We are living through some very interesting days, particularly when it comes to the rapidly changing landscape of the international political economy.
For some pretty cool picks on what is happening in the International Political Economy, check out this link:
www.globalnewspost.com
posted by Ruel Haymond of Project Liberty
Tuesday, October 14, 2008
What is Happening In Our International Political Economy?
Monday, October 6, 2008
Are We Headed for another Great Depression?
Posted by Dean Morgan of Project Liberty
Some say we are, so at the end of this message I will discuss what you can do to prepare for it.
But first, what I am about to tell you may shock you. In short:
1. Government intervention made the Great Depression worse, not better. Depending on who’s elected President, the same could happen again.
2. Too much government intervention, not a lack of regulation, caused our crisis.
3. The government is to blame, not irresponsible borrowers or greedy executives.
4. California is next in line for a government bail out.
5. Things will get much worse because of a game of financial chicken.
While we aren’t anywhere near another Depression (25% unemployment then vs. 6% now), some experts say a Depression is actually possible, especially if government makes the same mistakes it made trying to fix the Great Depression which started in 1929. As a result, the stock market didn’t recover to it’s pre-Depression level until 1954!
***Government Regulation Made the Depression Worse, Not Better***
Contrary to the popular belief that President Roosevelt’s big government programs caused a recovery, the Depression actually lasted much longer than it should have because President Roosevelt raised taxes and many businesses had to shut down leading to more unemployment.
***Too Much Government Intervention CAUSED our Current Crisis!!***
Will the Government save us this time? Don’t count on it. You simply cannot legislate a recovery. In fact, while many are calling for more regulations, if history is any indication, government intervention is likely to make matters WORSE.
And more to the point, the current financial crisis was actually caused by TOO MUCH REGUATION, not a lack thereof like most people assume. Here’s why:
Most of you know that lots of bad mortgages owned by Freddie Mac and Fannie May and other banks and brokerage firms is why we have a credit crisis. But exactly WHO is to blame?
DON’T BLAME THE BORROWERS: Sure, people shouldn’t borrow beyond their means, but let’s be real. When someone hands people free money for a house, car and anything and everything else, people will simply take it! It’s human nature.
DON’T BLAME GREEDY WALL STREET EXECS: Yeah, sure they ARE greedy, but greed is an unavoidable in a capitalist society. Fear and greed drive free markets, and always will. The FBI is investigating some firms, and they might find a few instances of fraud, but the fact remains that if you allow people to make easy money without breaking the law, they will!
DO BLAME THE GOVERNMENT!!: Not only was what the wall street companies doing legal, but the government encouraged it! Even worse, some in congress prevented attempts by those who saw the writing on the wall to pull the reigns.
Yes, blame the Government, because well-intentioned politicians, starting with Bill Clinton who enacted some low income lending policies, FORCED Fannie & Freddie to increase their portfolios of sub prime debt to unprecedented levels so that poor people could own homes.
And to ensure banks were loaning to people who couldn’t afford to repay the loans, a liberal group called ACORN, funded by Congressional Democrats, went around suing banks that refused to make what they called “financially irresponsible” loans.
In 2004 the Bush administration sounded the alarm and proposed legislative changes to reel in Freddie and Fannie that were voted down strictly along party lines in the Congress. In 2005 Josh McCain made another attempt, but the reform never made it out of the Democratic controlled committee to the Senate floor for a vote.
To ensure these bills would never pass, Fannie and Freddie spent hundreds of millions of dollars on lobbyists to ensure they could keep loaning to everyone and anyone. Senator Chris Dodd (D) Chairman of the Senate Finance Committee received the most campaign contributions of anyone in Congress throughout his many years. Barak Obama is #2 on the donation list after only 3 years in the Senate.
Here you can watch a bunch of politicians in one party saying Fannie & Freddie are just fine, while others try to sound the alarm unsuccessfully: http://tinyurl.com/3nkrp7
So, in the name of “fairness”, bad loans were made to people who couldn’t afford them, and the institutions doing the lending “kicked back” money to the politicians who protected them.
You see, it wasn’t a lack of regulation, but government interference in the private market FORCING banks to make bad business decisions that caused this mess.
***California may be Next in the Government Bailout***
Because of the current credit crisis, the State can’t get the loans it needs until tax time. The Governor has sent a letter to US Treasury Secretary Paulson stating that if things don’t improve by the end of the month, the State will need $7 Billion. 15 other states are in the same situation!
***Chicken or Egg? A Nasty Game of Chicken***
Banks are simply unwilling to lend until home prices start to rise. But it’s the availability of credit and loans that cause home prices to rise and fall! So banks and the housing market are playing a nasty game of chicken. And there’s a lot more properties in foreclosure that will get dumped on the market adding to the current supply, with few who can get loans to buy them, even if they qualify.
