Property confiscation and recovery in California

Before leaving California a few years ago, my wife and I moved into a rental home for a while so we could more easily sell our house. After the house sold, we of course sent a mail forwarding request to the post office. Some time later, my insurance company sent me a $500+ refund of some kind to our old address. Here's what happened after that:

1. The post office failed to forward the letter, and instead returned it to the sender.


2. Rather than spending the two minutes it would take to find us (we kept the same phone number), the insurance company instead sent the money to the California state office for unclaimed property.


3. The state deposited the money into the general fund. They never sent me a letter or otherwise made any attempt to contact me.


4. Almost two years after the fact, I accidentally discovered that the state is holding "unclaimed" property in my name (I think "stolen" would be a better word...).


5. I sent the state all of the requested information -- ID, proof of address, etc.


6. A few days ago, I received a letter from them saying that their office has received so many claims lately (300,000+ in the last year), that it will take at least six months before they can even look at mine. If the claim involved securities (which mine doesn't), they said it would take 8 or 9 months, since the securities will have been sold when they were first received and computing the resulting pay-out takes some extra effort. If all provided information isn't exactly as required, they will request the additional info only after they've reviewed the initial claim in 6+ months.

[[MORE]]When they do pay, they don't include any interest -- so the state gets a nearly 3 year "loan" from me without my consent and without compensation.

A similar thing happened maybe 10 years ago. My kids both had savings accounts at a local savings and loan. The kids weren't into the accounts that much, so they sat idle most of the time -- in theory collecting interest. Well, after about 2 yrs of no activity, the state considers the accounts abandoned, and requires the bank to send them the funds. We never received any notice. It wasn't until a couple of years after that, when we decided to check the balance in the accounts, that we discovered that they had been "closed".

If you or members of your family currently live in CA, or ever lived there, I highly recommend taking a quick look on the unclaimed property page to see if they have stolen anything of yours too. I found they also had property of my now-deceased grandparents, among others (reclamation of which is basically impossible):

http://scoweb.sco.ca.gov/UCP/

Naomi Wolf: The End of America

Interesting video by Naomi Wolf, on the "End of America."



[[MORE]]She mentions 10 steps on the path to the "end":

1. Invoke a terrifying internal and external enemy


2. Create a gulag


3. Develop a thug caste


4. Set up an internal surveillance system


5. Harass citizens' groups


6. Engage in arbitrary detention and release


7. Target key individuals


8. Control the press


9. Dissent equals treason


10. Suspend the rule of law

Unemployment during the Great Depression

Unemployment during the Great Depression:

1929 -- 3.2%
1930 -- 8.7%
1931 -- 15.9%
1932 -- 23.6%
1933 -- 24.9% peak
1934 -- 21.7%
1935 -- 20.1%
1936 -- 16.9%
1937 -- 14.3%
1938 -- 19.0%
1939 -- 17.2%

[[MORE]]On an apples-to-apples basis, we're at about 19% now according to SGS, with no sign of a slow-down in the unemployment rate, much less a reversal. So we're already worse than 1931.

Based on the current rate of change, I'm guessing U-6 might peak at or above 20% -- that's 24% on the Great Depression scale above and around 13% on the more widely-reported U-3.

What's your is yours, right?

I had an interesting conversation with a friend here in New Zealand today. He told me about a meeting he had with one of the local city Council members about an emergency generator that he had recently installed. They were talking about emergency preparedness, and he asked what the city would do in the event of an extended, wide-scale power outage. The Councilman said they would go around to local firms and individuals with generators, claim them under an emergency declaration, and take them where they were "needed".

[[MORE]]My friend subsequently wrote to our MP to ask if that was true and if they could provide assurances that it wouldn't happen. He responded by confirming it was true, and that they could not provide any assurances. Right after that, he sold the generator in an auction. What good is it if you can't be sure that you can use it?

I have no doubt that something similar would happen in the US.

The moral of the story: in a mixed economy, what you think you own, you really don't. Someone bigger and stronger, including your own government, can walk in at any time and claim it for "emergency" purposes. Not just generators, but food, clothing, weapons and even housing.

The realities of gunfights

Here's a link to a page with some interesting info about bullet stopping power:

http://www.handloads.com/misc/stoppingpower.asp?Caliber=0

It continues to surprise me how many gun hobbyists seem to refuse to accept the realities of a live gunfight, such as:

• Your assailant can easily keep moving for at least 30 seconds after being fatally shot (even with a so-called "one shot stop"). People usually don't fall down and stop like in the movies.

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• Depending on where you're shot and with what kind of bullet, it may not actually hurt that much, at least at first (unless the bullet hits a bone or some other tender area). I had friend who got shot in the leg and didn't even know it for many minutes afterwards.


• Aiming at a moving target when you're under life-or-death pressure isn't something you can learn at the range. Most weekend hobbyists will have terrible aim in a gunfight, at be lucky if they hit anything at all.


