FINANCIAL: Traders get wiped by a software bug!

*** begin quote ***

Negative oil price triggers trading software bug, wipes out traders
For the non-professional trader, dabbling in futures or FX contracts is generally a recipe for financial ruin.  There’s so much leverage in those contracts that it doesn’t take much of a move against your position to get wiped out.  When the underlying commodity does something weird, like say, flash crashing or something weirder (see below), all bets are off.  The situation is exacerbated if the trading desk software isn’t equipped to handle such an unprecedented move.
Bloomberg reports the tale of Toronto-based Syed Shah, who normally trades stocks and currencies on his Interactive Brokers account.  On April 20, Shah picked the absolute wrong day to try his hand at trading oil futures. That’s the day oil went negative for the first time in history, at one point printing a negative $37/barrel handle.
Shah waded into what he thought was an unsustainable discount on oil: spending $2,400 from his account on futures contracts at $3.30/barrel, $0.50/barrel, culminating in a tranche at the unbelievable price of one penny a barrel.  Except not only did oil fall to 0.01/barrel, it kept going, below zero, negative and further negative – only Shah, and all of the other traders on Interactive Brokers system didn’t know that, because the platform wasn’t coded to handle negative oil prices. None of them knew the contracts they were buying were actually costing them money the further oil went below zero.
When the end-of-day settlement notices went out, Shah, who started the day out with a balance of $77,000 in his account, now owed the house $9,000,000.
Interactive Brokers has since acknowledged the negative price exposed bugs in their own system, and IB will be making all traders affected whole out of their own book.  It’s estimated that will cost the brokerage around $113,000,000.
Charles Hugh Smith, Jesse Hirsh and I discussed this type of unprecedented signal distortion in our first AxisOfEasy Salon, available here.

*** end quote ***

That’s a horror story.

This “casino” is NOT for the faint of heart!

— 30 —

FINANCIAL: Help Main Street — Buy gift cards to support local business during COVID-19

Source: Help Main Street — Buy gift cards to support local business during COVID-19

# – # – # – # – #

I don’t know if that is such great advice.

It would be reasonable to think some, if not most, will fail, bankrupt, and not reopen.

Your gift card is smoke.

I’ve been stuck with some Christmas and Birthday gift cards.

— 30 —

FINANCIAL: Dealerships Give Car Buyers Some Advice: Just Stop Paying Your Loan – WSJ

The trade-in, where a buyer hands a car back to a dealership and uses it as credit toward another one, is often a crucial step in car buying. But some dealerships are instead telling buyers to give their old cars back to their lenders—and selling them new ones—in a practice known as “kicking the trade.”

Source: Dealerships Give Car Buyers Some Advice: Just Stop Paying Your Loan – WSJ

# – # – # – # – #

This seems dishonest by both the dealer and the borrower.

Like the sub-prime mortgage fiasco, the banks are letting the “originator” off the hook.

The fix is easy.  Make the originator responsible — both jointly and severally — for the loan when and if it defaults.

Problem solved.

Be it any kind of loan, everyone needs to have skin in the game!

— 30 —

FINANCIAL: Why youngsters will always be broke!


All, and I mean ALL, the youngsters I know, and I know at least a dozen, will always be broke because they are financially illiterate. Thanks to financially illiterate Gooferment Skrules, parents, and relatives.

Despite having suggested it often — to the point of making myself bored — not one of them, NOT one, has set up any kind of a sinking fund bank account.

Case in point, a certain young lady was give a car.  I strongly suggested that she take the cost of the car ~18k$ and divide it by an estimated life of 70k miles which would translate to ~26¢ per mile.  Then, she should deposit each week an amount equivalent to number of miles driven times 25 cents.  (Even the Gooferment Skrules mathematically challenge can divide by four for the number of dollars to be “saved”.)

Guess what?

Never did it and guess who’s car just clocked 70k miles?  And, now guess who’s in a quandary as repair bills start to come in (i.e., tires, brakes, belts, etc. etc. etc.).

And she is not alone.  EVERY one is in the same boat.

Financially illiteratacy “costs” lives, happiness, and relationships.

Nie mój cyrk, nie moje małpy . . . literally, “not my circus, not my monkey;” figuratively, “not my problem.” — Polish saying

And I am the grumpy old cynic!

# – # – # – # – #

FINANCIAL: A Health insurance alternative?

