2014-02 Bond Newsletter

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IF A BEAUTIFUL AREA IN A PERFECT CLIMATE AND A BOOMING ECONOMY DEFINE “PARADISE”… then those of you living in South Florida are enjoying your own personal paradise. When the economy went over the cliff in the second half of 2008, our prospects for a quick recovery looked very gloomy. Economic pundits were predicting that the approximate 10,000 condo units on the market, principally in Miami-Dade County at that time, would take ten (10) years to be absorbed into the marketplace. Within 2½ years most of that inventory had been absorbed and new condominiums were being planned.

According to some very reliable and high profile sources in the real estate marketplace, the last condo boom will look anemic compared to what will be coming within the next 5-10 years. It is important to realize that the real estate bust that we experienced after the crash of 2008 was not a real estate problem, but a national financial meltdown. There is absolutely no evidence that we have ever over built condos in our marketplace. The process of selling condominiums has been disrupted by national and international financial issues, but the demand for the product itself has always been there. Over 90% of the condominiums in the South Florida market are sold to other than U.S. citizens. The market for our condominiums is therefore worldwide with less than 10% being purchased by U.S. residents. It is difficult, if not impossible, to gauge the demand for a real estate product where the demand is generated from around the globe.

Although the data changes on a daily basis, since the rebuilding boom has started, there have been 268 condominiums in the planning, construction or completed stages. Twenty six (26) have been completed, forty (40) are under construction and the remainder are somewhere in the planning or permitting stages. The South American financing approach to the condominiums has proven to be a viable and successful approach thus far. The banks, however, are starting to feel a bit left out and a number of banks are competing for the business.


LET’S TAKE A BREATHER FROM OUR “IT’S GREAT TO LIVE IN PARADISE” SCENARIO… and talk about how men can extend their enjoyment of paradise by living a little bit longer. New research has uncovered a surefire way to add up to 20 years to men’s lives: castrate them. When Korean researchers analyzed the genealogical records of males who were castrated as boys to serve in the Palace of the Chosun Dynasty between the late 14th and early 20th centuries, they found that the Eunuchs lived between 14 and 19 years longer on average, than their non-castrated peers. The records also show that 3 of the 81 Eunuchs lived to be 100, a rate about 130 times higher than among people in developed countries today. The findings support “the idea that male sex hormones decrease the life span of men”.

In contrast to estrogen, which appears to enhance longevity, testosterone seems to weaken the immune system and increase the risk of cardiovascular disease. Lower levels of the male hormone may be a main reason why women tend to live longer than men and are ten times as likely to reach the age of 110. I have given you the facts men, you know what to do.


ON A LOOK FORWARD BASIS FOR THE NEXT 25 YEARS… Florida may have the best economic prospect in the nation. Two demographic studies have predicted that Florida’s population could double in the next 25 years. That would put us at approximately 40 million people. Miami-Dade County is the economic engine of Florida and, as I mentioned in my previous bond newsletter, the United Nations recognizes 195 countries in the world and if Miami-Dade County were a country, we would be the 60th largest economy in the world. There are 135 countries with a Gross Domestic Product (GDP) less than Miami-Dade County’s.

In my world, Florida is one of the three (3) largest surety premium producing states in the nation (California, Texas, Florida). Ironically, Florida has never produced a “jumbo” construction company…one that produces $1.0 billion or more of revenue on an annual basis. Last year, the largest Florida construction entity produced $443 million of revenue.

Florida has no real smoke stack industry. Jumbo construction companies are produced by huge manufacturing facilities, pharmaceutical facilities, and large government projects, particularly those that come under the Army Corps of Engineers. We are a very middle market economy with large contractors doing between $150 million and $250 million of revenue a year. Most of our construction economy is generated by contractors doing between $5 million and $50 million a year. These projects are typically funded by multiple municipalities and taxing districts in Miami-Dade, Broward, and Palm Beach Counties. After the recession, the funding dried up and these projects stopped. It is only now that we are seeing the slow return of these projects, but the various municipalities in South Florida are a year or two (2) behind the private money. Tax revenues have to regenerate themselves to fund the capital budgets. For the last couple of years the tax revenues in Miami-Dade County have risen rather dramatically. Last year the county’s tax rolls rose (now at $210 billion) and tax revenue rose by 6.5% which hopefully will have a positive effect on the county’s capital budgets.