Unfortunately, the “bail out” bill won’t spark a recovery. It’s simply a plug in a leaking dyke. Even worse, some experts say 1 in 8 jobs are related to housing. Plus people aren’t spending, either because they won’t or they can’t. A new report says 1 in 5 car dealerships are about to fail.
***Prepare Yourself***
So what can you do? First, ensure you have reliable sources of income. Since anyone who has a job is susceptible to a layoff, ensure you have other methods for making money. In a down economy most people get hosed. Only a few prosper.
If you want to prosper too, determine who they are and do what they do!
In that regard, SOCALCIA has scheduled 2 of the most successful money makers in SoCal to speak: Jeff Adams and Bruce Norris. Jeff Adams will be our keynote speaker at this Thursday Oct 9, and Bruce Norris is coming November 20. Learn more at www.socalcia.com
Any other comments related to preparing yourself?
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Wednesday, October 1, 2008
Should Investors Use Gold as Hedge During Times of Financial Uncertainty?
“It is well that the people of the Nation do not understand our banking and monetary system, for it they did, I believe there would be a revolution before tomorrow morning.” –Henry Ford
Yesterday when the House of Representatives voted down the financial bailout package,
the Dow Industrial experienced its biggest one-day drop in the Index's 102-year history falling 777.68 points.
And there still is no financial plan in place to help revive the economy.
Historically during times of financial uncertainty, investors have turned to Gold as a hedge. This is because gold is the type of investment that is always an asset. (not simultaneously someone else’s liability).
"Investors are leaning toward it as a hedge against what could happen next,” says Carlos Sanchez, a precious-metals analyst with CPM Group.
But, according to the author of an article I found at www.InflationData.com , Gold is actually a “crisis hedge’ not an “inflation hedge.”
During times of crisis, governments tend to lose control over the price of Gold. However, during more peaceful times, governments are able to keep a ceiling on the price of Gold. This causes Gold to move up in a “stair step” manner.
The author of this article at inflationdata.com also says that gold as an inflation hedge has “a very spotty record.”
But is Gold is a bad investment now? Of course not. However, I do tend to agree with the author’s notion about why the price of gold has not done well over the last twenty years. (See image: price of gold over last 20 years).
The author infers that Governments have historically been known to buy and sell Gold on a whim to create an a sort of “illusion of stability.” The low volume of the gold market compared with say the stock market also lends to it being seemingly easily manipulated by governments.
Most investors in my circle don’t know that, up until about five years ago, it was illegal to invest in gold in China. When that market opened up, obviously there was an increase in worldwide demand for gold when China was free to buy Gold. (See image: price of gold over last 8 years) By 2006, the Shanghai Gold Exchange had become the world’s largest trading exchange for gold bullion with its trading volume well ahead of London, New York, and Hong Kong! Now that’s an incredible fact to ponder on when looking at the price of gold.
But if not Gold as an effective inflation hedge then what are some other inflation hedges?
Commodities ?
Price Inflation is defined as the increase in the costs of various commodities. (Although it is also caused by an increase in the money supply). The idea is that, by investing in various commodities, you should be able to at least break even. What commodities have historically done well in times of inflation? Oil. And oil is also a primary component of the increase in the consumer price index. Also, think about the fact that China is also increasing the global demand for oil along with gold. China will also increase demand for other precious metals. And what about world demand for food and what that will do to its prices? Yippee.
*Inflation indexed bonds ?
Yes, there is such a thing .These bonds have an inflation adjustment characteristic. But they are not adjusted according to the “actual” inflation rate of course.
Any other suggestions for inflation hedges besides the ones I’ve mentioned in this post? Or any thoughts on utilizing gold as an inflation hedge?
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Thursday, September 18, 2008
Gold Recorded its Biggest One-Day Gain in Nine Years
Wednesday, September 17, 2008
AIG´s $1 Trillion Bankruptcy Would Be World´s Largest Ever
Monday, September 15, 2008
Want to Save Money in Taxes This Year?
Friday, September 12, 2008
Bad Business Decision For Apple?
Wednesday, September 10, 2008
6 Deadly Investing Mistakes
6 Deadly Investing Mistakes
Comments on article by William Lynott found at bankrate.com
Source: http://www.bankrate.com/brm/news/investing/20080822_6_investing_mistakes_a1.asp
Given that this article is coming from Bankrate.com I take a lot of things in there with a grain of salt. “Bill, I want you to create a piece called 6 deadly investment mistakes…yea yea, I’m likin’ the sound of that..”
Its definitely skewed like so many things on the Internet, including blog posts but it drew me in nonetheless.
