Market Insight

How Did Humans Get Here?

2011-05-25T10:11:00.000-07:00

An age old question to which there are many theories, but no real rock solid answers to how did humans come to occupy planet earth. Even though this may seem like a difficult question to answer, it pales in comparison to the question, WHY are humans or life for that matter here?

I'm not even going to pretend to answer the latter question, but I do have an alternative theory for the former.

Recently, I was reading an article in a Popular Science magazine that talked about some real world issues facing us today. An article debating each of these could be discussed, but to stay focused I'll suffice it to say that the resources this planet has to offer cannot sustain the entire population in the way they would like to live. In other words, Americans enjoy a lifestyle and an appetite for food and other natural resources that most of the rest of the world do not. For example, with only 5% of the worlds population Americans consume 60% of the worlds meat. With the worlds affluence increasing, there is a corresponding increase for the desire to consume like Americans. If you do the math the numbers don't add up to the earth's resources being able to support that kind of consumption.

So, the article surmised, that it would likely be required for humans at some point to move off the planet to ensure the long term survival of the human race. Technology exists today to construct huge self sustaining space stations that humans could live on, orbiting the earth and visiting the planet much like someone would visit Hawaii or some other exotic place.

It would be generations before these space stations would be capable of space travel since we don't have good enough rocket technology to get anywhere very fast. So they would just orbit the earth.

Problem with building these space stations is that they are very expensive and governments are having crippling money problems right now. And private industry hasn't yet figured out a way to profit from building these mammoth buildings in space so they haven't committed any funds towards these projects yet.

At some point, however, man may be forced to build these stations for survival. When that happens all bets are off for the expense of it, it will become a priority and it will happen.

So just for arguments sake let's say humans build some of these space stations and people actually begin living on them. Whether it be boredom or advances in technology, someone is going to want to begin exploring space and looking for other inhabitable planets.

This journey would take generations and people would be born and die in space without ever stepping foot on soil. Other evolutions may occur like happen when animal organs and senses change to adapt to their environment. In the low light environment of space maybe peoples eyes begin to enlarge and bodies begin to shrink or change due to minimal amounts of available food and low levels of gravity.

Hundreds, maybe thousands, of years pass and many potential planets are discovered before one is finally found that can support life. Anxious, but cautiously, people explore their new-found world and begin to develop it. Some stay behind, others jump back in the space ship and continue their journey. Maybe with improved technologies that enable them to travel ahead and back in separate space ships, the mother ship 'checks in' with the humans that stayed behind colonizing their new planet to make sure they are ok.

While this dream is many years into the future, if it is in the least bit possible, then maybe it happened before. Maybe that's how this planet was colonized too.

Dead Blackbirds

2011-01-27T07:40:00.000-08:00

According to scientists, the 5,000 blackbirds that fell out of the sky like rain in Arkansas, died of "blunt force trauma".

Scientists say that the birds have internal bleeding consistent with flying into a stationary object.

In other words, scientists believe that 5,000 birds flew into a tree, got up, dusted themselves off, began flying to another destination then all at once began falling out of the sky...dead.

Whatever.

Either these scientists are incompetent or they're hiding something.

Airport Security

2010-11-25T09:22:00.000-08:00

There comes a time in a nations history that someone has to decide what is best for the country. We are definitely at that crossroad today. Someone in TSA has decided that it is in the best interest of national security to strip search anyone choosing a plane as their mode of transportation.

One of the problems with America is that we have let political correctness go to far. We seem to be willing to allow foreigners to change our culture and traditions because it offends their religious and cultural beliefs. Remember how we used to be able to say Merry Christmas, now it has to be Happy Holidays?

I can see how racial profiling normally is not a good thing and not something we would want to make a habit of in a country that is considered a melting pot of cultures and people from around the world.

But when it is a choice between losing civil liberties, constitutional rights and rights afforded to citizens of America through the Bill of Rights and profiling the most likely terrorist suspect wanting to board a plane to blow it up, I think we need to consider an exception.

Of all the terrorist acts that have been committed in the world, how many have been committed by Americans? And of those, how many were suicide missions?

Americans don't buy the 72 virgin thing and they certainly will not blow themselves up to commit an act of terrorism. They might blow something up, but it won't be themselves.

So why do we subject millions of Americans to violations of their rights, including 80 year women and young children when the answer really is to set aside political correctness.

Integrity of a Tribal Gaming Agent

2010-09-14T11:39:00.000-07:00

Tribes have been conducting gaming operations as long as anyone can remember. It was this history of gaming that ultimately convinced the Federal Government and the Courts to authorize the Indian Gaming Regulatory Act (IGRA) that allows federally recognized Native American Tribes the right to open and operate casinos on trust land.

In the early 1990’s casinos began springing up across the country, once a Tribe negotiated a Compact with the State in which they reside to establish regulatory controls and agencies responsible for enforcing those controls.

As gaming expanded so did the controls and responsibilities of the agencies that provided oversight for the gaming operations. There are many debates on how much control these agencies should have or even if they should exist as oversight agencies. Tribal casinos are regulated by federal, state and tribal agencies, making them the most regulated casinos in the world. Overkill? Probably, but in the beginning the federal government was very concerned organized crime would infiltrate these casinos and siphon millions of dollars from tribes that are used to pay for governmental services to their tribal populations.

Almost all tribal casinos will report some conflict or adversarial relationship with their Tribal Gaming Commissions. There have been instances where the Tribal Gaming Commissions and Agents have sued the Tribe over control of the casino, even though the Tribe employs the agents that work for their Commissions. It comes down to interpretations over who has the control of the casino, the separation between the Commission and the Tribe and even the egos and lust for power the Tribal Gaming Agents (TGA) develop.

On at least one occasion a Tribal Gaming Director (TGD) couldn’t separate the power, ego and lust for control he developed in his prior career as a city police officer. Through the years he worked at this particular casino there were many observations of his vindictive behavior towards employees of the casino. Many people were afraid to not do what he said for fear of retaliation, even though he didn’t have the authority to tell operation employees what to do.

Due to the heavy regulatory requirements and the desire to keep operations of the casino and the regulation of the casino separate, the businesses were organized as two separate entities. Operations was responsible for running the business and generating income, while Regulatory was responsible for making sure Operations followed the rules in their mission to generate income.

This TGD, however, fancied himself as an operator of the casino and often had many ideas on how to run the casino better. In an effort to maintain quality relations with the Regulatory body, the Executive Director of Operations (CEO equivalent) created an Executive Board that included the TGD. This Board was in charge of high level policy development, major projects, finance control and marketing direction. The Board also helped facilitate communication between the two independent bodies of the casino and its existence improved the coordination during projects that required TGA input and approval.

It also fueled the TGD’s lust for becoming the Executive Director of the company. During these years the relationship was the best of any tribal casino and the model for other properties who wanted to improve the relationship between Operations and Regulatory.

But reports of the TGD’s vindictive behavior grew and began to tarnish his credibility. It altered the behavior of the Executive Board who now was concerned about becoming the target of his wrath if his ideas were not given adequate consideration.

This led to conducting meetings without the TGD, but that itself triggered the vindictive behavior the Board was trying to avoid.

Then an analysis by the General Manager was about to set into motion an uncontrollable series of events that would change the face of the business forever.

The biggest political witch hunt and most complex conspiracy the Tribe has ever mounted was about to begin. Led by the political backing of the Tribes Chairman, the actual hunt had the TGD as its General.

Starting in the fall of 2005, the casinos GM noticed an aberration developing in a trend of the table game hold percentage. The GM regularly performed analysis on the table games and other financial aspects of the business. The hold percentage is the result of two factors, the ‘drop’ and the house’s ‘win’ on any particular table. The ‘drop’ is the amount of money a customer pulls out of his/her wallet and places on the table in exchange for chips. That money then goes down a ‘drop box’ and is later taken off the tables, placed on a cart and rolled into the back hallway and eventually into soft count, the room where all the casino’s money is counted.

After the customer plays for his/her duration of stay, he/she will take their remaining chips to the cage and be paid in cash. Generally, the amount is less than the amount that they ‘dropped’ on the tables. The difference in those amounts is the house’s ‘win’. If you divide the ‘win’ by the ‘drop’ you end up with the ‘hold’ percentage.

So getting back to the aberration in the hold percentage, if the ‘win’ stays constant, but the ‘drop’ rises, the ‘hold’ percentage will drop. And if the ‘drop’ falls, the ‘hold’ percentage will rise. Since the ‘win’ is controlled in the cage and on the tables it can’t be altered. The tables have a starting chip count and an ending chip count. In simple terms, the difference will be what the house won or what the customer won depending if the ending count is higher or lower than the starting count. That starting and ending inventory is coordinated in the cage with the amount of chips that a customer cashes in and when reconciled the result is the house’s win or loss.

So, hypothetically, if someone were taking money out of the drop boxes prior to the money being counted, the ‘hold’ percentage would rise.

In fact, the hold percentage was showing abnormally high readings for a number of periods and because no one paid attention to it prior to this, the GM discovered that it had been that way for a number of years. The ‘normal’ hold percentage in this geographical region was around 24%. In Vegas and New Jersey those numbers are lower.

At this property the number had been running consistently between 27% and 29%. At this property, during this time, the drop box carts were wheeled into a back hallway and left there until such time they were moved into the soft count area.

The soft count door required two keys, one was held by security and the other by the TGA’s.

The TGA’s also controlled surveillance. The GM was granted access to the property’s camera via a terminal connected to his computer. The TGD authorized the GM to view every camera in the business, except the one camera that had a view of the drop box cart while it was in the back hallway.

It was possible that someone in the TGA department could systematically remove several thousand dollars from the drop boxes while it was in this back hallway on every shift and it would go unnoticed. Except, a red flag would pop up and reveal itself in the hold percentage. It is conceivable that the hold percentage could pop up to 29% and then come back down to normal ranges. But it becomes a red flag when the hold percentage stays up at those levels for an extended period of time, as it did at this property.

The GM brought this to the attention of the Tribe at a regularly scheduled Business Committee meeting. Even after several warnings, the Business Committee took no action. The Business Committee was the Tribes oversight committee for Operations and reported directly to the Tribes governing body.

Casino management was conducting a regular year end clean up of unnecessary expenses, in this particular year it included deactivating unused cell phones in early January. The TGD announced in late January that he was going to do a routine audit. The audit was anything but routine.

Later, the timing of the announcement of the audit and the deactivation of the phones would be a point of debate.

The audit began with cell phone use, but as nothing could be found it quickly expanded to credit cards, tools, computers, payroll and virtually everything in the casino that the GM, the Executive Director of Operations, the Controller and the Facilities Manager had some oversight. The audit became an investigation of the top management officials and in this case a related manager.

Casino management and employees were cooperative and gave the Tribal Gaming Agents everything they asked for, this is documented in e-mails sent to management from the Gaming Agents.

After three months of investigating and coming up empty handed, the TGD decided to pull in the Feds. But how could he do this without hanging himself?

In a bold move, the TGD tells the Tribe he is not getting all the information he needs to wrap up his investigation. Later, in June, when the TGD turns in his findings to the Tribes governing body, the Senate, there is nothing in the report that he didn’t already know in February.

But he presses on and delays the conclusion of his investigation. By this time he has the auditor, who is conducting the Casino’s annual audit, unknowingly in on the scheme. The auditor will not release the audit until the investigation is complete.

Interestingly enough, the auditor conducting the annual audit in this particular year was hired by the TGD. It is the first year that it is done this way. In all prior years the auditor was hired by casino management.

The TGD delays the investigation, the audit is not ready by the April deadline and the National Indian Gaming Commission (NIGC) issues a violation. A short time later the TGD asks the NIGC to come in and assist with the investigation. When asked later by the Tribe, the TGD denies asking the NIGC to come in, but NIGC investigators admitted being asked by the TGD to assist.

The TGD continued to report that he was not getting the information he requested. This is contradicted by emails sent to Operations by the TGA’s, but it served to divide the Tribal council’s loyalty to Casino management.

The Chairman of the Tribe had for 10 years been trying to gain control of the Casino and its resources, but needed to remove its top management to accomplish his goal. This was not as straight forward as it would seem for two reasons: 1) casino management were Tribal members and it has always been the goal and desire of the Tribe to have Tribal members in high level jobs; and 2) they were honest and had turned the casino around from losing $1 million dollars a year to making over $11 million dollars a year.

The Chairman saw this as his opportunity to gain control of the casino and encouraged the TGD to move forward while showing sympathy and support by attempting to save casino management, get the investigation behind them and move on.

The TGD’s delay of the investigation resulted in the annual audit being delayed and missing the deadline for submission to NIGC. This failure to submit the audit and the invitation by the TGD for NIGC’s assistance elevated the investigation.

Months of interviews and time consuming submission of materials followed. During this time the TGD turned every molehill he could find into a mountain. For example,

The casinos slot manager discovered an accounting error involving one of the casinos slot vendors. During one of the machine installs, TGA failed to accurately count all the machines that were delivered. This resulted in an overpayment to the vendor. Upon further investigation by casino management and the vendor, a refund check from the vendor was issued to the casino for the machines not delivered.

The TGD jumped on this and began accusing the slot manager of embezzlement, even though the vendor admitted fault and reimbursed the casino. This resulted in the slot manager being charged with a crime by the Tribal Gaming Commission.

On one occasion slot personnel with TGA assistance needed to access a slot player terminal, it was discovered that one of the keys that opens the machine was missing. There is absolutely nothing in this terminal of value, yet it led to a several month investigation of the slot manager. The morning of the day the slot manager was to attend a hearing of the Gaming Commission on the issue, the manager discovered the key on her desk when she entered her office. She requested to see tapes of the cameras that were outside her office to determine who had been in her office the night before. The TGD indicated that no tapes existed. It is surveillance policy and a Compact requirement to keep tapes of every camera on file for seven days. It is believed that one of the TGA’s put the key on her desk and the TGD was protecting him. The TGA’s had the key the whole time during the investigation and were using the issue to implicate the slot manager in a crime.

The casinos controller had a company laptop stolen from her home during a New Year’s Eve burglary. Because the casino’s deductible is too high to turn the theft in on the company’s insurance policy, the controller included it in on her policy along with the other articles that were taken so the company laptop could be replaced. Again the TGD made this an issue of theft and charged the controller with a crime. The new laptop was delivered directly to the casino, the Controller never came into contact with it at any time. Even so, the TGD had a forensic expert scour the new laptop for evidence the Controller was using it for personal use. His vindictive rage was so blinding that it never occurred to him that no one had yet used that computer.

The licensing agent, an employee of the TGD and close friend, was overheard talking to the TGD on the phone. He was heard saying “I’ll bet you want to blow her brains out”. At the same time the GM was at a meeting that was being held with the Tribal Council, casino management and the TGD. The topic was the TGA investigation. The TGD was seen talking on his cell phone during a break at the same time the licensing agent was overheard. They were talking about the casinos Controller.

Even though the TGD was responsible for delaying the investigation and causing the submission of the audit to be late, he blamed it on casino management and charged them with impeding the investigation.

Top management, the GM, Executive Director and Controller along with the slot manager were charged with allowing their spouses to use their company issued phones. Currently, that is a common practice and the new GM even pays for his spouse’s phone with the casinos credit card.

All the aforementioned were released from their duties because of the TGD’s actions. They also lost their licenses to work in the gaming industry. Later, the TGD was also released and began bouncing around from casino to casino. After his departure, investigators found both sets of keys that opened the soft count room in his desk. Nobody was supposed to have both sets of keys at the same time and all keys were supposed to be locked in a key box. Video was captured showing the TGD and on a separate occasion the Licensing Agent leaving the casino back hallway moments after coming to work in the morning with brown bags, the size being consistent with stacks of money.

The TGD initiated and conducted this investigation in retaliation of thinking he was being accused of stealing money from the drop boxes. Circumstantial evidence would indicate that there were serious holes in the controls of the table game drop boxes that could allow theft to occur. Although no allegations were made or hard evidence found that theft was occurring, subsequent actions taken by the TGD would indicate he had a need to tie up loose ends.

The victims of the investigation and in the months to follow several other management employees lost their jobs and no longer work in the casino industry.

The TGD has bounced around several casinos but is still in the industry working as a Gaming Director for a Tribe. No investigation of theft or the possibility of theft was ever conducted.

All of the over 300 employees’ lives were affected by this change. Many now work in fear of losing their jobs due to the management style of the new GM who rules by fear. Many have asked for former management to return.

The Chairman of the Tribe went on to hire a new GM who was pushed through the approval system without a background check.

The performance of the casino has deteriorated under the new GM with the profit dropping by over a million dollars for each of the first three years of his tenure.

One of the first things he did was to eliminate or materially alter the internal controls of the operation.

Since then there have been numerous complaints of wrongdoing and red flags that indicate the probability of fraud and theft at the casino, it has grown out of control.

Some highlights:

The TGA’s conducted an audit of the credit card use in the second year of his employment. They found almost $200,000 of charges that had no receipts. The GM was allowed to hand write receipts and turn them in as proof of payment
GM bought his wife a laptop computer through the company in order to get the company discount and evade taxes
An all-you-can eat lobster dinner was held and 1000 lobster tails purchased, a subsequent audit could only account for 566 lobster tails.
Charges on the company credit card for a hotel in the same town he lives
GM rented a car to attend a one day conference and kept the car for an entire week, paid for by the casino
Took his mistress (also works at casino) to Canada for vacation. On a whim he purchased tickets to the Olympics in Vancouver and distributed them to friends at the casino. Cost over $8,500. Of course he and his mistress attended several days of the Olympics free of charge, they also received spending cash from the casino
Created a job for his mistress and recently gave her a raise to $70,000/year. She works part time and rarely is seen at casino
Promotions are held without any advertising, patrons don’t even know the promotion is going on; GM authorizes accelerated point accumulation in the player tracking system…and doesn’t tell anyone about it, including the players. Points allow players to purchase slot tickets without hard cash.
GM holds expensive promotions without doing proper analysis of its chances for success, often losing tens of thousands of dollars.
GM’s player development program caused the marketing budget to run $1.7 million dollars over budget, nearly doubling the budget itself
TGA investigators suspect the GM’s hiring of close friends who own marketing companies to be a conduit for kickbacks for unneeded or overpriced services
TGA’s have found evidence of receiving travel advances for trips to conferences even though expenses during the trip are paid for with the company credit card
GM goes to conferences and never attends meetings or seminars, instead plays golf on the casinos dime the entire trip
Tribal Chairman, Gaming Commissioners and Business Committee Chairman receive special treatment from the GM including:

Free golfing at local courses
Free golfing during conference trips
Tickets to attend U.S. Open golf championship
Free lunches and dinners for self and family, including rides to restaurants in casinos luxury car
Exclusive rights to sell shellfish and salmon to casino from family fishing business at prices higher than market

Business Committee Chairman recently paid off his 30 year mortgage…only 12 years into his contract

TGA investigations have revealed numerous problems that can be documented, but the Chairman of the Tribe is furiously defending the GM and even squashed a suspension the Gaming Commission was trying to give him.

