Money sinners in 2008, same old, same old and two good advices

If hell exists and if some are fearful of going to be dammed in eternity, it seems that it misses the point with some of the “experts” that distribute ideas via the talking tube.
Let’s start by the outright liars of 2008, who happen to be the same of 2007 and I am confident they will be the same of 2009.
First the officials, those who are running the show:
The grand prize of misrepresentation and outright lies goes to Fed Chief Greenspan. It took a Congressional hearing for him to accept error. His following act Chief Bernanke is not doing better.
Chief Bernanke blunders with the economic status of the country and continued assertions of "everything is fine" until he got tomatoes thrown at him and had Cramer –also a sinner- screaming like a maniac, it was too late for the economic meltdown and actions to be put in place.
The Secretaries of the Treasury in unison were also big time sinners. The prize has to go back to the pernicious views of Robert Rubin who castrated any regulation with the help of the Senators from New York Schumer and Clinton. This triumvirate set the political doing for the present fiasco.
Secretary Paulson needs to get the prize for "idiocy in economics and purposeful erroneous public statements". The Secretary got caught in so many blunders that had to beg the Chinese and the Saudi clan every other week for a bail-out of the treasury debt, while telling everybody and Congress that he did not see any sign of distress in the economy. While the Secretary had his counter part saying the opposite! Bloomberg news found Mr. Paulson irrational talks funny; to the extent of creating headlines that were incomprehensible.

To the guy with the sign “the buck stops here”, well, no comment, I leave that one to your own assessment.

Big air heads with fancy titles in the talking tube:

Again the “you better ignore him or else” prize, for the past decade and for the next decade goes to the king of misinformation and intention to misrepresent the reality goes to: Lawrence Kudlow of MSNBC.
I am really sad for Kudlow and for having to live a life so full of air and deception to accumulate personal wealth at the expense of the less powerful.
Kudlow is the ultimate insider, whom benefits from others misinformation, he shows it every night. The power of deception in Kudlow’s TV show has no parallel.
Be careful about following Kudlow’s or his buddies forecasts, the probability of been is wrong is almost assured, not because they are not trained or uneducated, but because they are demagogues above anything else.

Cramer is the next in winning the “be careful how you interpret me” prize.
I like Cramer rants, he is sometimes too darn right that one has to wonder if it is his sanity or insanity talking.
The danger with listening to Cramer is that he needs to run a TV show and telling the truth will not gain him access to the people ne needs to get his business going. Cramer has the problem of "the happy herd" mentality, if Kudlow is goldilocks economy, Cramer is "there is bull market somewhere" . Cramer is is afraid the herd will disband if he cries wolf. If things are bad Cramer has the tendency to say is ok to keep saying something even if he is wrong. Think of the show as entertainment with the same purpose of any other TV show, that is to get you watching not matter the content.

To start the New Year after all the bail-outs etc., if you think this is not going to affect you, just wait and see.
So worry a lot about your own comfort level, and start to question how much you have been put to task with your future, and ask of your elected official’s questions, you might find the answers beneficial to have a better plan in 2010.

Now my personal and two best wealth building ideas of the next years:

First listen to a few honest people like Profesor Nouriel Roubini, economist Peter Shiff’s, and the foudner of Vanguard funds John C. Bogel forecasts and opinions. Over the years this trio are shown to be honest and truthful.

Second, be aware of all you buy, put your money to work with america. STrategy is to buy only if it is all “Made in the US” and your all staples should come from less than 100 miles radius from where you live.

If by the end of 2009 you have not save money versus 2008 and help your fellow citizens, throw me a note and tell me why you think it did not work.

Prosperous 2009 !!!!

Ponzi Schemes and Other Dreams of Fortune

Mr. Madoff has brought to the forefront, again, the sad reality on which the present regulatory and investment ethics are grounded, and teh sad acceptance by all.
If you think nothing can be done, I suggest you write a note with your feelings to the Senate Banking Committee.

Express to your elected officials a yawn, yeah or nay, for tough regulatory environment. Either way, let regulators know what you think of the present situation, at this point your opinion counts, amid the flagrant set of scandals they want to hear do people care or it is just another short memory whiohc people will forget.

Let’s give credit to Mr. Madoff.

It was himself who tipped his family and senior employee of the charade. No a single regulatory agency got even a whim of what was cooking, they were to busy covering up the “real” banks schemes.
Do not forget to send a kick in the butt to the SEC for failing to recognize most of the investment and bank practices are no dissimilar to Mr. Madoff scheme. Intentionally, I used the word scheme with pure intent as way to deceive others.
If Mr. Madoff is going to go to jail, thus, the same should occur to the rest of schemers in the banking industry. Those banks receiving billions of dollars in tax payers money are much not different, they too would have collapsed as Mr. Madoff scheme.
Government has failed to investors, citizens and the country. Elected officials continue to fail to stop tax payer’s money use in the cover-ups, from the bank industry too many obscure financial industry pyramid schemes.

