Government Sachs

Larry Levin to me

show details 7:16 AM (3 hours ago)

 

 

Larry Levin's Nightly Newsletter & Trading Signals

 

Government Sachs

 

There has been a great deal of talk in blogs and some media circles recently about Goldman Sachs. The discussions have mainly centered on a few issues; the AIG swindle and the GS role, all of the ex-executives working for the government, and more recently High-Frequency Trading (HFT).

 

I ran across this article today and decided to forward it to you all. It only mentions HFT in passing. Maybe I can find more on that at another time. The total story is 8-pages long in The New York Magazine and can be found here http://nymag.com/news/business/58094/

 

On the weekend of September 12, 2008, as the financial system shuddered and appeared to be on the verge of lurching to a halt, two Goldman Sachs men, former CEO Hank Paulson and current CEO Lloyd Blankfein, huddled with other banking heads at the Federal Reserve Bank of New York to consider how to stave off disaster. Bear Stearns was dead. Merrill Lynch, run by another former Goldman man, John Thain, was in desperate need of a savior. And now Lehman Brothers was on the brink. As secretary of the Treasury, Paulson asked the banks to come up with a private-funding solution for Lehman before it imploded from lack of cash. But all the banks had been scrambling for cash reserves or strategic mergers to buffer against a rapid freeze in lending. No one was able, or willing, to help. And Paulson, a free-market purist, had made one thing clear up front: The government would not bail out the firm. Lehman Brothers, a longtime Goldman rival, prepared to declare bankruptcy, ending its 158-year run on Wall Street.

 

By Sunday night, Paulson realized he had an even bigger problem: the insurance giant AIG. AIG had sold billions in credit-default swaps to several major banks, what amounted to unregulated insurance on risky subprime-mortgage investments, the very ones that were bringing down the economy.

 

Hank Paulson and then-New York Fed chief Tim Geithner called an emergency meeting for the following Monday morning at the Federal Reserve Bank, ostensibly to discuss whether a private banking syndicate could be established to save AIG-one in which Goldman Sachs and JPMorgan Chase, two of the ailing insurance giant's clients, would play prominent roles.

 

At the meeting, it was hard to discern where concerns over AIG's collapse ended and concern for Goldman Sachs began: Among the 40 or so people in attendance, Goldman Sachs was on every side of the large conference table, with "triple" the number of representatives as other banks, says another person who was there. The entourage was led by the bank's top brass: CEO Blankfein, co-chief operating officer Jon Winkelried, investment-banking head David Solomon, and its top merchant-banking executive Richard Friedman-all of whom had worked closely with Hank Paulson two years prior. By contrast, JPMorgan CEO Jamie Dimon did not attend.

 

The Goldman domination of the meetings might not have raised eyebrows if a private solution had been forthcoming. But on Tuesday, Paulson reversed course and announced that the government would step in and save AIG, spending $85 billion in government money to buy a majority stake.

 

Of the $52 billion paid to AIG's counterparties, Goldman Sachs was the biggest recipient: $13 billion, the entire balance of its claim. The amount was surprising: Banks like Merrill Lynch that had bought credit-default swaps from failed insurers other than AIG were paid 13 cents on the dollar in deals moderated by New York 's insurance regulator. Eric Dinallo, the former New York State insurance commissioner, who was at the AIG meetings, characterizes the decision this way: AIG's counterparties, Goldman being the most prominent, "got to collect on an insurance policy without having the loss."

 

Somehow not recognizing (or perhaps not caring about) the brewing backlash, Paulson continued to appoint Goldman Sachs alumni to positions of power after the AIG decision-he named Edward C. Forst, a former head of Goldman's investment-management division, to help draft the $700 billion Toxic Asset Relief Program (of which $10 billion went to Goldman Sachs), and then Neel Kashkari, a former Goldman V.P., as the TARP manager. And of course Edward Liddy, former Goldman board member, was already serving as the new CEO of AIG. Suddenly, everywhere you looked, men who had passed through the Goldman gauntlet of loyalty and rewards were now in key positions overseeing the rescue of the financial system. The company was earning its nickname: "Government Sachs."

 

Both Rogers and Paulson (who's publishing a book this fall that will presumably attempt to justify his decisions and save his damaged legacy) have argued that the AIG decision was about saving the system as a whole, not Goldman in particular.

 

Similarly, they say, when it came to AIG, the firm was "prudent" in hedging its bets, buying credit-default swaps from Bank of America, JPMorgan, Soci?t? G?n?rale and other banks in case AIG failed to pay the money it owed Goldman-in effect, hedging its hedge against the mortgage market. Goldman Sachs had no "material exposure" to AIG, they argue. One senior executive goes so far as to suggest the firm might even have benefited from AIG's demise. "We might have done very well," he says, "but I wouldn't be so presumptuous as to say that. Who knows?"

 

Not a single Wall Street executive I spoke with, including several Goldman Sachs alumni, believe those hedges would have survived an overall collapse of the financial system. A large loss would have been inevitable as lending evaporated, and Goldman Sachs would have struggled to shrink the company to a fraction of its size overnight. But the most glaring argument against Goldman is Goldman's own: If AIG's biggest and most important bank customer was hedged against losses in AIG, as it claims, why did the government need to pay Goldman Sachs the full $13 billion?

 

Lost in the haze of Goldman's recent record profits is the fact that the firm nearly went under even after the AIG bailout last fall. As the market continued to plunge and Goldman's stock price nose-dived, people inside the firm "were freaking out," says a former Goldman executive who maintains close ties to the company.

 

Salvation came on November 25, a few days after Goldman's stock price plunged to $52 a share, down from the year's high of $200 and the lowest price the company had seen since it went public. Again, the white knight was the government. It turned out that Goldman's conversion to a garden-variety bank-holding company offered an amazing advantage: Goldman now had access to incredibly cheap money. Exploiting its new status, Goldman became the first financial institution to sell $5 billion in government-backed bonds through the Federal Deposit Insurance Corporation, which allowed Goldman to start doing deals when the markets were at a near standstill.

 

Those FDIC notes they got were lifesaving because they couldn't issue any debt. If it had gone on another week or two, Goldman would have failed, they would have gone the way of Lehman, and you'd be talking about Lloyd the way you talk about [Lehman CEO] Dick Fuld."

 

Even Goldman alumni were struck by the company's shameless posture in ramping up the leverage again so soon after the government bailouts. "It's a statement of arrogance," says one former executive.

 

Goldman claims that there is a Chinese Wall between the advisory business and the trading business. "There are rules and laws regarding information sharing, and we scrupulously follow them," says a company spokesman.

 

But two former clients told me they had observed firsthand how Goldman traded against their interests to improve its own bottom line-one who didn't like it, the other accepting it with a shrug and saying, admiringly, that Goldman's ability to convince the world that it is a "client-oriented" business was its most masterful PR coup.

 

Goldman's profiting from this ethical gray area was exemplified by the real-estate market and the subprime-mortgage collapse: Goldman Sachs sold subprime-mortgage investments to its clients for years, but then in 2006 began trading against subprime on its own balance sheet without informing its clients, a hedge that ultimately let it profit when the real-estate market cratered. For some, this was a prescient call; for others, a glaring conflict of interest and inherently dishonest, since the firm let its clients take the fall.

 

Earlier this month, Goldman had an ex-employee arrested for allegedly stealing computer codes that could be used, as the prosecutor noted, "to manipulate markets in unfair ways." Some hedge-fund traders and financial bloggers have speculated that Goldman itself could have been using the codes for the same purpose.

 

Now attention is turning to Goldman's dominance of trading on the New York Stock Exchange-as the exchange's biggest high-speed program trader as well as a provider of liquidity to other traders-and whether that ubiquity has afforded the firm undue advantage. If Goldman's database knows nearly every trade that is about to be made, sophisticated computer codes could, theoretically, instantly execute fail-safe trades on Goldman's behalf milliseconds beforehand. This, some are insisting, is where the company is manipulating the markets and making hundreds of millions of dollars a day.

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Becoming Your Own Banker

Fleece the Public - Protect the Banks

Larry Levin's Nightly Newsletter & Trading Signals

 

Kleptocracy Examples

 

Dear Andre,

 

In today's missive, penned by Bill Jenkins, you will read some great examples of central bank and commercial bank fraud/theft. And since this is done with the approval of Congress, one could call it further examples of Kleptocracy.