The GM has serious problems with the IRS. He hasn’t paid them taxes for over 10 years and stop making payments on an agreement to repay them. He’s filed bankruptcy twice and has indicated he is about to file again. He is the highest paid employee at the Tribe, but he can’t afford to pay his taxes. When questioned about his money problems he told investigators that his wife handles his finances, then when asked about 30 payroll advances he received he said he doesn’t trust his wife with his money.

Employees that followed him to this property from his former property are beginning to leave their employment because they don’t believe in his ethical standards and methods of operating the casino.

The Tribal Chairman now has control of the casino and its finances and is doing everything in his power to maintain that control. Recently, the Gaming Commission concluded an investigation of the General Manager that revealed extreme motive to defraud the casino. There is substantial evidence that this is happening, but the Chairman maintains that the GM is doing a good job. The GM has reneged on agreements with the Internal Revenue Service, but the Chairman continues to reprimand staff and attorney’s on staff to back off their verbal characterizations of wrongdoing by the GM.

Speculation on what the Chairman has to gain by keeping the GM on staff is increasing. The Chairman himself has said, “if we knew everything we know about the [GM] when we hired him, we wouldn’t have hired him”. Yet the opportunity to correct that oversight has passed and it was the Chairman who squashed it.

The casino is operating at a level that can be considered ‘auto pilot’. It will generate its current level of profit with no one in charge. It takes a good GM to squeeze the few extra million it’s capable of out of it.

There are only a couple of self serving winners in this saga. The community and the casino that these Tribal leaders were elected to serve are the big losers.

The Government Admits Incompetency

2009-09-02T11:36:00.000-07:00

The government is incompetent...say it isn't so!

Today the Inspector General said the SEC botched the Madoff investigation. Past SEC probes of the Madoff investigation were incompetent, the report says.

The report says that three agency exams and two investigations failed to uncover Madoffs ponzi scheme.

It also says that they found no evidence of improper ties between the SEC and Madoffs firm.

Finally, someone in the government admits what the rest of us already knew, but I wouldn't go out and start your own ponzi scheme anytime soon.

The government and SEC are shoring up regulations and investigative techniques and are more likely to be overzealous than over cautious.

Big business had to virtually destroy our financial system, but maybe something good will eventually come out of it, once the government stops meddling.

Is Inflation Ready to Come Back?

2009-05-27T09:19:00.000-07:00

The actions of the government seem like they are extremely inflationary. That is the view of most investors. Inflation happens when the government prints money and it enters the economy. The government's actions today are not inflationary. For one thing they are borrowing money not printing it. And for another, the money that is going to bailout companies is not re-entering the economy. Banks, for example, are using the money to shore up their capital, not lend it out. They are buying Treasuries with the money.

Following are excerpts of an article from someone who believes the opposite of what everyone else believes. It provides interesting insight. He believes the stock market and gold will crash not rise as the public is being led to believe.

Here's the inside story Wall Street doesn't want you to know. The
entire global fnancial and baking system is built around the presumption of
inflation.

They desperately need you to believe inflation is still here. In fact,
they need you to think it's about to make a roaring comeback.
It's the only way they can sell you more loser investments. To sell their investment products, Wall Street must convince people we are NOT in a depression. They must persuade you prices are not falling.Instead, the masses must believe we are about to enter a period of massive inflation...or even hyper-inflation, due to government bailouts and massive deficits.
If we had inflation, prices would be going up. But prices are not going up. They are going down. In fact, they are plunging.The world isn't just in a recession. We are in a full blown depression. People are buying less. Paying less. And most definitely spending less. This is going to last a decade or more.
The politicians' schemes to "save the economy" will not work,
any more than band-aids cure cancer.
Remember how Wall Street tried to get you to buy more real estate teh past
few years? How they told you $150 oil was cheap and here to stay...and
that the 14,000 Dow was "a buying opportunity?"
People from New York to New Delhi are losing their jobs. People without
jobs do not go on shopping sprees. They don't buy things like homes or
cars. They don't sell them. They can no longer afford them. They desperately need to raise cash. And massive selling brings pricess lower and lower.
Wall Street wants you to believe that the U.S. government is printing money
and "monetizing the debt." That will supposedly inflate the money
supply, sending prices higher.
Truth is, the U.S. government is getting all the money it needs by borrowing, not printing. It does this at Treasury auctions that are 3 times over-subscribed.
Bottom line is that government borrowing is NOT inflationary. Just the
opposite. It sucks money out of the economy. It decreases the total
money supply, and is deflationary.
In normal times, banks wouldn't hold the trillions of dollars in bailout
funds. They would loan it out, over and over. The bank loaning
multiplier would go to work: the trillion of dollars would get
leveraged up to 100 times. Banks would create upwards of $100 trillion
in new debt. This is how new money is created.
In the past, all this new credit would bring about an explosion of economic
activity. People would buy cars and houses. They would go on
shopping sprees at WalMart. That would be inflationary and prices
would climb.
Not now, though. Now those trillion of dollars never get into
circulation. Banks do not loan the money out.
You see, the Fed is not giving money to the banks so they can make loans. Banks are getting bailout money to shore up their shrinking capital. To cover their bad loans and derivatives, that are still going broke en masse.
Guess how banks keep those trillion of dollars in bailout funds? They
buy T-bills from the Treasury. U.S. Treasury holds these T-Bills for
the banks. They keep them as the banks' reserve requirements.
The money ends up right back where it came from.
Over the past 10 years 1 quadrillion in derivatives has been created.
That is 20 times the entire worlds GDP.So how did Wall Street get away with this out of control debt creation?
They devised a mathematical formula, that supposedly "valued" derivatives.
It's called the Black-Scholes formula. Supposedly, Black-Scholes predicts
market moves and teh value of derivatives - not just now, but 10, 20, even 50
years in the future.
The Black-Scholes model claimed banks didn't have to book current losses from
derivatives. It said banks didn't have to value derivatives at their
current real market prices. (Called "mark to market.")
Instead, Black-Scholes said the derivatives would bounce back, and make huge
profits decades in the future.
And here's the kicker, Black-Scholes said banks could book those theroetical profits now - and ignore current losses.
This is why derivatives traders - like Warren Buffet - trade derivatives 20,
30, 40 years into the future. Even though they are losing money.
Buffet's company, Berkshire Hathaway, booked the biggest losses in its
history. Its stock lost 50% of its value in one year, and Buffett's
net worth dropped by half. All due to the derivatives trades gone
bad.
But Black-Scholes says by the year 2040 these positions will be
profitable. So Berkshire keeps holding the biggest losing bet they
have ever made, just like the dead broke banks.
You've seen the incredible losses in commodities. In stocks. In real estate. In corporate debt. All because of derivatives.Black-Scholes claims these losses will magically become profits some day. And banks can book those profits now!
It is why banking executives say they are not losing money. Why they
claim that, in fact, they are profitable. Even as they losse every
last dollar of their capital...and every month need $50 billion more in
bailout funds.
Government regulators have bought into this mathematical hocus pocus, hook,
line and sinker. Remember when government was going to buy up all the
toxic derivatives? They were going to put them into a so-called "bad
bank". That was the original plan, but it was quietly dropped.
Why?
Because once derivatives are sold, they must reflect real valuations.
Not Black-Scholes fantasy valuations. Banks would have to admit their
huge losses. The world would know they already lost more money than
exists.
Politicians and government regulators have no concept of the amount of money
banks have lost. They do not understand derivatives, the valuation
tricks Wall Street uses, or what's really going on: That banks are
permanently broke...the derivatives losses can never be reversed...and will
keep getting bigger and bigger...as more and more of the loans that are at
the heart of these derivatives go bad.
Top echelon traders and corporate CEO's know this, but will never breath a
word of it. So month after month you see the same thing. More staggering losses that seem to come from nowhere and that the government must rush in to cover.

The article goes on to say how Black-Scholes is responsible for the destruction of capitalism and how the failure of AIG could lead to a catastrophic event. It's main thrust is that inflation is not coming back, the U.S. is in a depression and not to buy into the gold mania about gold soaring to $2,000 an ounce.

Obama nominates Sotomayor to Supreme Court

2009-05-26T11:10:00.000-07:00

Sotomayor will be the third women and the first hispanic Supreme Court judge if she is confirmed by Congress.

Born in 1954 in the Bronx, Sotomayor was raised by her mother, a nurse, after her father died when she was only 9 years old.

Sotomayor graduated from Princeton summa cum laude and from Yale law school in 1979.

She was nominated to a federal bench by George Bush in 1991 and was a U.S. District Court Judge from 1992 - 1998. In 1997 she was nominated to the U.S. Appeals Court, 2nd Circuit by President Clinton. A year later she was confirmed by a 67-29 vote. All 29 votes were republican, 11 of whom still serve today.

Obama says that Sotomayor will bring more experience to the bench than any other judge had when they were nominated.

Do You Wonder What to Do With Your Failing Relationship?

2009-05-21T09:33:00.000-07:00

A new site posts advice on how to handle different stages of faltering relationships. These posts cover every possible situation on how to deal with relationships that have failed or are on the brink of failure.

What to do? Are you interested in getting your boyfriend or girlfriend back? Do you want to get back at your ex? What about having secret relationships?

These questions and more are answered. Click here to learn more about how to deal with your relationship or give advice to a friend.

Automakers - Bankruptcy

2009-04-13T12:00:00.001-07:00

Will the bankruptcy of GM help other automakers? It seems that stock investors are willing to gamble that it will.

While auto stocks are still way down from a year ago, some are doing well in 2009. Ford, the only automaker of the Big 3 that is not in financial difficulty, is up big this year. Foreign automakers are doing exceptionally well also and many believe they will capture market share if GM goes into bankruptcy.

Even though the government has guaranteed that purchasers of GM cars will be able to get their cars serviced, consumers may still be leery of shelling out hard earned dough for a GM car when they can get a perfectly good car from another company.

Sales for GM are undoubtedly going to fall if bankruptcy is the path the government chooses to go. This will help other manufacturers, but could have a ripple effect to suppliers. Since GM is the largest car maker, suppliers could begin feeling the revenue pinch and some may go out of business.

This, of course, has a ripple effect to other manufacturers who may use the same supplier and will send more Americans to the unemployment line.

The hope here is that GM will emerge a better, more efficient company that can compete profitably. In the long run GM stock may be a good buy if you can endure the pain until then.

Stock Market Extends Rally

2009-03-12T12:36:00.000-07:00

The stock market is managing to rally three days in a row. Is this the beginning of a new bull market or just a bear bounce?

In order for the market to make a sustained rally it is said that the financial sector has to recover and hold its gains. Recently Citigroup and Bank of America have announced profits for the 1st quarter. This is encouraging news, but does it mean a turnaround or is it just an aberration.

In fact, when the government gives a behemoth corporation $45 billion and they turn it into a $8 billion profit, I have to wonder if things are getting better.

At any rate, the stock market has gained 700 points since last Friday. The charts don't necessarily look like a bottom has been made, but a decent money making bounce is in progress.

Foreclosure Relief Ready to Go

2009-03-04T10:54:00.000-08:00

President Obama's foreclosure prevention program is ready to begin saving homeowners. The plan is set to help 4 million owners who are behind on payments by lowering their payments to 31% of income and 5 million owners who are not yet behind on payments, but may be in danger of missing scheduled payments.

The $75 billion plan will provide incentives to borrowers, lenders and investors. The government will also subsidize interest rates.

It is estimated that 8 million homeowners are under water with their mortgages, meaning they owe more than their home is worth. It is unclear if this number is part of the 9 million owners that the bailout plan is supposed to help.

To participate in the program, borrowers must:

have obtained their mortgage before Jan. 1, 2009;
have a primary mortgage of less than $729,500;
live in the property;
fully document their income by providing tax returns and pay stubs;
sign a statement of financial hardship; and
go for counseling if their total household debt - including auto loans, credit cards and alimony - totals more than 55% of their income.

The modification program will be in effect until 2012, but loans can only be modified once.

Servicers must try to modify a loan to at least 38% of income and the government will subsidize the rest to 31%. Interest rates can go no lower than 2%.

The new interest rate will remain in effect for 5 years then increase 1% per year until it reaches the original rate of the prevailing rate at the time of modification, whichever is lower.

If the rate modification isn't enough to get the payments to 31% of income the servicer can extend the loan to 40 years or shift principle to the end of the loan with no interest. Also, servicers can reduce the principle.

Obama Unveils Budget Plan

2009-02-26T12:24:00.000-08:00

President Obama's new budget proposal includes health care reform, tax increases for the richest Americans and new spending. Despite this, Obama plans to slash the budget deficit in half by the end of his first term.

The budget deficit for 2009 is expected to reach $1.75 trillion or 12.3% of GDP. That is a record in dollar terms and the highest percentage against GDP since World War II.

President Obama has called on Americans to sacrifice for the good of the country. He is confident we will get through this, but we will have to re-prioritize our spending.

The White House expects to spend $3.6 trillion dollars and GDP to fall to 1.2% this year. Growth in GDP is expected to grow 3.2%, 4% and 4.6% over the next three years.

Unemployment will rise to 8.1% this year, but then is expected to drop to 7.9% next year and around 5% by 2014.

The budget outline also sets aside $250 billion for stabilizing the financial system, which is net of the $750 billion that will be spent. In other words, the government is no longer expecting to recover all of their investment as the previous administration promised.

The budget proposal includes $634 billion for a health care reform reserve fund. This will be paid for in two ways. First, top tax payers would only be able to deduct 28% instead of their top income tax rate. This is expected to raise $318 billion over 10 years.

Secondly, by reducing payments to private insurance companies offering Medicare and reducing prescription drug prices the administration believes it will save $316 billion.

By letting Bush's tax cuts for the rich expire, Obama expects to raise $640 billion over 10 years. The other side of the coin, however, is that the tax cuts for the middle class and poor total $900 billion.

The President wants to make permanent the Making Work Pay tax credit, the child care credit and the newly enlarge college credits.

Every year Congress attempts to protect the middle class from having to pay the Alternative Minimum Tax by passing a "patch". Every year the "patch" is not included in the budget, this year it is.

Obama wants to tax the portion of profits paid to managers of hedge funds and private equity firms as ordinary income rather than as an investment gain, thereby subjecting it to much higher tax rates than the 15% capital gains rate. This could be worth $24 billion over 10 years.

Reducing limits on direct payments to farms that have over $500,000 in sales is expected to raise $10 billion over 10 years.

Obama's budget will call on Congress to create a cap-and-trade program in which companies would have to pay for permission to emit greenhouse gases. Revenue from the program is intended to pay for a $150 billion renewable energy fund among other things.

The new cap-and-trade program would pay for making the Making Work Pay credit permanent, which the White House estimates will cost $537 billion over 10 years.

Jobless Claims Jump to 667,000

2009-02-26T12:18:00.000-08:00

The number of Americans receiving unemployment has jumped to 667,000 for the week ended February 21, 2009. The number of Americans on continuing unemployment benefits topped 5 million for the first time.

Economists expected a drop for this week, but a sharp spike is what they got instead. And first time claims are expected to rise to 750,000 for the coming weeks.

President Obama's stimulus plan includes some relief for displaced workers. There will be a weekly increase in the benefits of $25.

Also, the first $2,400 received in 2009 are tax free. And when your benefits run out, you'll get an additional 20 weeks. If you live in a high unemployment state you could get another 13 weeks on top of that.

Stock Market Headed For New Lows

2009-02-23T10:01:00.000-08:00

The Dow has been making new lows for this bear market for a week now. Today the the Dow is headed for new lows that some analysts say could be a precursor to another 2,000-3,000 point drop.

The S&P is also headed for closing below its November low today. The day is not over yet and a rally could ensue, but over the short term it does not look good for the S&P. Some analysts are predicting 650 in the short term for the S&P.

I've been saying for some time that 6,000 on the Dow and 600 on the S&P are my minimum low predictions. Longer term I think the Dow could get to 4,000 and there is an outside chance the ultimate low could be around 3,000. That could mean the S&P could get to around 400.

When that happens there will be some great bargains out there, but stick to quality companies. That could be a challenge to find, what I may have considered a quality company a year ago, may not be today. Good hunting.

Auto Companies Are Back

2009-02-23T09:42:00.000-08:00

As everyone, except Congress, expected the automakers are asking for more money. In their recent plan submitted to Congress on how they are going to save the auto industry, they say they need another $22 billion dollars.

Currently the auto companies are worth only a fraction of what they borrowed the first time around and now they are asking for even more money.

As I've said before it is only a matter of time before the automakers go into bankruptcy and after that time all the taxpayer money could disappear forever.

Should the government continue to throw good money after bad? Probably not, but will they? Probably.

I got to give the government credit really. They are trying to do everything they can to fix the economy. Maybe it's the wrong thing to do, maybe some companies should be allowed to go bankrupt. But maybe things could be devastating if they did nothing. Maybe they still will be.

I think I can say that no one really knows how this is going to turn out...only time will tell.

U.S. Recession's Far Reaching

2009-02-20T08:43:00.001-08:00

Many countries around the world depend on the economy of the United States to sustain their own economies. The U.S. is a nation of consumers, other nations produce. Without someone to buy and use your products, your own economy will suffer.

This may not be more noticeable anywhere than in China. The U.S. imports thousands of products from China. China was becoming a dominate economic power because of it. The U.S. also gets most of its loans from China in the form of Treasury bond purchases.

Now China has closed 70,000 factories and laid of 20 million workers. These young workers are faced with few choices and are forced to resort to the old ways of making a living...farming. Non have the skills or know how to farm, but must learn in order to feed their families.

Factory workers could make $10,000 a year, a good wage that provided all their needs, now they make nothing. Farming doesn't pay well, but has the advantage of feeding the family.

Many will return to the cities to look for work, but the world is watching and hoping for a speedy U.S. recovery.

Foreclosure Relief

2009-02-18T08:10:00.000-08:00

President Obama has put together a plan to help 9 million homeowners stay in their homes. The plan calls for $75 billion to subsidize rates and help protect servicers from falling home prices.

