MONEY: The worst is not yet over

Friday, September 18, 2009

http://www.vtcommons.org/blog/2009/09/15/daily-maul-under-obama-big-banks-get-bigger-shocker

DAILY MAUL: Under Obama, Big Banks Get Bigger – Shocker!
Submitted by Rob Williams on Tue, 09/15/2009 – 4:57am.

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In promoting and subsidizing the takeover of failing banks by the biggest banks and investment houses, the Post notes, the government violated federal antitrust regulations, which prohibit any single bank from controlling more than 10 percent of deposits nationwide. They also violate Justice Department antitrust advisories on the degree of control over regional financial markets by individual banks.

*** end quote ***

What a surprise!

So the next time, the problem will be even bigger. And the gooferment will have a bigger role in the “solution”.

Argh!

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MONEY: Ignore the 5% “rule” at your own financial peril

Thursday, September 17, 2009

http://tinyurl.com/q2c7fp

Tales From Lehman’s Crypt
By LOUISE STORY and LANDON THOMAS Jr.
Published: September 12, 2009

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“I spent a long time being very angry,” says Mr. Schaefer, the former Lehman executive turned gas station owner. “Angry for working so hard and doing so much. More importantly, for my family and all the time I was away traveling — the time I put in away from them. Now all that money I earned, the money paid in stock, is gone. I can’t go back and remake it.”

*** and ***

When Lehman closed its origination business, Mr. Linton lost his job. Rich and single, he has pursued a life of leisure since then — sailing in his 37-foot boat, playing jazz trombone and, at the moment, taking a week to learn how to fly Russian fighter jets and gliders in New Mexico. He briefly considered attending culinary school.

Although Lehman laid him off in early 2008, his departure turned out to be a boon for Mr. Linton. Being forced out convinced him to bet against the firm’s stock as a counterweight against the Lehman shares he still owned, which protected him when the stock’s value plummeted. Combined with a well-timed sale of his Manhattan apartment and a stream of income from real estate investments, the moves gave him financial padding that frees him from job worries.

“I have been fortunate to have some nice toys,” he says. “And they are all paid up. It’s a nice situation to be in.”

*** end quote ***

I don’t understand a lot of things.

I didn’t understand how smart people, with dependents, working on Wall Street, don’t have life insurance. 91101 exposed they didn’t.

I don’t understand how these ex-Lehman people, who worked on the Street, have all their portfolios so heavily weighted with Lehman. Guess they never heard of options or derivatives.

I don’t understand a lot of things. Wall Street’s “rules of thumb” have been time-tested. Ignore them at your own peril.

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MONEY: UN says kill the dollar!

Tuesday, September 8, 2009

http://www.telegraph.co.uk/finance/currency/6152204/UN-wants-new-global-currency-to-replace-dollar.html

UN wants new global currency to replace dollar
The dollar should be replaced with a global currency, the United Nations has said, proposing the biggest overhaul of the world’s monetary system since the Second World War.
By Edmund Conway, Economics Editor
Published: 6:45PM BST 07 Sep 2009

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In essence, the report calls for a new Bretton Woods-style system of managed international exchange rates, meaning central banks would be forced to intervene and either support or push down their currencies depending on how the rest of the world economy is behaving.

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And, why are we in the UN? We’re financing this “barbara streisand” against our own self-interest. We “nuked” Sadam for suggesting oil should be priced in Gold not dollars. Let’s see if we do the same to the UN for a similar suggestion!

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MONEY: FDIC “insurance”?

Wednesday, September 2, 2009

http://www.lewrockwell.com/sardi/sardi117.html

FDIC Walks a Tightrope
by Bill Sardi

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Bair’s second assignment is to slowly put small insolvent American banks out of business, over a thousand of them, while fostering public confidence in the FDIC insurance company’s ability to insure the public’s money. The FDIC admits to only 416 on the agency’s “problem bank” list. Frankly, without bailout money, few banks would have adequate reserves. By collapsing small banks, depositors are likely to bank their money at larger institutions. So Bair is really a shill for the large bankers to rub out their smaller competition, though she may have no other option in this instance.

*** end quote ***

So, why if “too big to fail” is bad, does the gooferment limit the size of a single bank to say ONE ONE THOUSANDTH of it’s reserve. And, oh by the way, why doesn’t it have a REAL RESERVE? Not so IOU from the FED or the Treasury.

Argh!

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MONEY: In Gold We Trust

Thursday, August 27, 2009

http://www.lewrockwell.com/orig10/fink1.1.1.html

IN gOD WE TRUST
  by Gabriel Fink

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The merits of placing references to deity on currency is another debate. What should not be debatable to any of the three Abrahamic religions, is placing the name of God on something that is worthless, has no value, represents debt, usury, and facilitates war. The only type of currency that the phrase “In God We Trust” could be placed upon without taking the Holy name of the Lord in vain, is gold or silver coinage. After all, God indeed himself created these materials of intrinsic value, a feat the anointed Fed chairman can only feign doing in spite of his lofty seat in the marble temple in DC.

*** end quote ***

Without a question, the American motto should be:

In GOLD, we trust!

Clearly anything less is fraud.

And, let’s just go with ounces. No need for the word “dollars” anywhere.

It’s even OK with me if we want to be international friendly!

KILOGRAMS of gold!

See ounces have flavors; even grams do to.

We need a crystal clear measure.

A stone. (The old New England measure for potatoes!)

Heck we can call it a nano-STONE.

Let’s just be honest in our vocabulary. And our money!

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MONEY: Might be a good answer to the wrong problem!