 

 

 

SAME PLAY, DIFFERENT ACTS

 

One book I recommend reading is The Creature From Jekyll Island by G. Edward Griffin. It is an excellent treatment of the origin and goals of the Federal Reserve. I am surprised at the number of people who have never even heard of this book. It ought to be required reading in all civics classes - if they even teach that stuff anymore. Actually, I was shocked when a friend who I highly respect in our industry recently commented to me that he was just reading this for the first time.

 

So if you've never read it, get a copy. It's available in plenty of places online. The book is a large one, and intimidating to those who are only occasional readers. But it is well worth the effort, and a real eye-opener as to why things have played out the way they have over the last year and a half.

 

Tracing the founding of the central bank in the United States, Griffin clearly demonstrates how and why it was formed, and how it is functioning EXACTLY as planned. The Federal Reserve is not America's first attempt at a central bank, but all others were eventually shut down because they were recognized for what they really are -- an attempt to create a cartel of bankers who, with Congressional support (even though they are not a federal agency), constantly overextend themselves in the pursuit of higher and higher profits. And when the game is up, it uses its Congressional "connection" to foist the losses onto the American taxpayer.

 

It always occurs with the same themes: "Too big to fail"... or "The first domino to fall in a nationwide/worldwide catastrophe."

 

Each successive failure became more massive than the previous one, and a strategy emerged - start discussing amounts of money so big that the average citizen was simply mind-boggled by the size of them. As generations of public dis-education came home to roost, people increasingly believed that economics was the realm of governments rather than markets. And with that fallacy came the ingrained idea that money comes from the government, so it is the only entity able to create the resources to "correct" gargantuan fiscal shortfalls.

 

Of course what "everyman" missed was that the government's creation of money out of nothing simply fleeced the citizenry in the form of the hidden tax of inflation.

 

Let's take a quick and closer look at this sordid history.

 

I catalogued for you recently one of the failures of the central bank. It was purportedly established to stop market crashes and end recessions. But we have seen recessions in '53, '57, '69, '75 and '81, the crashes of '21 and '29, the Great Depression I, Black Monday in 1987 and the current lollapalooza of 2008-?

 

But one of the Fed's other foundational reasons for existence was to reduce competition from outside banks, as previously mentioned. It also planned to foster an attitude of easy lending, perpetual indebtedness and constant loan rollovers and interest charges. Then when the jig is finally up, and the indebted families, corporations or nations can no longer even afford the interest payments, the debt burden will be passed to the unsuspecting taxpayer by way of inflation.

 

Since the inception of the Fed, the game has been managed very well. Smaller banks were allowed to fail, just as they are now. This gives the appearance of "letting the market work."

 

Let's look at some of the worst of the big bailouts, just so you can see get a grasp of what has happened, what will happen and how that affects your money.

 

SAVING BAD BUSINESSES BY STEALING YOUR MONEY

 

Penn Central was the nations' leading railroad prior to 1970. And it was a pretty egregious example of how far bankers were willing to go to bilk money out of a cash cow.

 

Penn starting getting deeply into debt. Its loans were rolled over, and more money was forwarded to keep operations going, which included servicing interest on their current debt. But as things got worse, the huge banks who were in on the play, which included Continental Illinois, Chase Manhattan, Chemical Bank, Manufacturer's Hanover and First National City, agreed to continue the loans only if the banks' officers were put on the railroad's operating board.

 

So essentially, the bankers lent themselves money and were in cahoots with the whole game. Also, they were privy to information about the railroad and its stock far ahead of the public. They used this information for their own private profit as the railroad bit the dust. Public records showed that the top executives saved themselves more than $1 million dollars by the sale of stock ahead of the public. A million saved is a million earned.

 

After all the banks who were called in to support the railroad with cash funds were given complete assurance that the Fed would guarantee the loans, the bailout was a done deal. Immediately all the unionized employees of the failing enterprise were given 13.5% raises. In the end, the Fed authorized loan guarantees of $125 million.

 

This was never really intended to solve the problem, and a year later the railroad was nationalized and its passenger service became Amtrak. It is a government-run enterprise to this day and continues to operate at a massive loss... only staying open with further governmental subsidies.

 

The freight side of Penn Central became Conrail, with the government owning 85% of its stock. Fortunately it was sold in a public offering in 1987, staged an impressive comeback and operates at a profit.

 

At the same time, defense giant Lockheed was also on the edge of bankruptcy. It was $400 million in debt, and Bank of America, along with several other smaller banks, were anxious to keep the milk flowing. Eventually, they marshaled an army of interested parties and went to Washington. They claimed that tens of thousands of jobs would be lost, along with suppliers and subcontractors who would be forced into bankruptcy if Lockheed were allowed to fail. So the government gave them an additional $250 billion in guarantees. That increased their total indebtedness 60%.

 

Of course, the government had a not-so-secret desire to see Lockheed pay off these debts, and the only way it could do that would be to earn more money. So the company became the chief winner of no-bid contracts and recipients of other governmental work. In the meantime, other defense contractors suffered, since they were essentially pushed out of the whole process in the rush to save Lockheed.

 

In the mid-'70s, New York City was pursuing the same path. Waste and overspending abounded in this gigantic welfare experiment. By 1975, NYC had sold so many bonds, the market was flooded with them, and there were no more lenders. Well, almost no more. Chase Manhattan and Citicorp were the banks that were benefiting the most from interest paid on these debt, but when the day finally came that interest payments were halted, both bankers and city leaders put together a caravan to Washington, D.C.

 

Same game plan: Threats of halting essential services... no firemen... no police... no garbage pickup. Rioting and anarchy in the streets. Spreading disease. In New York City? This could have international repercussions.

 

Out came the federal checkbook and draft was made for $2.3 billion, double what the city already owed. Even though there were a number of conditions placed upon the loan to balance the NYC budget and get a surplus to pay off these debts, none of them were ever honored. The city remains in debt to this day.

 

Then there was Chrysler for $1.5 billion.

 

Unity Bank, which eventually cost taxpayers just under $4.5 million.

 

Commonwealth Bank of Detroit, which enjoyed a $1.5 billion fed bailout - then was eventually sold to First Arabian Corporation, a firm funded by Saudi princes.

 

First Pennsylvania Bank was carrying $328 million in questionable loans, $16 million more than the entire stock float of the company. They received a $325 million loan from the FDIC.

 

Continental Illinois was the nations' seventh-largest bank. It had assets of $42 billion, thousands of employees around the globe and an annual income of $254 million by 1981. Unfortunately, its stellar growth was based on shaky loans to risky businesses and foreign governments who could not obtain financing anywhere else.

 

Its stock was doing wonderfully, and it was named one of the five best-managed banks in the country. But as they began to reap the risk they had sown, the worlds' first electronic bank run began. Customers were blissfully unaware, but the biggest depositors began withdrawing their funds, and the business was rumored to be in trouble. Creditors raised their interest rates to the banks and began withdrawing funds. In just four days, Continental's withdrawals were so heavy, they were forced to go to the Fed for a $3.6 billion loan to cover them. Several banks extended a 30-day line of credit, but it was of no use. Within a week, the bank's outflow ballooned to over $6 billion.

 

In the end, Continental's liabilities (including those off-book) totaled $69 billion. Only about $3 billion of that was FDIC insured. The final bailout was more complicated than I can go into here. But just know that the bank was bailed out, and the taxpayers were stuck with the bill.

 

Then comes the subprime fiasco of 2008. Notice the fact beyond debate, that the Fed did not come to the rescue of the subprime borrowers. Nope -- it rescued the banks. It was for this purpose that it was designed, and it continues in its mission today.

 

All in the name of preventing catastrophe, protecting the public and providing "liquidity" to the markets.

 

The multibillion-dollar bailout engineered last year is only chump change to what it will eventually cost the taxpayer. Protect the banks -- fleece the public.

Pizza Order in 2010

http://aclu.org/pizza/images/screen.swf

Momentum Trading: Good or Bad

Momentum: Good or Bad?

 

 

To be sure, momentum markets are exciting, and very profitable. But they have a limited lifespan and they always end up badly. One of the most dramatic momentum runs of all time was the last six months of the Internet bubble, the period from September 1999 to March 2000. The Nasdaq rose 86.4% during the period, and it seemed as if the market would never fall again. Of course it did, and the Nasdaq Composite, despite a nifty rally since March, is still off 65% from its March 2000 peak.

Momentum is a double edged sword. When it's going your way, it feels good. The problem is that it's not going to last forever. And the damage, not to mention the hangover could both be devastating and long lasting.

As traders and investors, it's foolish to fight a strong tape. Thus, we have increased our exposure to stocks over the last few weeks, and we have several positions that are acting well.