In a sharp reversal of the Republican plan, which calls for servicers to voluntarily restructure loans, the Democratic plan will provide incentives for servicers to help homeowners stay in their homes by modifying loans, reducing payments, subsidizing interest payments, and protecting servicers from falling home prices.

Servicers will receive $1,000 for each loan modification and an additional $1,000 a year for three years if the borrower remains current on payments. The plan would also give $500 to servicers and $1,500 for mortgage holders if they modify loans before a borrower falls behind in payments.

Obama will also work with the bankruptcy laws to allow judges to modify mortgages.

The mortgage relief would be available to borrowers who are at risk of falling behind in payments and those that have already fallen behind. The goal is to reduce monthly payments to less than 31% of a borrowers monthly income .

Who's Responsible for Economic Crisis?

2009-02-13T08:19:00.001-08:00

Did you ever wonder who is responsible the the current economic crisis? The financial mess is very wide spread and many people are involved. Now the government is trying to fix the mess, but has a poor record of fixing anything. Most likely the problem will get worse.

So who is responsible? Read about 25 people identified to have played a major role in setting the country up for disaster.

Stimulus Package

2009-02-13T08:09:00.000-08:00

Are you wondering how the stimulus package affects you? Read more to see if you qualify for some free government money.

Do you think this stimulus will work?

There was a former Senator on the Daily Show last night talking about how tax cuts are needed. Jon Stewert brought up how when Bush took office the Federal Government has a surplus so Bush gave tax cuts.

Now we have huge deficits and the government is giving tax cuts. Tax cuts seems to be the answer for everything.

Stock Market

2009-02-12T11:15:00.000-08:00

The Stock Market has been trading sideways for quite awhile now. Some analysts are saying that it is making a bottom, while others are not convinced it has finished its sell off.

The key resistance areas, that are above today's market price by 40 points on the S&P, have resisted the bulls' attempt to drive prices higher and the market experienced a large one day sell off unlike any seen for a couple of months.

There are some key resistance points to keep an eye out for. On the S&P it is the 800 level. If the market closes below that level and does not quickly reverse back above, then the odds of visiting the previous lows of 739 increase. If that level is broken then watch out below.

On the Dow the key support area is the previous lows around 7,400. If that level is broken and not quickly reversed then the bottom could retreat to 6,000. Some more conservative analysts have indicated the bottom would be around 6,500.

At any rate, being prepared for a potential fall of this magnitude would offer some great bargains and profits to be made from a snap back rally. Keep your eyes open.

Senator Dodd Introduces Credit Card Bill

2009-02-12T11:05:00.000-08:00

Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, today re-introduced The Credit Card Accountability, Responsibility and Disclosure Act (“the Credit CARD Act”), legislation to better protect consumers from confusing, misleading and predatory practices by credit card companies.

The Credit CARD Act will help protect American consumers by bringing an end to wrongful credit card practices. Among other provisions, the legislation will:

Protect consumers from any-time, any reason interest rate increases and account changes;
Prohibit unfair application of card payments;
Protect cardholders who pay on time;
Limit fees and penalties;
Ensure that cardholders are informed of the terms of their account; and
Protect young consumers from credit card solicitations.

It's amazing that it took a national catastrophe in the the financial markets for Congress and the Senate to realize that credit card companies have been gouging Americans for decades on interests rates, late fees and more when it comes to credit card accounts.

Illegal Immigrants

2009-02-10T11:37:00.000-08:00

With the economy turning sour in 2008, the flow of illegal immigrants has not only slowed, it has reversed. That's right, immigrants are returning to the their own countries.

For the first time since records began being kept, immigration from Mexico and other countries has declined. Workers cannot find work and have been out of work for over 6 months in some cases.

Some illegal immigrants are saying that if they have to suffer, they may as well suffer in their own country with their families.

While most Americans will not do the work that illegal immigrants do, even with the unemployment rate at 7.6%, the businesses that would normally employ the illegal's are going out of business anyway or have less work available.

There is an abundance of unskilled American workers and with the immigrants leaving, it gives Americans the opportunity to work in that field, whether they take it or not is another question.

Former President Bush always said he was working on a plan to reduce illegal immigration. Little did we know that it had something to do with destroying the economy.

At any rate it worked, immigration has declined and many are heading back home. That's the first thing I can think of that Bush accomplished.

Bailout Money Pit

2009-02-09T08:13:00.000-08:00

The bailouts don't seem to be having the desired effect, but the government keeps pouring money into the system. The economists that say this is just a normal recession are not from this planet.

When discussing the stimulus package, Congressman educated everyone on how much a trillion dollars is, how high the bills would stack above the earth, how many times the money would circle the globe, but I never did hear how he liked the stimulus plan.

Currently the government has issued bailout money or loans totaling 9.7 trillion dollars, so far. That is enough money to give $1,400 to every human being in the world, it's 13 times the cost of the Iraq and Afghanistan wars and it would pay off 90% of all the mortgages in the U.S.

Now it seems that since it was the housing bubble that started this mess, using the money to pay off mortgages would have been one heck of a stimulus package. I know I would be more willing to spend if my mortgage was paid off.

Ten trillion dollars is almost as much as the U.S.'s GDP. What happens if the businesses the government is loaning money to still go bankrupt? That money never gets repaid, what effect does that have on the country?

Now the government is thinking about forcing GM and Chrysler into bankruptcy so they can be guaranteed to get paid back. Just a couple of months ago they were debating loaning them money to keep them out of bankruptcy. Of course, they did loan them money and now they are doing what everyone said they should do in the first place, let them go into bankruptcy. This is the same Congress that is trying to save the country.

Stimulus Plan Waste

2009-02-03T09:01:00.000-08:00

GOP leaders have put together a list of waste, as they view it, in the Presidents $900 billion stimulus plan.

Naturally, the Republicans tend to believe only their ideas will stimulate the economy, but there may be a few items on the list that should be reconsidered.

As reported by CNN, here is the list, you be the judge.

• $2 billion earmark to re-start FutureGen, a near-zero emissions coal power plant in Illinois that the Department of Energy defunded last year because it said the project was inefficient.

• A $246 million tax break for Hollywood movie producers to buy motion picture film.

• $650 million for the digital television converter box coupon program.

• $88 million for the Coast Guard to design a new polar icebreaker (arctic ship).

• $448 million for constructing the Department of Homeland Security headquarters.

• $248 million for furniture at the new Homeland Security headquarters.

• $600 million to buy hybrid vehicles for federal employees.

• $400 million for the Centers for Disease Control to screen and prevent STD's.

• $1.4 billion for rural waste disposal programs.

• $125 million for the Washington sewer system.

• $150 million for Smithsonian museum facilities.

• $1 billion for the 2010 Census, which has a projected cost overrun of $3 billion.

• $75 million for "smoking cessation activities."

• $200 million for public computer centers at community colleges.

• $75 million for salaries of employees at the FBI.

• $25 million for tribal alcohol and substance abuse reduction.

• $500 million for flood reduction projects on the Mississippi River.

• $10 million to inspect canals in urban areas.

• $6 billion to turn federal buildings into "green" buildings.

• $500 million for state and local fire stations.

• $650 million for wildland fire management on forest service lands.

• $1.2 billion for "youth activities," including youth summer job programs.

• $88 million for renovating the headquarters of the Public Health Service.

• $412 million for CDC buildings and property.

• $500 million for building and repairing National Institutes of Health facilities in Bethesda, Maryland.

• $160 million for "paid volunteers" at the Corporation for National and Community Service.

• $5.5 million for "energy efficiency initiatives" at the Department of Veterans Affairs National Cemetery Administration.

• $850 million for Amtrak.

• $100 million for reducing the hazard of lead-based paint.

• $75 million to construct a "security training" facility for State Department Security officers when they can be trained at existing facilities of other agencies.

• $110 million to the Farm Service Agency to upgrade computer systems.

• $200 million in funding for the lease of alternative energy vehicles for use on military installations.

Superbowl

2009-02-02T14:20:00.000-08:00

One of the biggest annual sporting events in America is football's Superbowl. It is the most hyped event and the most watched. TV ads go for astronomical prices and the commercials tend to be better than most.

Last year the commercials were hyped up beyond belief and then viewers were let down when they didn't live up to the hype. This year there was no hype and it's a good thing, because they weren't anything to write home about.

The game itself this year was very exciting, unless you're a Cardinals fan. The Cardinals didn't really show up to the game until the 4th quarter. They finally started going to their franchise man Fitzgerald and suddenly they were back in the game.

It's too bad the Cardinals defense didn't come to the game. Not that they are rated highly or anything, but they couldn't stop the Steelers offense the whole game. I was hoping they would dig down deep into their bag of tricks and find some motivation to stop the Steelers final drive, but it didn't happen.

Of course when you are the Steelers you have extra players on your side. They wear different uniforms but they are very effective.

You remember when they played the Seahawks and Rothlisberger was given a touchdown he didn't make (even he admitted it on Jay Leno). This year they took it away and instead were given a bigger gift at the end of the game when the Steelers stripped players ruled Warner's forward pass a fumble and gave the ball the the Steelers to end the game.

I used to be a fan of the Steelers, but ever since they began enjoying calls that aren't available to every team it turned me against them.

Admittedly, they have a very good team this year, way better then the one that played the Seahawks. The Cardinal defense couldn't stop the mighty Steeler offense. Too bad, it was exciting to see the Cardinals come back and take the lead at the end of the game, if only the defense could have played hard for a couple of minutes the outcome would have been different.

The way I see there were two key issues that cost the Cardinals the game. First, the poor play call at the end of the first half that led to a Steeler touchdown with no time remaining. I agree it should have been a pass play, but to the corner, not in the middle of the Steeler defense.

Second, the Cardinal defense. I think that says it all.

Who Can You Believe?

2009-01-27T11:58:00.000-08:00

America is going through the worst recession since they changed the name to recession from depression. After the Great Depression the government decided calling economic corrections a depression would leave a bad taste in people's mouths so they changed it to a recession.

Politicians and corporate CEO's all feed us a line of optimism when describing a potential catastrophe, I guess to keep everyone from panicking. I suppose that is the best policy, after all what would happen if we knew the truth.

What do this executive insiders really know about what is about to happen and how much should they tell us?

Who can we really trust when we are trying to ferret out information to make an investment decision?

If you are wondering if you can trust CEO's who come on TV to tell the public that their company is doing better than everyone thinks - then read on...

More Jobs Lost

2009-01-26T12:11:00.001-08:00

Another 50,000 jobs are lost this week bringing the total, so far, this year to 185,000.

Nearly 2.6 million jobs were lost in 2008, the highest since 1945. It has become a vicious cycle where weak spending results in job layoffs, which in turn leads to further weak spending and that leads to more layoffs.

Caterpiller announced the layoff of 20,000 workers being the largest of the latest announcements. These layoffs of course, reflect how the world economy is performing.

Sprint Nextel cut 8,000 jobs, Home Depot cut 7,000, ING cut 7,000 jobs, Pfizer will cut about 8,100, Deere will cut about 700, Schlumberger will cut about 5,000 jobs, Time Warner will cut about 800 and Microsoft cut 5,000.

While many analysts expect the unemployment rate to approach 10%, some are thinking of this as a normal business cycle and expect everything to suddenly turnaround and improve from here.

There are those, however, who have a more extreme view and believe that we are just beginning what could become a 10 to 20 year depression, if the right decisions are not made in the next 90 days.

These people feel that politicians should let capitalism run its course. That means letting the banks and large corporations fail. It will be painful in the short run, but the continued bailouts will lead to prolonged pain.

The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery. -Winston Churchill

Banks have lost trillions of dollars in wealth and the last thing they want is to go bankrupt. The people that are making the decisions on what to do, Paulson, are former bankers and they don't want to see the banks they used to run go under.

Currently, banks are being nationalized, which is more socialism than capitalism and this is offensive to many. Of course, this is more of a stealth nationalization. An official nationalization would require the government to freeze accounts and limit withdrawals (which could happen anyway). This would be very undesirable, the loss of shareholder equity would wipe out the stock market.

Nationalizing banks, officially or unofficially, is going to require the government to pour trillions of dollars into the system to keep it from going bankrupt. This is money that will never be returned to taxpayers.

With all of the recipients of the bailout money having burned through half of it already and asking for more. It is becoming clear that whatever they are given it will not be enough.

That is why, the extremists say, action, the right action, is needed immediately. One conspiracy theorist says that Obama will need to act within the next 90 days to shore up the financial system or it could collapse completely. He gives it a 50/50 chance.

Stay tuned, there will be opportunities to make a lot of money if this were to come true. For now it is best to be in cash.

Bragg Tag list

2009-01-23T12:14:00.000-08:00

Blog Till Death Just Another Wordpress Weblog Asian Celebrity News One Million Shirts Tech at Hand Rich Minx Internet Marketing Austria Technology Music Life Mariuca Blogging Money Secret Internet Startup Blog Web Design Blog Daily Life Technology Make Money Blogging Steve’s Tech Blog Agloco Internet Marketing Daily Bulls Investing Tech Gadgets Stocks Affiliate Program Computer Seventy-Five Learn about e-Learning Tech Hack Ramblings Jack Book Screen Writer Guy Overseas Filipino Worker BraggTag BraggTag BraggTag BraggTag BraggTag BraggTag BraggTag BraggTag BraggTag

Obama's 3 legged Stimulus Plan

2009-01-23T11:29:00.000-08:00

President Obama has proposed a plan that has at least three legs. They include the economic stimulus package that is currently being debated in Congress, an improved financial system stability program and a financial market regulation reform.

Obama's says they are putting in place the kinds of elements - oversight, transparency and accountability - that are needed to instill confidence from the American people.

Citing a report from the Government Accountability Office, the President said the financial markets have "major weaknesses" that can lead to wasteful spending.

Most notably the recent firing of Merrill Lynch CEO John Thain who did a $1 million office remodel after the government gave parent company Bank of America billions in bailout money.

Congress has said that the economic stimulus package should be on the Presidents desk by mid February.

Naturally, the republicans are having difficulty with the size and content of the stimulus package. House minority leader John Boehner, R-Ohio, said his party is looking for more tax cuts and less spending and thinks that the $825 billion bill (Boehner rounds it up to $1 trillion), is too much.

Nancy Pelosi says that much of the bill is tax cuts and not all spending. She also notes that many of the measures in the bill are republican ideas. She states that the size is not as important as the stimulus and number of jobs that are created.

The House is expected to continue its debate next week and vote on Wednesday. The Senate begins its debate next week.

Obama is Sworn in as America's 44th President

2009-01-20T11:03:00.000-08:00

President Barack Obama was sworn in today as America's 44th President. Citizens in America and around the world watched with excitement and hope in their eyes that the world will become a better place to live.

As usual Obama delivered an eloquent speech to the nation and the world acknowledging the situation we're in, but promising hope that America is willing and able to work its way through these troubled times.

To read the entire speech click here...

Even so, the stock market still feels an air of uncertainty and is trading down 200 points. The markets are looking for something more to grab onto. Now that the new President is in place, the market will need to see action and results before a rebound can begin.

Obama's Historic Inauguaration Speech

2009-01-19T11:39:00.000-08:00

Barack Obama has made history, it's no doubt. Now he is faced with some great expectations. The world is expecting his inaugural address to bring hope, provide guidance and send profound messages.

In fact, many are hoping that the words he speaks will someday be carved in marble.

Obama has been studying the words of Abraham Lincoln and Franklin D. Roosevelt as they inspired the nation and help calm troubled times. Can Obama do the same? Many think so, most hope so.

At the same time, when he takes office, he faces some of the most troubled times and biggest problems this country has faced in decades. It's a historic inauguration, but it will be no picnic in the White House for this President.

It's ironic that history will judge how the first African American President does as a President, but Obama faces the biggest challenges of any President in recent memory. How he handles the challenges and whatever the outcome, he will be judged, hopefully as a man who faces insurmountable odds and not as a black man facing those odds.

Circuit City Files For Bankruptcy

2009-01-16T10:28:00.000-08:00

Circuit City filed for Chapter 11 protection as it hire liquidators for begin selling its inventory. Officials said they will likely close most of its stores if they can salvage their online business.

There is still hope that Circuit City will come out of this if they can find a buyer in the next few days, but its more likely path is to continue operating its billion dollar online business and shut down most if not all of its stores.

Experts warn that this is a path for possibly thousands of other retail operators in 2009. After a dismal holiday season and consumers afraid to spend on anything other then needs, retailers are facing lower revenues and expenses that reach unsustainable ratios.

When retailers run short of cash, manufacturers don't want to sell goods to them on credit, because they are afraid the company will go out of business and they won't get paid. So, unless retailers can improve cash flows they could be facing bankruptcy.

How does this affect the stock market? It doesn't bode well for it, at least not the retail sector. The first analysts came out and said that if the Dow pierces the November lows it could be heading toward 6,000.

If we look at the lessons of the Great Depression, the stock market declined in waves for two years after the initial break. The sell offs made new lows and the bear market rallies were sharp and fast.

So, if the market does break to 6,000, look for a quick rally back. How high? I'd guess back to 8,000. From there it may trade sideways and work lower to a new low later in the year. If Obama's stimulus plan gets the economy back on track, then maybe 6,000 will be the low and stocks will be a very good value at that level.

Personally, I think that we are going to experience an event as bad as, if not worse than, the Great Depression. It may not be a depression, it may be hyperinflation with pockets of depressed areas, like housing. Either way, coming out of this unscathed seems unlikely.

Consider how much money the government is printing and borrowing and how it's going to get paid back. What if one or more of the giant corporations that the government loaned money to still fails. The money is gone forever. These companies are holding on by a thread. If fact, the government has loaned them more money than the company is worth if sold. In a panic, the government will likely throw even more money at it to keep it afloat and protect their investment, but will it work? As long as the confidence in the economy by the consumer and investors is gone, then the probability of success is low.

Still there are opportunities. Many people became millionaires during the Great Depression. Look for rally backs after big sell offs. Anxious investors who crave to put money to work in a rising market will pour money into stocks on the rally backs, but be careful to take profits when you have them.

Senate OK's Release of 2nd Half of Bailout Funds

2009-01-15T14:21:00.000-08:00

The Senate vote 52-42 against a bill that would prevent the Obama administration from accessing the 2nd half of the TARP funds.

Obama wants to use the funds to expand lending to consumers and small businesses. But leaders from both parties expressed concerns about using the remaining TARP monies.

Larry Summers, Obama's economic advisor, sent a letter to Senate Majority Leader Harry Reid assuring him that the incoming administration would be more responsible in using the remaining funds. Summers also pledged to commit $50 to $100 billion to address foreclosures.