Wednesday, August 26, 2009

Nothing against discount brokerages, but may I suggest that it might be the “right answer to the wrong problem”. I was always enamored of the metaphor of “leaning your ladder against the wrong wall”. Recently, after many years of meandering and sometimes successful trading (i.e., went all in on a stock that tripled), I’ve decided that, like medicine, sometimes one can be too smart for one’s own good. I hired what I’ll describe as “an institutional portfolio manager”. (Yeah, have to a 500k$ portfolio to get into that game!) But, I’ve concluded that the “casino” (aka Wall Street) is no place for the DIY crowd like I once was. The electronic trading, the specialists, the “financial consultants”, mutual fund’s crass graft, and all the other machinations have taken the “game” to a new level. The globalization of finance has convinced me that the dollar is on a fast road to perdition. Even gold coins now carry a hefty 12% markup over spot. SO there is no “good” investment for the little guys. Even at cheap transaction fee!

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MONEY: Dollar is in big trouble

Saturday, August 22, 2009

http://www.lewrockwell.com/lilley/floy10.1.html

Sound Money: The Impossible Dream?
by Floy Lilley

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Debt: The US must borrow 46 cents for every dollar spent this year. Outstanding public debt as of 18 August is $11,704,322,903, 918. An estimated population of the United States is 307,209,243, so each citizen’s share of this debt is $38,127. The debt-to-GDP ratio is 82%. This debt will grow by a trillion dollars a year. The debt has to be rolled over every four years. That’s $240 billion a month to be skimmed off capital markets. The four largest budget items are wars, social security, Medicare/Medicaid, and interest on the debt.

*** end quote ***

How does the Republic get out of the mess that the congresscritters have created?

Inflation? Repudiation? What Chapter applies to the nation?

It’s clear we can’t meet our commitments. So what, or rather who, gets thrown under the bus?

Clearly the Chinese, and any one holding our debt. Senior citizens, pensioners, the sick and elderly.

Social security goes broke. What does that look like?

Argh!

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MONEY: Your Home Is Not An Investment

Wednesday, August 19, 2009

http://www.bargaineering.com/articles/your-home-is-not-an-investment.html

Your Home Is Not An Investment
from Bargaineering.com by Jim

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There are many benefits to owning a home and I’m a huge fan of it, but don’t justify buying a home by thinking its home is an investment. It’s not.

It is, however, a place to live, a place to make your own, and a place to make yours. It’s a place to put down roots, a place to raise a family, and a place to grow old in. It’s a place to call your own, it’s just not an investment. It’s a home.

*** end quote ***

Had this discussion a few weeks ago with an OLDER friend and his family. Couldn’t seem to break thru that “rent” was not “lost”. Sigh.

It’s only an investment if you get rent for it.

Frau is enamored with HGTV and all the renovation, vacation, and first time. (I don’t understand how they can ignore labor cost in the renovations. I don’t understand buying an international vacation home for several 100K$; how many times can you go there? I don’t understand first time buyers who exceed their budget consistently.)

It’s only a legacy.

It’s not an ATM like how people were refinancing to get cash out.

Everything is great when the market is going up; down, not so good.

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MONEY: Hyperinflation

Tuesday, August 18, 2009
http://www.spiegel.de/international/germany/0,1518,641758,00.html
MILLIONS, BILLIONS, TRILLIONS
Germany in the Era of HyperinflationBy Alexander Jung

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During the hyperinflation in Germany of 1920s, the country’s currency, the mark, went crazy. The government of the Weimar Republic may have been able to clear its debts, but it came at the cost of the citizens’ savings. It’s an era that is still part of the national psyche today.
*** and ***

Take for example the family that sold its house to emigrate to America. On arrival at the port of Hamburg, they found that the money wasn’t enough to pay for their crossing — in fact, it didn’t even pay for their tickets back home. Then there was the man who drank two cups of coffee at 5,000 marks each, only to be presented with a bill for 14,000. When he asked why this was he was told he should have ordered the coffees at the same time because the price had gone up in between. And then there’s the story about the couple that took a few hundred million marks to the theater box office hoping to see a show, but discovered it wasn’t nearly enough. Tickets were now a billion marks each.

*** end quote ***

And that kiddies is what faces us here in the USA in the near future.
But It CAN’T happen here!
Can it?
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MONEY: An interesting facet; most will miss it

Friday, August 14, 2009

http://www.lewrockwell.com/north/north742.html

Pink Slip Nation
by Gary North

*** begin quote ***

The re-sets will not be re-set. The lenders will face walkaways. Not that many home owners have enough savvy to keep paying on the mortgages, on the assumption that the lenders will not foreclose.

*** end quote ***

There’s a pearl of wisdom in here.

In an ARM (adjustable rate mortgage), there are times when the interest rate “resets”. Goes higher from the “teaser rate”.

Here’s the gem.

Just ignore the reset.

The bank can’t afford to foreclose. It can’t afford to renegotiate. It’s “hung”.

Payers should just keep paying based on their old schedule. There may be idle threats from the bank. (The smaller your bank the better.)

When does the chicken come home to roost?

I’m not so sure. When this trouble works itself out, interest rates may be lower and the ARM resets back down? When the bank eventually gets shut down and acquired by a bigger bank? When the Ponzi scheme runs out?

When it does go to foreclosure, the homeowner will have a valid argument: precedent. The bank kept cashing my checks, didn’t foreclose, so it — remember my law degree is from the Judge Judy school of law — has accepted a modification!

Very cute! No?

Just ignore the big bad wolf cause he can’t blow very hard!

This may be wrong, but I’m not so sure. I think it’s a very very savvy move. And, costs the homeowner nothing to try.

Comments?

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