There are no signs, at this point, that the stock market will do anything other than have an occasional moderate day or two off here and there.

We see no technical divergences to worry about too much at this point. Volume, breadth, and momentum are all headed in the right direction. And sentiment is nowhere near the total euphoria that marks major market tops.

The S & P 500 looks on course for the 1000 area, where there will be some backing and filling. Even a pullback of several days is possible there, as well as a failure of the rally. But until the 1000 area is near, there is nothing to do but stay with the trend, which is up.

The caveats are always there, external events, especially political insanity, in Washington or elsewhere, as we have listed above.

For now, the best course is to stay with the trend, and to continue to monitor events with a very cautious eye.

Read Dr. Duarte's All NEW Books "Market Timing For Dummies." and "Trading Futures For Dummies." The Trading Manuals for All Seasons. Also Available As Kindle Books

Gangster Government

Technical Tips from Dan Gramza

 

Hello everyone, this is Dan Gramza and welcome to Gramza Market

Studies Technical Tip.

 

Well today we're going to be talking about selling rallies. Now what

does it mean when people say, "sell the rally" when you want to

get into a trade? Or they sell a pull back? Or you hear things like,

"The Trend Is Your Friend?"

 

Well we're going to explore this here in just a minute. I want to show

you the technique and I want to show you some examples of how

these markets behave in those settings.

 

I want to show you an example, but before I can talk to you too much

about this example I need to define a few things for you. First candles...

the approach that I use with Japanese candle charts, and that is what

you're looking at here, is not the standard approach. So from my

perspective,

I don't focus on patterns, I focus on behavior. If we see a green candle

that represents buying, that means that the closing price is higher than

the open. If you see a red box that represents selling it means that the

closing price is below that opening price. If you see a white line on top

that's called a shadow, I think that represents selling. If you see a

white

line on the bottom that represents buying. Now with that in mind, the

sizes

of the bodies and the shadows tell us about the degree of buying or

selling.

 

Now let's talk about this set-up here...

 

To get the rest of the tips, please visit the link below and WATCH me!

http://www.ino.com/info/36/CD3616/&dp=0&l=0&campaignid=9

MarcFaber – Great Article

Faber: Next Stimulus Will Be Worse
Wednesday, July 15, 2009 3:46 PM By: Julie Crawshaw Article Font Size
Some economists think that another bubble is what's needed to get the economy moving again. Gloom, Boom and Doom publisher Marc Faber said this is ridiculous, and that the Federal Reserve — which he holds responsible for creating the housing bubble — wants to do it all over again. The central bank should not encourage excessive credit growth, Faber tells Moneynews.com's Dan Mangru in an exclusive interview. Between 2000 and 2007 the total U.S. credit market debt increased at five times the rate of nominal gross domestic product. Unfortunately, Faber said, the next bubble is already here. This time it's government spending and fiscal deficits that Faber thinks will double the government's debt during the next six years or less. "The U.S. government is largely deranged," he said. "The private sector is the dynamic one, and that's why I object tremendously against building up fiscal deficits because (they) shift economic activity into unproductive government instead of leaving it in the private sector." Another stimulus package would only make matters worse. "In the Depression, they had one stimulus after another and it didn't help," Faber said. "What helped was World War II." The problem with bubbles, Faber said, is that they only temporarily stimulate the economy. "The whole economic expansion driven by a bubble in America has been a total disaster and has shifted wealth from the ordinary people who work … to the Wall Street elite," he said. Nor does the government score any higher when it comes to managing inflation, which Faber thinks will reach Zimbabwe-like levels in the U.S. courtesy of the Fed's policy of keeping interest rates too low. "The Fed, in my opinion, has zilch idea about monetary policy," Faber said. "What they focus upon is basically core inflation, which does not include energy and food prices and the way the Fed measures inflation is highly questionable in the first place because when you measure inflation it's a basket of goods and services." When the economy recovers, interest rates should go up because of inflationary pressures, something Faber expects the Fed won't let happen because it could cause interest payments on the government's debt to double. Those payments today are slightly below $500 billion annually. If the global economy collapses in a deflationary spiral, those government deficits actually expand, leading to more central bank-driven monetization, Faber said. And keeping interest rates artificially low will lead to more and more inflation. Add to all of this the expectation that health care costs will soar and jobless rates will probably continue to be high, and the economic picture becomes even gloomier. "I think we've just gone … to the beginning of the realization that the economy may be bottoming out but not much recovery is forthcoming," Faber said. © 2009 Newsmax. All rights reserved.

Bad Banks?

Special Report from The Daily Reckoning:

Do You Own Stock in Any of These Banks?

And what to do if the answer is YES…

The Crisis

It all started as Wall Street crumbled around him, former Treasury Secretary Hank Paulson claimed a $700 billion bailout was necessary to prevent financial meltdown.

When that didn't work — the Dow and S&P were each down over 18% just a week after the bailout emerged from Congress — Paulson suggested the federal government step in and prop up the banks.

Since it all began, the Feds have been pumping out billions in phantom money to shore up banks across the country. There seems to be no limit to the amount of money the government is willing print up and dump into this crisis. If this seems reasonable to you, you probably work in Washington, D.C.

The "Solution"

But will this drastic "solution" make the banks solvent again and avert a total meltdown? It's doubtful. Problems and pitfalls lurk everywhere.

Right now the banks are simply hoarding the injections of cash, in a desperate attempt to maintain liquidity. The banks are terrified of becoming insolvent.

Worst still, a wide-array of extreme oversight and regulation is right now in the works. How strong the restrictions will become is yet to be determined. The only thing that seems cut and dry is where the final accountability will rest. The answer? With taxpayers like you! Are you willing to help foot the bill?

As new details come to light each day, it becomes increasingly clear that we're staring at the very real possibility of a depression in this century. If you expected good news from the bailouts by now you should be thoroughly disappointed.

The Depression

Home sales are poised to continue plummeting, even as prices fall around the country. The U.S. unemployment rate at 8.1 percent in February is already the highest in more than 25 years.

The Dow could easily shed another 30% from its current level, as investors ditch any further effort to beat inflation and flee to the comfort of cash under the mattress.

Your first step in preparation of this potentially dire situation is to analyze what you own and why you own it.

For example, if you hold stock in any of the following five banks, you may want to reconsider your exposure. There may be another very big leg down in this continuing financial fallout. This year is shaping up to be bumpy and to require some belt-tightening, so it pays to be prepared.

Citigroup (C:NYSE)

Billions of the government bailouts have been handed out with Citigroup's name on it. Bailout after bailout, three in total, and Citigroup is still at risk of returning to a $1 stock.

The share price currently has been cut down to a tenth of its 52-week high, and much less at times. If you can believe it, since the February 27 round of government life support, taxpayers already own about 36 percent of Citigroup's common shares. That's not saying much — it may become much worse.

J.P. Morgan Chase (JPM:NYSE)

J.P. Morgan Chase has taken $25 billion from the government's Troubled Assets Relief Program (TARP) assistance — this when over 50 million Americans own JPM shares, many through 401ks and other retirement accounts.

So, is J.P. Morgan solvent? Some estimates indicate it might have potential current derivatives losses of over $240 billion, which would far exceed its $144 billion in reserves. Could it get better? The potential future exposure looks even worse, with staggering exposure of up to $300 billion.

The Rest of the Fallout:

Goldman Sachs (GS: NYSE)

Morgan Stanley (MS: NYSE)

Bank of America (BAC:NYSE)

Goldman Sachs, Morgan Stanley, and Bank of America each also require a hard look if any one of those banks is a part of your portfolio. Although they have sometimes claimed to not need them, Goldman Sachs and Morgan Stanley are eating up bailout dollars without remorse — and both sit on billions of dollars in rotten debt.

Bank of America, after taking over collapsed firms such as Countrywide Financial and Merrill Lynch, also deserves a much closer look. The investigations into exactly how much worthless paper it holds (and who's on the hook for it) are just getting started…

It doesn't look good so far! Bank of America has over $80 billion in potential current derivatives exposure. That's below its $122 billion reserve, but it's really its total exposure is the terrifying part… greater than $200 billion!

If you own any of these stocks, you need to do some hard thinking. Do you own these banks for what they are right now — risky stocks with dubious assets and significant bad debt? Or, do you continue to hold them based on what they were once, and will likely never be again — the titans of Wall Street?

Likewise, if you own Wells Fargo (WFC:NYSE) — which recently stepped in and gobbled up struggling bank Wachovia— you owe it to yourself to pay close attention to just how bad the situation at the combined banks has really had become, It has combined reserves of over $100 billion, but its total future risks also exceed $100 billion.

