appraisal may depend.  The following tale may not be typical, but it illustrates how the process can malfunction.  This is a true story of a hilltop house in the fashionable community of Dana Point in southern Orange County, California, regarded as an area of desirable homes.

The house sold in June of 2008 to an admittedly unsophisticated buyer at a price of nearly one million dollars.  At the time of purchase a major savings bank obtained an appraisal in connection with a mortgage loan to be placed on the property by that institution.  The fee appraiser gave a valuation of $999,500, and cited three comparable properties to justify the figure.  On that basis, the purchaser made a down payment of $298,000 and obligated himself on a mortgage loan of about $700,000.

Several months following the purchase the buyer arranged for a second appraisal, this time with an independent appraiser, to see how his investment was holding up.  To his dismay, he discovered the property's value to be in the $600,000 range¾some $400,000 less than his purchase price.  The details of this second appraisal revealed that between January and April of 2008, six comparable homes sold in a price range of $579,000 to $644,000.  In addition he learned of an overstating of the house’s size by nearly 20 percent, and that two of the three comparable sales used had been more than eight months old during a period of rapidly declining real estate prices.

The claims, charges and recriminations that followed, together with the legal actions involving non-payment of the mortgage, foreclosure and eviction, constituted an exhaustive effort.  But what must not be overlooked in all the turmoil is that the system is designed, in a perverse way, to function in this manner.

And while we try to sort things out, there’s another piece to fit into the puzzle.  The status of the appraiser as an in-house employee rather than an outside fee appraiser can affect the valuation.  A most striking example of this is the Property Tax Assessor who, though posing as an impartial arbiter, is little more than a governmental functionary in the tax collection process.  It takes no great insight to deduce the Assessor's position in establishing property values.

If there’s one thing to recognize concerning real estate and its valuation, it’s that the outsider, or casual dabbler, is at an inherent disadvantage.  When you find yourself involved, you must either develop expertise quickly or hire a reliable expert to represent your interests.  Sad to say, this is more easily said than done, with "reliable experts" often hard to find.  One place not to look is in a law office; attorneys may possess certain capabilities, but property valuation is not among them.  Neither can the local real estate broker be depended upon, even though he or she may have intimate knowledge as well as access to all the data.  This is because the broker's intentions must, by necessity, be questioned.  Many of the truly successful real estate agents learned early on to play the game tight-lipped and close to the vest.

Finally, merely retaining an independent appraiser is no assurance of complete and competent representation, though it’s probably the best that can be done in most cases.  In circumstances where truly professional appraisal service is warranted, what should be found is an experienced, fully communicative member of the American Institute of Real Estate Appraisers holding the designation M.A.I.  As to "fully communicative," this means one willing to dispense with professional folderol and provide information in basic and understandable terms.  With that achieved, you must then take as active an interest in the process as you’re able, and hope for the best.

A last word to the wary: Whether it be real estate, gemstones, colonial furniture, or Rembrandt masterpieces, the appraisal must be suspect.  A corollary to Murphy’s Law is accurate: If all the involved commission and fee participants agree upon a price, it must be the wrong one.

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If you enjoy this weekly Straight Talk by Al Jacobs, you’re invited to check out my monthly Financial Newsletter, as well as my new book, The Road to Prosperity

Click onto http://www.onthemoneytrail.net/

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THE BLESSINGS OF AUTOMATION

The latest word from the self-driving car world is favorable.  Despite the recent fatal crash involving a Tesla Model S sedan during “autopilot” mode tests, the U.S. Secretary of Transportation, Anthony Foxx, just proclaimed such vehicles possess great potential to improve safety and advised the federal government will commence “premarket approval steps” for this technology.  Inasmuch as the Transportation Department is extensively involved with Google, BMW, General Motors and other companies in developing driverless autos, is it possible these devices might become part of America’s future?

Let me bring you up to date on the development and progress of what’s known as the autonomous car.  Thus far four states enacted laws permitting operation and testing of such vehicles on public roads.  Nevada’s went into effect in 2012, with the first license issued to a Toyota Prius.  Florida became second, California third, and finally Michigan in December 2013.  In May 2014, Google presented their concept for a fully functioning prototype, with neither steering wheels nor pedals, and plans to offer these cars to the public in 2020.  A spokesmen announced in June 2015 their testing teams drove over one million miles, essentially driverless, with no serious hazardous events.