I was listening to “Charitable Liberty: An Honest Word with Bo Brown, Libertarian 2.0” by Jenn Gray

Leading Liberty – Libertarian Marketing Podcast Trailer … The first marketing and communications podcast ever created for pro-liberty professionals … She’s shown libertarians around the country exactly how to use Facebook to create targeted video advertising campaigns that reach users from both the left and the right.”.

And I heard about “Liberty Health Share”.

I was very impressed with Ms. Gray’s personal experience with her personal health insurance needs.

I immediately identified some folks who could use this option. 

I’m putting it on my blog so perhaps it won’t be such a secret.


# – # – # – # – #

FINANCIAL: “Social (In) Security” Trust Fund reserves become depleted in 2035″

Social Security Proposes “Immediate And Permanent Reduction” In Benefits
by Tyler Durden
Tue, 01/09/2018 – 16:47

*** begin quote ***

Literally tens of millions of people depend on it.

The Social Security Administration itself reports that 62% of recipients rely on the program for at least HALF of their income.

And further research by the Center on Budget and Policy Priorities (CBPP) shows that, without Social Security, 22.1 million Americans would fall below the poverty line.

Needless to say, major cuts to the program would have nuclear effects.

And yet, year after year, the Social Security Board of Trustees publishes an annual report that describes the program’s terminal financial challenges in excruciating detail.They mince no words in plainly stating that Social Security pays out far too much money, and takes in far too little.

According to the 2017 Trustees report, “Trust Fund reserves become depleted in 2035.”

They’re practically giving us a date that we can circle on a calendar and mark “End of Social Security.”

*** end quote ***

Unfortunately, all the politicians and bureaucrats that stole and spent it will be all dead and out of sight!

And there will be a lot of unhappy “Sheeple” look to hang someone out to dry.

Not sure, how it will be resolved. But it’s going to be dangerous and “unpleasant”.

# – # – # – # – #

FINANCIAL: Talk to one of the folks at RICE DELMAN for free no-obligation to do anything but listen



Screenshot 2017 04 24 09 51 11

No secret, I am a Client. And a raving fan.

I’ve gotten all sorts of my friends and relatives to just talk to them. And, I have received nothing but positive feedback.

Of course, they’d like you to become a Client. And their minimum account is 5k$. BUT, that’s not the purpose of starting the conversation. As Ric says — sometimes too often — he wants everyone to become “rich”. (That’s a concept I find hard to wrap my head around. EVERYONE?)

I have had people without two nickels “chat with an advisor” and come out with a plan how they were going to become “rich”. Or, at least, “richer”.

I have no vested interest in this recommendation. I get nothing from them, except the service I pay for. 

TANSTAAFL (“There Ain’t No Such Thing As A Free Lunch” From Robert Heinlein’s classic) 

But you can get some free advice. Which IMHO is worth a lot more than you pay for it. 

Remember I’m the cynic who worked on Wall Street.


# – # – # – # – # 

FINANCIAL: Get kids working?


*** begin quote ***

Going back to our story above, if you are a parent, do you or did you assign chores to your children? Send your comments, which we may edit before publication, to Please include your name and location.
*** end quote ***
I don’t have children. But, my sainted Mom sent me to hustle up carrying bags for folks outside the local supermarket. I worked for tips and some times it was up six flights. Then at the end of the day, I’d give her what I earned and depending upon how broke we were, she give me some back. After that I couldn’t wait to get a real job, it was easier. I had a regular part tim job when I was 14 — due to Gooferment regulations. And was working full-time when I was 17 and in college full-time. Now 70, wish I could do it again.
# – # – # – # – # 

FINANCIAL: Get a big mortgage BEFORE you retire

*** begin quote ***
Please permit me to “pontificate” since I feel strongly about this bit of “whizdom”.
The desire to pay off the mortgage before retiring is based (imho) on a false paradigm and a obsolete meme.
The false paradigm (perception of reality) is that it’s “safe” not to have a payment in retirement when your earnings are reduced. While it’s not “safe” to have any “bad” debt ever (i.e., Macy’s at 21%; etc.), a mortgage is “good debt” (i.e., your living in an asset that will probably appreciate). Isn’t it safer to have a big chunk of cash, “safely” invested, that you can use when needed?
The obsolete meme (framework of thinking) is based on the pre-1940-ish mortgage where the bank could demand payment in full of the whole mortgage at anytime. That’s why depression era folks lost their homes or farms to foreclosure. After the New Deal (I believe) mortgages were not subject to the bank’s demand, so you can never lose the house due to foreclosure — as long as you make the payments.
The argument FOR a big long mortgage going into retirement is that you will have the cash, the house, and a very low tax deductible interest rate (i.e., 4%).
The argument for doing it BEFORE you retire is that you CAN NOT do it after you retire. So if you were to need money, then you’ll have to sell the house to get the cash or take a Home Equity Loan at a higher and variable interest rate.
I invite you to talk to my “finance guy” to get the scoop. He loves to chat with all my friends and relatives who are all broke and don’t have two nickels to rub together. Laugh! The Edelman Group’s philosophy is they to help everyone get rich.
Now I don’t have to rant next time I see you. 

