Is this the real
price? Is this just
fantasy? Financial
landslide No escape from
reality
Open your
eyes And look at your buys and
see. I'm now a poor
boy (poor boy) High-yielding
casualty Because I bought it high, watched it
blow Rating high, value low Any way the Fed goes Doesn't really matter to
me, to me
Mama - just killed my
fund Quoted CDO's
instead Pulled the trigger, now it's
dead Mama - I had just
begun These CDO's have blown it all
away Mama -
oooh-hoo-ooo I still wanna
buy I sometimes wish I'd never left
Goldman at all.
(guitar solo)
~~~
I see a little silhouette of a
Fed Bernanke! Bernanke! Can you save the
whole market? Monolines and munis - very very
frightening me! Super senior, super
senior Super senior CDO -
magnifico
I'm long of subprime, nobody loves
me He's long of subprime CDO
fantasy Spare the margin call you monstrous
PB! Easy come easy go, will you let me
go? Peloton! No - we will not let you go
- let him go Peloton! We will not let you
go let him go
Peloton! We will not let you go -
let me go Will not let you
go let me go (never) Never let you go -
let me go Never let me go – ooo No, no, no, no, no, no, no,
- Oh mama mia, mama mia, mama mia let
me go S&P had the devil put aside for me For me, for me, for
me
~~~
So you think you can fund me and
spit in my eye? And then margin call me and leave me
to die Oh PB - can't do this to me Just gotta get out - just gotta get
right outta here
Ooh yeah, ooh
yeah No price really
matters No
liquidity Nothing really matters - no price
really matters to me Any way the Fed
goes.....
Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for $10 each. The villagers, seeing that there were many monkeys around, went out to the forest, and started catching them. The man bought thousands at $10 and as supply started to diminish, the villagers stopped their effort.
He further announced that he would now buy at $20. This renewed the efforts of the villagers and they started catching monkeys again. Soon the supply diminished even further and people started going back to their farms.
The offer increased to $25 each and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!
The man now announced that he would buy monkeys at $50! However, since he had to go to the city on some business, his assistant would now buy on behalf of him. In the absence of the man, the assistant told the villagers. "Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each."
The villagers rounded up with all their savings and bought all the monkeys. Then they never saw the man nor his assistant, only monkeys everywhere!
Now you have an understanding of how the stock market works.
I was doing some prep work for my panel appearance on this week's MoneyTech conference, when I came across David Armano (Critical Mass) and his neat illustration below.
David's supposition? While the Tipping point may be an overstatement, there are many different levels of influencers -- A-listers, Mainstream Media, ordinary bloggers -- but each can influence the other, as well as the general public.
A stunningly revealing interview that Jon Stewart conducted with Easy Al on the 9/18 “Daily Show." It’s telling that the fin media and Street are ignoring Easy Al’s answers.
Easy Al admits to Jon Stewart:
1) Excess money causes inflation. 2) Fed easy credit favors stock market operators at the expense of savers. 3) The Fed believes that the market trades more on perception of what the Fed is or will do instead of the actual policies. 4) The Fed must make the market perceive that the system is sound. 5) The presence of the Fed guarantees there is no ‘free market’. 6) He still can’t forecast the economy or whether there is a bubble or too much exuberance.
Here's a transcript of the interview (via Dummy Spots):
Stewart: (after Greenspan’s explanation that the market moves on expectations of the Fed move, not the fundamentals of it) So the Fed, or whoever’s leading it, if they wanted to could in fact “goof” on all of us...
Greenspan: (smiles) You wouldn’t want to.
Stewart: When you say “Open Market,” I always wonder... Why do we have a Fed? Wouldn’t the market take care of interest rates and all that? Why do we have someone adjusting rates if we are a free market society?
Greenspan: We didn’t need a central bank when we were on the Gold Standard . . . [Conspiracy theorists note- the Fed was created 20 years BEFORE we decoupled from the Gold Std] . . . people would buy and sell gold and the markets would do what the Fed does now. . . but by the 1930s most everybody in the world decided that the Gold Standard was strangling the economy and universally the Gold Standard was abandoned...you need somebody out there or some mechanism to determine how much money is out there because the amount of money in an economy relates to the amount of inflation...
Stewart: So we’re not a free market then - there is an invisible...a “benevolent” hand that touches us...
Greenspan: Absolutely, you are quite correct. To the extent that there is a central bank governing the amount of money in the system, that is not a Free Market, and most people call it regulation.