Despite the rapid development of the technology, there’s opposition from many quarters on the very concept—and understandably so.  Fundamental to the objections is the question as to who controls the code.  The variant goes like this: Your self-driving car realizes it can divert itself in one of two ways.  It may kill you while saving a busload of children, or save you as it kills all the kids.  Which should it be programmed to do?  More importantly, who will decide?  Will it be the likely occupant of the car, or a committee established by the U.S. Department of Transportation?  And whatever the problems, they’ll be worsened by designing the vehicle’s system to treat passengers as hostile interlopers.

There are other things that can go wrong.  All computers have flaws.  Even software used for years and whose source code is considered foolproof may have subtle bugs.  Even when functioning perfectly, the program may malfunction in a variety of ways, such as identifying harmless objects such as trash and light debris, causing the vehicle to veer unnecessarily.  But perhaps most vexing of all will be incessant government demands to be given the right to control vehicles.  It’s not unlikely police departments will petition for authority to send signals to your car to force it to pull over.  You may then expect the same from drug enforcement agencies.  And finally, how long will it be before thieves and other outlaws successfully impersonate law enforcement agencies?

I admit to having mixed emotions over the concept of a moving vehicle with no driver behind the wheel.  The potential benefits are obvious.  Persons whose physical limitations prevent them from driving will suddenly enjoy mobility.  A lone commuter in a car need no longer devote full attention to traffic or staring at the centerline of the highway.  And if safety of the system can be insured, the elimination of injury and death caused by careless drivers will become a thing of the past.

It seems axiomatic that every single benefit technology bestows upon us will come with some sort of offsetting disadvantage.  I recall an earlier time when, as a Los Angeles teenager, I made my livelihood setting pins in a bowling alley.  It’s true the introduction of the Brunswick automatic pin-setting machines eased problems for my boss, the bowling alley owner. There was, of course, a downside; I lost my job.  And this brings back even more memories . . . and questions to go with them. How would the self-driving car have affected me many years ago when I drove a Yellow Cab?  It takes no imagination to figure the answer.

While we’re on the subject of the professional driver, there are a few facts you might take into consideration.  There are 3.5 million truck drivers in the U.S., with average annual salaries of $40,000.  Add yet another 5.2 million employed in support of the industry, those who don’t drive trucks.  When you then consider the many businesses built around the trucking industry, such as motels and restaurants, you realize how dependent our economy is on the persons who operate trucks.  What may we expect if self-driving trucks put these millions of persons out of work?  This is particularly crucial, for truck driving is one of the few remaining trades to provide middle class incomes to persons with no more than a high school education.  Never forget middle income manufacturing jobs of the once gainfully employed masses of Americans no longer exist.  Those not automated away by the computer or robotic machines were mostly shipped overseas to countries whose employees subsist on three dollars per day salaries.  Yet, despite the economic misery facing us as a nation, it appears we’re about to do it to ourselves again.  My question: Who shall we blame?

I’ll conclude this critique on the economy with a testimonial.  Several days ago I purchased a pair of Skechers leather sandals from a local discount shoe outlet, at the particularly attractive price of $39.95.  As you’d expect, Made in China.  If we all resolve to purchase only American made sandals, at a cost probably topping $150, our domestic industry will prosper.  I’ll repeat my concluding question—now rhetorical—from the prior paragraph, relative to our coming economic misery: Who shall we blame?  Perhaps we should all look in the mirror. To quote Walt Kelly’s character, Pogo Possum, nearly a half-century ago: “We have met the enemy and he is us.”

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If you enjoy this weekly Straight Talk by Al Jacobs, you’re invited to check out my monthly Financial Newsletter, as well as my new book, The Road to Prosperity

Click onto http://www.onthemoneytrail.net/

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CUSTOMER BEWARE

The full page newspaper advertisement can’t be ignored, and not just because of the impressive color pictures and three-inch headline.  The carpet and flooring store’s offering simply seems too good to believe.  “5 YEARS FREE FINANCING • NO INTEREST • NO DOWN PAYMENT • NO FINANCE CHARGE”  If that weren’t inducement enough, the carpet price quoted apears to be from an earlier, less expensive generation.