In the letter, Summers wrote: "We completely agree that this program must promote the stability of the financial system and increase lending, preserve home ownership, promote jobs and economic recovery, safeguard taxpayer interests, and have the maximum degree of accountability and transparency possible."

Many Republicans were angry that Bush used the money to help the auto industry. No one wants to use it for anything other than the financial industry.

The general public is also angry, shouting out at lawmakers and asking when they are going to get a check.

In the end it will not be enough money to do much good. The first $350 billion did nothing to help the economy. Giving money to bankrupt companies is just delaying the inevitable. Many of these companies are worth less than the amount of money they are receiving.

Oil Prices

2009-01-12T08:57:00.000-08:00

I was just watching an interview on Bloomberg where the guest was talking about oil prices. He said that oil should be trading in the $65 range to be "normal". I've heard that a lot lately with prices ranging from $60 to $75 as the "normal range" price need to trade for oil companies to make money.

Personally, I can't believe that oil needs to trade that high for oil companies to make money. Just a few short years ago, the world cringed at the thought of oil trading at $50. Everyone thought that would be the apocalypse and the economy would head into a tailspin.

Now, it's normal.

What changed so dramatically that oil companies can't make money at $20 per barrel anymore? It traded there for decades and oil companies made billions. It still costs around $2 per barrel to extract from the ground. Other expenses can't have gone up that much. Sure, exploration costs are high and we need to find more oil, but there are already known sources that we just haven't tapped yet. And there are other technologies that we haven't used to their potential yet.

So why is it becoming acceptable for oil to trade between $60 and $75 per barrel? Maybe there just isn't as much oil in the ground as governments would have us believe and the markets are taking this into consideration.

There have been many studies that said we would reach peak oil in the 70's, then it got pushed back a decade or two. But maybe we've passed it and prices are beginning to reflect that. If so, prices will make new record highs. Prices in the low 30's may be an excellent buying point. That is coming soon and it may not get any lower than that.

On the other hand, if you are a contrarian, you might think that since most analysts are talking about oil trading normally in the $60 to $75 range then lower prices could occur.

TARP - The Original Idea

2009-01-10T11:33:00.000-08:00

Was the first idea of the TARP the better idea? Remember Paulson was going to purchase all the toxic assets banks carried on their books to free up their balance sheets. It essentially was getting them out from their debt. This would allow banks to begin loaning again without having to worry about old debt coming back and haunting them.

Then Paulson decided it would be better to give banks capital, which they could loan and get the economy jump started. Well, that isn't working and the banks want the first idea instead.

If you were one of the taxpayers to get a $600 dollar stimulus check last spring, did you spend it, save it or pay off debt? How far did it go? Did it change your life or somehow incent you to start spending again? Looking back, that plan didn't do anything to help the economy either. But what if the government paid off your mortgage, would that boost your confidence to spend?

That's essentially what the Treasury is doing with the banks. Their giving them a chunk of stimulus money that is a drop in the bucket of their problems. And at the end of the day, their problems are still there.

That's not to say there aren't problems with buying toxic assets. How do you determine what price to pay for them? And will banks want to sell them if they are priced too low? Pricing them too low could lead to more balance sheet write offs that might send the stock market lower. But giving banks some pocket change is just putting the problem in hibernation. I know what you're thinking, $25 billion doesn't seem like pocket change, but you have to keep things in perspective. Compared to the hundreds of billions in toxic assets, $25 billion isn't very much money.

Maybe it's just better to take the medicine all at once and get it over with so there isn't anything else that can be a problem later. We may go through a period of heartache, but dragging it on for a year or two and then finding out the problem is still there to prevent recovery could make the heartache we experience in a couple of years worse.

In fact, it seems like the government's hidden agenda is really to inflate us out of the problem by printing huge amounts of money. In time, the debt we are incurring will be worthless in inflated dollars. Problem solved. Historically, inflation rises at the same rate at which we print money. Lately, that rate has been around 40%.

Three weeks ago in Zimbabwe you could buy 20 loafs of bread for $10 billion Zimbabwe dollars. Today you can buy 1 loaf of bread with $50 billion Zimbabwe dollars. I can't image the inflation rate in the U.S. every reaching Zimbabwe's rate, but it won't be the first time in the world's history that a great economic power was brought down by runaway inflation.

Obama Names CIA Director

2009-01-09T08:10:00.000-08:00

Obama named Leon Panetta as the CIA Director and Dennis Blair as the Director of National Intelligence. In addition, John Brennan was named the White House homeland security advisor.

Panetta, who has little intelligence experience has had a 40 year political career, which include being the Chief of Staff during the Clinton administration.

Blair served 34 years in the Navy and led the Pacific Fleet after 911.

-----------------------------------------------------

The economy lost 2.6 million jobs in 2008, including a whopping 524,000 in December, a month that traditionally sees a lot of seasonal job creation. Last year was the worst job loss years since 1945, which saw layoffs after the war ended.

The unemployment rate jumped to 7.2% from 6.7%. Additionally, there are over 8 million people working part-time who want to work full-time. The under employed rate, which includes part-time workers jumped to 13.5%.

The total number of unemployed Americans rose 632,000 to 11.1 million. November and December marked the first time in history that job losses totaled over 500,000 in consecutive months.

This morning President-Elect Obama said, "This morning, we received a stark reminder about how urgent action is needed," when talking about his economic stimulus plan.

------------------------------------------------------

Henry Paulson is the man that has put together a plan to save the economy. As an example of one of the deals he made with Goldman Sachs does not distill a lot of confidence that we picked the right guy.

Paulson invested $10 billion bailing out Goldman Sachs and received $882 million in warrants. As a comparison, Warren Buffet invested $5 billion in Goldman Sachs and received $3.6 billion in warrants. Paulson's investment was his terms, not Goldmans.

Analysts say that if Paulson did that while working at Goldman, he would have been fired. Too late for that now.

$1.2 Trillion Dollar Budget Deficit

2009-01-07T09:07:00.000-08:00

Hold on to your hats! Remember last year when everyone was aghast at the prospect of a $500 billion deficit? Well now all the temporary tax incentives, spending measures are expiring and low and behold, the deficit Obama is inheriting is $1.2 trillion.

And no, that doesn't include Obama's economic stimulus package that he must do because of the collapsing economy he's also inheriting. That could add anywhere from $800 billion to $1.3 trillion more.

These are record dollar amounts. But our wise government has found a way to make it seem not so bad. Yes, these are the same people who remove food and energy from the inflation index calculation. Doesn't make sense to include things everyone uses and needs, after all.

As a percentage of GDP, the 2009 deficit is less than the deficit in 1983 when it was 6% of GDP. The current deficit could grow to 14%, but don't worry because it is still less than the 21.5% deficit in 1945.

The Congressional Budget Office says the cause of the deficits was the collapse of the housing market and the financial market turmoil. The Federal government has thus far committed $7.2 trillion to combat the crisis, primarily in the form of investments and loans.

The CBO expects GDP to fall in 2009 and slowly recover in 2010. But the unemployment rate at the beginning of 2010 is expected to be around 9%.

The markets go through recessions to correct the imbalances that occur during normal economic activity. In this case, the imbalance was astronomical having been inflated even further with low interest rates and easy money for so long.

Given that's the case, what kind of correction will we have to go through to correct the imbalance of artificially injecting trillions of dollars into the system? Trillions of dollars that no one has, money that is literally being printed as fast as the presses will allow.

It is ironic that the people that are interfering with the free market system are the same ones that say the market should be allowed to correct itself.

Inflation is being built into the system, hopefully it won't turn into hyperinflation, but it will be big.

Bernanke, a student of the Great Depression, doesn't want to make the same mistakes that were made in the 1930's. Back then, they did virtually nothing. Now, the Fed is doing a lot. So that mistake is not being repeated, but that doesn't mean the outcome will be any better. Last time we had a great depression, this time we could have hyperinflation.

It is worthy to note that before 1929, all recessions were called depressions. The depression of the 30's was so big that it was labeled the Great Depression. After the Great Depression the government felt that it carried a bad stigma to call economic corrections depressions, so they changed the title to recession.

In other news, Democratic leaders are ready to accept Roland Burris into the Senate. The only obstacle left is the Illinois Supreme Court's decision to determine if the Secretary of State is required to sign off on Burris' credentials.

Pelosi Re-Elected to Speaker of the House

2009-01-06T10:54:00.000-08:00

Congress re-elected Nancy Pelosi as the Speaker of the House.

FOMC saw a "substantial" downside risk to the economy in December when they lowered interest rates to 0%.

Fed sees outlook for the economy "weak for a time" and an appreciable reduction in inflation. In fact they see inflation as "uncomfortably low".

FOMC says balance sheet likely to remain at a high level. Fears prolonged contraction.

Obama said the deficit could reach $1 trillion dollars.

Roland Burris Denied Entry

2009-01-06T10:02:00.000-08:00

Attorney General Roland Burris was denied entry to the Senate Chambers Tuesday. The Secretary of the Senate told Burris his credentials were not in order.

Illinois Secretary of State Jesse White has not signed the certificate of appointment for Burris because he believes, as other Democrats do, that the appointment is tainted by the scandal surrounding Governer Blagojevich.

Burris has stated that the Blagojevich's problems have nothing to do with him and that the appointment is legal.

Burris' attorney, Timothy W. Wright III, has said that the rejection of Burris' credentials is unlawful.

Burris has said he is not seeking a confrontation, but Wright has said they are ready to take this unlawful action "to the highest court in the land."

Even Republican leaders are urging Democratic leadership to seat Burris because it is not a battle they need or one that the incoming President needs.

Some believe that because of who appointed Burris, he may have difficulty getting re-elected in 2010.

Obama Tax Cuts

2009-01-05T10:31:00.000-08:00

Obama and the country face serious challenges with the economy and the plan to right the ship. There have been 2 million job losses in the first 11 months of 2008, the economy has stagnated, the stock market suffered its worst year since the Great Depression and housing prices have fallen while foreclosures have risen.

Most States are facing budget shortfalls and may be required to cut spending and raise taxes.

While many economist predict a stimulus package exceeding $1 trillion, the Obama camp puts it closer to $750 billion.

The plan will include tax cuts, breaks for small businesses, job creation credits and increased write-offs of expenses.

The tax credit could be a $500 cut for individuals and $1,000 for couples and would become part of the payroll system, meaning the cut would reduce the tax deducted from a workers paycheck so people would get the money right away. If a person doesn't have any tax liability, a refund could be issued to that person.

Currently businesses can carry-back losses for 2 years. Under Obama's plan that would be extended to 5 years, so businesses can carry-back or forward business losses and apply that to past or future tax bills.

Obama would establish a new tax credit for businesses that create jobs or avoid layoffs.

For 2009 and 2010, small businesses would be allowed to write-off expenses up to $250,000, up from $125,000.

Obama's team is looking for a plan that will have the fastest impact on jobs and economic stimulus.

Other parts of the President-Elects proposal will include:

double renewable energy production and make public buildings more energy efficient;
rebuild crumbling roads, bridges and schools;
computerize the health care system;
and modernize classrooms, labs and libraries.

Everyone agrees that the country needs a plan that will help avoid a steeper economic downturn and creates jobs in the short term and growth and competitiveness in the long term.

5 Signs Your Investment Advisor May Be Dishonest

2008-12-31T11:05:00.000-08:00

Do you have a sinking feeling that your money manager is benefitting from investing your money more than you are? Can you sleep at night entrusting your hard earned savings with your money manager? If you have some reservations about where you've invested your money, here are some red flags to consider:

The background check doesn't check out
You don't understand the strategy
Your manager makes a bundle even if you don't
No one else is watching the books
Your fund manager doesn't invest alongside you

Ask these questions when choosing your money manager. If you already have a money manager and these 5 issues are concerns then you can read more here...

Financial Forecast for 2009

2008-12-31T10:32:00.000-08:00

Do you wonder how your investments will perform in 2009? Here are some highlights from Jon Markman's newsletter.

No. 1: Infrastructure spending plans will bog down in Congress.

No. 2: The unemployment rate will approach 10%.

No. 3: Weak second-quarter earnings will dash hopes.

No. 4: Synchronized swoon will become an Olympic event.

No. 5: Markets will reach lower lows.

No. 6: Chinese growth will slow to the 0%-to-4% range -- or worse.

No. 7: Russian, Persian Gulf and Japanese investors won't bail out the U.S.

No. 8: Treasurys will trump corporate debt.

No. 9: Market timing will beat buy-and-hold.

No. 10: Investors will seek low-risk growth.

No. 11: Russia will seek its own bailout.

Fill in the blanks - Read more...

Israel Retaliates Against Hamas

2008-12-30T09:27:00.000-08:00

Is Israel's retaliation justified? Is it excessive use of force? Should Israel invade the Gaza Strip and overthrow Hamas?

Would the United States (or any other country for that matter) sit idly by as a neighboring country lobbed rockets over the border, killing civilians and destroying buildings?

Hamas is nothing more than a terrorist organization determined to exterminate Israel, aligning themselves with the ideology of Iran.

As Israel continues its fourth day of attacks, the death toll reaches 375 and the Prime Minister warned that the air offensive is only the beginning.

Israel is in the first stage of their operation with a ground attack looming. Israel says its offensive is only against Hamas militants, but Palestinian parliament member Mastafa Barghouti has called the raids a "war on the Palestinian people" and said the incursion is politically motivated.

Like most terrorists, Hamas militants are firing rockets and killing civilians then, in a show of courage, hiding behind their own civilians .

This is an area of the world where there can, unfortunately, never be peace. It is a terrorist breeding ground that the United States recently made worse with the destabilization of Iraq. The fight's against terrorism and terrorists, but since kids in the region are raised to hate and to fight, the war will be difficult to win.

Year in Review - 8 Days to Remember

2008-12-26T09:50:00.000-08:00

The year 2008 was a wild ride for investors and a turning point in the American economy. It could be very well the year that marks the end of economic dominance by the United States. Here are some defining days in this wild ride.

June 6, 2008

Crude oil prices were soaring, this was the worst day on Wall Street before the credit crisis hit. Oil had risen $16 in two sessions, was up $10.75 that Friday. Wall Street sold off 394 points or 3.13% but was still at 12,209.

Consumer spending became a huge worry as gas prices spike to $4 a gallon and unemployment jumped to 5.5%, biggest one month surge in 20 years. Demand dropped leading to gas prices plummeting in late summer.

The government's $100 million stimulus package was having little effect.

September 15, 2008

The stock market dropped 504 points or 4.42% as the 158 year old investment bank Lehman Bros. declared bankruptcy. The Dow was trading at 10,917.

Stocks traded lower on further news that AIG was having trouble raising capital to fend off a downgrade. Later that week the government would bail out the company for $85 billion.

Also, Merril Lynch sold itself to Bank of American and Washington Mutual searched for a white knight to avoid bankruptcy. One month later it would become the biggest bank failure in history.

Quick action by the Federal Reserve, FDIC, Treasury and lawmakers would pour trillions of dollars in rescue money into the system. This day would make the start of the credit freeze.

September 29, 2008

Congress rejected a $700 billion bailout plan presented by the Treasury and Federal Reserve. Investors expected this to pass, when it didn't stocks would sell off in its worst day ever, dropping nearly 800 points in one day. The plan would pass a week later.

October 9, 2008

The Dow fell 2,400 points in the trading sessions spanning Oct. 1- Oct. 10, a drop not seen since 1930. On this day the Dow, trading at 8,579, dropped 7.33% as Treasury officials said they would purchase equity stakes in banks.

Announced just a week after the bailout plan was approved, the plan was radically different than the plan that was sold to Congress. The market shunned the strategy shift.

The Chicago Board Options Exchange Volatility Index, a measure of investor fear, rose as high as 64 on Oct. 9th, the first time it ever rose over 60. Later in the month it would reach 90 before falling back to 50. The index typically trades between 15-20 and never rose above 30 before this year.

October 13, 2008

The Dow would rally back 936 points or 11.2% cutting its loss from the 8 day slide in half. A series of global initiatives and details about the $700 billion bailout plan being announced was credited for the bounce.

In addition to buying up equity stakes in banks, and, eventually, mortgage-backed securities, Treasury said it would purchase whole mortgage loans, insure home loans against default and help keep delinquent borrowers in their homes.

On Oct. 12, 15 European nations agreed to help their troubled banks by injecting capital and guaranteeing inter-bank lending. Additionally, the British government said it would pump $63 billion into three of the country's banks.

The U.S. Federal Reserve responded by offering an unlimited supply of dollars to three other central banks in an effort to keep money flowing. The list eventually grew to 13 foreign central banks.

October 15, 2008

In its biggest percentage drop since 1987, the Dow lost nearly 8%. It has fallen 35% year to date. The Dow is trading at 8,577.

The market was taking its cues from some gloomy economic indicators including a report that showed retail sales suffered their biggest drop in three years.

Comments by San Francisco Federal Reserve President Janet Yellen drove the point home by announcing that the economy "appears to be in recession".

November 5-6, 2008

While the nation rejoiced in Obama's victory, the market shifted its focus back to the economy. The Dow rose 300 points as the election got under way, but then quickly reversed to its worst ever two day point loss, dropping 929 points or 9.66%.

Unemployment was the stimulus for the declines as claims shot to a 25 year high.

December 1, 2008

Confirming what the rest of the world has known for the past year, the National Bureau of Economic Research announced that the economy is in a recession.

Stocks tanked, even though the news was not a surprise, on the predictions that the recession could last well into 2009 and be the longest in history.

The market's selloff came after a huge 5-day surge in which the Dow gained just under 17% in the closing week of November. In a sign of a tumultuous year, that rally came after stocks hit multi-year lows Nov. 20, with the Dow sinking to near 7,500 points.

Fed Chairman Ben Bernanke added that the economy will take some time to recover even after the credit crisis is over.

Madoff Ponzi Scheme

2008-12-23T08:39:00.000-08:00

Was Bernard L. Madoff's Ponzi scheme the largest in history. Investors lost $50 billion dollars. But what is a Ponzi scheme? Did you know it was named after a con artist named Charles Ponzi? He orchestrated a postal coupon scheme so large he made millions. It was so famous it prompted officials to name similar schemes after him.

Read more...

Army Robots to Help Save Soldiers

2008-12-22T09:41:00.000-08:00

The Army has been using robot technology for some time now, but they are currently developing a robot called Battlefield Extraction Assist Robot or BEAR, built by Vecna Technologies. While still a prototype, BEAR will be able to retrieve injured soldiers from the battlefield.