IT IS NO SECRET… I have not been a fan of our current President, but feel duty bound to acknowledge a recent study done by a group that rated President Obama the fourth best President:

(1) Reagan and 9 others tied for first.
(2) 15 Presidents tied for second.
(3) 18 other Presidents tied for third.
(4) Obama came in 4th.

Based upon all that is going on from an economic and international perspective, I am certain I will not get as much push back as I might have gotten a few years ago. From a military standpoint, I consider myself a “hawk”. I think we should and that we must maintain the strongest military in the world. There is a reasonable debate as it relates to ground troops and their numbers. On the other hand, we must dominate the skies and we must dominate the seas. It concerns me that Obama’s plans to shrink the Navy, and China’s rate of building their Navy, would give China Naval dominance within seven (7) years. This can never happen.

On the other hand, I do agree with President Obama that there is no United States solution to Iraq, Syria, Libya, and particularly Afghanistan. These countries consist primarily of tribal cultures that have existed in some cases for thousands of years. Without completely annihilating the populations and starting from scratch, we cannot change them no matter how much blood we leave in the sand.

Whether it is ISIS or al-Qaeda, we are not going to militarily wipe them out. We can drastically diminish their ability to act against us as we have been doing for years in a number of African countries. Al-Qaeda continues to exist, but the airstrikes and drones have contained that threat. In the Middle East, citizens of the various countries are going to have to step up to secure their borders and their way of life. I think that we can do a tremendous amount based upon airstrikes and drones to assist their efforts, but I do agree with President Obama that it would be foolish to send any troops into any one of those countries. We should never have been in Vietnam, Iraq or Afghanistan. Everything that we need to do can be accomplished from thirty thousand feet, and with our superior intelligence gathering abilities.

Our military continues to say that airstrikes are not enough to destroy ISIS and they may be correct, but no matter what we do, we probably are not going to destroy ISIS. I am totally unconvinced that our air power cannot contain them, along with the intelligence and training that we can provide for the locals. It is interesting to note that a number of years after the end of the Vietnam War, the leaders of North Vietnam admitted that if we had continued our B-52 bombing strikes over Hanoi for one more month, they would have surrendered to the U.S. The Air Force, intelligence, and drones are the answer to containing the various threats around the world, not American blood. To a great extent, even as a hawk, I subscribe to the great Lao-Tzu who said: “It was only when you see a mosquito landing on your testicles that you realize that there is always a way to solve problems without using violence.”


IN MY OPINION IT IS OVER… Whether drastic changes come in the next five (5) years or whether we stumble on a little longer, the end of the age of entitlement is around the corner. The welfare state seemed like a good idea at the time. In the economic boom following World War II, successive Presidents launched a great liberal experiment — an “entitlement paradise” in which everyone would enjoy a job, a home, a lifetime pension and the most sophisticated medical care on the planet.

These things can no longer be considered privileges; they were rights, which “fairness” demanded that the government provide, if you couldn’t provide them yourself. But today, with crushing debt and an aging population, the experiment is failing as far as I am concerned. When President Franklin Roosevelt created Social Security, the average life span of American men was 58 years of age. Now many people live into their 80’s and 90’s, thanks to costly drugs, artificial hips, and organ transplants for which they expect to pay little, if anything.

People collect far more in Medicare and Social Security than they contribute while working. To pay these bills, the U.S. has been printing money, and taking on $17 trillion in debt. Is it cold hearted or cruel to note the obvious? We can no longer afford to guarantee every American the good life. Good intentions are fine, but without means, they are useless and in the very near future some very difficult political and economic realities are going to be forced upon our government and the American people.


GREAT BRITAIN AND GERMANY… in my opinion are the only two fiscally responsible economies in Europe. It is, therefore, disappointing when we see the Germans start to slip from basic economic and social reasonableness. The German government has proposed giving time off to grandparents so they can help their children care for their grandchildren. Family Minister, Kristina Schroder, said working grandparents should have the right to take up to three (3) years of leave without losing their jobs or credit towards their retirement benefits. In Germany the law requires that the parents who take maternity leave will get paid, but the grandparents who take advantage of their three (3) year leave will not get paid when they are not working. As stupid as the grandparents maternity leave law is, at least they do not require employers to continue to pay wages for the grandparents…at least not yet.


SAY WHAT YOU WANT ABOUT VLADIMIR PUTIN AND HIS UKRANIAN ASPIRATIONS… but in my opinion, President Putin has his act together, knows what he wants and has a plan to achieve it. In addition, Russia is smart enough not to let their culture and society be changed or controlled by an immigrating Muslim population as much as Europe and Great Britain have.