Apartment Grade Carpet, Reg. $5.99 sq. ft.

free installation w/ lifetime guarantee

Free furniture moving, Free removal of Old Carpet

Now 97¢ sq. ft. installed.

The last time I saw such a price dates back to the days when two-tone green shag nylon was the rental carpeting of choice . . . let’s hope we never see similar bad taste again.  With that said, let me offer a brief instructional session for those of you not intimately familiar with apartment carpeting—or with the techniques regularly employed in modern marketing.

Carpet prices are normally quoted per square yard, not per square foot.  However, with nine square feet in each square yard, the conversion is simple.  Next is the significance of apartment grade.  Such carpeting is normally of lower quality and less expensive than what discriminating owners chose to place in their personal residences.  Decent home grade carpet today starts at about $20 per yard, installed, with the price increasing from there.  By comparison, you might note the apartment grade carpeting I use in modest units, those renting in the $750 to $1,000 per month range, is installed at $13.50 per yard.  Thus, a typical 800 square foot rental apartment, requiring about 70 yards of carpeting, will cost $945 to re-carpet.  This is a reasonable price for middle-income units.

Now consider what this advertised carpet will save me.  Their 97¢ per foot special, which converts to $8.73 per yard, reduces my cost to $611 per apartment—a savings of $334.  As you might guess, I paid a prompt visit to their store to see if I approved of what they offered.  An inspection of their “apartment grade carpet” immediately told the story.  It wasn’t at all what they claimed, but, instead, an indoor-outdoor fabric, the sort you’d find glued to the concrete area surrounding a swimming pool.  I’m familiar with these coverings, made of polyester with a 0.20 inch pile height, and sold in six-foot wide rolls over the internet at prices starting at $2.61 per yard.  The salesman at the store acknowledged its unsuitability as an apartment carpet, suggesting instead their next higher grade: a plush or textured Saxony at $21.96 per yard.  You’ll not be surprised to know I fled within three minutes.

Before we conclude our evaluation of this particular firm, and its advertising methods, there’s another matter you must be aware of, relating to the offer of “5 YEARS FREE FINANCING.”  I neglected to mention the small asterisk immediately following the word financing.  If you search the ad, you’ll find the explanation as a footnote at the very bottom, in the smallest possible font.  It reads: “*5 year financing on approved credit.  60 equal payments, if not paid in full 60 months from purchase date, accrued 29.99% APR will be applied (from original date of purchase.)”  I’ll now provide you with a translation and an explanation.

Very few carpeting firms can afford to carry a purchaser for five years with neither down payment nor interest.  The way it works is the contract is sold at the time of transaction to a finance company.  A typical home installation, where perhaps 100 yards of the Saxony is foisted off on the buyer at $21 per yard—at a wholesale cost to the store of $11 per yard—results in a $2,100 contract, generating a potential net profit of $1,000.  The finance company pays the store $1,600 for the contract.  The store makes a satisfactory $500 profit on the sale; the finance company stands to reap a somewhat mediocre $500 net return over a five year period . . . on the expectation the homeowner honors the contractual obligation.  At this point, however, it all becomes surrealistic.

 

In the marketing business, payment histories of buyers who make nothing down purchases are well documented.  The percentages of likely non-payers can be accurately predicted.  Let’s presume 30% of this firm’s buyers default on their obligations at some point.  In the event of default, the contract permits the holder to assess retroactive interest at 29.99% from date of sale.  If, for example, payments cease after three years on the $2,100 contract, the homeowner instantaneously owes an additional $1,889.37.  Concerning collectability, it’s likely the obligation is secured by a mortgage or deed of trust on the property.  As for enforceability of an unconscionably high rate of interest, prior legislation granted finance companies exemption from state usury laws.  In short, the homeowner is effectively bound and gagged.  As you see, the finance company may expect to make a fortune off the backs of many unsophisticated carpet buyers.  This is how it’s designed to operate and this is how it works. 