BEAR is built in a semi human form with eyes, ears and arms and is capable of lifting 250 pounds while standing on its toes. Outfitted with lights, two cameras and infrared capabilities, it can travel up to 10 MPH and is remotely operated.

Robots can be outfitted to accomplish various duties. One can detect 38 different kinds of chemical or biological explosives from 3 to 5 meters and can be used to scan car doors or trunk lids for explosives or chemical residue.

About 10,000 robots are expected to be deployed in 2009. Packbot, already deployed in Iraq, is used for surveillance, reconnaissance and explosive removal. Packbot can be outfitted to react to voice commands given remotely through an earpiece.

Some robots can be outfitted with a retractable mast called a zipper mast or situational awareness mast. These mast are equipped with cameras or communications devices that can peer over a wall without risking a soldier.

Star Wars had a lot of foresight, robot warriors are on their way. Or is the military copying the movies?

President Bush Announces Bailout Plan for Automakers

2008-12-19T08:34:00.000-08:00

The Bush Administration will make $13.4 billion from the TARP funds available to U.S. automakers to keep them afloat for a few more months. The automakers will have until March 31st, 2009 to prove they are a viable company and will be able to operate profitably.

This loan uses most of the rest of the first $350 billion appropriated by Congress. If Congress approves the use of the last $350 billion, the automakers can borrow an additional $4 billion.

The loans are for 3 years but will have to be repaid within 30 days if they don't prove their viability by March 31st.

GM thanked the administration for the loans and looked forward to showing what American ingenuity can achieve.

The terms of the loan are similar to what was approved in the House but shot down in the Senate. The automakers must limit compensation and eliminate perks. They also must issue warrants, which convert to non-voting stock, to the government.

The terms don't include a car czar, but does say a government designee will determine if the automakers are making changes that will make them viable. It is expected that Treasury Secretary Henry Paulson will fill this role.

Details of the automakers plans must be submitted to the government by February 17th. The government wants the automakers to reduce their debt by two thirds via a debt to equity exchange with current bondholders and get the Unions to agree to wages and work rules competitive with non-union plants operated by Asian companies by the end of next year.

The government is also requiring GM and Chrysler to use their stock to pay for half of the future retiree health care expenses, which will be paid by union controlled trust funds rather than the automakers themselves, starting in 2010.

There is flexibility in the terms that allow automakers to hold the loans even if they don't meet the targets, if they can explain why they are still viable.

Automakers recently announced plant shutdowns that will last weeks longer then is typical for this time of year.

Obama Names Secretary of the Interior

2008-12-17T08:53:00.000-08:00

President-Elect Barack Obama named Ken Salazor the new Secretary of the Interior. Salazor is a first time democrat Senator from Colorado who spent 11 years as an environmental lawyer. He supports oil drilling on federal lands and is a champion on environmental issues and alternative energy. He wishes to reduce the dependency on foreign oil.

Thomas Vilsack, a former Iowa governor and attorney at the Dorsey Trial Group, was named the Secretary of Agriculture.

Stocks Rally Ahead of Fed Decision

2008-12-16T09:45:00.000-08:00

The Stock Market awaits the Federal Reserves decision on what it will do with interest rates. Rates are currently at 1% and investors expect the Fed to lower them to 0.5%, some expect them to go to 0.25%. Either way they are almost as low as they can go and any rate cut is not expected by itself to have much effect on the economy. The Fed has been lowering rates since September of 2007 and the economy has actually gotten worse, not better.

Of most significance will be the accompanying statement the Fed will release about the economy, labor market and the credit crisis. Also, investors will be interested in what else the Fed has up its sleeve. Recently, the Fed has used a range of innovative tools to jump start the economy with little to no positive results.

The housing starts and building permits plunged 15% to record lows in November to an annual rate of 616,000 for both areas. These were worse than economists expected.

The consumer price index fell 1.7% in November after falling 1% in October. Economists expected a drop of 1.3%.

The core rate, which excludes the things consumers use most...uh, I mean the more volatile food and energy, was flat, versus an expected rise of 0.1%.

The dollar has resumed its decline falling to an 8 week low versus the euro and is hovering near a 13 year low versus the yen.

5 Mistakes Investors Make

2008-12-15T10:52:00.000-08:00

MSN posted an article on the '5 biggest investing mistakes'. While in general I can agree with the philosophies discussed during bull markets, it's a hard pill to swallow when we're going through what we are today. Granted, if you didn't get out of the market before the collapse, it may be too late to get out now. That is, if you think we're near a bottom. If you think the economy is on the verge of turning around, then now is probably a good time to buy. If you think that the economy is going to get worse before it gets better, then it may not be too late to sell your holdings and preserve your capital for even lower prices. The key is, however, you can't wait until the market recovers to where it is today to re-enter the market. You have to have a plan and determine when the risk of further economic deterioration has subsided.

The 5 mistakes MSN discusses are:

1. Panicking and Selling.

When the markets are tanking the way they did in October, most people will hope for a swift rebound then swear to sell if they can get most of their money back. But the downturn we had was bigger than most expected so investors tend to want to stop the bleeding and get out even with big losses.

MSN recommends holding your investments since your losses aren't realized until you sell. Past market downturns have eventually rebounded and in the long term you will be better off, you will recover your losses and even make money. Many investors will panic, sell low, then buy back in after the market recovers, essentially selling low and buying high.

I get this and can agree to a point. At some point, if you believe the market is not done tanking, it is not a bad idea to sell some or all of your holdings on a rebound, preserve your capital and return to the market when it looks like the economy has a chance of recovering. The markets love to suck in investors to steal their money in bear markets. This is called a suckers rally. I haven't seen anything that is screaming to me that the economy is done getting worse. The government is still bailing out corporations, unemployment is still rising, banks are still not lending, the auto industry is still on the brink of failure, etc, etc. I'm still glad that I went to cash 7 months before the stock market wipeout.

2. Tuning in Too Much.

There is a lot of information out there, on TV and the internet. People tune in and want to react to every little bit of information. One day the market is up and the next it is down. Reacting to every bit of news can kill your investments.

This information overload can cause investors to react emotionally instead of logically. I agree with this. Develop a long term plan and don't get bogged down too much with day to day stuff. Reposition your portfolio based on what your long term plan is.

3. Halting Retirement Contributions.

MSN recommends to continue contributing to your retirement plan. Many people have lost half or more of their retirement funds and don't want to throw good money after bad.

It is understandable that people are hesitant to contribute more money into a plan that is losing money at alarming rates. But you don't have to invest it in the stock market. Put your money in a money market fund or keep it in cash until you believe the economy is about to rebound and the market looks to be making a bottom, then begin to slowly invest back into the market.

4. Veering from Your Plan.

MSN says that during market downturns people will stray from the path of their long term plan. Instead of holding and waiting, investors begin to try and time the market for quick profits.

I think the long term plan is a good idea, but I think that considering downturns and readjusting your portfolio accordingly can be part of the long term plan. Trying to time the markets for quick profits is probably not a good idea for a retirement portfolio. Keep this speculative activity for a separate account. I'm not an advocate of buying stocks and not checking them again until the day before you retire, like many buy and hold advocates will tell you. Holding through downturns in a bull market when the economy is growing is fine, but holding through a downturn like we're having today is going to be costly. If you are close to retirement, it is possible that you may never recover the losses you are accumulating. Even though analysts don't like to compare this market to Japan's market in the 1990's, it is possible that, like Japan, this market could take 20 years or more to recover. Japan's still hasn't recovered after 18 years and given what's happening today, it could be another 18.

5. Holding One Basket on the Upswing.

It is important for investors to harvest cash when they have top performing stocks or funds during an upswing. Take some profits after a price increase; it is easier to sell during times of investor enthusiasm and get good prices, although greed keeps many investors from letting go of profitable trades. Also, investors should invest in a diverse cross section of the economy to take advantage of rising sectors and counterbalance sectors that aren't performing as well.

By taking profits from big winners it makes it possible to change the definition of portfolio diversity and buy investments that are more appropriate for the economic climate. Recently, as stocks plummeted, investors switched to bonds for safety. Soon they will need to re-evaluate this strategy and find the next hot sector.

Have a plan, diversify, but don't be afraid to reallocate your portfolio to investments appropriate to the economic climate. And if you fear a huge market correction, it is better to be safe than sorry. You may give up some short term gains, but you might be better off preserving capital for better opportunities. In this market, it is better to be a month late than a month early.

Home Values Plunge in 2008

2008-12-15T09:06:00.000-08:00

Home values have dropped 8.4% year over year since 2007. That amounts to homeowners collectively losing over $2 trillion in value.

Some 11.7 million Americans are now "underwater" owing more on their mortgages than their home is worth. Most of the subprime loans that will fail, have failed. But there are still option ARM's that are expected to continue an increasing failure rate and the so-called 'liar loans' where incomes were not verified are expected to continue failing.

While the decline is beginning to slow, there is no bottom in sight. The worst performing market is in Stockton, Ca where housing prices have dropped more than 32%.

A few cities have registered gains over the past year with Jacksonville, NC leading the way with home values rising 4.9% year over year.

Obama Names Housing Secretary

2008-12-13T12:24:00.000-08:00

Shaun Donovan, New York City's housing commissioner was nominated by President Elect Obama to be the Secretary of Housing and Urban Development.

Donovan has said that addressing the mortgage crisis is essential for restoring the American Dream.

Obama has asked his economic team to develop a plan to keep Americans in their homes and stem the rise of foreclosures that are crippling the economy.

Donovan has experience working in business, academia and at HUD during the Clinton administration.

Last week jobless claims rose to a 30 year high and that 1 in 10 people who hold mortgages are in some form of distress, highest in ever recorded.

Trader Pyschology

2008-12-12T08:57:00.000-08:00

Succeeding at trading in the markets combines learning everything you can about the markets and trading tools and getting to know yourself as a trader.

Learning about the markets and technical analysis tools is the first thing that most traders dive into, they often are unaware of how important the roles of human nature and psychology play in defining markets and market success.

Becoming a profitable trader is more of a journey than a destination. Concentrate on learning the craft of technical analysis and try to become a better trader each day enjoying the progress you make. Focus on improving your trading skills rather than on the amount of profit or losses in your trading.

Feel good about a trade when you have followed your trading plan and congratulate yourself, regardless of the profit or loss on the trade.

Treat your trading like a business and maintain an even keel and professional outlook. Don't get to overly excited about winning trades or depressed about losing trades.

When entering a trade there is no certainty. You are looking for a preponderance of evidence or a high probability that a trade will react a certain way according to your indications of trend and reversals and your trading plan.

Read more...

Learn how to use psychology to your advantage. Today's markets offer extraordinary opportunities for those that know how to spot the trends.

Debt Drops for 1st Time Ever

2008-12-11T11:14:00.000-08:00

The consumer debt that Americans hold dropped by 0.8% in the third quarter by an annualized $30 billion. Net worth also dropped as house prices and stock prices dropped.

On the surface that seems like a good thing. But since America's economy basically runs on debt, it's not good for the recovery. People are spending less and loans are harder to come by, so purchases of homes, cars, boats and other big-ticket items has fallen.

Americans are experiencing a major shift in their spending/saving philosophy. Instead of spending their entire paycheck as it comes in, they are saving for the future. Saving used to be the job of their house, as housing prices were rising. Now you can't depend on that.

With 70% of the GDP coming from consumer spending, this trend is a cause for concern.

Net worth of Americans dropped by 4.7% in the third quarter or by $2.8 trillion.

Thoughts on the Future of the Markets

2008-12-10T08:46:00.000-08:00

Fortune spoke to eight of the sharpest thinkers on the markets. Here is a summary of what they had to say. Click on the title to read the article posted on CNN.

Nouriel Roubini - Known as Dr. Doom, the NYU economics professor saw the mortgage-related meltdown coming.

Roubini says we are in the worst recession of the last 50 years. It is an unwinding of a huge leveraged - up credit bubble. All of the advanced economies will experience a hard landing and the emerging economies will experience a severe slowdown. And it will get worse.

GDP will be negative throughout 2009 and during the recovery in 2010 and 2011 will be very weak. So weak it will feel like a recession. Unemployment will peak in 2010 at 9% and housing prices will fall another 15%.

Roubini says that for the next 12 months, stay away from risky investments like the stock market and commodities and invest to preserve capital. Buy treasuries and bonds. It is better to make low returns than to lose 50% of your capital.

Bill Gross - The founder of bond giant Pimco warned of a subprime contagion back in July 2007.

In 2008, over $30 trillion worth of paper wealth was destroyed. This was not caused solely by the sub-prime mortgages alone. There was a great leveraging that embodied derivative structures of all types. As 2008 ends, investors are fearful that the recession may bring us to the brink of a depression.

Federal guarantees and trillions of dollars will be required to fill the gaps created by the deleveraging of private balance sheets. The process will take longer than 12 months and after the bottom is reached profit margins and earnings growth will be low.

Investors will have to be content with single digit returns for quite awhile and should stick with high quality bonds and preferred stocks, especially those that are part of the TARP bailouts. While the returns will be small they should be safer than most other investments.

Robert Shiller - The Yale professor and co-founder of MacroMarkets called both the dot-com and housing bubbles.

Shiller sees similarities between now and the 1930's. The percentage rise and fall of the stock market, interest rates and housing prices. Unemployment is not anywhere near the '30's, however.

Other similarities include consumer confidence (even though our numbers don't go back that far, it is likely at its lowest level since then), volatility, biggest one month drop in consumer prices and it's a world wide event.

He thinks we'll manage it better this time around, but we are still vulnerable. One of the lessons from the Depression is that things can smolder for a long time. Consumer confidence needs to return to get things rolling again.

The PE ratio reached a record high at 44 and has since fallen below the average of 15. It is now 13, but in the '30's it fell to 6, so that is a concern. Investors may feel comfortable that valuations are good right now, but there still is the risk they could fall by half.

Sheila Bair - The FDIC chairman has been pushing to get mortgage relief for borrowers.

Chairwoman Bair is a believer in the basics of investing. That is find a stock you like and hold on for the long haul. That seemed to work for her mother and she would like to see America return to that philosophy.

The crisis we are currently experiencing was caused by investors not doing adequate homework in their investments and as housing prices deteriorated the problem began feeding on itself and getting worse.

Jim Rogers - The commodities guru predicted two years ago that the credit bubble would devastate Wall Street.

This forced liquidation we're in has only happened 8 or 9 times in the last 150 years. It's no fun, but the way to make money is to buy investments that are unimpaired by their fundamentals. GM and Citigroup are impaired.

The only group that Rogers can find that is unimpaired is commodities. He especially likes agriculture. The cost of raising crops is increasing and the supply of commodities is decreasing. At the same time the demand for food is increasing. Getting loans to acquire the goods needed to continue produce commodities is also getting harder. This is a recipe for higher prices.

Rogers has been buying Chinese stocks and stocks in Taiwan for the first time. He has covered his shorts on U.S. stocks and is shorting Bonds. There is a huge amount of bonds coming onto the market and soon inflation will return.

Rogers feels stocks are still overpriced. Historically, you buy stocks when yields are 6% and selling at 8 times earnings. You sell when they are 22 times earnings and 2% yield. Stocks are cheap, but yielding only 3%. To get to that 6% yield the market will have to drop to 4,000. If an investor is still solvent at that point you should be buying everything in sight.

To read what Wilbur Ross, John Train and Meredith Whitney have to say about the markets click here.

Automakers to Get $15 Billion

2008-12-09T08:56:00.000-08:00

It appears that Congress will give the automakers $15 billion. While we are still waiting for the vote, most analysts expect that the automakers will get a bridge loan designed to get them through until the Obama administration can do something more fundamental.

The government will get a 20% stake in the company calculated by how much each car maker gets in loans. So, if GM takes $10 billion the government would get $2 billion in stock. Now with GM being worth $3 billion, this means that the taxpayers will own 2/3 of the company.

In addition, executive salaries will be capped, stop paying dividends; answer to a car czar and there will be no corporate jets.

Now, it has been said that GM could need up to $50 billion over time in order to survive. If a company is worth $3 billion but needs $50 billion to avoid bankruptcy, I'm thinking they are already bankrupt. And maybe it would be better for the company to go into Chapter 11.

I know what the implications of that are. People won't buy cars from a bankrupt company; lenders won't lend to people buying from a bankrupt company; suppliers to the company could go out of business; more jobs would be lost; and on and on.

On the other side of the coin, somebody will come in and buy the company, reorganize, make it more efficient, start building the cars that are in demand and emerge with a better, more profitable company.

The current management failed to have the foresight to produce products that would survive this environment and lost billions of dollars, falling behind their competitors who did have the foresight to build the right products. I'm not convinced current management will use the bailout money effectively, losing more billions and maybe going bankrupt anyway.

And here's the real kicker, Chrysler won't open its books to Congress because they are a private company. Congress doesn't even know for sure if Chrysler needs the money, they are just taking their word for it. Chrysler won't even tell Congress who is on the board of directors.

Now, I could be missing something here, but I believe Congress has been admonishing banks, investment bankers, Freddie Mac and Fannie Mae executives and others involved in this financial crisis that one of the reasons for being in this mess is because people who were applying for housing loans were not required to prove their income, in some cases they didn't even have to disclose their income.

Now Congress is about to make the same mistake. Give GM and Ford money, but withhold Chrysler loans unless they disclose financial information to Congress. The rest of us have to fill out an application and disclose financial information, Chrysler shouldn't be exempt from that.

Stock Market Profits - How to Make Money

2008-12-08T20:57:00.000-08:00

We are experiencing the most turbulant stock market in recent history. One day the market is wildly higher and the next it is just as wildly lower. If you are a day trader this type of volatilty is a great way to make money. Of course, you need to be quick on your feet. Buy! Sell! Sometimes trades lasting minutes or less.

Day trading is very difficult and not many are successful at it. Most people don't have the temperment it takes to successfully trade this way. Usually when most people have losses they want to wait until the market recovers, then they'll get out and hopefully breakeven. But successful day traders know that sometimes you will take a loss and you have to take it and move on to the next trade.

There are a lot of brokers who are willing to give their advice on what stocks to buy, but you have to wonder if they have another motive...like making commissions or if they really have superior information that can lead to stock profits. Could be a little of both really, but wouldn't it be nice to increase your confidence in a stock pick?

A pair of computer programming "geeks" while contracted to Goldman Sachs have now developed a Stock Trading Robot they've coined "Marl" (a combination of both their first names) that they've documented picking stocks with a high percentage and low risk of doubling your money.

"Marl" works by analyzing each stock using technical analysis, which is a fancy way of saying it analyzes a stocks past price movements to attempt to determine a stocks future price movements.

