Archive for the 'Finances' Category

Date: October 6th, 2008, Filed under Money, Uncategorized

Chicago, IL

By A.B. Dada

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My business partner sent me a text this morning as we work together on a big project: “The DOW is under $10k!”  I popped over to the web, checked, and realized he’s right.  Within 30 minutes, I had a ton of emails from people about it.

Guess what?  It doesn’t matter.  Even if you’re in the stock market, the dollar price of the DJIA, or the NASDAQ, or even gold or silver means nothing.  You may think it does, the mainstream press wants you to believe it does, and even your government wants you to worry about the value of the DJIA and other market indicies.  But in reality, they mean nothing.

What does a market index show?  Basically, it shows the current value of a bundle of stocks or commodities.  Over time, you can look at pretty little graphs that show this number going up or down.  Most investors want those graphs to go up.  This is what amateurs do.  This is what the sheeples clamor for: more upward movement!

But that upward movement means nothing.  It means that the specific number goes up.  It does not mean that the value in the investment goes up.  When the number goes down, it does not mean the value of the investment goes down.

You can believe what they’re telling you, and you can end up a sucker like the rest.  When the masses look at a simple number like the DJIA and think that up = good and down = bad, the powers that be have won.

I prefer to think of these numbers as useless except in a pool of comparisons.  If I buy an index fund that tracks the DJIA, I will look at the specific price I paid, in comparison to a variety of products.  What is the ratio of the DJIA to gold?  What is the ratio to the DJIA to a case of eggs?  How about the DJIA to a gallon of gas?

If I move to sell that same investment, I’ll compare the same ratio comparisons.  That tells me if my investment was profitable, or if it was a loss.  Imagine if the DJIA tripled in price in 1 year, and you had an index fund investment.  Wouldn’t you be ecstatic?  Now imagine if gasoline quadrupled in price in that same time frame, and food went up 1000%.  You might still be happy, but once someone points out that you actually LOST value, you might change your mind.

So stop watching the dollar value of anything — stocks, commodities, and assets.  Instead, create your own comparison chart based on things that matter to you.  When you do, you’ll have a better understanding of what is actually happening to YOUR economy, the only one that matters.  While you’re at it, throw in your annual salary and your weekly salary after deductions, and create new ratio comparisons to see if you’re making more money-value over time, or less.

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Date: July 23rd, 2008, Filed under Housing Bubble

Chicago, IL

By A.B. Dada

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Daniel Gershburg Esq., is a Bankruptcy & Real Estate attorney serving clients in Brooklyn, Queens, Manhattan, Staten Island, Long Island and Westchester. Gershburg is a NACA member, an organization I speak very highly of who defends consumers from junk debt buyers and other collector nightmares.

On his blog, Gershburg covers a topic that we’ve spoken about lately: short sales. Gershburg introduces a new thought in the mix:

Furthermore, the remaining balance of the mortgage would be forgiven by the lender and she would be able to live in the house, albeit with a new owner, until such time as she had the funds to repurchase the house. The description is insane.

Read the rest of this article titled Short sale to investor who rents to previous homedebtor? at the Housing Bubble site.

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Date: July 23rd, 2008, Filed under Housing Bubble

Chicago, IL

By A.B. Dada

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Used home sellers for recent years were tricked into believing their homes were worth more than they probably should be: some people bought homes at a huge price, others extracted equity using loans or lines of credit. As the housing market returns to realistic figures, prices are falling, leaving some homeowners upside down on their loans. These people are the most likely to default on their mortgages and lose their homes to foreclosure.

But not every homedebtor bought more than they could afford, many still have equity or are not too underwater. When homedebtors hold to previous year’s ridiculous pricing, the news media loves to quote a common phrase used: “We’re not going to give our house away.”

Read the rest of this article titled Sellers won’t give their house away: smart at the Housing Bubble site.

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Date: July 23rd, 2008, Filed under Gold Investment

Chicago, IL

By A.B. Dada

To free market economists, such as myself, the term inflation means one thing: the increasing of the money supply. In simple terms, this means creating more money than was previously in existence. Inflation has a primary side effect: the increasing of prices. It has another side effect: malinvestments, which mean that investors see increasing prices in a market, so they put more money into that market, causing prices to skyrocket. This is how bubbles are created, usually put at the fault of the central bank that created all the new money. The third effect of inflation is the boom-and-bust economic cycle.

When most “normal” non-economist people talk of inflation, they mean one thing: the rise in prices. Fuel prices are up double in one year; housing prices skyrocketed 100% to even 300% in some markets in 4 years. People call that inflation, even though it is an effect of inflation, or the creation of new money.