Now that you know the lay of the land, how will you make sure you don’t become a victim of some marketing scam?  I’ll offer a couple of suggestions.  First, and perhaps most important, don’t begin to negotiate a major purchase of anything until you develop a pretty good feel for what you’re buying and what its true value actually is.  In the carpet market, accessing a few websites to see what’s offered and at what prices is easily done.  Then visiting one or two large carpet outlets can round out your understanding of what you need and what you will pay for it.  With this bit of expertise under your belt, you’re now ready to begin your search in earnest.  There’s really no secret to this.  Initially you must gain enough information on a subject so you’ll know if you’re getting the straight story.  Simply put: When you master the details, no one can lie to you.

The second tip I want to pass on concerns the payment of interest.  With the exception of mortgage interest on sensibly acquired real estate, I disapprove of paying interest.  This means you do not purchase a motor vehicle on time—nor do you lease one either.  Your vehicle should be purchased all cash.  If it means you must drive a 1984 Toyota Corolla, so be it.  And as for your credit card, when the monthly bill arrives the charges are paid in full.  If you’re unable to adhere to this schedule, then cut up the card with a scissors and fashion your life accordingly.  Again, simply put: If you never agree to interest charges, you’ll never pay highway robbery rates.

A final thought: Since the 1920s, when marketing developed into an art, the American public has been deluged with a cascade of ingeniously orchestrated sales schemes.  Examples are endless and, human nature as it is, deviousness in marketing goes hand in hand with a successful sales outcome.  Whether it’s a campaign to peddle a cheaply made pillow for $58, on the assurance it will “ensure the soundest and most comfortable sleep possible,” or the touting of a presidential candidate who fraudulently claims to be “good for the working men and women of America,” more and more the result is tied directly to the effectiveness of the duplicitous pitch.  And these programs are not merely contrived by the participants along the way.  They’re developed by professional marketing agencies, perfected by legal practitioners and taught in universities to students who receive degrees in marketing.  Is it any wonder so many consumers find themselves on the losing end when confronted by the professional marketer and the standard sales contracts?

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If you enjoy this weekly Straight Talk by Al Jacobs, you’re invited to check out my monthly Financial Newsletter, as well as my new book, The Road to Prosperity

Click onto http://www.onthemoneytrail.net/

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AN ILLUSION OF TAX REFORM

The title, “A better way for tax reform,” might have been ignored, as I’ve been reading articles of this sort for more years than I can count and I’ve yet to come across a convincing plan.  However, its author is a prominent member of congress, so I’m interested to see if there may be a few well thought out ideas I’ve not heard before.

As you might expect, the first several paragraphs paint a picture of statistical gloom.  Our tax laws consist of 74,608 pages and more than 700,000 words which, as the article suggests, “bury our families and businesses in paperwork and confusing language.”  And since Americans spend 6.1 billion hours and $400 billion annually complying with the tax code, it’s “placing the American Dream beyond the grasp of far too many.”  The final criticism: “Our tax system is broken and adversely impacts all of us.  There has to be a better way.”

So far, so good!  I can’t argue with numbers too large to visualize.  Now let’s see what better ways may be in store.  The first suggestion is that “our tax code should be simple and fair.”  This is then translated as being “a straightforward form that could be only one page . . . clear and concise, like tax forms should be.”  At first blush this certainly sounds reasonable, for who can object to fairness?  However I have my doubts about a tax return relegated to a single page.  Such a return may be easily prepared, but perhaps not equitably so.  My concern is that as a return becomes less complex, the tax collector has fewer obstacles to overcome when ruling to assess a maximum taxable income.  I’m convinced simplicity works to the benefit of the taxing agency, not the taxpayer.

A second aim listed is that “our tax code should incentivize businesses to invest and grow.”  It goes on to stress that, to make the tax code fair and competitive, “businesses will be incentivized to invest in job creation and technological innovation.”  In theory this sounds commendable, but I suspect that, as in the past, incentivizing will merely devolve into the creation of conventional tax credit incentives which are traditionally lobbied by ever more politically motivated campaign contributions.  The only way government can encourage creativeness in business is by throwing money toward the source and hope something worthwhile happens. 

And lastly, the author described the plan, recently put forth by the House of Representatives, calling for “a simpler, fairer and flatter tax code.”  Ah ha, there are the magic words which will always bring cheers from the gallery: the flat tax.  As the concept is actually taken seriously, it’s worth discussing.