The big difference here is that one is operating under the umbrella of regulation and this is only 20% as recognized by the SEC, and 80% is unregulated in many forms of schemes.

Mr. Madoff major case against him is that he ran and unregulated operations, the same were SWAP and many CDOS and off the books operations in most banks and investment houses around the country.

We only have a solution that is to replace in mass all head regulators for failing at their jobs. That must include the Federal Reserve chairman whom was a proponent of such unregulated instruments.
When you fail to discipline you end up with self-destruction and that is not a good path to follow.

We all have dreams of fortune.
It has become so prevalent to scam around investments that it is an ethical stand that is perceived as acceptable and to some extend considered as part of the “process” to the leaders of the country.
The latest research conducted at major universities from where the next generation of leaders will come such as Harvard, Yale and other Ivy League schools shows that we are in ethical trouble.
The latest study shows that most MBA graduates are willing to comprise their ethics for money. When money is so easy to take from others in a questionable and illegal way and the penalty is so lame, the risk-reward ratio is tilted towards the unethical. Who is going to take the task of reeducating and creating tough white collar penalties for people who affect social well been.

How Much Golden Garbage Do We Have?

So far bank and governments have bail out executive bonuses, golden parachutes, end of the year bonuses, but hey have left holding the bag to around 6,000,000 families.

The problem with the present situation and all the talk about recession and probably depression is that a massive amount of money has been redistributed from most people to a few using a system of wealth transfer that is based in ideological falsehoods.

How much financial garbage needs to be dumped to the always trusting and always unsuspecting citizen.
The math is quiet simple the governments around the planet allowed financial institutions to move out of their books trillions of dollar financial garbage in the form of products that were called investment s to a rate of 32 times the actual asset value of the investment.
So far we have siphoned around $6 trillion to $10 Trillion into banks and other institutions and the stock markets around the planet have eliminated around $32 Trillion of wealth. So how much more is left?
The answer common answer these days is: unknown the amount of leverage left in the system.
I think I have an answer based in the amount of financial garbage “exports” generated as part of the profits reported by Wall Street firms.
The magic number lay between $210 trillion to $250 trillion, so far of that amount 35% is consider to be “toxic” in other words worthless no even to profit as garbage dump, the rest has three components, and have been performing so far. First, is considered prime government debt obligations –here is where you are expected to pay your taxes to pay the bondholders-. Second, corporate operating debt –here is where workers are expected to work for less to pay bondholders. Third, is your mortgage and other consumer debt – here is where you are expected to pay your mortgage and credit cards as you have been doing all you life.
The scary Halloween components of such debt are the toxic part, so far we have only clean up around 20% of the considered toxic. We have around $22 to $25 trillion of garbage to clean up, basically the wealth accumulation of the country for the next 50 years or so as long as we do not get more in debt, in that case the USA will have to default on its debt obligations and more serious global disaster will occur. No a likely event in the next 20 years but a very probable event after that, unless a massive program of government intervention takes place around the planet.
Who in heavens would have ever thought that the right wing of the conservative party under Bush Jr. will make the global economic situation evolve into a massive interventionism that will create the largest socialization of the economy?

It started by the federal government under the auspices of the financial lending lobby, and continue with banking lobby to permit leverage of those assets more than the 12 times that the law had on the books and allowed to increased to 32 times leverage. Today there is not a single government in the planet who is not in the brink of disaster thanks to the control by lobby and the elected official’s lack of independence.

Selling Golden Garbage

How so many smart Ph.D.s MBAs and government institutions failed to control the amount of financial garbage sold to the public., destroying people's futures and pensions.
The answer is no simple, but the intentions are, the main intention was to create something that will generate commission thus bottom line profits from which those paid for running those outfits will get billions of dollars in pay.
Thus the answer is greed. Because greed is good for those who can have access to the money of people’s pensions assets, offered by the managers of those pensions, who usually are golf buddies of the sellers of financial garbage.
Here where is lies the problem to the potpourri of obsolete controls. When humans are left to run amok the results are obvious, they can range from plain thievery to noble laureates creating untested theories that can be catastrophic for the rest of society.

When Milton Freedman the economist Nobel Laureate in the 1950’s from the school of Chicago economics, started to launch his theories it took its laureate status for schools to start to teach the premises of government regulation was bad, and the market will be self-regulation mechanism will correct themselves. The problem is that both premises cannot work without allowing destruction and there is not will to allow destruction of capital when affect those who are the wealthiest and control 80% of the national assets of a country. Much less when there is no economic security for very large part of the population. Specially, for those who are over their productive life, most people after age above 65 to 70 is a very difficult endeavor to earn a decent living. When the Freidman theories are apply to society at large they fail to account for very large part of the population as variables. Politically they are theories that are easy to manipulate and create thriving fallacies that seem to be of pleasant tone fueling the need for greed.