The big story here is simply this: If you own banking stocks right now, you need to seriously reevaluate why you own them. Do you honestly think the fate of each may improve in the long haul? Perhaps now is the time to sell and move on? An obvious first step is to speak with your investment professional in order to begin weighing your options.

How We Can Help

The Daily Reckoning has been following the entire mess very closely, and we've been warning about the impending banking meltdown for years — long before the mainstream financial press woke up to the trouble.

Not only can you avoid the worst of the fallout starting right now, but you can also begin to gain consistent and relatively effortless profits, too. We know a simple, yet lucrative way for you to pad your portfolio against what is bound to be a trying time for our economy now and for some time into the horizon.

To uncover this great nonbanking portfolio — which actually pays you to own it — check out this extra exclusive report reserved only for Daily Reckoning readers like you.

Introducing the Single Best Way to Make Sure You'll Never Run Out of Money…

The Endless "PAYCHECK PORTFOLIO"In three simple steps, unleash a steady flow of work-free income… starting with up to 75 automatic "paychecks" deposited directly into your account. Act now or risk missing the next "payday". To access your report please CLICK HERE.

Copyright © 2009
Agora Financial, LLC and Daily Reckoning,
808 St. Paul St., Baltimore, MD 21201
All rights reserved. Information contained herein is obtained from
sources believed to be reliable, but its accuracy cannot be guaranteed.

Crude Oil

Crude Oil & Energy Update - Interview with the CME Group's Joseph Ria When you hear the news reporters talk about the price of crude oil in the marketplace, they're generally talking about WTI, which is West Texas Intermediate crude oil. It's a very light, sweet crude oil and the highest grade that's out there. Crude oil is based on and priced on the amount of sulfur that's in the oil. It makes it easier or harder to refine base on the amount of sulfur. WTI being the lightest and sweetest, is the highest priced crude oil in the marketplace. It is a benchmark delivered in Cushing, Oklahoma. In benchmarks for crude oil and global pricing of crude oil, WTI probably prices about 50% of the global pricing of crude oil. Brent being basically the other pricing benchmark. There's two out there, Brent being a little of a mixture of three different grades of crude oil; BF&O, Brent 40 and Ossenberg. They're all produced in the North Sea. Please visit the link below to stream live the rest of the complimentary article from Joseph Ria. The link below will also give you exclusive access to three more video seminars and articles! http://www.ino.com/info/36/CD3616/&dp=0&l=0&campaignid=9

Dump Your 401k

Dump Your 401k
Common Sense VS. Conventional Wisdom

 

Denver, CO - July 1, 2009 -

Americans are trapped by an economic model that treats conventional wisdom as common sense.
 
I define conventional wisdom (CW) as doing what everyone else is does and thinking what everyone else is thinks just because that is what they are doing and thinking.
 
I define common sense as simply being awake.  Common sense is paying attention to obvious realities and allowing yourself to be aware of what options and alternatives best serve you based on that reality.
 
Tax deductibility is an aspect of reality where we Americans have forsaken common sense to follow CW.  I'll explain what I mean, and then I'll give you an example.
 
CW tells us that we should contribute as much as we can to our 401(k) or its equivalent.  CW convinces us that we should at least take advantage of our employer matches in order to get the free money.
 
However, CW isn't concerned with how much we can afford.  CW doesn't provide guidelines that allow us to make informed decisions based on the common sense reality of our own lives.  Here's the case of Bob and Sally...
 
Bob and Sally have good jobs. Sally is a schoolteacher in a public system and Bob is a sales representative for a copier company.  Between them, they earn about $120,000.00 per year.
 
Sally and Bob believe they are doing the right thing by putting $10,000.00 each year into the mutual fund type investments in Bob's and Sally's defined contribution retirement plans (that includes the employer's matching contributions).
 
Since 1999, the amount in their retirement plans grew, shrank, grew again and shrank again.  They contributed $100,000.00 over the past decade and it is only worth about $98,000.00 today.
 
Their advisor wants to convince them that they should stay the course because in the long-term they will see the gains.
 
Here are other realities facing Bob and Sally that aren't apparent from the facts we've seen so far.

• Bob drives a new SUV and Sally drive a relatively new sedan.  Both are financed.  They owe about $50,000.00 on the two cars and have payments of over $1,200.00 per month and much of that is interest.  The insurance on the cars amounts to $250.00 per month.
• Bob and Sally each have their own credit card.  They use them to pay for vacations, purchases such as TV's and appliances, and entertainment.  They owe a balance on both credit cards.  The balance is just over $20,000.00.  The interest rate on the cards averages about 18%.  Each month they pay more than the minimum, but they tend to spend more than they pay and the balance they owe is increasing slightly each month.
• Bob and Sally have a $400,000.00 home with a conventional thirty-year mortgage for $320,000.00 at 6% interest.  Their payment of $2,500.00 includes taxes and insurance.
• Sally and Bob owe $32,000.00 on an equity line of credit also.  They used it to build a home-theater and finish their basement.
• Bob and Sally also follow CW and have an emergency fund of $40,000.00 in a savings account.

From the perspective of CW, Bob and Sally look pretty normal.  However, if we deconstruct their personal economy with the sledgehammer of common sense we'll discover another way of looking at their condition that makes more sense.
 
On the first venture into awareness, we can see that Bob and Sally's total debt is $102,000.00, excluding their mortgage.  Amazingly, their debt exceeds their total investment in their retirement accounts over the past decade.  We can also recognize that it is greater than the assets that remain in their retirement accounts.  One does not have to have a degree in logic to realize that the money they borrowed ended up funding those retirement accounts.
 
Moreover, their retirement accounts earned a negative rate of return over the past decade.  Worse, the interest on the money they borrowed averaged more than ten percent each and every year.  What does that mean?  It means that the retirement accounts would have to earn much more than ten percent in the future just to catch up to and to break even with the cost of the debt that Bob and Sally used to fund the retirement accounts in the first place.
 
If common sense considers the cost of borrowed money over that same decade, the picture becomes bleaker.  Bob and Sally shelled out almost $72,000.00 in interest payments in addition to creating more debt and experiencing a negative return on their invested money.
 
When you calculate the total, Bob and Sally used $174,000.00 to build an emergency fund of $40,000.00 and put $98,000.00 in their retirement accounts.  Even though the contributions to their retirement accounts allowed them about $25,000.00 in tax savings over the same period, they still end up in a negative position.
 
How about an alternative common sense approach?

Bob and Sally could have paid $10,000.00 each year as participating whole life insurance premiums[i] instead of opting for employer matches and tax deductions.  At the end of the period, the cash value of the policies would have been about $128,000.00 - $30,000.00 more than the retirement accounts...so much for the tax deduction.
 
Here's more.  Remember the $72,000.00 Sally and Bob paid in interest to banks?  By borrowing against the cash value of their life insurance policies and repaying those loans on the same terms they would have had to repay any other lender, Bob and Sally would have redirected interest back to their own policy and reduced and/or eliminated interest payments to others.  That would have saved tens of thousands of dollars.
 
In addition, Bob and Sally put $40,000.00 aside in an emergency fund.  If they added that money to the participating whole life insurance premium, the cash value of the policy would increase to about $180,000.00.
 
Consider also that Bob and Sally do not need permission to access the money in their policies.
 
Then again, Bob and Sally pay no penalties or taxes when they borrow money from their policies.
 
Here's another coup - growth of the money in Bob and Sally's policies is tax deferred, the same as in retirement accounts.  We know that the IRS taxes the income from retirement accounts.  However, Sally and Bob, with the help of their insurance and financial advisor/guide, can receive tax-free income from their policies for life.
 
There's a whole lot more, but that's all for today...except...
 
If Bob and Sally put their money into participating whole life policies...
 

• Both Bob and Sally would continue to drive new cars financed for about $50,000.00.  However, they would redirect the monthly payments of $1,200.00 back to their life insurance policies and would replenish the equity in those policies for use again in the future.
• Bob and Sally would continue to have credit cards for vacations, major purchases, and entertainment.  However, the balance on the credit cards would revert to $0.00 at the end of each month, and the 18% interest rate on each card would be irrelevant. 
• Bob and Sally's $400,000.00 home would still have a $320,000.00 conventional thirty-year mortgage at 6% with a payment of $2,500.00 including taxes and insurance.  However, in another few years, Bob and Sally would have enough money in their whole life policies to repay the mortgage and begin repaying themselves by redirecting the interest to their policies.
• Bob and Sally would not owe $32,000.00 on an equity line of credit that they used to remodel their basement.
• Bob and Sally would still keep about $100,000.00 cash in their policies as an emergency fund.