Income tax in the United States is assessed and collected in what are known as “brackets.”  A tax system with a wide percentage variance between the lowest and the highest brackets is referred to as progressive, where the proponents believe it’s fair that those with the larger incomes pay a greater percentage of that income in taxes.  If the number, size, and tax rates of the brackets constituted the sole variables, income tax analysis would be a simple matter.  However, it’s by the granting of various exclusions, exemptions, deductions, and credits that the taxation of income takes on its true character, and it’s through the use of these devices that the effective rates are distorted into a bewildering array of meaninglessness. 

This brings us to the flat tax which, at its simplest, is the taxing of all income from whatever source, with no exemptions or exclusions, at a single rate.  This concept is propounded from time to time by various political candidates in the hope that its simplistic approach will somehow capture the hearts and imaginations of the beleaguered tax-paying voters.  Its supporters include representatives of both major parties, where variations on the specific details are introduced in order to satisfy one or another special interest group. 

My objection to the flat tax is its offer of tax simplification.  For the taxpayer willing to understand and utilize the system, complexity is desirable, and the more, the better.  Complexity, by its very nature, creates opportunities for creativeness ¾ "loopholes," if you prefer that description.  It also complicates the tax collector's ability, sometimes to the point that the entire process bogs down in a mass of self-contradictory rules and procedures.  Ease of administration of a tax system normally results, as I’ve previously suggested, in maximum revenue to the collector, whereas complexity works in the taxpayer's best interest.  It’s my fervent belief that the sole hope for the citizen is a perpetuation of the presently existing labyrinth of tax laws.  Only a system that provides an element of indecipherability will allow the knowledgeable taxpayer some maneuvering room.  I contend that the world of taxation is hostile and the appetite of the governments is insatiable.

Let me add a concluding though on this subject.  I’ve finally come to the realization there’ll be no viable tax reform proposals benefitting the taxpayer that come from elected or appointed government officials.  This is true regardless of party affiliation or philosophical inclinations.  The reason for this is fundamental.  The relative eagerness to collect taxes from the citizen is not a factor relating to Democrat vs. Republican—nor liberal vs. conservative—nor progressive vs. reactionary.  The distinction is far more basic than this; it’s one between those on the inside collecting the taxes vs. those on the outside paying the taxes.  It’s my belief that when dealing in the political world, don’t place much faith in pronouncements, regardless of the source.  You may rarely depend upon the people who make them.  And finally, you should never have any doubts about exactly what the government expects from you.  It wants your money.

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If you enjoy this weekly Straight Talk by Al Jacobs, you’re invited to check out my monthly Financial Newsletter, as well as my new book, The Road to Prosperity

Click onto http://www.onthemoneytrail.net/

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THE FEDERAL RESERVE - PURE POLITICS

Though it’s taken a full century in its transformation, the agency instituted in 1913, to regulate the nation’s volume of credit and the money supply—the Federal Reserve System—finally completed its metamorphosis into a purely political arm of the executive branch.

How the need for this regulatory body developed is a story unto itself.  In America’s earlier years regular financial upheavals were common, with the Panic of 1819 as our first boom-to-bust economic cycle.  Less than twenty years later, the Rescission of 1837 resulted in numerous bank failures, followed by a 5-year depression.  Similar crises occurred in both 1873 and 1893, with the Panic of 1901 ending in a fight for financial control of major railways.  But the Panic of 1907, known as the Bankers’ Panic, truly demonstrated the fragility of the nation’s economic system and the need for some sort of consorted action by an overriding authority.

For a three week period starting in mid-October of that year, as values on the New York Stock Exchange fell almost 50% from their peak of the previous year, a number of financial institutions, along with several large brokerage houses, hovered on the verge of failure.  There followed a run on New York banks, with both the City of New York and the New York Stock Exchange becoming temporarily insolvent.  The entire economic structure of the nation then seemed threatened; something drastic became necessary.