Under mistake #1, I completely agree with Bill here but I always get a laugh from comments like that from Lisa Feathergill. She sounds like a typical stockbroker, "Remember, you haven't lost money until you actually sell the security. I know a guy who followed this advice and watched his million dollars in stock turn into zero dollars in a very short amount of time. Ouch!!
I agree with Mistake #3 that savvy investors make more money during downturns in the economy, however I’m having trouble with his stock pushing again. In my humble opinion, unless you are lucky, stocks wont’ make you rich Bill. Any comments on this?
I wholeheartedly agree with Mistake #6, Abandoning your investment strategy. Bill’s right. Whatever you decide to invest in, stocks, bonds, real estate, gold or silver…stick to the plan.
I think the worst thing any investor can do is react to the whims of the media about the investment environment, from wherever you are looking. Bill wrote, and I agree, “If the headlines are full of it and everyone else is doing it, you're probably too late.”
Does anyone have any other comments or thoughts on these 6 deadly investing mistakes? I’d love to hear from you.
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Sunday, September 7, 2008
Why Proper Estate Planning Is So Important
Thursday, September 4, 2008
Oil: How low can it go?
Oil: How low can it go?
Article found on CNN Money
With the little bit of relief that we’ve all experienced at the pump, it is easy for people to lose sight of the fact that six months ago we all would have thought that $3.75 was high. (at about $108 a barrel, the price of oil is around 50% higher than it was a year ago). Referring to this recent CNN Money article, although the article is extremely pessimistic, I do agree with the Resler’s insight about the proliferating effects of the higher prices on the consumer mindset, “even if they (oil prices) continue to fall, consumers may be wary for the next few months.”
Any thoughts or comments on this?
http://money.cnn.com/2008/09/03/markets/thebuzz/index.htm?postversion=2008090311
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Tuesday, September 2, 2008
Make a Comeback in a Stalled Job Search
Source http://lifehacker.com/5043382/make-a-comeback-in-a-stalled-job-search
Most business people are completely out of tune with this new phenomena of social media and really…how many business executives have time to regularly post on blogs or create a Facebook profile? Although its obvious to see how a blog in conjunction with a good resume is a must for tech professional on the job search, I also think that a blog is a good addition to a business executive’s job search. A blog is a great snapshot of a business executive’s projects, business ventures, and other accomplishments and interests. But who has time to create a mind blowing resume, much less a mind blowing blog? I found a professional blogger who created a blog for me relatively inexpensively and so far it has been an excellent accompaniment to my resume. But…I don’t know if it would actually help, “make a comeback in a stalled job search,” as the post on lifehacker.com indicates. If you are serious about a blog, use a professional blogger (person who blogs !) that has experience creating blogs. Particularly if you are considering a blog or forum for your business, there is a ton of research and traffic driving stuff that goes into it so leave it to pro bloggers.
Posted by Corey
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Why Generation Y is broke
http://articles.moneycentral.msn.com/Investing/HomeMortgageSavings/WhyGenerationYIsBroke.aspx
This article on MSN Money really caught my eye. The article said that “…some 85% of those aged 25 and older hold a high school diploma, and 27% have a college degree, and is of course, the most technologically sophisticated to date…”
But this same generation has zero financial literacy. Most twenty-somethings can barely manage their own personal finances much less knowing what a balance sheet and/or income statement is. And with the introduction of so many new financial products, young people are even more doomed in this new financial landscape. Should financial literacy be taught in schools so that we don’t raise another generation on debt? Any comments?
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Friday, August 29, 2008
10 Things Millionaires Won't Tell You
Source: http://www.smartmoney.com/10things/index.cfm?story=september2008-10-things-millionaires-will-not-tell-you
1. "You may think I'm rich, but I don't." While $1 million was a tidy sum three decades ago, you'd need $3.6 million for the same purchasing power today. So what does it take to feel truly rich? The magic number is $23 million, according to Fidelity.
2. "I shop at Wal-Mart..."
3. "...but I didn't get rich by skimping on lattes." So how do you join the millionaires' club? You could buy stocks or real estate, play the slots in Vegas — or take the most common path: running your own business. That's how half of all millionaires made their money, according to the AmEx/Harrison survey. About a third had a professional practice or worked in the corporate world; only 3 percent inherited their wealth.
4. "I have a concierge for everything.
Thursday, August 28, 2008
How Do Companies Like Trump Realty and Wal-Mart Save Millions of Dollars on Taxes?
Wednesday, August 27, 2008
As gas prices go down, so will food, right? No.