Conventional wisdom is not wisdom at all.
Investing in retirement plans (or anywhere else) is not saving.
 
Tax deductibility is a trap.  Don't fall in.

 

By Jeffrey Reeves MA

 

Off - Wall Street Cash Recovery Plan!

"Off-Wall Street" Cash Recovery Plan!

Gold Energy Fields-Can They Be Worth 400% Returns?

http://www.ino.com/info/384/CD3616/&dp=0&l=0&campaignid=3

Sickening

Straight from the horses' mouths, a quick time line of Paulson's & Bernanke's economic assessments: February 28, 2007 - Dow Jones @ 12,268March 13th, 2007 – Henry Paulson: “the fallout in subprime mortgages is "going to be painful to some lenders, but it is largely contained."March 28th, 2007 – Ben Bernanke: "At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained,"March 30, 2007 - Dow Jones @ 12,354April 20th, 2007 – Paulson: "I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained." , "All the signs I look at" show "the housing market is at or near the bottom,"April 30, 2007 - Dow Jones @ 13,063May 17th, 2007 – Bernanke: “While rising delinquencies and foreclosures will continue to weigh heavily on the housing market this year, it will not cripple the U.S.”May 31, 2007 - Dow Jones @ 13,627June 20th, 2007 – Bernanke: (the subprime fallout) ``will not affect the economy overall.''July 12th, 2007 – Paulson: "This is far and away the strongest global economy I've seen in my business lifetime."August 1st, 2007 – Paulson: "I see the underlying economy as being very healthy,"October 15th, 2007 – Bernanke: "It is not the responsibility of the Federal Reserve - nor would it be appropriate - to protect lenders and investors from the consequences of their financial decisions."December 31, 2007 - Dow Jones @ 13,265January 31, 2008 - Dow Jones @ 12,650February 14th, 2008 – Paulson: (the economy) "is fundamentally strong, diverse and resilient."February 28th, 2008 – Paulson: "I'm seeing a series of ideas suggested involving major government intervention in the housing market, and these things are usually presented or sold as a way of helping homeowners stay in their homes. Then when you look at them more carefully what they really amount to is a bailout for financial institutions or Wall Street."February 29th, 2008 – Bernanke: "I expect there will be some failures. I don't anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system."March 16th, 2008 – Paulson: "We've got strong financial institutions . . . Our markets are the envy of the world. They're resilient, they're...innovative, they're flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong."March 18th, 2008 - Bear Stearns Bailout AnnouncedMay 7, 2008 – Paulson: 'The worst is likely to be behind us,”May 16th, 2008 – Paulson: "In my judgment, we are closer to the end of the market turmoil than the beginning," he said.May 30, 2008 - Dow Jones @ 12,638June 9th, 2008 – Bernanke: Despite a recent spike in the nation's unemployment rate, the danger that the economy has fallen into a "substantial downturn" appears to have waned,July 16th, 2008 – Bernanke: (Freddie and Fannie) “…will make it through the storm”, "… in no danger of failing.","…adequately capitalized"July 20th, 2008 – Paulson: "it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation."July 31, 2008 - Dow Jones @ 11,378August 10th, 2008 – Paulson: ``We have no plans to insert money into either of those two institutions.” (Fannie Mae and Freddie Mac)September 8th, 2008 - Fannie and Freddie nationalized. The taxpayer is on the hook for an estimated 1 - 1.5 trillion dollars. Over 5 trillion is added to the nation’s balance sheet. September 16th, 2008 - $85 Billion AIG Bailout “Loan” September 19th, 2008 - $700 Billion Bailout Plan AnnouncedSeptember 19th, 2008 – Paulson: "We're talking hundreds of billions of dollars - this needs to be big enough to make a real difference and get at the heart of the problem," he said. "This is the way we stabilize the system."September 19th, 2008 - Bernanke: "most severe financial crisis" in the post-World War II era. Investment banks are seeing "tremendous runs on their cash," Bernanke said. "Without action, they will fail soon."September 21st, 2008 – Paulson: "The credit markets are still very fragile right now and frozen", "We need to deal with this and deal with it quickly.", "The financial security of all Americans ... depends on our ability to restore our financial institutions to a sound footing."September 23rd, 2008 – Paulson: "We must [enact a program quickly] in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families' financial well-being, the viability of businesses, both small and large, and the very health of our economy,"September 23rd, 2008 – Bernanke: "My interest is solely for the strength and recovery of the U.S. economy,"October 31, 2008 - Dow Jones @ 9,337March 31, 2009 - Dow Jones @ 7,609 If Bernanke and Paulson were doctors, and our economy was the patient, they would be in jail for malpractice.

Tolstoy

"I know that most men, including those at ease with problems of the greatest complexity, can seldom accept the simplest and most obvious truth if it be such as would oblige them to admit the falsity of conclusions which they have proudly taught to others, and which they have woven, thread by thread, into the fabrics of their life." - Leo Tolstoy

Ayn Rand

"When you see that trading is done, not by consent, but by compulsion -- when you see that in order to produce, you need to obtain permission from men who produce nothing - when you see money flowing to those who deal, not in goods, but in favors - when you see that men get richer by graft and pull than by work, and your laws don't protect you against them, but protect them against you - when you see corruption being rewarded and honesty becoming a self-sacrifice - you may know that your society is doomed."

GM America

So the Guvment(taxpayers) now own 60% of GM! Can someone please find out 60% of what? Also, while you're at it, find out how the Guvment(taxpayers) are going to get paid back (cash, link card, check card, food stamps, rebates,mileage points,visa debit card,silver, gold, beads, Ruth Chris's gift certificate, 2 fish and 5 loaves of bread, 40 acres/mule, new GM car, etc.

Ulli...The Wall Street Bully — insights into no load mutual fund/etf investing: Sell In May?

Ulli...The Wall Street Bully — <br>insights into no load mutual fund/etf investing: Sell In May?

S&P 500

The SP 500 index is caught between two trend lines that arethe dominant technical indicators right now for this market. Ifeither gives way, it will point the direction of the next major swing. You can view this new video with our compliments.http://www.ino.com/info/353/CD3616/&dp=0&l=0&campaignid=3

Financial Solutions For Everyone

http://www.payneinvestment.com

Suze Orman - How Much Does She Really Know?

http://www.youtube.com/watch?v=rd_3nCENMT8

Ed Slott - Retirement Planning

http://www.youtube.com/watch?v=vxxD5WOiOu8

Good Job Citi -lol

Hell, If the Guvment gave me $10,000,000,000 I would have made a profit in January and February! no lol

Taxes American Style

JUST SOME Taxes Americans

Accounts Receivable Tax
Building Permit Tax
Capital Gains Tax
CDL license Tax
Cigarette Tax
Corporate Income Tax
Court Fines (indirect taxes)
Dog License Tax
Federal Income Tax
Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel permit tax
Gasoline Tax (42 cents per gallon)
Hunting License Tax
Inheritance Tax
Interest expense (tax on the money)
Inventory tax IRS
Interest Charges (tax on top of tax)
IRS Penalties (tax on top of tax)
Liquor Tax
Local Income Tax
Luxury Taxes
Marriage License Tax
Medicare Tax
Property Tax
Real Estate Tax
Septic Permit Tax
Service Charge Taxes
Social Security Tax
Road Usage Taxes (Truckers)
Sales Taxes
Recreational Vehicle Tax
Road Toll Booth Taxes
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone federal excise tax
Telephone federal universal service fee tax
Telephone fed, state and local surcharge taxes
Telephone minimum usage surcharge tax
Telephone recurring & non-recurring charge tax
Telephone state and local tax
Telephone usage charge tax
Toll Bridge Taxes
Toll Tunnel Taxes
Traffic Fines (indirect taxation)
Trailer registration tax
Utility Taxes
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft registration Tax
Well Permit Tax
Workers Compensation Tax

COMMENTS: Not one of these taxes existed 100 years ago and our nation was the most prosperous in the world, had absolutely no national debt had the largest middle class in the world and Mom stayed home to raise the kids.  What the hell happened?

Every entity that produces and sells goods and services also pays taxes. The tax is an expenses that is ultimately paid by consumers. Approximately 23% of the cost for everything we buy is just to pay the producers taxes. Remember: businesses do not pay taxes they pass that expense onto  the consumer, you and me. To raise tax on business is to raise tax on you and me. Our leaders know this fact they just count on us being to stupid enough to fall for class warfare.