Today, we are confronted with a massive privatization of risk driven under the Friedman economic theories, has made the speculative market a large part of the economic global structure, this risk pervasiveness is proving toe be pernicious to human lives and pursue of a society well-being at large and individual’s social development.

The solution is quiet simple, as Freidman pointed out let the consequences of greed be dire and stop the government intervention. Politics of convenience have allow Freidman be use when usurpation of wealth participation is convenient but stop the full application of the theory when is not.

It begs the question, why in heavens you want to elect politicians who are constantly working against your economic interests?

Where are we going

Without speculating much and looking at the sequence of present events, surrounding America’s foreign policy and its stand in the global market of power, one has to worry, seriously, worry about the present and future.

Most western countries have develop a culture that has eliminated ingredients to foster debate and dissent, to support a social format that support a class system that is probing to have more cracks than the present obvious crisis.

America has lost its capacity to foster varied views and debates and has entrenched itself in a very narrow set of views, this views are becoming every passing day more evident out of synch with the needs of most Americans.

There is not debate about the present standing of a America. It is an important piece of conversation to have a national level, for all Americans. Out the radical view it is America’s way or the highway, that was true ten years ago. Now it is no more a feasible and true view of acting, the marines cannot bring more contract to Boeing as they used to, of to Chiquita Banana a new banana republic with a corrupt dictator in charge to exploit the local assets to be brought back to America‘s shareholders and corporate bosses. The Chinese, The Russian, most of the European Union and in some cases the African union, are acting that indicates America power is not absolute anymore and needs to be share in all aspects. So far they have chosen to use the power of capitalism to put the brake on the United States, as the Chinese did with the bond market of the European Union with they currency policy, or Latin America asserting equal trade conditions and renegotiating past (most Latin American leaders agree to qualify those contracts as abusive) corporate contracts to exploit their natural resources.

In the eyes of citizens of the rest of the planet, there is a consistent view of disapproval of America.
It used to be that the populist line was “everybody complaints about America, but all want to come to America” that was true until ten years ago, now what we are seen is a major shift, mostly due to economic equality. As an example, the minimum wage in Portugal is 30% higher than in the US, and in Portugal with the minimum wage a family of two can be above poverty level, and afford a decent way of live, in the US with minimum wage you will need both members of the family to work and still be under pauper conditions. Those are hard facts and the adjustment is spreading to most Americans, and it is not been accepted as a new way of life.
Among leaders of the same people who disapprove of America present standards, there is consensus of approval, but it is for a very different reason.
Each country has a reason to go against the will of their own citizens, the most interesting is the present position of England. The English government continues to be label by Britons as a lap dog of the Americans, but there is more behind scenes that the eye can see.
British ruling class by aligning themselves, what it seems to many blindly, with America, they are actually doing something much more important. British rules are asserting their economic power in the form of a new renaissance of English colonialism, by accumulating political favors. Those favors are getting cash-out in the form of corporate favoritism and American military support to expand corporate penetration in countries in which England can exert very little influence by themselves, but they can assert and obtain trade preferences by using America’s military and in many cases dictator rules under the control of America’s protection. The list of those countries is large but the most important are those that separated from the former Soviet Union.
Other countries like China are using their fast gained economic power to assert preferential market access.

There must be a national debate about how to confront the next years in a world that is changing their economic structures from energy to currency formations and technological development. America’s ruling class is failing to bring American citizens to a higher level of competitive advantage and the price to pay is going to be dear and painful.

Liars, their lies and those who help them propagate

http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20080602&id=8712024

I open my news service I was confronted by headline that strikes “again” as the mulling of reality.
The head line read: “Paulson committed to dollar as reserve currency.”
It is true that the American Secretary of the Treasury is committed to have the dollar as reserve currency. I do not think that if the American Secretary was not committed to our dollar he might be suggesting switching to a stronger currency. This headline is the natural and poor reporting that the Reuters has to offer, but it has a deeper meaning, that is Reuters has choose to be a propaganda outlet to distribute so called news. No one with a straight face will put his or her name in such headline.
Any person will immediately recognize Paulson as the Secretary of the US Treasury and Ex-CEO of Goldman Sachs, also known for missing the mark and outright lying in a consistent basis and misinforming the people that granted his job.
The intent here of the editor clearly was to minimize the meaning of Paulson as Secretary of the Treasury and make the name to be some kind of abstract entity that chooses to make statements of profound meaning and solid.
By now, we know that Paulson is a crony elitist CEO for whom American citizens and well been is a peripheral thought part of the benign neo-fascist movement, that has arose in the past 30 years in the USA. Strong statements but the facts and situations we are living totally fit the definition.
Paulson and the media which provides the propaganda is very similar to any other benign fascist process in history. This is a natural evolution in America, by a large majority more American are more comfortable with pseudo-fascism that they are with a working Democracy. You can call any political ruling system anything you please and loudly defined, but the real measure is the inner workings of the system and how it affects the citizens under the system. Paulson like others whom are promoters of benign fascism are comfortable lying and manipulating the facts.