Marl can easily monitor hundreds of stocks at the same time, while most individuals can only monitor a few stocks at once.

Marl can process 1,986,832 mathematical calculations per second and; Marl looks at volume traded, Support and Resistance levels, Trend reversal patterns, Consolidation patterns and Channels a stock trades in.

They claim their program averages a 105.28% trading profit which comes unsually within 3 hours of the market opening. They don't claim, however, to make money on every trade. They have, in fact, documented and displayed some losing trades. These trades are generally small compared to the winning trades.

Their software program is so expensive that the average person can't afford it up front. I suppose after some successful trades you could take another look at the cost of it. But they do have an alternative. They offer a weekly newsletter and updates that can provide some very profitable trades.

In these turbulant times information is very important. Having a successful advisor in your corner can be the difference between making money in the stock market and losing your retirement account.

To learn more about this amazing service click here!

Stocks Get Boost From Obama's Comments

2008-12-08T09:23:00.000-08:00

President - Elect Obama pledge to boost public spending on infrastructure. Obama's speech is having a positive effect on the stock market with gains reaching highs not seen for about 3 weeks. The hope of stock investors, of course, is that the spending will filter down and help the bottom line of thousands of U.S. companies.

Oil and oil related companies as well as copper prices have been early benefactors of Obama's comments with prices sharply higher today.

President Bush has agreed to a troop pull out plan as he tries to salvage his legacy. Bush in a recent interview admitted that he wished he had better intelligence before making the decision to invade Iraq. Too bad he can't have do-overs, we all wish he had better intelligence too.

Dow Chemical is joining other large Dow Jones Corporations and will be cutting 5,000 jobs and closing 20 plants as the economy continues to worsen despite all the promises and current Congressional work to boost it.

Barney Frank thinks there is a deal between the White House and the Automakers. It's not quite what the Auto CEO's had in mind, but it has to be better than nothing. The government is willing to loan the automakers $15 billion, but may re-consider the $25 billion. They were asking for $34 billion.

Obama has accused the auto CEO's of taking a "head in the sand" approach to long festering problems. He believes that the CEO's should lose their jobs. Sen. Dodd argees with Obama and called for GM CEO Wagner to move on. Stands to reason that the current management of the automakers couldn't keep the companies from losing billions and keep them competitive with other automakers, what makes us think they will do it now?

Economy Worsens in November

2008-12-05T08:07:00.000-08:00

Job losses in November were the highest since 1974 with 533,000 jobs lost. That brings the year to date total to 1.9 million and the unemployment rate jumps to its highest since 1993 at 6.7%.

Also, job losses for September and October were revised higher at 403,000 and 320,000 respectively. Just in the last three months 1.3 million jobs have been lost.

The job losses in this recession have now surpassed the 2001 recession by 300,000 jobs. One big difference from 2001 though is that when the tech bubble burst the job losses were confined to mostly one sector, this time they are spread out throughout the economy. The labor department confesses this may be one of the worst reports they've ever had.

Analysts expect more job losses over the next 3-6 months while Obama's team works on getting an economic stimulus plan put together for approval immediately after he is sworn in. That package is projected to be around $600 billion. The printing presses are running overtime.

The so-called under employment rate, which includes part-time workers and those that have become discouraged and stopped looking for work has risen to an all-time high at 12.5%

California may resort to depression era IOU's as the recession hits particularly hard there.

Oil hits $40 a barrel and gasoline futures traded as low as .92 cents. Prices at the pumps are generally 60-70 cents higher than futures prices, signaling some relief for consumers at the pump.

How to Become a Master Stock Trader

2008-12-03T14:02:00.000-08:00

Have you been trading the stock market and been taking a beating? Are you having problems trying to decide the perfect entry and exit points? Is your system only working part of the time? You're not alone.

Have you ever thought you were going to wake up one day, plunk down a few thousand of your hard earned dollars and make a killing in the market, only to discover that by the end of the day your hard earned cash was gone. It gives you a sinking feeling in your stomach and you either never want to trade again or you are more determined then ever to get your money back!

From time to time, we all need some guidance when investing in the market. It likes to throw unwary investors for a loop as often as possible. Truth is there is nothing wrong with improving your knowledge of the markets no matter how experienced a trader you are.

Sometimes traders go into slumps, like baseball players, and it is helpful to get a new perspective on your trading strategies.

Well now there is a book that can help you make money every day the stock market is open.

You will learn:

* The shortcut secrets to day trading profits you don't know about...

* How to cream the market for all it's worth day in and day out...

* How to turn your passion for investing into a full time business that can set you up for life...

The markets will give all beginners a thrashing at least once. If you want to learn how to make profits it is a very rewarding business. It can give you the freedom to do what you want, live anywhere, travel, work when you want. If you know a few little secrets investing can be safe and predictable.

There are other benefits as well:

> You don't need a lot of money to get started.

> The time required to trade is minimal.

> Returns are almost immediate.

> It's easy to learn how to profit from the stock market.

Learn how to spot hidden trades poised to take off and put hundreds of dollars in your pocket everyday as a skilled trader using your own system.

Download your copy now!

-----------------------------------------------------

Here are some other hot topics covered in the book:

> The most important factor you must understand to avoid losing money... and... achieve a steady, consistent income just like professional swing traders! (Don't even think about trading until you discover this.)

> My step-by-step guide to setting up your own fail-proof trading system.
A complete explanation of market terms even a 10-year-old can understand. (No need to "crack" your brain trying to figure out complex jargon. I provide definitions of stock terms in plain simple English.)

> How to time the entry point just right so you pocket the biggest profits possible. (Here's how to spot the three trends that let you know when to get in.)

> A "secret weapon" used to pinpoint the potential of a stock going up or down. (No serious trader would be caught dead without this resource.)

> How to spot the famous "cup and handle" pattern everyone relies on to pick money making stocks!

> How to take advantage of short-term and long-term strategies to minimize your risk!

> Why you can make serious money trading stocks when prices go up or down! (I'll share with you a valuable lesson I learned by watching a stock drop form $13.80 to $13.05.)

> Four little-known rules you must memorize before you start trading... if... you want to put the odds of success in your favor!

> The basic "buy set up" strategy: How to always buy the right stock every time!

> All the "ins and out" of making a nice living as a day trading renegade!

> How a stock's moving average reveals the right time to buy or sell!

> My secret swing trading blueprint! (It took me months and plenty of mistakes to develop this process. But it works like crazy and puts you in control.)

Download your copy now!

-------------------------------------------------------------------

Here's what others have had to say about the book:

"I almost gave up but thanks to your ebook and training I am now averaging $4000 plus per week. I never thought trading could be this easy! I can't understand why nobody wrote a book like this before, Jens." Dave M., Nevada

" Dear Sir, I have been trading for many years, read many books and subscribed to many who claim that I can increase my return by 100% - none worked. The MasterTrader book that I have bought from you is worth a million dollars which I lost before I bought the master trader. No other book or newsletter teaches what the Master Trader teaches. I am sure that with the knowledge I gained from the MasterTrader I will be able to beat Wall Street. I call your book the green book..." U. Liberati Sr.

"This book is an amazing and invaluable resource for a beginner trader. Undoubtedly, the best and the most practical I have seen so far . I only wish I could have had all this information compiled in one place when I started trading. It would have literally saved me thousands." Sergei I., Canada

"Jens, I never read anything so comprehensive. I am a daytrader and will pass it on to my friends who are investing. The course covers about every aspect of the business." Dr. Mark V., Atlanta, GA

------------------------------------------------------------

The order comes with 11 free bonuses and a 60 day money back guarantee. It is the most comprehensive trading book on the market. Learn everything you need to know in one short lesson. Become a Master Trader and earn great profits everyday do something you love to do.

Order Today!

Should the Government Bailout the Automakers?

2008-12-03T11:49:00.000-08:00

The Big 3 Automakers again made their trek to Washington D.C., this time in automobiles, to make their pitch a second time to Congress. They are there to justify their need to acquire bridge loans from the federal government to regain their competitiveness in the world auto markets.

The first time they were in Washington they asked for $25 billion, this time they are going after $34 billion. GM says they will need $18 billion, but will only use the last $6 billion in case of emergency or if market conditions deteriorate further. I guess they don't consider this an emergency. Ford doesn't think they will need they $9 billion they are asking for, but want it there for a "backstop". Chrysler is asking for $7 billion.

The loans are said to help not only the automakers, but the entire economy. Without it, many analysts say the economy will suffer a major setback. This is the sales tact that the automakers are using to convince Congress they should give them billions of dollars. After all, they couldn't make their companies competitive before, losing billions in recent years, but this time will be different.

Will the bailout work or will it just put the economy in worse shape by forcing taxpayers to pick up a tab that may not get paid back? With all the money printing going on, at some point the fed will have to deal with inflation.

Congress may be fooled by the reports the Big 3 submitted, but the general public don't buy it. If fact, 61% of those polled believe that the automakers should not get the funding. Another 53% say that they don't think the funding will help the economy.

Only 15% say they will be directly affected if the automakers were to go bankrupt. As expected most of the opposition to the bailout comes from people in West, Northeast and South. But still 53% of people in the Midwest oppose the bailout.

Democrats are more supportive of the bailout, but still 53% oppose it, 70% of Republicans and 61% of Independents oppose the bailout. Seventy percent of Americans feel it is unfair to the taxpayer to bailout the automakers.

The poll was conducted by CNN/Opinion Research Corporation by phone with 1,096 adult Americans. The survey's sampling error is plus or minus 3 percentage points.

Experts Warn of Terrorist Attack By 2013

2008-12-02T11:28:00.000-08:00

Somewhere in the world, experts warn, there will be a terrorist attack with a weapon of mass destruction.

It is more likely that a biological weapon will be used than a nuclear weapon because it is easier to obtain and easier to use. There are a lot of scientists in the world that can develop biological weapons.

But that is not to say that a nuclear event is off the table. There is still a risk of a nuclear weapon falling into the hands of terrorists. They are actively trying to acquire a nuclear weapon and with many countries seeking to develop nuclear power and others expanding arsenals, the risks of a nuclear device falling into the wrong hands increases.

We're talking about the worst possible weapons falling into the hands of the worst people in the world. The consequences would be catastrophic in terms of the number of people dead.

In 1918 a flu virus killed 40 million people. Experts warn that a biological weapon used by terrorists would multiple that number by a minimum of 10.

The report interviewed over 250 experts worldwide and warned that securing these weapons would not be cheap and would require sacrifice, but it was absolutely necessary.

Ford Unveils Plan to Congress

2008-12-02T10:55:00.000-08:00

Ford unveiled its 33 page plan to survive the crisis to Congress calling for an investment of $14 billion with $9 billion being a bridge loan. Ford says it doesn't see that it will have a liquidity crisis in 2009 and expects to break even or make a profit by 2011.

Ford has reduced executive salaried employees wages by 40% and is cancelling bonuses. CEO Mulally agreed to work for $1 if Ford uses the loan from the government. The other CEO's have made the same promise.

It will also sell some of its corporate aircraft, reduce dealerships by 14% compared to 2005 levels, cut capital expenditures, explore balance sheet restructuring and raise equity capital.

Ford is in talks with the UAW to identify ways to cut expenses. Despite these cost cutting measures, Ford does not see an end to the crisis in the near term. It did not mention any new reductions in plants or capcity eliminations, but has made a committment to speed up hybrid and electric models of cars.

Ford shares rose on the news of the plan, in fact all auto shares are rising. The other companies, GM and Chrysler have not reportedly turned in their plans yet, but plan to by the deadline of 5:00PM. Although GM's plan is not known in detail, it is said to include the sale of corporate jets and the halting of corporate jet use.

NBER Says It's Official, We're In a Recession

2008-12-01T12:31:00.000-08:00

The National Bureau of Economic Research (NBER) is a leading group of private economists that are charged with determining the start and end dates for U.S. economic downturns. Because of the need to look at financial indicators, it takes a long time to declare a recession and figure out its start date.

The NBER stated that the deterioration of the labor market was the main reason for declaring a recession and choosing the start date as December of 2007. During the first 10 months of 2008 1.2 million jobs were lost and another 325,000 are expected to be lost in November when the government announces these figures on Friday.

The NBER also looks at real personal income, industrial production as well as wholesale and retail sales. All those measures peaked between November of 2007 and June of 2008.

In addition, the NBER considers GNP. Most people erroneously assume that GNP must decline 2 quarters in a row for there to be a recession. This has not taken place yet in this recession.

It did not give any reasons for the cause of the recession, but many believe that the housing downturn led to the broader economic collapse.

The falling housing prices that peaked earlier this decade, led to falling housing starts and home purchases. This also caused a rise in mortgage foreclosures, which in turn led to billions of dollars in loses to the nations largest banks and a tightening in credit.

This is the longest recession since the Great Depression in the 1930's and is not expected to bottom until mid 2009. The two most recent recessions in '91 and '01 lasted 8 months.

The government has pumped trillions of dollars into the economy to try and pump it up and get things rolling again. So far, the economy is slow to respond, but most economists don't expect this recession to turn into a depression even with all indicators in a tailspin.

The biggest government worry now is not, 'are we in a recession', but how do we fix it? With rising costs, rising unemployment, record foreclosures and depleted savings it is very important that the government do more to help American families make ends meet.

Obama Names National Security Team

2008-12-01T11:29:00.000-08:00

President Elect Obama named his National Security Team today. No surprises to these well kept secrets though.

Senator Clinton was chosen as the Secretary of State and awaits confirmation by the Senate.
Napolitano was named to head up the Homeland Security Department.
Gates was asked to stay on for at least another year as the Secretary of Defense.
Susan Rice was named as a UN Ambassador.
Jim Jones was selected as the National Security Advisor.

Obama says that 16 months is the correct time frame for pulling the troops out of Iraq and turning security of the country over to the Iraqis.

India says Pakistani 'elements' were responsible for the Mumbai attacks and calls on Pakistan to follow up on its words with 'action' to punish those involved in the attacks.

In other market news:

Treasury's drop to a record low on economic concerns.

Financials reverse week long advance and drop in a big way to start December.

The Manufacturing Index fell to the lowest level since May of 1982.

Mutual Fund investors are stuck with capital gains tax even as the market suffers huge losses.

OPEC delays decision to cut oil output by 2 weeks; crude oil falls and trades below $50 a barrel.

Is the market rally we saw last week exaggerated by short covering? Stocks that were most heavily shorted beat the market averages last week.

The National Bureau of Economic Research (NBER) has given us the official word, that we all have known for months, that we are in a recession. They put the start date of the recession at December 2007. Now the government can finally stop denying we are in a recession.

The Automakers have until December 2nd to tell Congress their plan for using the bailout money and what they will do to turn the industry around. GM may get $10-12 billion, but they want $50 billion. So does this indicate that the $10-12 billion they might get is not enough to do any good and therefore a waste of money or is it an indication that GM is still in denial and unwilling to become more efficient?

Automakers are expected to make concessions and compromises to get their hands on that $25 billion.

2008 is the Year of Bailouts

2008-11-28T11:55:00.000-08:00

Never before in history has the government bailed out the financial industry as they have in 2008. Major American corporations are failing at an alarming rate. The government let some go into bankruptcy, others they funneled an unprecedented amount of money to keep them afloat.

Government funding of bailouts is totaling in the trillions of dollars. It's hard to even imagine how much money that is and it may never be repaid. If it is, it will likely take decades.

Saving Wall Street, saving Main Street, saving Corporate America, click here to read about the total dollar amount involved, it's staggering.

Even with the sky high dollar totals already pledged, the government is presenting new programs to save the economy, totaling billions more. How will this end? Will it end anytime soon? With a new President coming soon, will it be enough to save America? Obama has got his work cut out for him. We wish him luck, he's gonna need it.

Mumbai Terrorist Attack Rocks Financial Center

2008-11-27T10:44:00.000-08:00

At least 10 hostages were reported freed at the recent siege by terrorists in the Indian city of Mumbai. Still, at least 20 hostages remain captive or trapped.

The Indian Prime Minister is saying that the terrorist group is from an outside country and the goal is to disrupt the financial center of the country. The group has killed 125 people so far. Explosions and gun fire can be heard even 24 hours after the siege began. Another 327 people have been wounded.

There are many Westerners held captive and it is believed that the attack was designed to target foreigners from the West.

Authorities found 17 pounds of RDX, one of the most powerful kinds of explosives, indicating that more violence may have been planned. It also indicates that this group may be well funded by a foreign government.

Gunman are firing guns indiscriminately, killing citizens in their homes and kids who venture outside.

Police say the attackers came by boat and found a fishing trawler loaded with high tech satellite gear and GPS equipment.

Volker Named to Obama's Economic Team

2008-11-26T08:31:00.000-08:00

President-Elect Obama named former Federal Reserve Chairman Paul Volker to head his new Economic Advisory Board. A panel set up to analyze recommendations and get the economy back on track.

Analysts estimate that GM's debt could lose 75% of its face value if the government provide aid to the company.

Mortgage rates finally fall under pressure from the Fed. Average rates dropped to 5.5% this morning from 6.38%.

Buffet had a good 3rd qtr with financial stocks, Wells Fargo, US Bankcorp and American Express, earning 36% and averaging 2.3% over the course of the year. So far in the 4th qtr, Buffets financial shares have lost 41%.

Sales of new houses has fallen to the lowest level since 1991 on the loan freeze. Units sold totaled just 440,000 units.

Treasury's are at a record low yield of 2.9837%.

Crude inventories rose an unexpected 7.28 million barrels. Analysts expected a rise of 1 million barrels. Options traders are betting the price of February crude to fall below $25.

Great Depression 2?

2008-11-25T14:52:00.000-08:00

We are in what economists and analysts like to refer to as a recession similar to 2001 only deeper. I was pretty busy in 2001, but I don't recall some of the worlds largest banks and brokerage houses going bankrupt. I don't seem to remember the government authorizing $700 billion dollars to keep the financial system from collapsing. I don't remember the Federal Reserve offering $7.4 trillion dollars in funding to banks with frozen credit.

Maybe I blacked out for a few months, but I barely remember a recession back then. In fact, the only reason I knew we had one was because the press talked about it briefly several months after it happened.

I've been hearing some chatter, lately, about an ancient Myans prediction that the world is going to end in December of 2012. I find it hard to believe that the world is going to end, but I can buy into the theory that the world will end as we know it. That can mean a lot of things, but probably not that people will suddenly cease to exist.

Paul B. Farrell has an interesting perspective that makes people's hair stand on end. Most think he is just too far out in left field, but maybe there is some middle ground that helps explain what the Myans are trying to tell us.