When is it our fair share and when is it another form of slavery?

It is a fact that USA is the greatest & strongest nation in the world and we offer the highest standard of living because we are Capitalists. I want to keep my hard earned money, you can keep the CHANGE.

Bailout American Style

Bailout Analogy - Restaurant

 

 

I  have 2 tenants that run restaurants. One of the tenants offers great food & great service so they are busy all the time and making money.

The other tenant has lousy food & lousy service so they are going broke and can't pay their rent.

Should I raise the rent on the good restaurant and give the money to the lousy restaurant so they can stay in business?

Milton Friedman - Greed

http://www.youtube.com/watch?v=RWsx1X8PV_A

Can Crude Survive $80

Can Crude Survive 80?

Economy is bad, jobs numbers are bad, everything seems bad…but what about Crude? Wasn't it the hottest thing all over Bloomberg and CNBC just a few weeks ago? What happened? Whatever the case, this new video is EYE OPENING!

http://www.ino.com/info/300/CD3616/&dp=0&l=0&campaignid=3

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Subject: Can the US Survive 80 Crude?

For the first time since September of 2007, the crude oil (NYME_CL) market has flashed a positive signal that it is headed higher. This is the first buy signal that we have seen in over 18 months in the energy markets.

The big question is, if crude oil is headed higher, how much of a price increase can the US economy afford and withstand? Find out here:

http://www.ino.com/info/300/CD3616/&dp=0&l=0&campaignid=3

Here is a raw commodity that is used by everyone and the US has no control over. This key commodity to commerce just happens to be in areas that are normally hostile to the US. If we see a hiccup in the supply chain that changes this market dynamic, even for a short time period, we could see oil move back to the $80/barrel range in a heart beat.

So how will this affect the US equity markets? If crude oil heads back to the $75-$80 range, I expect that the major indices will head south. I call it the 551 syndrome. 5000 on the Dow, 500 on the S&P 500, and finally 1000 on the NASDAQ.

In this short video I will share with you the potential target zones we could see in the next 6 to 12 months in crude oil.

http://www.ino.com/info/300/CD3616/&dp=0&l=0&campaignid=3

So with the trend in crude oil in a positive trajectory and the trend in the US equity markets in a negative trajectory, I think the two will feed off themselves. Look for traders and hedge funds to move aggressively in both these areas with abandon.

Lastly with no reinstatement of the up-tick rule, expect stocks to once again get pummeled to oblivion.

Enjoy the video and all the best in trading,

Adam Hewison
President, INO.com
Co-founder, MarketClub

Right On Jim!

Jim Rogers Doesn't Mince Words About the Crisis

Maria Bartiromo talks to global investor Jim Rogers

By Maria Bartiromo

In 1970 a young Wall Streeter named Jim Rogers hooked up with George Soros to start the legendary Quantum Fund. The ensuing decades have seen Rogers build an iconoclastic career as an author, adventurer, and creator of the Rogers International Commodities Index. And throughout, Rogers—now based in Singapore—has remained an outspoken global investor. Today is no different. He has harsh words for former Fed Chairman Alan Greenspan, suggests President Barack Obama and his economic team are not up to the task, and thinks tough love is the answer for America.

MARIA BARTIROMO

What do you think of the government's response to the economic crisis?

JIM ROGERS

Terrible. They're making it worse. It's pretty embarrassing for President Obama, who doesn't seem to have a clue what's going on—which would make sense from his background. And he has hired people who are part of the problem. [Treasury Secretary Tim] Geithner was head of the New York Fed, which was supposedly in charge of Wall Street and the banks more than anybody else. And as you remember, [Obama's chief economic adviser, Larry] Summers helped bail out Long-Term Capital Management years ago. These are people who think the only solution is to save their friends on Wall Street rather than to save 300 million Americans.

So what should they be doing?

What would I like to see happen? I'd like to see them let these people go bankrupt, let the bankrupt go bankrupt, stop bailing them out. There are plenty of banks in America that saw this coming, that kept their powder dry and have been waiting for the opportunity to go in and take over the assets of the incompetent. Likewise, many, many homeowners didn't go out and buy five homes with no income. Many homeowners have been waiting for this, and now all of a sudden the government is saying: "Well, too bad for you. We don't care if you did it right or not, we're going to bail out the 100,000 or 200,000 who did it wrong." I mean, this is outrageous economics, and it's terrible morality.

You have said Bear Stearns and Lehman (LEHMQ) would still be around if Greenspan hadn't bailed out Long-Term Capital Management in 1998. Can you explain?

Well, if Long-Term Capital Management had been allowed to fail, Lehman and the rest of them would've lost a huge amount of money, their capital would've been impaired, and it would've put a terrible crimp on Wall Street. It would've slowed them down for years. Instead of losing capital, losing assets, and losing incompetent people, they hired more incompetent people.

Should AIG (AIG) have been allowed to fail, too?

First of all, banks and investment banks and insurance companies have been failing for hundreds of years. Yes, we would've had a terrible two years. But you're dragging out the pain. We had 10 years of the worst credit excesses in world history. You don't wipe out something like that in six months or a year by saying: "Oh, now let's wake up and start over again."

What about Citigroup (C)? What about the car companies?

They should be allowed to go bankrupt. Why should American taxpayers put up billions to save a few car companies? They made the mistakes! We didn't make the mistakes! I'm sure they'll give them the money, but I'm telling you, it's a mistake. It's a horrible mistake.

I totally understand what you're saying, but the banks are under massive pressure.

They all took huge, huge profits. Who was the head of Citigroup? Chuck Prince? I mean, how many hundreds of millions of dollars did Prince take out of the company? How many hundreds of millions of dollars did other Citibank execs take out of the company? Wall Street has paid something like $40 billion or $50 billion in bonuses in the past decade. Who was that guy who was the head of Merrill Lynch (MERR)?

Stan O'Neal?

Right, Stan O'Neal. He got $150 million for leaving, even though he ruined the company. Look at the guy at Fannie Mae (FNM), Franklin Raines. He did worse accounting than Enron. Fannie Mae and Freddie Mac (FRE) alone did nothing but pure fraudulent accounting year after year, and yet that guy's walking around with millions of dollars. What the hell kind of system is this?

Are you worried the economic crisis will lead to political turmoil in China and elsewhere?

I absolutely am. We're going to have social unrest in much of the world. America won't be immune.

What does all this mean from an investment standpoint?

Always in the past, when people have printed huge amounts of money or spent money they didn't have, it has led to higher inflation and higher prices. In my view, that's certainly going to happen again this time. Oil prices are down at the moment, but that's temporary. And you're going to see higher prices, especially of commodities, because the fundamentals of commodities are enhanced by what's happening.

Which commodities are worth buying or holding on to?

I recently bought more of all of them. But I really think agriculture is going to be the best place to be. Agriculture's been a horrible business for 30 years. For decades the money shufflers, the paper shufflers, have been the captains of the universe. That is now changing. The people who produce real things [will be on top]. You're going to see stockbrokers driving taxis. The smart ones will learn to drive tractors, because they'll be working for the farmers. It's going to be the 29-year-old farmers who have the Lamborghinis. So you should find yourself a nice farmer and hook up with him or her, because that's where the money's going to be in the next couple of decades.

Maria Bartiromo is the anchor of CNBC's Closing Bell.

Free Real Estate Investing Information

http://www.reiclub.com/articlescripts.txt

Will America’s New Heroes Stand UP!

By Forrest Wallace Cato

 

Financial Planners Emerging As America's New Heroes

 

According to recent issues of The Wall Street Journal, Forbes, and The New York Times (among others): "The over-all national image of financial planners continues to improve despite major frauds being perpetrated by scoundrels like Bernard Medoff and others in the financial world. Their frauds are being exposed as stocks and real estate values tumble." America's planners and our military personnel have long been my heroes. There are a few bad apples in America's military but they are a very small minority. All-in-all we can be extremely proud of America's financial planners and service men and women.

 

Lew Nason, founder of the famous Insurance Pro Shop, explains, "Reliably measured trends now indicate that more-and-more insurance agents eventually become financial planners. Most planners today come from the insurance industry. This trend helps improve the ranks of planners. The average planner sells more insurance than does the average agent! The old self-promoting financial planner clown is becoming a relic of the past. This positive trend is being lead by Registered Financial Consultants, many of whom are considered industry role models. Of course these professionals are members of the emerging International Association of Registered Financial Consultants (IARFC)."