If you have not heard

*-If you have not heard we are in a recession.
*-If you have not heard 84% of Americans believe fairy tales are facts.
*-If you have not heard the cost of the cheapest 4 year college degree with room at board and related expenses is at $80K and climbing.
*-If you have not heard we do not have poor in America we have “Low Food Intake Families” in other words families in famine.
*-If you have not heard we have more than 10 million families in low food intake category.
*-If you have not heard the president’s approval ratings is at the lowest ever record.
*-If you have not heard 1 in every 32 Americans will file for bankruptcy in the period 2007-2010.
*-If you have not heard America is the only developed country that does not provide alternatives for Universal medical coverage.
*-If you have not heard the average savings rate is a negative 5%.
*-If you have not heard the Defense Department failed again to pass the most basic auditing of its accounts.
*-If you have not heard the war in Iraq costs $750 Billion and by some accounts can reach up to $2 Trillion by 2010, that is $61,500 per citizen.
*-If you have not heard Communist China owns more US debt than any other country in the planet.
*-If you have not heard Communist China has a total of $1.2 Trillion in US Treasury Debt and they receive $3.000 in interest per American citizen per year.
*-If you have not heard The US is the second to last of developed countries in Health Care development.
*-If you have not heard college graduates will have to pay debt for their schooling for more than 15 years.
*-If you have not heard minimum wage in America now is earned by more workers than ever in history, said, the working poor are the largest growing group.
*-If you have not heard 62% of all tax received by the IRS is spent by the federal government in military or pseudo military expenditures.
*-If you have not heard the federal government has cut spending in research and consumer protection by 92% in the last 15 years.
*-If you have not heard has failed to comply with 67% of its international agreements signed in the past 20 years.
*-If you have not heard, you better start pay to pay real attention.

Professor Elizabeth Warren

The Author of "The Income Trap" was the Jefferson Lecture in 2007.
The research presents what many knew already, we are in going in the wrong direction, it is something that has occurred in the past 30 years and we hare choosing to ignore at our own peril.
This lecture is a must share item with friends family and no politico should scape from the facts presented.

Here We Are! Now, What?

If you had read my posts in the past, I had postulated a view stating the present disaster was coming.
The labor department and the USDA, stated that more than 23 Million Americans are in need of Food stamps to be able to have a poor meal.
If you think that famine is not possible in America, you are not seen what is happening around you. It is not OK to be blind for political or philosophical reasons.
When people in Argentina started to die of famine was a disgrace for the country that was in 2003.Here we are 6 years later in America we are setting the seeds of famine. You might negated but you will read, that is not an arrogant forecast it is a reality that is happening around you.

The present government has brought down America supremacy in many areas. The most important one is the economic supremacy, today the financial system is been saved by foreign debt, that is floated in open markets, those markets want their coupons, so this time is different. The lenders will do two things: one ask for the interest the other is to demand the few assets left and a currency that at the present cannot compete globally.

It is sad but it is true.

Liars and the Liars Den

As I watched Secretary Paulson today describe the present economic crisis, I said to myself, he is not only full of it, but he was lying beyond the acceptable level for the last six months.
What is the difference today versus six months ago.
Simple, six months ago it was a sotto vocce agreement among big bankers that all involved will find ways to pump and dump their mess into the global markets.
What they -by they I meand The Fed, banks and politicos- have encounter is a disproportionate abuse of trust and greed that goes beyong any one acceptable actitude. This is the result of a corrupt set of values that assume that you can foul the people all the time. They might be right but th truth is catching up with them, but most people are not swilling to hold them accountable for thir lack of values.
This recession now is starting to evolve, some think we might find a worse situation going forward.
The facts all indicate that the US has lost its economic supremacy, and its social supremacy, and the only supremacy left is the military supremacy, and to conitunue this supremacy, it must generate enough business, as of today is not generating enough business to sustain the large expenditures to mantain such large amount of dollars need it to keep going in debt to levels that taxes cannot mantain.

Unless policy makers decide tocome up with a major shift in the economic paradigm. For example a shift in energy generation, we are so far behind in the solar and wind generation technology, that by implementing a national R&D ten year plan, to regaign leadeship in technology and energy it will be extremely difficult to compete in standard industry development with China, India and in the twenty years with Africa.