He basically explains 7 nightmare scenarios and briefly justifies each one. His scenarios range from there is no exit and we will continue to experience never ending disasters to an endless 100 year bear market, warfare, too many people chasing too few resources, maybe it's just a dream and maybe there is a solution if we act correctly right now. Read his whole article here.

Market News

2008-11-25T10:01:00.000-08:00

Fed Chairman Bernanke says he is aiming to bring down mortgage and consumer rates. To assist in this endeavor he is adding $800 billion more to help home buyers, consumers and small businesses. The spigot is wide open.

Paulson says that market stabilization may take some time to work. Conservatorship is working as planners hoped. Paulson has no time line for seeking the final $350 billion. He says that the financing market is not working as they hoped.

Paulson announced that the $200 billion for the Asset Backed Securities (ABS) is just a starting point and will likely expand from there.

FDIC Chairwoman Bair says that they expect more bank failures. YTD there have been 16 bank failures, 5 times normal. Problem banks have risen 46% and FDIC insurance money has declined.

President-Elect Obama has announced Peter Orszag as the new Director of the Office of Management and Budget and Rob Nabors as the Deputy Director of the OMB.

Market News

2008-11-24T10:57:00.001-08:00

Shares of Citigroup soared 65% this morning as the Government bails the company out by issuing $306 million in loan guarantees and providing $20 billion in cash. Citigroup is getting $27 billion in preferred stock from the Treasury requiring it to pay 80% in dividends. Citigroup will also cut its quarterly dividend to $.01. This frees up $64 billion in capital for spending.

In comparison, the Savings and Loan bailout in the 1990's cost the government $210 billion total.

The Federal Reserve has pledged $7.4 trillion in rescue funding to banks with frozen credit. This amount is 9 times the cost of both Iraq and Afghanistan wars to date, it is 1/2 of the GNP of the United States, it amounts to $24,000 for every American and dollar bills placed end to end would reach Pluto at the outskirts of our galaxy.

Paulson may ask for the last $350 billion to bolster consumer credit.

Obama's stimulus plan may top $700 billion.

Bush has announced, along with Citigroups bailout, that he will make more financial moves as necessary to stimulate the economy.

GM seeks to cut debt and change union rules to gain support for U.S. aid amid speculation that one of the Big three are likely to fail.

Obama Names Economic Team

2008-11-24T10:18:00.000-08:00

President-Elect Obama has named his Economic Team. As expected he chose Federal Reserve President Timothy Giethner as the Treasury Secretary. Giethner help managed Wall's Streets meltdown earlier this year, overseeing the purchase of Bear Sterns by JP Morgan, the bailout of AIG and the bankruptcy of Lehman Brothers. He was appointed the Fed President in 2003.

Larry Summers will Head the National Economic Council. Summers served as Treasury Secretary in the Clinton Administration. He was chief economist at the World Bank from 1991-1993 and he taught at Harvard.

Christina Romer was chosen to be the Head of the Presidents' Council of Economic Advisors.

Obama also announced Melody Barnes as the Director on the Domestic Policy Council and Heather Higginbottom as the Deputy Director on the Domestic Policy Council.

Saturday, Obama offered an outline of his economic recovery plan to create 2.5 million jobs by 2011, but decline to offer details or specific numbers until his newly appointed team has a chance to provide input.

Obama also talked about a $175 million dollar stimulus plan, but many analysts suggested the number will have to be much higher.

Strategic Petroleum Reserve

2008-11-21T12:45:00.000-08:00

The Strategic Petroleum Reserve (SPR) was created in 1975 in response to the oil embargo of '73-'74. The purpose was to prevent the economic effects of future temporary disruptions of oil supply to the United States and provide a safety net until supplies were restored.

The SPR is located in the Gulf of Mexico region and is capable of holding 727 million barrels of crude oil. It reached its highest capacity in 2008 at 707 million barrels.

Thirty years ago designers could not envision how this responsible idea could be used to manipulate market prices for huge windfall profits.

In 2001, President Bush issued a directive to fill the SPR to 700 million barrels, a level reached in August of 2005. Hurricane Katrina caused some drawdowns on the reserve, but it was restored in April of 2008.

The Iraq war began in March of 2003 in response to the events of September 11, 2001. The United States government felt going after the person responsible for the 9/11 attack would not necessarily protect the national security of America and decided to attack Iraq because they felt it was supporting terrorism.

On the chart on the right, it is evident what the Bush administration decisions had on the price of oil. A small decline occurred following the announcement to fill the SPR to 700 million barrels, but then began increasing as the purchases started. After the war started prices began increasing more rapidly on the fear that oil supplies could be seriously disrupted, despite the fact that the United States imports only about 1 million barrels of the 21 million barrels it uses daily from the Middle East.

After the Department of Energy announced plans to purchase more oil for the SPR in March of 2007 prices spiked sharply. Even after reaching its goal of 700 million barrels, prices continued to rise. Then Katrina hit and prices accelerated its climb. By this time, speculation and euphoria takes over. With oil approaching $100, then breaking through with very little resistance, the price rose rapidly on every announcement of possible supply disruptions.

In January of 2007, President Bush suggested in his State of the Union speech that the Strategic Petroleum Reserve double in size. This was on the heels of the Energy Policy Act of 2005 that requires the SPR to fill to 1 billion barrels of oil.

At the time of the speech oil prices had been declining and were at the lowest point they would reach until October of 2008.

After reaching $100/barrel and with no sign of slowing down, House Speaker Pelosi called on Bush, in April of 2008, to suspend purchases of oil to the SPR and help to ease prices of energy to the consumer, a move Bush previously opposed.

On May 12, 2008 Representative Peter Welch (D,VT) and 63 co-sponsors introduced SPR fill Suspension and Consumer Protection Act.

The DOE announced on May 16, 2008 that it would halt all deliveries to the SPR by July of 2008.

On May 19th, President Bush signed the bill into law.

Ironically, the price of oil peaked in July of 2008.

Could it be that Bush orchestrated the biggest conspiracy of all time? Sending the price of oil into the stratosphere for the benefit of his buddies, Dick Cheney, his father and their Saudi friends the Bin Ladens?

The announcements to fill the SPR and the start of the Iraq war; was it a plan to increase oil prices from $20 to $147 and reap huge profits in the process?

It seems that Congress knew that ceasing the purchases of oil for the SPR would ease prices as demonstrated by their actions in May of '08.

Since purchases to the SPR have stopped, prices of crude have plummeted to under $50/barrel, a level no one ever expected to see again. You be the judge.

Market News

2008-11-21T12:40:00.001-08:00

President-Elect Barack Obama is expected to announce his nomination of Hillary Clinton to the post of Secretary of State after Thanksgiving.

Citigroup denies rumors that it intends to breakup the company even as its value on the stock market drops below $20 billion increasing its credit risk.

GM is facing a cash squeeze and announces further production cuts.

President Bush signed into law an extension for the jobless benefits to unemployed workers.

GM is returning some of its leased jets, leaving just three in its fleet. It denies this action has anything to do with recent Congressional criticisms.

Speaker Pelosi rejects the notion of bankruptcy for the automakers.

Auto Bailout Support Disappearing

2008-11-20T15:55:00.000-08:00

Congress has scrapped the vote on the bailout for automakers due to a lack of support for the bill. Lawmakers want to see a plan before they are willing to give money to the industry. The House expects to reconvene in December to take up the issue.

In Anna, Ohio near a thriving Honda auto plant, citizens say Congress should not give the Big 3 bailout money. They say the companies should be allowed to go into bankruptcy. September Quinn, a waitress at the Inn Between says there is "something not right in the way they running their business, why should the American people have to bail them out if they can't figure out how to do it right?"

For the time being automakers are going to have to wait to see what Congress decides to do. There is a growing consensus that despite the cries for help and the warnings of societal catastrophe from the prophets of doom, that it may be better to send the companies into bankruptcy, allow them to restructure labor contracts and re-emerge stronger, more efficient companies.

Car makers shares managed to hold on to rallies they enjoyed as news of a possible bailout emerged, but the stock market sank to new lows as the two day sell-off seems to gain momentum.

Market News

2008-11-20T10:14:00.000-08:00

GMAC joins the ranks of financial institutions applying for bank status, making them eligible for bailout funding.

Pirates demand $25 million for Saudi's oil supertanker.

Goldman erases 10 years of advances as share prices slump below the IPO price.

JPMorgan predicts that the Federal Reserve will cut interest rates to 0% in January.

Jobless claims are at the highest level since 1992.

Congress is yet to approve a bailout plan for the automakers, but Congressman Bond says that a group of bipartisan lawmakers have agreed to a plan. The plan entails expanding the authority of the already approved $25 billion to be used for bridge loan purposes. Originally, money was to be used for re-tooling. Some Congressman want to see tight restrictions put on the money and some are still upset that the CEO's are not acting like they are in crisis mode even though they say they are. This was evidenced by their using private jets to travel to Washington D.C. instead of saving money by travelling commercial.

GM is down over 90% YTD and traded at its lowest price since the 1930's. On news of the rumor of a bailout plan, shares traded to session highs. Kerkosian aide York says that GM may have only weeks to survive, not months.

Oil prices traded below $50 for first time in 24 months. Prices rose to a record $147 in July as the U.S. added oil to the strategic oil reserve, since July the U.S. has stopped purchasing oil for the reserve.

Auto Exec Criticized by House Committee

2008-11-19T14:04:00.000-08:00

In a grueling day of testifying before Barney Franks' House Financial Services Committee, auto company executives endured a barrage of questions and criticisms regarding their request for another $25 billion to bailout the auto industry.

GM's Rick Wagoner said a failure of the auto industry would be catastrophic to the American economy. Auto CEO's stated that the failure of one of the Big 3 would have dire consequences to the others.

Congressional leaders tried to understand why giving the automakers another $25 billion would help solve their problems and how long the money would last. The CEO's would not give a straight answer as to how long the money would keep them afloat, but GM's Wagoner said they estimated GM could survive through next year with current funding.

Automakers were pressed for plans to curtail expenses and if they had contingency plans for bankruptcy. One lawmaker asked if the executives travelled to Washington in their private jets or if they flew commercially. They all indicated that they used company planes.

Although many lawmakers indicated the money would likely be forthcoming, they weren't happy about it and probably not going to vote for the proposed bailout plan. Congressional leaders are worried about who will come to congress next asking for a handout and aren't convinced that giving the automakers another $25 billion will stop the bleeding. How long will it be before they are back asking for more?

One house member raised the point that they could give 2 million small businesses $25 billion and possibly have a more positive effect on the economy than giving it to the auto companies.

Senator Bunning says he would prefer to give the auto companies money to assist them through their chapter 11 bankruptcy, hoping that a new and more efficient company emerges.

Al Qaeda mocks Obama

2008-11-19T13:46:00.000-08:00

Al Qaeda's number 2 leader mocked President-elect Obama on a web broadcast citing a "heavy legacy and crimes await" him.

Ayman al-Zawahiri criticized Obama's foreign policy on Israel, Afghanistan and Iraq, comparing him unfavorably to 1950's and 60's activist Malcom X.

There are videos of messages including speeches from Malcom X in the taped broadcast.

The speaker says that Obama's plan to pull troops from Iraq and send them to Afghanistan "is a policy that is destined for failure before it was born."

The message says Obama is the direct opposite of honorable Americans like Malcom X. The speaker says that Obama and former and current Secretaries of State Colin Powell and Condoleezza Rice fit the description of "house slaves", a term Malcom X used to describe African Americans who were subservient to whites.

The message reiterated the call to fight Western powers in the Middle East and to be "firm and resolute". The speaker says the enemy has begun to stagger so keep hitting him.

Begich Beats Stevens

2008-11-19T13:34:00.000-08:00

Stevens conceded the race for Senator of Alaska to the democratic mayor of Anchorage Wednesday.

Stevens was very gracious in his concession speech and wished Mark Begich well. Begich was ahead of Stevens by 3,724 votes with only 2,500 ballots to count. A recount could take place if the difference is less than .5% and Stevens would have the right to a recount regardless of the percentage difference if he paid for it himself.

Governor Palin congratulated Begich and said she looks forward to working with Mark on issues important to the State.

Stevens, 85, who was convicted for taking gifts from the oil companies and then lying about it on his financial disclosure forms said two days before the election that he hadn't been convicted of anything.

The full results will be certified the week of December 1.

The victory gives democrats 58 seats in the Senate with races in Minnesota and Georgia still to be resolved. If the democrats obtain 60 seats they would have a fillibuster-proof majority in the Senate.

Defensive Stock Plays

2008-11-19T12:03:00.001-08:00

Many analysts would agree that in today's market there are not many areas that will have good returns in the short term. Investors need to take a long term outlook if they intend to invest in the market.

If someone wants to put some money to work it is best to purchase stocks in defensive industries which would include consumer staples. People still need to eat, even as they put of luxury purchases. Here are a couple of ideas to consider:

Campbell Soup (CPB); Family Dollar Stores (FDO); Apollo Group (APOL). These companies may do OK in a down market since they provide services that people need no matter what the economy is doing. Even though they may enjoy profits it doesn't necessarily mean their share price will increase.

Clinton - Secretary of State

2008-11-19T11:56:00.000-08:00

Hillary Clinton would face a decision to pay off $7.6 million in debt before accepting a post as Secretary of State. The debt is left over from her presidential bid. Legally she can accept money from her Senate campaign committee account which would pay about $6 million of the debt. She can also legally continue to raise money to pay off the debt, but it would raise ethical questions that could marr her appointment.

She is not allowed to accept money from foreign governments and nationals, but she can accept money from U.S. lobbyists for foreign governments. Obama may ask his administration to follow his lead in accepting money from government sponsor coffers, which is to not use this as a source of contributions.

Rolling Back the Future

2008-11-19T11:03:00.000-08:00

GM and Citigroup are trading at 13 year lows. Goldman is trading at 6 year lows. Housing starts are at 791,000, the lowest level on record, permits are sliding as well. Gas Prices at the pump have come down some, but not as much as the lowest futures prices since records started being kept.

GM plunges 89% YTD; Ford is down 79% YTD. Citigroup and Alcoa have both tumbled more than 70% YTD.

This is just a very small list of lows that have been happening for all stocks in the recent past. It seems that prices will continue to slide and the opportunities to accumulate stocks at the lowest prices we've seen in a generation continue to increase. Patience is required to get the best bargains. We've got a ways to go to the bottom, in this market I think it will be better to be a month late than a month early.

Other market insights:

The threat of ID theft is on the rise as web users ace a jump in 'Matware' Spyware programs.

NATO won't increase its anti-piracy fleet even as the Saudi's encourage future piracy by negotiating ransom demands with the pirates that recently hijacked their oil tanker.

Automaker CEO's testified before Congress today, GM's Wagoner said that if the auto companies fail it would be catastrophic to society. Senator Bunning would like to use federal money from TARP to assist the auto companies through the bankruptcy process, hoping they will come out of it better, more efficient companies.

NASA astronauts watched a tool bag float away as they were performing their high tech grease job. Someone apparently forgot that things float in space and didn't tether the bag.

16 banks have failed so far in 2008. Typically about 2 or 3 banks will fail in a year, none failed in 2005 and 2006.

Paulson, Bernanke, Bair Testify

2008-11-18T11:09:00.000-08:00

Today Secretary Paulson, Chairman Bernanke and Chairwoman Bair testified before the House Financial Services Committee Chaired by Barney Frank. Committee members were a little irritated by the fact they voted for a bailout package under false pretenses.

Some members felt duped by the bait and switch calling it the 2nd largest in history. The largest bait and switch was the invasion of Iraq according to one House member.

In response, Paulson said that markets changed materially. That banks were failing, events in Europe worsened and the credit spread widened. These factors justified a change in strategy for the $700 billion bailout plan.

Paulson said he feels the program seems to be working.

Bernanke said he sees some signs that the credit markets are improving, but more is needed on mortgage modifications. He also said that credit conditions are "still far from normal".

Chairwoman Bair has a system for modifying loans that the FDIC is utilizing and urges Congress to develop a plan to avoid 1.5 million foreclosures.

Paulson said he has not said no to mortgage help in the TARP, but in a prepared statement at the beginning of his testimony he said he is not in favor of using TARP funds for foreclosure mitigation because, and get this, that was not the intent for the use of the funds when he sold the concept to Congress.

One House member was very upset that a bank in his district could not get a response when applying for TARP funding. He said that the bank was in a relatively healthy position, but got the run-a-round when attempting to apply. He wondered why some banks that received money didn't even ask for it and didn't need it to survive. Paulson said that TARP funding was not designed to prop up weak banks only healthy ones and he wanted to get it to them before they needed it, not after.

This logic sounds familiar. Banks tend to lend money to people that don't need a loan and the ones that do can't get a loan. I can understand this philosophy, since banks want to get repaid and people with money are more likely to pay it back. But if you're trying to save the economy from financial collapse, giving money to healthy banks and not to banks that need some help from failing lacks logic. That's like saying bank failures won't hurt the economy. If that's the case then what was the point of TARP in the first place?

The Auto makers are seeking funding as well. Paulson says that funding for an Auto industry bailout was not the intent of TARP. TARP funding was intended to bailout the financial industry, although as we've heard from Paulson, only the healthy portion of the financial industry.

Paulson said Congress should consider modifying the $25 billion offer from the Department of Energy to bailout the Auto makers.

Paulson says there is no plans for the remaining TARP funds, yet.

In other news:

The U.S. producer prices plunged 2.8%, most on record.

Auto makers will testify before Barney Franks committee this afternoon to push for aid. In the meantime they sell assets to raise cash.

Blackrock announced job cuts for the 1st time in its history.

Home prices drop in 80% of U.S. cities due to a rise in foreclosures. Paulson says more needs to be done for homeowners.

Berkshire Hathaway trades at a 2 year low, trading below $92,000 share. Berkshire's credit risks soar on their AAA rated debt.

Airlines are looking for buyers of their idle outdated aircraft. They are being forced to absorb storage costs and are shopping emerging markets to unload excess inventory.

Idle planes does not bode well for plane makers like Boeing, whose Dreamliner delays are a major setback for the company. Shares are falling.

Insider Buying

2008-11-17T11:24:00.000-08:00

Insider buying of their own shares hit $1.4 billion in October. Usually when this happens the shares of stock in those companies rise. Between 1988 and 2007 this has happened 8 times and the market rallied each time. But this time, as with the last two times in August of 2007 and March of 2008, the market declined one month after the purchases. Maybe insiders are a little over optimistic or maybe they see their companies shares as a good value, but either way the market is punishing them.