President Putin gave a speech to the Duma (Russian Parliament) about the tensions with minorities in Russia. The speech was as follows:

“In Russia, live like Russians. Any minority, from anywhere, if it wants to live in Russia, to work and eat in Russia, it should speak Russian, and should respect the Russian laws. If they prefer Sharia Law and live the life of Muslims, then we advise them to go to those places where that’s the State law.

Russia does not need Muslim minorities. Minorities need Russia and we will not grant them special privileges, or try to change our laws to fit their desire, no matter how loud they yell ‘discrimination’. We will not tolerate disrespect of Russian culture. We better learn from the suicides of America, England, Holland and France, if we are to survive as a nation. The Muslims are taking over those countries and they will not take over Russia. The Russian customs and traditions are not compatible with the lack of culture or the primitive ways of Sharia Law and Muslims.

When this honorable legislative body thinks of creating new laws, it should have in mind the Russian national interest first, observing that the Muslim’s minorities are not Russians.”

The politicians in the Duma gave Putin a five (5) minute standing ovation. Our legislative bodies both on a national and state level would be well advised to listen to Putin if our culture and way of life is to survive.


THE ALL IMPORTANT MID-TERM ELECTIONS ARE COMING UPON US… On a national level, the key question is whether or not the Republicans will take the Senate. Based upon my reading and research, I would give the Republican Party a 60% chance of taking the Senate. We will need to win seven (7) additional seats to have a majority in the Senate. The Republican majority in the House of Representatives is safe. The Republicans have the possibility of picking up eleven (11) additional seats, but I think we will add no more than six (6) to the House of Representatives.

As far as the gubernatorial race in the State of Florida is concerned, to me that situation is “black and white”. First of all, I think Rick Scott has done an excellent job (not perfect, but excellent) as Governor. There are over 2,500 business regulations that Governor Scott has trashed. There is a lot of argument as to how many jobs have been created under Governor Scott, but without question, Governor Scott’s pro-business policies have created over a half a million jobs compared to over one million jobs lost under the previous administration. Governor Scott and his administration have cut taxes twenty-four (24) times since he has been in office and will be cutting another $500 million in taxes this year, including a rollback of vehicle registration fees that were increased under Governor Crist. By the way, unemployment has been reduced by 6.3% and we have paid down $36.6 billion in State debt and paid back another $3.5 billion borrowed from the Federal Government for unemployment assistance. We have a balanced budget and for those of you concerned about crime, the crime rate in the State of Florida is now at a forty-two (42) year low…need more be said.

Although I think the political party of any candidate should be subordinate to the qualities of the individual, it is important to understand that a candidate’s policies on any issue are often mandated by the masters that they serve…the political parties that pays for their campaign. Therefore, it is very difficult for a Republican or a Democrat to stray too far from the stated party platforms. In that regard and for those interested, let me provide a comparison of the party platforms between the Republican Party and the Democratic Party as follows:



Safeguarding Religious Freedom: HHS Mandate

  • Republican Party opposes the HHS Mandate and firmly believes the government has no right to force individuals to abandon their religious beliefs and violate their moral values by forcing us to provide sterilization, abortions on demand and contraceptive coverage to their employees.
  • Republican Party supports the public display of the Ten Commandments in government agencies, judicial courts and public schools.
  • Republican Party affirms every citizen’s right to apply religious values to public policy and the right of faith-based organizations to participate fully in public programs without renouncing their beliefs, removing religious objects or symbols, or becoming subject to government-imposed hiring practices.
  • Republican Party supports the right of students to engage in student led prayer in public schools, athletic events, and graduation ceremonies, when done in conformity with constitutional standards.
  • Republican Party deplores the increasing incidence of attacks against religious symbols, as well as incidents of anti-Semitism on college campuses.

Abortion – Protecting Innocent Life

  • Republican Party supports the Sanctity of Human Life and refuses to fund organizations performing abortions, like Planned Parenthood, the United Nations Convention on Women’s Rights, and the United Nations Convention on the Rights of the Child.
  • Republican Party supports using adult stem cells, umbilical cord blood, and cells reprogrammed into pluripotent stem cells. Opposes investing federal funding and tax payer dollars in research that unethically destructs embryonic human life.
  • Republican Party opposes the use of public revenues to promote or perform abortions, nationally & international.
  • Republican Party supports the Born Alive Infants Protection Act that ensures infants who are born alive during an abortion receive the treatment and care that all newborn infants deserve.
  • Republican Party supports traditional family adoptions.