Stewart: When you lower interest rates, it drives money to stocks and lowers the return people get on savings.
Greenspan: Yes, indeed.
Stewart: So they’ve made a choice - “We would like to favor those who invest in the stock market and not those who [save]”...
Greenspan: That’s the way it comes out, but that’s not the way we think about it.
Stewart: Explain that to me. It seems to me that we favor investment, but we don’t favor work. The vast majority of people work, they pay payroll taxes, and they use banks. And then there’s this whole other world of hedge funds and short betting... y’know, it seems like craps. And they keep saying, “No no no, don’t worry about it, it’s Free Market, that’s why we live in much bigger houses.” But it really is, it’s the Fed, or some other thing, no?
Greenspan: I think you’d better re-read my book.
Stewart: Am I wrong that we penalize work by not making the choice to...
Greenspan: No, what a sound money system does is to stabilize the elements in it and reduce the uncertainty that people confront, and when people confront uncertainty they withdraw and it reduces economic activity...
Stewart: So it’s all about perception then. It’s about making people believe the system is sound. If the stock market is high, people feel confident in spending, and if it lowers, they feel less confident?
Greenspan: Well...uh...I think you have to realize, there are certain aspects of human nature, which move exactly the way you defined it. The problem is, periodically we all go a little bit euphoric until we are assuming with confidence that everything is terrific, there will be no problems, nothing will ever happen, and then it dawns on us- NO!
Stewart: And then it goes the other way.
Greenspan: Exactly.
Stewart: Huge Fear.
Greenspan: I was telling my colleagues the other day...I’d been dealing with these big mathematical models for forecasting the economy, and I’m looking at what’s going on the last few weeks and I say, “Y’know, if I could figure out a way to determine whether or not people are more fearful, or changing to euphoric... I don’t need any of this other stuff. I could forecast the economy better than any way I know. The trouble is, we can’t figure that out. I’ve been in the forecasting business for 50 years, and I’m no better than I ever was, and nobody else is either.”
Stewart: (Leans back in chair)...You just bummed the sh*t outta me!
And here's something I never thought I would type: Alan Greenspan on The Daily Show
In what has to be one of the most brazen examples of click
whoring I have ever come across, is this list of “20 timeless money rules” from
CNN/Money Magazine
I won’t lift their copyrighted material, but let me save you
the 20 clicks: Here are a collection of quotes that addresses the same issues that CNN addresses:
1. Be humble When you do not know a thing, to allow that you do not know it--this is knowledge. --Confucius
2. Take calculated risks He that is overcautious will accomplish little. --Friedrich von Schiller
3. Have an emergency fund For age and want, save while you may; no morning sun lasts a whole day. --Benjamin Franklin
4. Mix it up It is the part of a wise man to keep himself today for tomorrow and not to venture all his eggs in one basket. --Miguel de Cervantes
5. It's the portfolio, stupid Asset allocation...is the overwhelmingly dominant contributor to total return. --Gary Brinson, Brian Singer and Gilbert Beebower
6. Average is the new best The best way to own common stocks is through an index fund. --Warren Buffett
7. Practice patience It never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight! --Edwin Lefevre
8. Don't time the market The real key to making money in stocks is not to get scared out of them. --Peter Lynch
9. Be a cheapskate Performance comes and goes, but costs roll on forever. --Jack Bogle
10. Don't follow the crowd Fashion is made to become unfashionable. --Coco Chanel
11. Buy low If a business is worth a dollar and I can buy it for 40 cents, something good may happen to me. --Warren Buffett
12. Invest abroad The World is a book, and those who do not travel read only a page. --St. Augustine
13. Keep perspective There is nothing new in the world except the history you do not know. --Harry Truman
14. Just do it It takes as much energy to wish as it does to plan. --Eleanor Roosevelt
15. Borrow responsibly As life closes in on someone who has borrowed far too much money on the strength of far too little income, there are no fire escapes. --John Kenneth Galbraith
16. Talk to your spouse "In every house of marriage there's room for an interpreter." --Stanley Kunitz
17. Exit gracefully Only put off until tomorrow what you are willing to die having left undone. --Pablo Picasso
18. Pay only your share The avoidance of taxes is the only intellectual pursuit that carries any reward. --John Maynard Keynes
19. Give wisely The time is always right to do the right thing. --Martin Luther King Jr.
20. Keep money in its place A wise man should have money in his head, but not in his heart. --Jonathan Swift
Never hurts to learn from people smarter and/or more experienced than yourself . . .