Read the rest of this article titled Inflation figures are even worse than the free market economists think at the gold investment site.

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Date: July 21st, 2008, Filed under Gold Investment

Chicago, IL

By A.B. Dada

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As an avid gold bug, with almost a decade of praising the gospel of gold to the masses (and those closer to me), I continue to get looks of surprise from people I haven’t met in years who yell at me for not being pushier over the years in getting them to buy gold. “Why didn’t you tell me it would go up so much?”

And today, while still an avid goldbug advocating the many reasons to own gold, my new proclamation to these fine folks makes them frown: Gold is a terrible investment. No, not because I feel it will fall in relation to the dollar or other currencies; gold has always been a terrible investment, even when it has skyrocketed almost 400% in less than a decade.

Read this entire article titled Gold is a terrible investment at the gold investment site.

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Date: July 16th, 2008, Filed under Finances

Chicago, IL

By A.B. Dada

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Announced just days ago, Blackstone Group’s founder is taking on a huge philanthropic jump in releasing a movie titled I.O.U.S.A. and a billion dollar effort to promote it and strong fiscal responsibility for the U.S. and its future.
I.O.U.S.A. details the huge debt that all Americans live under: nearly $10 trillion.  That number is unfathomable.  When written out, it is $10,000,000,000,000.  If you earn $50,000 per year as a household, it would take you 200,000,000 years to pay it off (200 million years).  If you live in a town of 50,000 people, it would take your town 4000 years if everyone paid just the debt and each earned $50,000 per year.  If each American had to pay it off today, it would be almost $33,000 per living person in these united States to pay it off tomorrow.  And it’s growing.  And growing.  And growing.  A child born tomorrow instantly has this burden.  And their children might have worse.  Your grandchildren.
Peter George Peterson is a bit of a hero of mine, even though his cohorts may not have been such glamorous people.  Peterson was the Chairman of the conspiracy-laden Council on Foreign Relations.  He was the U.S. Secretary of Commerce from 1972 to 1973.  His firm, the Blackstone Corporation, manages nearly a third of a trillion dollars in assets.  They “help” hilarious badly managed corporations either merge, disappear, or find stability.  Enron and Global Crossing were dismantled by Blackstone.  Peterson made a fortune, as any capitalist should have, by being at the tail end of finding ways to extricate those failed corporations from an even bigger mess.

Peterson’s net worth is around $2.5 billion, on the books at least.  Think about that: if he invested his capital at just 5%, he would be receiving almost $125,000,000 annually in profits (that’s $125 million).  He can afford to put $1 billion of most his money into reminding Americans and the world that we’re in a huge toilet that is close to being flushed.  And I applaud his venture, even though I haven’t seen the movie yet.

The movie’s cast of villains and characters includes the “honorable” Greenspan, hopefully months away from incarceration for going against Volcker’s desire for a stronger dollar.  Oh, Volcker is also there, as is current billionaire Warren Buffet, and a host of other powerful men, in and out of government.

Yet the movie has its own share of conspiracies attached to it, many of which I haven’t heard anywhere online and offline.  One is that it is based on current U.S. Comptroller-General David Walker’s tour of the U.S., warning people of pending financial chaos.  Walker is due to step down from this position in 2013, but “surprisingly” he is stepping down any day now to head up the Peter G. Peterson foundation.

The other main character in the movie is Robert L. Bixby, a former lawyer and Chief Staff Attorney of the Court of Appeals of Virginia.  Bixby is a thin, strong looking fellow, sort of a Buddy Epsen (Barnaby Jones) type strongman.  It’ll be interesting to see how he is involved.  Bixby happens to be the Chairman of the Corcord Coalition, a group dedicated to warning Americans about the idiocy of spending more than you make, and passing it on to your great-grandchildren.    A casual Google Video and YouTube search will find you many videos of Bixby and Walker touring the States and Congress, hand-in-hand, making speeches warning about the danger of this debt.  The Congresscritters are oblivious, of course, only perking up whenever the word “dollars” and “pockets” are said.  What do they care, they’re the ones who put us in this mess.

So the movie could be terrible, or it could be great.  It could have a motif of needing more government, or maybe it will tell the truth that we need less government, far less.  Who knows?  I’m still interested, and can’t wait for my VIP invitation to see it ahead of the film festival circuit.

It’s due out in Fall of 2008, and the Peter G. Peterson Foundation will be distributing free DVDs of the movie after it hits theaters.  Watch this site for more information on what should be a great, and scary, movie of our generation.

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