• Most gunfights are over fast. Assuming you're actually aiming (as you should), you'll be lucky to get off 2 or 3 rounds, much less a whole clip.

Those are a few of the reasons why I would only carry a 45 or a 357, and never a 9mm. The chart from the page above says 91% one-shot stop for 9mm vs. 96% for 45. If I'm probably only going to get one hit to start with, why not make it count?

And here's a big one you won't hear from anyone except those who have been through it: what's one of the most important pieces of backup gear you can bring to a gunfight? A knife. Contrary to the old saw about not bringing a knife to a gunfight, that's the most effective weapon during the 30 seconds between when your assailant has been shot and when he falls.

How bad is the Dow now, really?

Every once in a while, I like to break the Dow index down and look at the 30 individual components. I just finished comparing it to where is was on Jun 1, 2008. A few facts:

1 company was dropped from the average (AIG). Its price has dropped 99%. It was replaced with Kraft Foods.

1 other company has dropped more than 90%: Citigroup.

3 companies have dropped between 80 and 90%: Alcoa, BofA and GM.
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5 companies have dropped between 50 and 80%: Dupont, Amex, Boeing, GE and Caterpillar.

The average itself has declined by 43.6%.

The top 3 best performing companies dropped 9.5% (McDonalds), 11.7% (Walmart) and 22% (Home Depot)

GM alone lost 45% of what all of the other companies earned together (on a per-share weighted basis).

The companies that are the largest components of the Dow are IBM, Exxon Mobil and Chevron.

Including AIG, the P/E on the Dow is 27. Excluding AIG and GM, the P/E is about 9.7. Historically, "reasonable" valuations are around 7 at the end of a bear market. Using the more optimistic number, that would put the bottom around 5100. Except earnings are declining rapidly with no end in sight and the impact of unfunded pension fund liabilities hasn't hit yet, either. If the P/E goes to 5 and earnings of the profitable companies drop by another 30%, that could be 2500.

The highest individual P/Es (which applies only to companies earning a profit) are 27.2 for Alcoa, 26 for JP Morgan, 16.4 for Coke and Home Depot is at a very questionable 15.2.

The lowest P/Es today are Caterpillar 4.3, GE 4.7, Amex 5.0 and Chevron 5.3.

A one-point move in any of the Dow components moves the Dow average by almost 8 points.

Sucked into the green zone

I ran across a blog post that includes an article called Sucked into the Green Zone, by Andrew Redleaf (Dec 2008). It presents an interesting perspective on how government-backed borrowers are crowding others out of the market:

Here's an excerpt:

When a massive and sudden deflationary credit collapse hits a modern economy, borrowing becomes extremely expensive for everyone—almost. The government, and certain government backed institutions, will still able to borrow at pre-deflation rates. With money plentiful and cheap on one side, the government’s side, but scarce and expensive on the other side of the room, assets will flow toward the government’s side of the room like water flowing downhill. Over time all ‘normal’, not government-backed, asset holders who can borrow only at high rates would lose everything they own to those who can borrow at the government rate. If government backed entities can finance an asset at 5 percent, and everyone else in the room is obliged to finance it at 15 percent, and if this condition could long endure, ultimately every asset in the economy would be owned by the government backed crowd.

Thus, just as in an inflation, by precipitating a sudden catastrophic deflation the government not only shifts wealth from one citizen to another, the government itself can massively confiscate assets.

[[MORE]]At first this seems odd, since the government itself is massively a debtor, and deflation is generally held to be bad for debtors (as inflation is generally held to be good for them). Is it not for this very reason that governments are tempted to inflate the currency, so that their own debts can be wiped away, paid off with cheap currency of its own issuance?

All true. But our deflation—let us call it the deflation of the Red Zone—is the creature not of a long term shortage of currency, as for instance the US saw frequently in the 19th century, but a catastrophic credit collapse. A credit collapse, as the very word implies, is preeminently a crisis of trust. A lone trusted borrower in the midst of a financial terror can borrow and lend at an extraordinarily favorable spread, putting assets on its balance sheet at amazing bargain prices. This is exactly what the government is doing right now—even though it is trying to give the spread away by tossing money to its favored banks. Right now, the only US debtor with access to still functioning credit markets is the U.S. government. Because only the Treasury can borrow, only the Treasury, or those on whose behalf it consents to borrow, can lend, or buy.

A deflation arising from a catastrophic credit collapse can thus be described simply as a condition in which the spreads between risk free, or Treasury rates, and all other rates, or risk premiums, are radically out of proportion with real economic risks. (Or at least those real economic risks apparent before the collapse. The longer credit markets remain dysfunctional, the more the real economic risks will increase to match the increase in risk premiums.)

If such a condition could persist forever, only the state would own any assets, which is why the estimated price of the bailout keeps rising. The government is borrowing, lending, and buying in an attempt to keep the system afloat, but it is not closing the spread between risk free and risk premium paper. Perversely, by driving down risk-free rates it is actually widening the spread.

(continues)