# – # – # – # – # 

FINANCIAL: What is the defined-benefit pension plan alternative?


*** begin quote ***

Jerome Schmid of South Carolina commented: “Sad to see defined-benefit plans slip away into history. But employers no longer care about employee welfare (despite volumes of acclamations in various mission statements), as once-paternalistic corporations have been reduced to financial schemes, manipulated like exotic derivative securities. It is probably a very good idea to turn over the plans to insurance companies who are staffed with people who are (thought to be) competent risk managers, and who are far more likely be around 10 years from now.”

*** end quote ***

Well, I’m no Ric Edelman, but here’s my suggestion.

Remember the history of defined-benefit plans and take action accordingly.

Remember “benefits” — that is employer supplied and paid for “entitlements” — is a vestige of the World War II wage and price controls. Prior to that, the employer just paid you what you had earned. What you did with it was up to you. To get around the WW2 wage and price control, employers offered “benefits” which were found to not be wages — probably due to Crony Capitalist bribing the politicians. Of course, as an expense to the company they were tax deductible. Unfortunately, if the employee bought the very same “benefits”, then they paid with “after tax dollars”. (That’s how the whole “pre existing conditions” and “health insurance tied to the job” disaster got started! Thanks to the Gooferment.)

So, the defined-benefit pension plan is a fiction. Some companies like AT&T were rigorous in their financial planning for it. To the extent of setting up a completely separate corporate entity, with its own Board of Directors, to manage the funds. (And, to insist that all liabilities be 100% funded.) Other, like Enron forced their pension and 401k plans to hold only Enron stock in the plans. (We all know how that worked out.) Also, look at Dallas where the city my have to file for bankruptcy because of the unfunded liabilitiesOther horror stories exist. Like CalPers underfunded by many trillions of dollars. Like some Union pension funds underfunded by 75%. And other pension making risky investments, like Puerto Rican junk bonds, to try and catch up.

My suggestion?

Easy. Take responsibility for yourself and your own future. The Gooferment is NOT your friend. Your employer is NOT your friend. Your insurance agent, your broker, and your banker are NOT your friends. So you have to treat them and their promises like a used car salesman’s as you driving off the lot. (At least, the salesman is “honestly” lying to you.)

You have to hire a “team” — lawyer, accountant, and registered financial advisor — that you WILL pay for out of your own pocket — to help you. Then, you figure out how much you will need in retirement to NOT be eating dog food and choosing between medicine or heat. How much you “discount” the promises of Social Security, Pensions, and Retirement savings is an important calculation. And, finally, you build your own “defined-benefit pension plan” with a well diversified investment portfolio that you save into. 

Hard, not really. Essential, absolutely.

# – # – # – # – # 

This is entertainment; not investment advice. Call Ric for help. 1-800-call-ric anytime.

Remember the sources of my education! I’m just a fat old white guy retired injineer who’d now a poor old senior citizen on a fixed income with:
* Law “degree” from watching Judge Judy;
* Medical “degree” from watching Doctor Phil;
* Building “degree” from watching “Holmes on Homes”;
* Investing “degree” from reading about Bernie Made-off;
* Finance “degree”from listening to Ric Edelman;
* sensitively managing Human Resources from watching Chef Ramsey; and
* creating loving / caring human relationships from studying the movie roles of Gunny Ronald Lee Ermey

# – # – # – # – # 



A menagerie of fallacies

 — via my feedly newsfeed

# – # – # – # – # 

Pretty funny stuff.
I have seen a lot of “hippos” in my career and completely agree about the coin flip risk — although in my case it’d be 10k$ to 10k$+100 before I’d puke. (I wouldn’t take such a risk unless it was for “life changing money” aka LC$). Hence my play of the lotto when it’s over 400M$. Then, I wouldn’t mind the 50% tax bite.
Less than that, shrug! It’s not LC$. Remember 85% of winners of more than 1M$ go bankrupt in 3 years.
1M$ at 5% is 50k$ per year forever.
Hmmm, maybe I need to lower my definition of LC$? I think I’ll move the selctor dial down to 8M$ — half for taxes, and that 200k$ per year. Have to check with Dan the Finance Man, but that would make different life.
Maybe I could afford another additional gal pal, better car, or even a plane.
Yup, that’s how folks go broke. Laugh!
# – # – # – # – # 



# – # – # – # – # 

Full disclosure. I am a fan. And, he’s sending me a book for free.