 

Here is a fact that more people should know…

…Financial Planners take an oath to act in the best interest of their clients. Independent professional "ethics studies" about the financial industry, show that planners do not routinely take advantage of people and exploit them as do many other financial professionals. In many-many cases, financial planners help more people than do any other financial professionals, including attorneys, accountants, bankers, and people in the brokerage business. Why do accountants enjoy such a good image when they charge the hell out of people? And lawyers never do for their clients in one visit what they can do for them in three visits, while some brokers needlessly buy-and-sell (churn) stocks in the client's portfolio. It seems that these professionals charging fees and commissions go on-and-on.

 

 

 

Marvin Schur Froze To Death

 

Ninety-three year old Marvin Schur of Bay City, Michigan, froze to death in his home a few weeks ago. He owed the local municipal electric utility a thousand dollars in past-due bills. The greedy utility turned off his electricity during freezing weather. The thousands of dollars that Marvin Schur paid the utility over many years counted for nothing during the recent blizzard. Living in a town of 35,000, about 80-miles from Detroit, in the USA today, he was forced to gradually freeze to death because of money he owed.

 

What a miserable way his life was ended just because he could not pay his most recent electric bills on time. Will you eventually expire like he did? Will some of your loved ones go to their death like this? No less than eight financial planners e-mailed me, or phoned me, to talk about this tragedy. Their responses did not surprise me. They were upset because they cared about this 93-year old citizen, though they did not know him.

 

The first financial planner to mention this incident to me was T. Jerry Royer, RFC, of Group 10 Financial in Haines City, Florida. T. Jerry Royer is considered by many in the financial planning industry to be a consummate role model. Jerry Royer's compassion, concern, and caring for his clients and fellow man, is outstanding amongst financial advisors and consumer activist groups.

 

Like the post office, the cable company, the phone company, and many other USA monopolistic "service" corporations, the only apparent major concern of that money-grabbing utility was to periodically raise prices and forever get still more bucks out of the elderly Mister Schur.

 

My first three immediate thoughts, after learning of this tragedy, were:

(1) This is another horror caused by "free enterprise" run amuck. Please read this complete article before you quickly disagree.

(2) What a perfect retirement cottage Mr. Schur lived in. His house was small, neat, clean, and well-kept, in a middle class neighborhood. From the appearance of his modest home I assumed that he had been very responsible during his life and had planned well.

(3) Fat politically-connected old white men are usually in charge of any utility. And old people tend to be rigid and set in their ways.

Oddly enough I also quickly even visualized the appearance of those typical, fat, politically-connected white men who are the top executives of most any American utility. Every top executive at any utility that I have ever seen was always a soft and bloated, politically-connected, self-important, old white man who was over-paid. The greedy people in leadership positions on Wall Street, banking, mortgage companies, auto companies, and other corporations, that I have met, or seen, mostly appear (to me) to be fat, politically-connected, and self-important, old white men -- a trend I predict will soon change to include plump and complacent old rigid and pompous people of other races. These dull old farts are so inflexible and uncreative. You're right, I'm not a fan.

 

Myths About Who Really, Helps America's People!

 

There are many rapidly fading American myths about who actually helps the people in our country. These myths have grown over the past hundred years having been promoted by people the myths benefit. Finally our citizens are wising-up:

 

Wall Street doesn't help people. People at most every level along Wall Street help themselves. Wall Street pays-off greedy politicians in Washington so they will pass laws and regulations that enable Wall Street to exploit people and grab more-and-more of the investor's money. Financial planners help people.

 

Banks do not help people. Banks help themselves. The banking industry pays-off crooked politicians so they can get laws passed that enable banks to legally take more-and-more money from the people. The banking industry has gotten every law passed, that they wanted passed, for the last 85-years. All of these laws and regulations make it possible for banks to further exploit the people. Financial planners help people.

 

Mortgage Companies do not help people. Over half of the mortgage companies actually cheat people while claiming to be "making the American dream possible!" How wonderful mortgages are. You can easily buy a hundred and fifty thousand dollar house and eventually pay half a million dollars (or even more) for it. But the repossession rate keeps rising and rising, so don't count on ever getting your house paid-off. Not one person in a hundred actually understands the mortgage he or she has. This is no accident. Mortgage companies pay-off worthless Washington politicians so mortgage companies can get laws and regulations passed that enable mortgage companies to steal and exploit people. Mortgage companies establish resolution departments to guarantee that they win every dispute. It has long been well-known that over 50% of all mortgages in effect today are excessively exploiting the customers yet the disgusting politicians do nothing about this! Mortgage companies over-pay their top executives. You could often get a better deal from organized crime. In fact, why are so many criminals in the mortgage business? Financial planners help people.

 

American Auto Corporations do not help people. Car companies take advantage of people. American auto companies pay-off stinking politicians in Washington to pass laws and regulations enabling the car industry to make mostly inappropriate and over-priced junk products. Car companies highly exploit their customer base. They over-pay their top executives. Financial planners help people.

Corporations do not help people. Corporations exploit people. Corporations pay-off the lying politicians in Washington so corporations can get laws and regulations passed that enable corporations to squeeze every dollar they can out of their customers. Many corporations obscenely over-pay their top executives. If a hamburger can be worth three hundred dollars then a top corporate executive can be worth over five million dollars. The greedy corporate executives – who are the shame of America -- grab this excessive amount of money and perks because they can. Financial planners help people.

 

The Drug industry does not really help people. Drug companies exploit people to the max! They have corrupted medicine and meaningful regulation by paying-off the rotten people in Washington. The paid-for politicians pass any and all laws the drug industry desires. And they desire laws that enable them to over-charge and exploit consumers. Financial planners help people.

 

Lawyers do not really help people. Lawyers exploit you if you have a legal problem or need. They stand ready at this moment to take advantage of you. They created the legal mess and got the laws and regulations passed (by paying off your "so-called" representatives in Washington) and guess what – these laws require you to need and use their services and to pay for them at their rates and on their terms. All this even though mere lawyers can not stand-up to the massive unlimited powers of the feds. Financial planners help people.

 

Oil and gas industry leaders, executives and managements do not help people. This giant industry helps itself. The oil industry pays-off dishonest Washington politicians so they can get laws and regulations passed that make it legal for the oil and gas industry to charge massive prices and gouge, and gouge, and gouge, and gouge. Financial planners help people.

 

Congress does not help people. Elected representatives help the special interest that pays them money! Politicians mostly tell you untruths and pretend they are honest and worthy. They pass laws and regulations that make it legal for you to be robbed, exploited, cheated, used, abused, etc. Financial planners help people.

 

The Georgia Governor Asked Me To Help

 

The Governor of Georgia appointed me to serve on the Consumer Utility Counsel. Our job was to find help for people who could not pay their gas, water, or electric bills. Our objective was to assist troubled folks in resolving their financial problems with utilities. Over the years, America's utilities paid-off state and federal politicians, this enabled them to get many laws and regulations passed allowing them to exploit their customers. I'm not a trained social worker. But like a good financial planner, I know what is acceptable and decent, though I am not a financial planner.

 

You don't allow people to freeze, or starve, or to be cheated, simply because corporate entities are greedy, politically connected, and can routinely pay-off despicable politicians to pass laws so that utilities can mistreat the people. But that is what has been taking place in America more and more, year-after-year, as "free enterprise" is abused due to a lack of enforced meaningful regulation, plus a lack of honest government. Our present dreadful economic conditions did not happen overnight.

 

We – the members of the Georgia Consumer Utility Council, based in Atlanta, -- gave-up our salaries, so that even that money could go to help those in need.

 

Once again, the profession that called me the most – when they learned of someone needing assistance – was financial planners. Dentists, doctors, lawyers, ministers, and Congressional members never called. The planners called because they cared. Over-and-over I reacted by calling on different financial planners to help people in need who were not their clients.

 

Perhaps that was because financial planners were the professionals I know best.

 

And many planners responded and helped because they were good and decent men and women. They managed to find time in their busy schedules to help rescue desperate people, who the greedy elements of our society do not care about. Actually these overly-greedy elements of our society do not care about you, they only care about the money they can get from you. I knew the moral fiber of financial planners. I thought they would help. I was not disappointed. They did help.

 

During my lifetime I have only been cheated by one New York financial planner. One, -- out of the many hundreds of planners I have known, -- is not bad odds.