Consumers hoping for easing of supercharged inflation likely won’t see it
http://www.msnbc.msn.com/id/26316365/
Corn and soybeans have dropped 24 percent and 17 percent, respectively, in the last two months but food prices have continued to go through the roof. If commodity prices have dropped, why are food costs still going up? This article says that retail prices for cereal, eggs, cheese and meat generally lag by several months or longer. With commodity prices being so high this past year, its no wonder that retail food prices in the U.S. have jumped on average 6 percent this year — triple the normal inflation rate of around 2 percent.
I thought it was just a rumor that food manufacturers have done such things as “shrinking boxes of cereal and bags of potato chips so they can sell less product for the same price.” The article also mentions a factor that is keeping food prices high: Although commodities prices have gone down, they're still well above historical levels. Corn and soybeans have dropped 24 percent and 17 percent, respectively, in the last two months but are still about double where they were two years ago.
Any comments on this supercharged inflation or what the future holds in regard to food prices?
Posted by Corey of Project Liberty
Tuesday, August 26, 2008
Why is Florida gas cheaper??
My father in law has a home in St. Lucie Florida. I asked him yesterday what was the price of gas? $ 3.68 per gal. What’s up with that? How in the name of cents, can I be paying $3.98 up here in Kaysville, even up to $4.03. Any one out there have any ideas? A limo driver told me that us here in Utah should be getting gas cheaper, because is comes from Wyoming, and that Florida gas comes from over in Saudi or some where. I don’t know if this is true or not, but if it is, that’s pretty bad that, oil from Saudi is cheaper than our own right under our feet!
Back home in the Bahamas 3 weeks ago, gas was $6.27 per gallon and diesel was $6.72, lets hope it don’t reach that much here, it’ll be a whole lota people peddling to work.
Dino
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Friday, August 22, 2008
What Is the Tytler Cycle? Where Is the United States In This Cycle?
What is the What is the Tytler Cycle ?
Alexander Tytler, a Scottish historian who lived at the same time as the American Founding Fathers, who described a repeating cycle in history. He had found that societies went through this same cycle again and again, and that the cycle lasted roughly 200 years each time. Tytler said the cycle starts out with a society in bondage. Then it goes in this sequence:
Bondage
Spiritual Faith
Courage
Liberty
Abundance
Selfishness
Complacency
Apathy
Dependence
Then starting over with Bondage
Tytler organized these items in a circle:
So to give a little more on the sequence above, a society starts out in bondage, meaning no or very limited freedoms. Now faced with a very difficult situation (bondage), they turn to religion and religious faith. Through this they achieve the courage they need to fight for and win their freedom. Next, through the benefits of freedom, they achieve an abundance in material things.
Now we start into the other side of the circle/cycle. We get selfishness and laziness setting in. Then we get apathy and finally dependence. Then we arrive back up at the top with bondage again.
Most of Tytler's work has been completely lost. I found this cycle to be very interesting in relation to where we are in the United States today. Everyone has said we are somewhere on the left side of the circle. I think we are somewhere between Apathy and Dependence. Any opinions on this? Comments?
Posted by Corey of Project Liberty
Thursday, August 21, 2008
Is Now a Good Time To Do Some Real Estate Investing Overseas?
What should you look for in an overseas property investment? Now that investing in property in our economy has become a risky venture in itself, maybe it’s time to look overseas. I’ve heard that it is a drawn out process (also mentioned in the article) and don’t know if it is worth the hassle. Does anyone have any thoughts or is currently contemplating investing overseas?
http://www.realestateweblog.org/due-diligence-and-overseas-property-investment.php
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Wednesday, August 20, 2008
Nouriel Roubini, Economics Professor, Announced Our Current Crisis Before it Happened and Lost His Job Because of it
People are finally paying attention to Nouriel Roubini’s thoughts on the future state of our economy. After being dismissed two years ago after envisioning the events that have caused this recession , economics professor Nouriel Roubini is being taken more seriously this time around. While others are announcing we have seen the worst of these problems, Roubini disagrees. (Quote in article: “We have a sub prime financial system,” he said, “not a sub prime mortgage market.”) But what does this mean? Any thoughts or answers to this question?
http://www.nytimes.com/2008/08/17/magazine/17pessimist-t.html?_r=2&pagewanted=all&oref=slogin&oref=slogin
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Results From Simulated Options Trade From Last Month
For anyone that did a simulated option trade as we discussed at last month’s Stock & Options Trading Symposium, here are the results:
SLB closed at 91.41 on Friday Aug 15th, which was the options expiration day. Right at the bottom of the trading range. Therefore, both legs of the options strangle that we entered, closed OTM and both legs of the option trade closed profitable… ie… you would have made $2050 on a $5k investment in one month!!
Posted by Cary Valerio of Project Liberty
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