I love a capella, and enjoy a good economic parody. So how could I not love the Richter Scales ode to the 2007 credit crunch, sub-prime implosion, and hedge fund blowups on Wall Street?
Lyrics are below:
There's a fine, fine line between investment grade and junk There's a fine, fine line between liquidity and a crunch And you never know 'til you settle up if the credit is benign There's a fine, fine line between a gain and a painful decline
There's a fine, fine line between the theories and the facts And there's a fine, fine line between what's solid and what cracks And now my holdings badly misbehave and my losses aren't confined 'Cause there's a fine, fine line between a gain and a painful decline
For years I piled on debt and smiled as my profits soared (I even bought a solid gold toilet, yeah) Now I see that I can't be levered this much any more (panicking, I'm panicking, I think I've soiled myself) Bernanke, please save me, cut rates, oh I implore... (please, even 50 bps)
There's a fine, fine line between a bull and a bear And there's a fine, fine line between delight and despair I'm hoping I'll avoid the pain to come from trades yet to unwind But there's a fine, fine line between a gain and a crippling, crushing, mortally wounding decline (help me)
This explains why I can never find a place to park the XSR48!
In a world where the lifestyles of the superrich are increasingly
spectacular, it seems as though there is no end to the number of
resorts under development and no limit to the luxuries they offer. And
some resort developers have found a niche that has not been fully
mined: luxe marinas with boat slips that can serve giant yachts.
These days there are more pleasure boats that are longer than 80
feet. In fact, they average nearly 100 feet and top out at about 500
feet, according to Yachts International Magazine, which publishes an
annual survey, The Global Build Report.
These boats are floating mansions, often with their own management
companies, captain and crew, chef, swimming pool, garages and helipad.
More than 820 such megayachts are now under construction, according to
Jamie Welch, the editor of Yachts International. That’s just a 3
percent increase over last year, he said, but a 58 percent increase
since 2002.
"All I ask is a chance to prove that money can't make me happy." — Anonymous
"What's the use of happiness? It can't buy you money." — Henry Youngman
"Some people will do anything for money - even work." — P.K. Shaw
"It isn't necessary to be rich and famous to be happy. It's only necessary be rich." — Alan Alda
"This planet has - or rather had - a problem, which was this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movements of small green pieces of paper, which is odd because on the whole it wasn't the small green pieces of paper that were unhappy." —Douglas Adams
"We live by the Golden Rule. Those who have the gold make the rules." — Buzzie Bavasi
"Money can't buy you happiness, but it can buy you a yacht big enough to pull up right alongside it." — David Lee Roth
"While money doesn't buy love, it puts you in a great bargaining position." — Anonymous
"Too many of us look upon Americans as dollar chasers. This is a cruel libel, even if it is reiterated thoughtlessly by the Americans themselves." — Albert Einstein
"Always borrow money form a pessimist, he doesn't expect to be paid back." — Author Unknown
"Some men worship rank, some worship heroes, some worship power, some worship God and over these ideals they dispute, but they all worship money." — Mark Twain
Given all the turmoil in the credit markets, consumer confusion is rampant. Dow Jones looks a t the 6 questions consumers are asking the most -- and answers them.
Will I still be able to get a mortgage?
Can I still get a no-down payment loan?
My mortgage lender declared bankruptcy. What do I do?
Should I be concerned if I currently have a subprime mortgage?
My certificate of deposit is from a lender that has made subprime loans. Is my money safe?
Advice to Graduates (and others) about spending saving money
Good advice for new graduates (and nearly everyone else) from NYT columnist Damon Darlin:
"Over the last two years I’ve been dispensing advice in this space about how to spend and save more wisely. This will be my last column for a spell as I am taking on editing duties that give me little time for reporting. But before I go, I want to remind the young graduates, their parents who scrimped and saved to get them there, and anyone else who stuck with me this far that are a few other rules of life worth considering."
Among them are the following.
• Never pay a real estate agent a 6 percent commission.
• Buy used things, except maybe used tires.
• Get on the do-not-call list and other do-not-solicit lists so you can’t be tempted.
• Watch infomercials for their entertainment value only.
• Know what your credit reports say, but don’t pay for that knowledge: go to annualcreditreport.com to get them.