But I pre-ordered the book so I can share it with those who promise to return it.

On his podcast, he’s be teasing the book and I have  say I’m excited to get his insights on the future.

In the immortal words of my personal poetess laureate Taylor Swift “Everything Has Changed” !

Only the dullest Luddite wouldn’t want to know what he’s predicting.

# – # – # – # – # 

FINANCIAL: The federal government’s student-loan debt-relief programs?

I fundamentally oppose any “debt relief” program on the grounds of “moral hazard”. In the future, loans will be taken out with the expectation of forgiveness.  
As a little L libertarian, the Gooferment does not have any funds that weren’t forceable taken from Taxpayers. Hence there should NOT be any FEDERAL loan program in the first place.
Further, you can correlate the rising tuition and rising student debt with the increasing Federal student loan involvement. 

fjohn reinke
keene NH
Going back to our story above, what are your thoughts on the federal government’s student-loan debt-relief programs? Send your comments, which we may edit before publication,

# – # – # – # – #  

Responding to yesterday’s question on the federal government’s student-loan debt-relief programs, Bernard Levine of Oregon wrote: “Solve this whole costly mess with one simple reform. Require colleges to co-sign every loan to their own students. Then if a student defaults, the college is on the hook to pay. Which is only fair, since it was the college, not the student, that received the proceeds of the loan. And it was the college that promised, implicitly or explicitly, to make its students employable and prosperous.” Cole Aston of Missouri said: “Forgiving student debt is merely a short-term fix to a long-term problem. Tuition is sky-high because of federal-government backed student loans. Until we get rid of these government loan programs, universities will continue to inflate their tuition cost. We can’t be half-free market and half-socialist; we need to pick one or the other and stick to it.” And Slade Howell of North Carolina commented: “The federal government forgiving student debt is a wonderful idea. It is exciting to think that tax-paying, working Americans can have the opportunity to fund a social interlude for our youth… This may well go down in history as the most ingenious welfare system ever devised to procure votes.”

# – # – # – # – # 


FINANCIAL: The FED is our enemy

Hillary’s “Partner in Government”
By Thomas DiLorenzo
September 17, 2016

*** begin quote ***

What all of this means is that the Fed is an engine of political corruption and economic instability.  It has generated inflation rather than controlling it (the dollar is worth less than 5% of its value in 1913, the year the Fed was created); has caused endless boom-and-bust cycles such as the 2008 real estate market crash; hides the true cost of government, especially the costs of war; and generates what economists call a “political business cycle” as described by Robert Weintraub’s research.

*** end quote ***

Yeah, and this article puts to rest the FED’s “independence”.

So what can’t we go to a REAL gold standard?

It couldn’t be any worse.


# – # – # – # – # 

FINANCIAL: When does a wife become a widow?

Why the Amount of Life Insurance You Have Could Be Misleading

# – # – # – # – # 

In this episode, Ric gives husbands a slap in the face. And wives a kick in the <synonym for donkey>!

When, at what age, does a wife become a widow?

On average?

Cue the final jeopardy themes … …

… … (don’t rush; we’ll wait; this is important.) … …

Ok? Pens down.


To quote Ric: “aaaaaaaaaacccccccccccckkkkkkkkk!”

Half at least that 60 and half after 60.

How much life insurance does a family need?

And, another great Ric-ism, “In this decision, husbands don’t get to vote because they will be dead!”

Rick gives the rule of thumb: Take the about of life insurance, half it, and drop a zero. (For the not mathematically challenged, that’s a 5% withdrawal rate.)

500,000$ = 25k$ / year

1,000,000$ = 50k$ / year

2,000,000$ = 100k$ / year

Not very much. 

Rick good news is that life insurance is cheap.

My life’s lesson is that husbands need to insure their wives. Every try to hire a nanny; housekeeper; even a baby sitter? Wives are economically very expensive to replace!

My maternal grandmother used to say: “A man who, dies without life insurance, doesn’t leave his family; he abandons them”.

A word to the wise.

Great advice from Ric.

# – # – # – # – # 

  • Why the Amount of Life Insurance You Have Could Be Misleading