Speaking of punishing, the SEC has charged Mark Cuban with insider trading of mamma.com shares in 2004. Cuban sold 600,000 shares at that time.

In other news:

The NABE economists, 96% of them, now agree that the U.S. is in a recession with unemployment to rise in 2009 to 7.9%.

Citigroup is announced it will layoff 50,000 workers, that's down 76,000 from its peak.

Goldman Sachs announced they will forego executive bonuses. These executives have received bonuses in the tens of millions annually for years, so it's hard to feel too sorry for them. At some point you have to wonder what will I do with another 10 or 20 million. On the other hand to be fair, the costs of operating yachts and jet aircraft can be very expensive with the pilots, captains, deckhands, laborers, parts and supplies, food and don't even mention the cost of gas to get to the next hot vacation spot. Whether you feel sorry for them or not, I'm sure they won't have to worry about putting food on the table.

Credit card late payments are rising, Target's credit card late payments are rising faster than the average at 7.7%. This retailer's been in the news a little too much lately with negative news. In September and October, companies that were in the news didn't fare well.

If you are looking for a place to park some money, defensive stocks are in the healthcare and comsumer staples sectors.

Auditors are removing the "doubt" language from Las Vegas Sands audit, meaning that the audit will not contain language indicating that the Sands' operation as a going concern is in doubt. Shares of Sands rose on this news.

Auto makers have not responded well to the $25 billion offers due to the 'strings' attached. They have yet to take the money. The Senate is not likely to approve the broader bailout plan with a vote expected this week.

Obama on 60 Minutes

2008-11-17T11:18:00.000-08:00

President-Elect Obama gave his first post election interview on 60 minutes. As expected his discussion topics centered around the economy, but he touched on a wide range of issues including a peek into his family life. Follow this link to view the complete transcript.

YOUR $$$ Can Make 1,000% in 10 Months:

2008-11-14T14:10:00.000-08:00

Buy XYZ Stock NOW to Own USA's #1 Oil Stock

Sell every major oil stock you own right now, then buy every share of XYZ stock you can get your hands on up to $X price.

Have you ever got one of these letters in the mail? Have you ever bought the stock that they were recommending?

These sales letters are well written and very compelling, but do their recommendations ever deliver what they promise? I've been getting these letters for years and I can't say I recall any stock that was ever bought out by a major company sending the penny stock skyrocketing.

I have purchased a couple of these recommendations and made some money too. But you have to be careful if you're thinking about jumping in on these risky investments. Most of these companies don't have any revenue and have never turned a profit. The sales letter is designed to push the price of the stock higher by enticing wary investors to call their broker the next day and begin buying.

I'm speculating that someone, whether it's the authors of the letter or someone else, has purchased a gazillion shares of this stock for pennies and now they are trying to get people to push the price up at which point they will start selling for huge fortunes.

I just received a letter and even though it is dated November 2008 and suggests that the stock will enjoy a spectacular rise in the next 10 months, I have received this same letter promising the same thing for the same stock over 10 months ago.

The letters are very compelling and make good arguments for why the stock should rise, but really I don't know how much, if any, of this information is true. I'd be jumping into the market completely blind by buying this stock. Sure I can do some research on the company, and I have, but usually the company is so new or has little to no financial information available, it's impossible to make a decision on that alone.

Now if you feel so compelled to try buying one of these 'shot in the dark' stocks, here's what you should look for.

Remember, these sales letters are designed to drive the price up. It's likely that when the letter was originally written the price of the stock was at or near the price suggested in the letter, but it may be higher by now, since it is unlikely that you are the first to receive this letter.

Get online and find a website that you can chart the stock symbol. I use Marketwatch.com. If the stock has already risen substantially on high volume and looks like its peaked and is turning back down, then stay away from this stock unless you like losing money in the market.

If the stock has started to move higher, but has not moved up substantially, then you might be able to take some high risk money you don't care if you lose and plunk it down on this trade.

BUT, watch it carefully and do not be afraid to take your profits. This is NOT a long term trade, it is a very short term trade that could last as little as a few days. Once the stock seems to run higher in a frenzy, get out! That could be defined visually by a large intraday trading range and extremely high volume uncharacteristic of the stock.

I once was fortunate enough to get in on one of these stocks trading around $4.5 - $5 at the time. The Stock ran up to $15, I sold it at $14. It now trades for under $1 and it traded for under $1 even before the stock market wipeout.

Good trading to you.

FDIC proposes a plan to modify loans

2008-11-14T12:37:00.000-08:00

The FDIC, in a break from Bush Administration's official stance, posted a proposed plan on its website to use TARP monies to restructure 2.2 million mortgage loans. Two days earlier Secretary Paulson rejected the idea to use funding from the $700 billion bailout monies.

The Treasury says they are aggressively searching for a solution to reduce escalating foreclosures. The Treasury says that use of the bailout money is to eventually bring a return to the Federal Government and the FDIC proposal does not meet this requirement, it's just a spending proposal.

The FDIC's plan would guarantee the 2.2 million modified loans — mainly risky loans made to borrowers with weak credit or small down payments — through the end of next year. Borrowers would get reduced interest rates or longer loan terms to make their payments more affordable.

FDIC Chairwoman Sheila Bair says that the housing market will enjoy more stability if we can avoid more foreclosures.

FDIC says that the lending industry will be more willing to back the loan modifications because taxpayers will absorb half the losses if the borrower defaults again. Also, loan servicing companies would be paid $1,000 for each loan they modify.

Clinton Mum on Cabinet Speculation

2008-11-14T12:27:00.000-08:00

In a speech in Albany, Clinton said she was "happy there is so much press attention and interest in transit", but refused to speculate on whether Barack Obama is considering her for a cabinet post.

Clinton said, "let me just say that I'm not going to speculate or address anything about the
president-elect's incoming administration."

Still, a meeting is rumored to be scheduled and everyone awaits an announcement on whether Clinton will make her way back to Washington.

Market Insights

2008-11-14T10:34:00.000-08:00

Here are some market headlines for November 14th.

Retail sales dropped most on record in October, a whopping 2.8%.
Freddie Mac lost over $25 billion and is seeking $13.8 billion in funding as their net worth turned negative.
Bernanke says that challenges remain ahead, but the worlds central bankers stand ready to respond in any way needed.
Buffets recent purchases of Goldman Sachs and GE are down 46% and 36%, respectively, resulting in a paper loss of over $3 billion dollars.
Top Republicans oppose the Auto industries proposed bailout plan, which could hasten their failure.
U.S. consumer confidence figures are at a 28 year low on job losses.
McDonalds is planning on adding 175 more stores in China as they complete their 1,000th today.
The Dow slides 8.5%, so far, in November, following a 14% drop in October.
Analysts see dividend paying stocks as the bright spots in the market as yields are very attractive due to stock price drops.

Stock Market Rebounds!!!

2008-11-13T13:05:00.000-08:00

In a 900 point swing the Dow traded below 8,000 after being positive on the open, then began a rally that took the Dow to a 552.51 point gain to finish at 8,835.17. Remarkable! Some analysts believe this reversal means the market has put in its bottom...at least for a few weeks.

Volume was about 5oo million shares above average. In terms of dollars, the Dow's swing amounted to a gain of over 600 million dollars after losing more than 300 million.

It's still wise to be careful investing at these levels, but now may be the time to test the waters.

Click on title to learn how to become a better stock market trader.

Volatility Returns to the Market

2008-11-13T11:26:00.000-08:00

The Stock Market, after opening higher, began selling off and sinking to lows not seen since March of 2003. The Dow traded below 8,000 and the S&P sank to 816. That had put the S&P on track for its worst year since 1931.

Then, out of nowhere, the market began retracing its steps and in less then 1 hour erased its loses and was actually in positive territory. By 2:30 EST the market was making new highs for the day. Volatility took a short breather, but seems to be making a comeback.

Hearing of Hedge Fund Managers

Hedge Funds managers testified before Henry Waxman, Chairman of the House Committee on Oversight and Government Reform. Hedge Funds have lost $100 billion in the last year during this bear market.

Billionaire George Soros testified that regulators should reactiveate margin requirements and blamed excessive deregulation has inflicted great losses in the hedge fund industry. Soros said that the amount of money hedge funds manage will shrink in the near term. Hedge funds need to be regulated within a framework, but warned legislators not to go overboard, Soros said.

All the hedge fund managers present supported higher margin requirements and reducing the leverage that financial institutions use to make money. They said that the high rates of leverage intensified the losses and led to capital shortfalls when market conditions deteriorated.

GM's Bailout

General Motors is seeking cash for ensure its survival. Twenty-five billion is the number being tossed around right now, but President-elect Obama says $50 billion is needed.

One Congressman says that his constituents have concerns about giving people making $75/hour with $250,000 bonuses money to save their company. He disputes claims that GM is "too big to fail" because it implies that some companies are too small to save. Saving large companies just makes them bigger and subject to higher a degree of systemic risk.

Congressman Cummings says that U.S. can't let the auto companies fail because 1 in 10 jobs in America are connected to the auto industry in some way. While Cummings is not thrilled with Treasury Secretary Paulson's bail and switch of the bailout money, he does think it is wise to change the strategy from purchasing troubled assets to providing capital to companies.

Cummings said that the auto industry needs to do some belt tightening and it needs someone to monitor the industry, kind of like an auto industry czar like Obama has mentioned. The labor unions are also going to need to cooperate if the industry is going to be able to turn around.

Bush Speaks

President Bush was speaking at the Manhattan Institute about supporting the free market system and had this to say, "I'm a market guy, but not when we're faced with a Global Meltdown". Telling people we're facing a Global Meltdown isn't very supportive. The markets began to sell off on his speech, but then recovered and continued higher. I can't wait to see if Saturday Night Live picks up on that comment.

Information You May Not Have Known About Heart Attacks

2008-11-12T16:44:00.000-08:00

Heart Attacks And Drinking Warm Water

The Chinese and Japanese drink hot tea with their meals, not cold water, maybe it is time we adopt their drinking habit while eating.

For those who like to drink cold water, this article is applicable to you. It is nice to have a cup of cold drink after a meal. However, the cold water will solidify the oily stuff that you have just consumed. It will slow down the digestion. Once this 'sludge' reacts with the acid, it will break down and be absorbed by the intestine faster than the solid food. It will line the intestine. Very soon, this will turn into fats and lead to cancer. It is best to drink hot soup or warm water after a meal. Common Symptoms Of Heart Attack... A serious note about heart attacks - You should know that not every heart attack symptom is going to be the left arm hurting . Be aware of intense pain in the jaw line . You may never have the first chest pain during the course of a heart attack. Nausea and intense sweating are also common symptoms. 60% of people who have a heart attack while they are asleep do not wake up. Pain in the jaw can wake you from a sound sleep. Let's be careful and be aware. The more we know, the better chance we could survive.

Stock Insights

2008-11-12T10:48:00.000-08:00

Here are some stock market highlights:

Best Buy cuts profit forecasts
GM is judged as too big to fail
Deutsche Bank says that the TARP's $700 billion bailout can't meet the phenomenal demand
Russia's crime rate has risen as more citizens are carrying cash due to the world's financial crisis
Macy's loss is smaller than expected
Global economic confidence remains at rock bottom levels
Singapore government says they won't bailout Las Vegas' Sands project
The Fed says regulators are to take action when bank dividends get too high
Persian Gulf shares decline led by Tamweed
Crude oil falls to 21 month low, trades below $57/barrel
American Express converts to a bank holding company and seeks $3.5 billion in bailout funding
Here's one for environmentalists - the U.S. Supreme Court rejects concerns over whales and allows the Navy to continue use of sonar

Paulson says banks must continue to lend money to help stimulate the economy, or in case no one has told him yet, they need to start lending.

Paulson has identified three areas of uses for the remaining TARP funds. TARP which stands for Troubled Asset Relief Program has yet to use any funds for troubled assets. Now, Paulson is abandoning the plan to buy troubled assets and shift the focus to supporting asset back securitization. The second half of the $700 billion will be spent to 1) reinforce the financial system; 2) support asset backed securities and non-bank credit, i.e. credit card debt, student loans, auto loans; and 3) explore ways to reduce risks of foreclosure.

Paulson is comfortable that $700 billion is enough to get the economy back on track.

The Master Trader

2008-11-11T19:01:00.000-08:00

Do you want to learn:

The shortcut secrets to day trading profits you don't know about...

How to cream the market for all it's worth day in and day out...

How to turn your passion for investing into a full time business that can set you up for life...

Cash in on the markets like the Wall Street tycoons with this almost fool-proof system. Anyone can use it to exploit the hidden trades (I call them "set ups") lurking in the stock exchanges around the world.

This is how the "insiders" play for big money in the investing game. Find out
how you can join us too...

You don't need a lot of money to get started. I mean, this is not like buying property, for example, and being on the hook for a monthly mortgage and other cash-draining expenses.

The time required to trade is minimal. Again, unlike building a conventional business, grinding out endless hours six or seven days a week. You can trade part time or full time.

Returns are almost immediate. I'm talking "fast cash" in the sense that trading allows for quick liquidation. You can convert trades for cash within seconds or minutes.

It's easy to learn how to profit from the stock market. Years of experience are not necessary. The critical factor is accurate information from someone who knows how to milk the markets.

Follow this link and Learn How to make hundreds of dollars of profit each day as a skilled day trader, using your own trading system — no matter if the market is up or down!

Forex AutoPilot

2008-11-11T18:45:00.000-08:00

You’re about to uncover a new, never-before-released program that makes the author $100,000+ Per Year -working from his kitchen table. This breakthrough is proven. You could be earning truckloads of money within hours…Everyday!

You probably found your way here as you’re interested in running your own profitable home-based business or a way to simply earn some extra income in your spare-time.

But if you’re serious about making a full-time income from the comfort of your own home -- pulling in more money than you ever dreamed off, and with no more than 2 -3 hours work, then you should continue to read on...

Would you be interested in learning the exact step-by-step techniques, that someone with no experience can use to make over a thousand dollars online -- every single day?

Would learning these insider secrets motivate you to provide a more financially stable environment for you and your family?

If you’re thinking that any of the above sounds impossible? Too good to be true? Think again!

What if today, I were to give you the exact knowledge and training that would allow you to sidestep your competitors and super-charge your income to a six-figure salary and beyond?

Would you sit back, yawn, and let the opportunity pass you by? Or would you sit-up, take notice, and grab onto a future that didn’t revolve around you slamming your head into a desk for 8 hours a day?

The fact that you’re here is proof enough that you’re finally ready to throw off the shackles of the 9-to-5 and start your new life earning a part or full-time income from the comfort of your own home. This is a REAL business you own and run and it will produce you passive income like nothing else on the planet!

Follow this link to learn exactly how you could be financially independent very soon.

Stock Insights

2008-11-11T10:43:00.000-08:00

Online Travel stocks are down 54%-74% YTD
Circuit City got a $1.1 billion dollar loan in a last ditch effort to stay afloat
The Sands in Las Vegas got a $525 million dollar loan from the Adelson Family, they seek more
Stillwater Mining plunges most in 5 years on lower profits
Starbucks retreats from its 40,000 store goal as 4th quarter profits expectations plunge
Goldman Sachs down 50% in last month, 70% YTD
Diamond prices are poised to drop for the first time in 5 years as unemployment rises

Fuel Factor

2008-11-11T10:36:00.000-08:00

Is the drop in gasoline prices over? Historically the price at the pump is about 50-60 cents over the futures price of unleaded gasoline on the futures exchange markets. The difference in prices is due to taxes and profit margins charged by the various distributers and jobbers that move the gasoline from the refiners to the gas stations. As oil was in a free fall so was the futures price of gasoline. The price at the pump lagged, but is now closer to the historical average.

In some places in the U.S. gas at the pump is just below $2.00. Today the futures price is $1.29. Either the futures price will rise slightly or gas prices at the pump will drop slightly more. It appears that the drop would be nearing a bottom and will likely rise with any shock in the oil markets.

Stimulus Package

2008-11-11T10:19:00.000-08:00

Analysts say that a stimulus package is needed sooner rather than later. The size of the package could approach $200 billion, but may come in two phases. It is widely held that the components of the package will be for tax cuts, infrastructure, income security and money for the States.

It would be likely that the first phase would be $75-100 billion and include cash, unemployment benefits and medical aid, while the 2nd phase would be tax cuts. If there is no package, many believe that the downward spiral the economy is currently experiencing will worsen. The hope will be that consumers spend the money this time rather than stash it in savings accounts.

Many ask how can we afford to do another stimulus package? Others respond, how can we not afford it? The alternative is a severe deflationary period. With prices so high now maybe that's not a bad thing.

Additionally, analysts believe that money should be provided to the Auto industry. Not for the Auto industry itself as much as for the suppliers that would be hurt by the Auto industry's slide. Many feel that the Auto companies made the mistakes that put them in this hole so they should take their medicine for it, but it would hurt hundreds, if not thousands of smaller companies that supply the auto companies.

Government Bailout Widens

2008-11-10T13:40:00.000-08:00

Today news of the AIG bailout re-negotiation was announced. AIG will now be getting $150 billion dollars from the federal government. The plan includes a capital investment of $40 billion which the government will receive preferred stock and a 10% dividend. Additionally, AIG only has to pay back $60 billion. That's a heck of a deal there, maybe more firms should seek government bailout funding. But that's ok because AIG believes they will be able to get good prices for the assets they plan to sell.

Who's next you ask? Well, the housing industry is looking for a bailout. It's this industry that is right in the middle of the cause of the economic collapse so if anyone should get government funding it's them. Many analysts believe the economy won't recover without the housing market turning around. You'd think this would be a priority for the government.

Fannie Mae lost $25 billion more, so they're looking for more bailout money too.

General Motors, whose bankruptcy is likely even with bailout funding from the government, is looking for $35 billion. That's more than the bailout of Chrysler in 1980.

Circuit City filed for bankruptcy today to add to a list of retailers going out of business before the holiday season is even here. They plan to stay in business while they're working on a restructuring plan. Twenty three percent of their stores are closing and they plan to layoff 7,500 workers.

Gerald Cassidy from RBC Capital Markets says that there are likely to be more problems with the top 25 banks in the 4th quarter. Regional Banks are faring better primarily because they were not big participants in the sub-prime lending market. Cassidy believes that the TARP (Troubled Assets Recovery Plan) will solve our problems...eventually.

The upcoming holiday shopping season is expected to be very weak, this could and likely will lead to more retail bankruptcies.

Have a nice day!

2008-11-09T13:54:00.001-08:00