• Consolidate your cable, phone and Internet service to get the best deal.
• Resist the lunacy of buying premium products like $2,000-a-pound chocolates.
• Lose weight. Carrying extra pounds costs tens of thousands of dollars over a lifetime.
• Do not use your home as a piggy bank if home prices are flat or going down or if interest rates are rising.
• Enroll in a 401(k) at work immediately.
• Find a partner and stay together. Study after study show that two can live more cheaply together than each alone and that divorce is the great destroyer of wealth.
• Postpone buying high-tech products like PCs, digital cameras and high-definition TVs for as long as possible. And then buy after the selling season or buy older technology just as a new technology comes along.
• And, I’m sorry, I’m really serious about this last one: make your own coffee.
I have violated most of these -- and regret doing so.
>
At the original column, there are links to just about every item.
Chinese pet food ingredients* spiked with a potentially dangerous chemical found their way into U.S.- manufactured pet food - as well as feed for hogs, chicken and farmed fish. After numerous pet deaths were attributed to the chemical, the FDA called for a series of recalls and quarantines beginning in March. Here is how the tainted ingredient spread.
Dried apples preserved with a cancer-causing chemical.
Frozen catfish laden with banned antibiotics.
Scallops and sardines coated with putrefying bacteria.
Mushrooms laced with illegal pesticides.
"For years, U.S. inspection records show, China has flooded the United States with foods unfit for human consumption. And for years, FDA inspectors have simply returned to Chinese importers the small portion of those products they caught -- many of which turned up at U.S. borders again, making a second or third attempt at entry.
Now the confluence of two events -- the highly publicized contamination of U.S. chicken, pork and fish with tainted Chinese pet food ingredients and this week's resumption of high-level economic and trade talks with China -- has activists and members of Congress demanding that the United States tell China it is fed up.
Dead pets and melamine-tainted food notwithstanding, change will prove difficult, policy experts say, in large part because U.S. companies have become so dependent on the Chinese economy that tighter rules on imports stand to harm the U.S. economy, too.
"So many U.S. companies are directly or indirectly involved in China now, the commercial interest of the United States these days has become to allow imports to come in as quickly and smoothly as possible," said Robert B. Cassidy, a former assistant U.S. trade representative for China and now director of international trade and services for Kelley Drye Collier Shannon, a Washington law firm."
>
Source: Tainted Chinese Imports Common In Four Months, FDA Refused 298 Shipments Rick Weiss Washington Post , Sunday, May 20, 2007; Page A01 http://www.washingtonpost.com/wp-dyn/content/article/2007/05/19/AR2007051901273.html
Let me start off with a list of good tips each with its own article from the very organisation who wants money from you. IRS 2007 tax tips
"10 tax blunders that can cost you" from CNN gives you list of don'ts. It is a good check list, you may know most of them. Also check out their Audit red flags article on more dont's
Smartmoney's tax tips are here. It also lists what is new for this year here. Both resources are useful and cover some new ground
Tax filing is all about various limits. Although most of the limits are verified and calculated by the tax software. It still makes sense to check them out at About.com and verify.
Top 10 tax tips from Turbo Tax is very detailed and useful.
Now here are few places covering special situations...
Small business portal AllBusiness provides 10 tax tips for the self employed. Another place where you can find help for avoiding audit on your small business return
After 18 years of service, Alan Greenspan is retiring as chairman of the Federal Reserve at the age of 79. What do you think?
Francis Englund, Programmer "He's irreplaceable. This Bernanke guy may be an anti-inflation fiscal conservative, but you just can't run the Fed if you've never screwed Ayn Rand."
William Oberst, Barrister "I guess the crash-and-burn lifestyle of a 'chairman of the Federal Reserve' finally caught up with the guy."
Lily Putnam, Nurse
"Wow. He's quitting at the same time as the American economy."
Here's a novel Real Estate idea: Sell your house like any other product to a willing buyer . . . Have them pay for their purchase, and then cart it away!
click for larger photos
This Glen Head house is about 2 miles from me . . .
Tim Iacono, proprietor of The Mess That Greenspan Made, made a wild discovery: three hundred unsold Hummers from one dealership, stored off lot so as not to scare away buyers.
Would someone tell me how this happened? We were the fucking vanguard of
shaving in this country. The Gillette Mach3 was the razor to own. Then
the other guy came out with a three-blade razor. Were we scared? Hell, no.