 

Most financial planners I know are honest, smart, concerned, disciplined and intelligent people who want to help others. But we need careful and enforced financial regulation because a few "who call themselves" financial planners are only hustlers out to grab some more dollars -- even if this means saying anything, promising anything, concealing anything, or selling an inappropriate annuity to an easily confused senior citizen. These clowns are becoming a "dying breed" because consumers are finally wising-up. They are a very-very small minority. And they are detested by real planners.

 

Loren Dunton, the founder of financial planning, once told me, "My greatest regret is the clowns who call themselves financial planners and have plagued our industry since inception." The clowns contribute nothing to the industry associations, except possibly complaints. Clowns do not support anything, they don't pay their membership dues, attend their own conventions, purchase books with state-of-the-art information about their supposed specialty, research and write articles, support projects that encourage college students in the study of financial planning, or do anything for the profession they claim to be a part of. Loren Dunton was most proud of the financial planners who helped protect and defend the people. This concept of "doing the right thing, by acting in the best interest of the client," played a large part in what Loren Dunton envisioned as the role for this new profession.

 

Only one professional group persistently phones me with complaints about excessive Wall Street greed. These immoral Wall Street hustlers and banker thieves actually feel entitled to take this money in the form of obscene bonuses! They have been actually stealing taxpayer bailout money. The one group that calls most often with complaints about the present obvious excessive corporate over-payment, bonuses, and other money misuse is – you guessed it – financial planners!

 

"Financial planners are important. Planners control a multi-trillion dollar industry.

More than any other profession, planners help people the most with their money goals." Lew Nason, LUTC, FMM, RFC

 

It bothers financial planners to see money stolen from the people and then hear Americans told that this is acceptable. These callers are not people who misuse the title of financial planner to help them hustle more people. These are real financial planners who are responsible financial professionals that care. They have studied and have become qualified with appropriate knowledge to properly practice their craft. They are not mere product pushers.

Do You Agree With Carl Marx?

 

Guess who once said, "Capitalism enables greed and exploitation to run amuck." The person credited with making that statement was Karl Marx (1818-1883, the founder of communism). So not to sound like a Communist, I used the words "free enterprise" instead of Capitalism. I never thought I would ever agree with Karl Marx about anything. But obviously what we have today in the USA is an abuse of the Capitalistic system through greed and exploitation with a lack of adequate regulations being enforced. We have basically evolved into a system of unaccountability.

 

Why does corruption flourishes in our system?

 

What produced our recessive economy was, is, and remains, greed and exploitation running unchecked at all levels, in ways small and large. What Wall Street, and the mortgage industry, and banking, are all most reflective of today, is greed, corruption, and exploitation operating without meaningful controls. They are not willing to accept both transparency and accountability. One of the leading causes of the lack of enforcement is the so called "revolving door policy," that allows the special interest groups to flourish by going unchecked from the private to the public sector and visa-versa. Our government – let's call it the federal government because it is not really ours any longer – is what happens when greed and exploitation are out-of-control, causing regulation to be circumvented and thus suppressed, enabling special interest to purchase the passage of any laws they desire.

 

Citizens are badly exploited and harmed when capitalism is abused by greedy special interest that purchases the prevailing laws and regulations. Ask the person on the street if he or she is happy with what is going on. Financial planners are also not happy about this because they serve the people's best interest. Planners are the good guys here.

 

James D. "Beau" Henderson, RFC, of Fiduciary Capital in Gainesville, GA, is a financial planner who is active in civic, social, fraternal, religious, and educational works, all of which are involved in one-time-only efforts or ongoing projects that benefit people of all ages in his market area. "Beau" Henderson often speaks to groups warning them about the many ways in which they are now exploited.

 

Here is an example of what James D. "Beau" Henderson says: "When money crosses hands the politicians quickly forget the perils of unfettered capitalism. They sell out and forget you. Today we see the results of deregulation. The results are obvious. Government is the problem and not the solution. This is the era when contaminated (salmonella) peanut butter is officially discovered; people are warned about it -- but it is sold anyway. Virtually everyone knows that you cannot serve two masters at once. A federal agency like the Food and Drug Administration, having been infiltrated through the revolving door policy, (like most government agencies) is destined to become incompetent, uncaring, and not held accountable."

 

Beau Henderson continues, "Can anyone in government be accountable to both the private and the public sector at once? It currently appears as if no one in government is accountable for anything. They can even refuse to accept federal subpoenas. You can not do that, but they can and do. Don't hold your breath until someone in a federal agency gives up their big salary to help. Don't expect a first time event like government employees working late at the office some night."

 

"Doublespeak," first mentioned in George Orwell's 1984, is alive and well here and now. Wall Street paid ratings agencies to declare that questionable financial offerings were sound. They took the money and did so. Again-and-again planners, -- financial professionals truly in the trenches with the people, -- sounded the alarm to deaf ears in governments at all levels. For years planners told me, "This is insane! The housing bubble will pop! Our economy will be a disaster."

 

At first I wondered why most everyone I knew lived in a mansion?

 

As I said before, it is estimated that more than half the mortgages now in effect cheat and exploit the people paying for them. Planners have railed about this. Yet nothing was done. America's financial planners decry this prevailing practice standard even now, still nothing is done. What happened to federal protection or state scrutiny? Why do states approve bad products to be sold in their states? Is this the result of "money getting results" again? What happened to our system of checks and balances and other built in "safety nets"?

 

Other than financial planners, who is concerned about the people? Is anyone else, anywhere, concerned about anything except endlessly taking money from the people? The financial planners I know and respect are very concerned about the many present massive abuses of capitalism that make excessive greed fulfillment possible.

 

Bailout tax money goes to the special interests that control the federal government. Thus, even the obscenely greedy can further enrich themselves. Plus, the special interest can better serve their greedy purposes. There was little in the stimulus program to help the consumer, private citizen, individual, poor, or middle-class. Apparently, the tax paying citizen is not even a real concern of Washington. Money is taken (in taxes) then given to special interests so that the special interests can continue to shaft the consumers who pay the taxes.

 

Do you really want another over-priced, gas-guzzling, American made car that you know is lacking in quality? An over-priced car actually made to exploit you! Arrogantly the easily deluded Americans laughed at Toyota, Kia, and Hyundai when they began competing here. Now these are the three top sellers. Do you really think there is any point in going to an American bank for anything? Are most places in America going to help you or harm you? If you think they are not going to exploit you to the max then let me tell you about a big bridge I have for sale in Brooklyn. America's financial planners are not happy about what is going on because they care about their clients and fellow man.

 

Allowing capitalism, as it currently exists, to police itself, can only result in more harm, ciaos, and corruption. What could we expect if the inmates in a mental institution for the criminally insane were to exchange places with the staff and then asked to regulate and police their institution? As long as we allow special interests groups to flourish through a revolving door policy the institutions will not work the way they were intended.

 

These special interests groups are winning at the people's expense. Each corporation will forever squeeze every possible dollar out of you and your elderly parents and your children. When you have no more money left you can simply freeze to death. Our present system has become brutal to our people. Past money they took means nothing to the takers. It is future money they demand, and now. To hell with you if you can not pay! To hell with your children! To hell with your grandchildren! If they can not pay more and more then let them freeze!

 

Greater oversight of commerce and industry is highly needed but will be fought with money from commerce and industry. And money, -- just like the banking or credit card industry, -- always wins in Washington. Fifty thousand citizen voters do not have the influence of one lobbyist with cash. American is like a candy bar. This country keeps getting smaller with more phony ingredients. The United States Postal Service, which seems to raise its prices every six months, now wants to discontinue delivering mail on Saturday.

 

The many abuses of capitalism mean that little-by-little, America is going out-of-business, unless this trend can be stopped or reversed. These abuses of capitalism even mean that the existing form of government is no longer working as originally intended. Capitalism -- the greatest system of all -- is now even becoming dysfunctional due to the money pay-offs to politicians that end-up causing capitalism to allow greed and exploitation to run wild.

 

Cato's Conclusion: Financial planners and many other responsible Americans are alarmed. Historically, the financial planning industry has seen the "handwriting on the wall" while others in the financial industry become part of the problem. Many planners have been outspoken critics of this system gone awry. Many financial planners, at great peril to themselves and their families, speak truth and reality to the lies of the controlling powers that enable endless predatory practices. Realities that became obvious during this decade of greed and corruption are causing Americans to realize that capitalism, as we now know it, is allowing people to be harmed because of the many abuses by special interest, and most financial planners are among the very few who are actually on the people's side. CNN reported, on January 31, 2009, "One profession that is certain to be in great demand in the USA during the next ten years is financial planning. Financial planning is certain to grow and even flourish during the difficult days ahead."