With the advent of the twentieth century, the world’s financial landscape no longer resembled its past.  The time-honored expression, “As safe as if it were in the Bank of England,” became a relic of a bygone era, and by 1907 the United States reigned as the world’s financial powerhouse.  But with the banking industry on the verge of collapse, someone or something, with an overpowering presence, had to materialize if the nation’s economy were to survive.  Fortunately, just such a presence appeared: J. Pierpont Morgan, unquestionably the nation’s most influential entrepreneur, with a dominant position in the fields of both domestic and international finance.  He warranted the title as The World’s Banker.

With the fate of the economy at stake, Morgan took charge.  Although seventy years of age, and in uncertain health, he put in twelve- to fifteen-hour days, working at times until three in the morning.  No one refused his calls as he summoned trust company presidents, brokerage chairmen and bank executives, all the while he banged heads and twisted arms to get the cooperation necessary to shore up the faltering system.  And when the crisis passed with a mostly favorable outcome, due solely to Morgan’s sheer personal authority, the nation realized, if nothing else, that something needed to be done to empower the U.S. government to take necessary action in any future cataclysms.  The result: consensus for the creation of the Federal Reserve System.

With this as our background, and following extensive legislative negotiations and maneuvering, the central banking system of the United States was established by the Federal Reserve Act, and signed into law by President Woodrow Wilson on December 23, 1913.  At its creation, it enumerated four primary functions: 1) purchase and sale of government securities 2) establishing the rate of interest banks must pay when borrowing from Federal Reserve banks 3) establishing the amount of money commercial member banks must maintain on deposit with the Federal Reserve 4) Regulation of allowable credit levels for stock market transactions.  As you see, it came into being to function as a non-political agency for a sole purpose: as a bulwark for the nation’s banking and financial stability.

An important factor in any organization is its structure.  With the probable scope of its functions, together with overriding congressional interest in its likely financial undertakings, a remarkably complex entity formed.  The system is divided into twelve districts, each serving a fixed geographical region of the U.S. through a Federal Reserve hierarchy.  There is also a Board of Governors consisting of seven members appointed by the President of the U.S. with the approval of the Senate.  Add to this a Federal Advisory Council comprised of twelve members, each representing a Federal Reserve district, with its members elected by the board of directors of the Federal Reserve banks.  Finely, there is the Federal Open-Market Committee consisting of the seven-man Board of Governors and the presidents of five Reserve banks.  As you see, despite a professed apolitical intent, the full set of political ingredients are built into the structure.

Many years have passed since the Federal Reserve assumed its limited obligations.  It’s a fact of human nature that as an organization ages, it strives to grow in size and functionality.  And why not?  Growth can promote its more aggressive members into positions which offer greater authority and reward.  So with over one hundred years of maturing, is it any wonder the system is now a power unto itself?  During the past several decades the Fed Chairmen assumed celebrity status, as the names Paul Volcker, Alan Greenspan, Ben Bernanke and Janet Yellen became household words.  And with presidential appointments and senatorial approval as the keys to this kingdom, who wouldn’t expect it to devolve into a maelstrom whereby the political tail wags the regulatory dog?

This brings us to its most recent declaration: the Fed’s semi-annual Monetary Policy Report to Congress.  On June 22, 2016, Fed Chairman Yellen decried the widening wealth disparity between races, calling it “extremely disturbing.”  The report questioned whether the “gains of the expansion have been widely shared,” and concluded that “blacks and Hispanics suffered the greatest proportional losses in full-time employment during the recession.”  Since her elevation as chair in March 2014, Yellen made prosperity for all a signature of her tenure.  Perhaps it comes as no surprise that in April of the same year, President Obama signed an Executive Order to prevent workplace discrimination and empower workers to take control over negotiations regarding their pay. In addition, he signed a Presidential Memorandum directing the Secretary of Labor to require federal contractors to submit data on employee compensation by race and gender.  Does it seem more than coincidence the President’s selection as Fed Chief is one who will aggressively promote his goals in this particular political arena.

A final thought: Regardless of the rules established and the precedents set, don’t expect purity in government. We function as humans, not as robots, so expect decisions to be twisted to favor the twisters.  Remember always, politics will be the deciding factor.  This is how it is and always will be.

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If you enjoy this weekly Straight Talk by Al Jacobs, you’re invited to check out my monthly Financial Newsletter, as well as my new book, The Road to Prosperity

Click onto http://www.onthemoneytrail.net/

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