Because we hit back with a little thing called the Mach3Turbo. That's three
blades and an aloe strip. For moisture. But you know what happened next?
Shut up, I'm telling you what happened—the bastards went to four blades. Now
we're standing around with our cocks in our hands, selling three blades and a
strip. Moisture or no, suddenly we're the chumps. Well, fuck it. We're going to
five blades.
Sure, we could go to four blades next, like the competition. That seems like
the logical thing to do. After all, three worked out pretty well, and four is
the next number after three. So let's play it safe. Let's make a thicker aloe
strip and call it the Mach3SuperTurbo. Why innovate when we can follow? Oh, I
know why: Because we're a business, that's why!
You think it's crazy? It is crazy. But I don't give a shit. From now
on, we're the ones who have the edge in the multi-blade game. Are they the best
a man can get? Fuck, no. Gillette is the best a man can get.
Source: Fuck Everything, We're Doing Five Blades By James M. Kilts CEO and President, The Gillette Company, February 18, 2004 | Issue 40•07 http://www.theonion.com/content/node/33930 See also: Gillette's Five-Blade Wonder William C. Symonds Business Week, SEPTEMBER 15, 2005 http://www.businessweek.com/bwdaily/dnflash/sep2005/nf20050915_1654_db035.htm
"On a cold winter night in 1953, the Netherlands suffered a terrifying blow as
old dikes and seawalls gave way during a violent storm.
Flooding killed nearly 2,000 people and forced the evacuation of 70,000
others. Icy waters turned villages and farm districts into lakes dotted with
dead cows.
Ultimately, the waters destroyed more than 4,000 buildings.
Afterward, the Dutch - realizing that the disaster could have been much
worse, since half the country, including Amsterdam and Rotterdam, lies below sea
level - vowed never again.
After all, as Tjalle de Haan, a Dutch public works official, put it in an
interview last week, "Here, if something goes wrong, 10 million people can be
threatened."
So at a cost of some $8 billion over a quarter century, the nation erected a
futuristic system of coastal defenses that is admired around the world today as
one of the best barriers against the sea's fury - one that could withstand the
kind of storm that happens only once in 10,000 years."
>
Why are the Europeans so much more forward thinking about the inevtiable cyclical natural disasters than we in the United States are?
>
"The Dutch case is one of many in which low-lying cities and countries with
long histories of flooding have turned science, technology and raw determination
into ways of forestalling disaster.
London has built floodgates on the Thames River. Venice is doing the same on
the Adriatic.
Japan is erecting superlevees. Even Bangladesh has built concrete shelters on
stilts as emergency havens for flood victims.
Experts in the United States say the foreign projects are worth studying for
inspiration about how to rebuild New Orleans once the deadly waters of Hurricane
Katrina recede into history.
"They have something to teach us," said George Z. Voyiadjis, head of civil
and environmental engineering at Louisiana State University. "We should
capitalize on them for building the future here."
The Dutch erected a kind of forward defensive
shield, drastically reducing the amount of vulnerable coastline. Mr. de Haan,
director of the water branch of the Road and Hydraulic Engineering Institute of
the Dutch Ministry of Transport, Public Works and Water Management, said the
project had the effect of shortening the coast by more than 400 miles.
For New Orleans, experts say, a similar forward defense would seal off Lake
Pontchartrain from the Gulf of Mexico. That step would eliminate a major conduit
by which hurricanes drive storm surges to the city's edge - or, as in the case
of Katrina, through the barriers.
The Dutch also increased the height of their dikes, which now loom as much as
40 feet above the churning sea. (In New Orleans, the tallest flood walls are
about half that size.) The government also erected vast complexes of floodgates
that close when the weather turns violent but remain open at other times, so
saltwater can flow into estuaries, preserving their ecosystems and the
livelihoods that depend on them.
The Netherlands maintains large teams of inspectors and maintenance crews
that safeguard the sprawling complex, which is known as Delta Works. The annual
maintenance bill is about $500 million. "It's not cheap," Mr. de Haan said. "But
it's not so much in relation to the gross national product. So it's a kind of
insurance."
WSJ: "Air travelers well beyond the Gulf Coast, where Hurricane Katrina
hit land, should brace themselves for delays and cancellations well into the
week.
Airports yesterday including Louis Armstrong New Orleans
International and Jackson International in Mississippi were closed, and airlines
grounded flights throughout the Deep South.