Education: Return education to parents – Abstinence

  • Republican Party supports programs for teens and funding for abstinence education, as the responsible and expected standard of behavior.
  • Republican Party supports School Choice, charter schools, vouchers and tax credits for attending faith-based or other nonpublic schools, as well as the option of home schooling.

Marriage – Preserving traditional marriage

  • Republican Party supports the Defense of Marriage Act, and recognizes marriage as the union of one man and one woman.
  • Republican Party also encourages states to review their marriage and divorce laws to strengthen marriages.
  • Military, International and Homeland Security
    Republican Party opposes the repeal of “Don’t Ask, Don’t Tell” in the Military, as this was the request made by its generals.
  • Republican Party supports Israel and all our allies, endorses strength through a strong Military force, a clear policy and firm position against our country’s enemies and support law enforcement agents for better Intelligence to fight bioterrorism and cyber-terrorism.
  • Budget, spending and taxes
    Republican Party favors the adoption of the Balanced Budget Amendment to force legislators to balance the budget every year except in time of war.
  • Republican Party understands our National Debt is a huge danger to our National Security and advocates reducing our expenses, minimizing regulations and running a smaller/smarter government.
    Republican Party believes in returning power to the states to return the power to the people.


  • Republican Party supports all energy sources and the Keystone Pipeline for energy independence and to secure American jobs.


Safeguarding Religious Freedom: HHS Mandate

  • Democrat Party supports the HHS Mandate and the Supreme Court rules it Constitutional, so it is now the law of the land, and religious organizations, as well as employers with deep religious beliefs, are now forced to provide sterilization, abortions on demand and contraceptive coverage to their employees.
  • Democrat Party opposes the public display of the Ten Commandments and enforces the separation of church and state.
  • Democrat Party opposes all faith-based initiatives on government property, including government agencies, judicial courts and public schools.
  • Democrat Party bans students from engaging in prayer in public schools, athletic events and graduation ceremonies.
  • Democrat Party opposes all displays of religious objects or symbols in government property.

Abortion – A woman’s right to choose

  • Democratic Party strongly and unequivocally supports Roe v. Wade and a woman’s right to choose an abortion, regardless of ability to pay. It also supports organizations like Planned Parenthood and United Nations abortion rights efforts.
    Democrat Party supports investing federal funds and tax payer dollars in research that destructs embryonic human life.
  • Democrat Party supports using public funds to perform abortions through Planned Parenthood.
    Democrat Party opposes the Born Alive Protection Act, and passed legislation preventing physicians from providing medical care to babies born alive after a botched abortion.
  • Democrat Party supports gay adoption of children.

Education: Public Schools control education

  • Democrat Party supports providing age-appropriate sex education to children, as early as elementary grades.
  • Democrat Party opposes School Choice and prefers all schooling to be received through the Public School System.

Marriage – Same sex marriage and civil unions

  • Democrat Party opposes the Defense of Marriage Act and supports same sex marriages.
  • Democrat Party supports the full inclusion of all families, including same-sex couples, in the life of our nation.

Military, International and Homeland Security

  • Democrat Party repealed the “Don’t Ask, Don’t Tell” policy in opposition of the recommendations of military leaders.
  • Democrat Party endorses a reduction in our military force and urged Israel to change its borders to benefit the Palestines.

Budget, spending and taxes

  • Democrat Party favors putting end to the special interest driven corporate loopholes and eliminating tax cuts for the wealthy.
    Democrat Party endorses Stimulus bills and bailouts to save failing industries.
  • Democrat Party believes in big government and looks to remove powers from the states and transfer them to the federal government.


  • Democrat Party only supports green energy to benefit the environment and prevent global warming.

SHERIFF JOE ARPAIO, MARICOPA COUNTY, ARIZONA SHERIFF… has provided us with a very enlightened view of a liberal paradise.

“A liberal paradise would be a place where everybody has guaranteed employment, free comprehensive health care, free education, free food, free housing, free clothing, free utilities and only law enforcement has guns.

And believe it or not, such a place does exist, it’s called prison.”


TRUST ME… If we currently do not have the privilege of providing surety credit for your company, there has never been a better time to set up a “back-up Line of Surety Credit”. Please give us a call and let’s discuss.

Parting shot: “The one difference between death and taxes is that death does not get worse every time Congress meets.” – Will Rogers