Food for the Soul and Pocketbook!!

[NASHVEGAS]

Agenda I guess keeps the virtual world separated from the real world especially in gambling! Nevertheless I wanted to share a friend of mine's summary of recent events....not meant to be a political statement but a macro-economic statement and imo my friend is spot on....thought you might find it interesting!!

"Yea, I've been following all of this for several weeks now. It takes a long time for this all to unwind, though. The Federal Reserve "printing money out of thin air" is exactly what Ron Paul was always talking about when everyone thought he was crazy. Now maybe everyone will see that he isn't, even though no one ever sees him on TV news.

Every time the Federal Reserve bank develops some new way of getting money to the Banks at discounted rates (First the anonymous Term Auction Facilities, now this $200 B 28 day loan window), they decrease the value of your savings account and of the dollar. That's the "inflation tax" that people talk about. [Btw, Elliot Spitzer was fighting this sort of bail-out behavior on Wall Street, but was just forced to resign right before this whole bail-out happened]

AND:
Today, Bear Stearns, the huge U.S. Investment bank started back in 1923, failed. It went bankrupt. The Federal Reserve gave it more money through J.P. Morgan (another bank, since they couldn't loan directly) to keep it alive. Banks in Europe have been failing for several weeks now, but the U.S. News seems to not report much of it. The multi-billion dollar hedge funds are liquidating, too. What has happened is "leverage" which is when you take out a loan at 5% interest to buy something that yields 9% interest... you make the difference in profit, or 4%. The hedge funds did this several times over, sometimes 30 times, making millions or billions of dollars!!! The problem is: if the original money goes bad, everything that was purchased by that money on leverage, also goes bad, so it "unwinds" very quickly, and even on relatively small margin calls. If something is "leveraged up" 5 times, then a failure of just 20% of the value erases it all.

I think this is set to be worse than the "stagflation" of the 70s, and the Savings & Loan crisis and LTCM and dotcom collapse. About 500 Trillion dollars in these credit and debt securities that are no longer selling and causing the "credit crunch" are out there in the world. The world's GDP is only about 65 Trillion dollars, which means there's far more money to be lost than there is total wealth and production on the entire planet. There's also a recession happening during the credit crunch.

There are a lot of very big problems, but what will probably end up happening is this: the Fed will continue to buy up all of this very bad debt in the markets, which will continue to push up inflation drastically. Otherwise, the economy could collapse on itself.

There's not much that any of us can do except make sure that all debts are paid ASAP and that you save as much as possible. "Live within our means, or live beneath your means"..."

[bryand]

If only Uncle Sam would bail me out every time I gamble it all on "bad investments" and lose.

[RobWin]

Great article (or letter from friend) Nash, Thanks for posting...looks like my boy Ron Paul actually does know what the hell he is talking about...too bad more people didn't realize that sooner...and I agree with all the points your friend was making in the letter too, especially about the worlds GDP average...too many people out there that don't even have a clue what the hell GDP really means and stands for and the same could be said of the National Debt...you would not believe the friends of mine who say that I'm crazy when I tell them that we have been borrowing money from China for the last few years in order to stay afloat and they think I'm nuts (well maybe a little...LOL).......

But that is fact and also another big topic that Ron Paul tried to tell the folks about and no one wanted to listen...the sad thing is that it will most likely take a major downturn or collapse of our economic system before most of the people out there actually wake the hell up and realize that this country has been sold out to these foreign governments for years now and especially now that our dollar is trading so low on the world market,,,actually at all time lows on the world market...these foreign governments are just like wolves standing on the edge of the field waiting on the sick sheep to fall so they can move in and capture more and more of our sovereignty here...and it is only going to get worse if something big does not step in and stop the bleeding !!!

[RobWin]

You know now that I actually think about it, I think this country would be in much better shape in the future if the school systems made it mandatory for kids starting out in Jr High School were required to take a course in Economics and then two more courses of it in High School...it definitely would not hurt....unless it was actually taught by the government...LOL

[NASHVEGAS]

Originally Posted by RobWin

You know now that I actually think about it, I think this country would be in much better shape in the future if the school systems made it mandatory for kids starting out in Jr High School were required to take a course in Economics and then two more courses of it in High School...it definitely would not hurt....unless it was actually taught by the government...LOL

agree and not to step on toes but I actually spoke with not just people on this forum this week but many (who say they are businessmen/women) and they did not know supply from demand moreless microeconomics from macroeconomics....I suppose I should not have been shocked but I was!!

[RobWin]

Originally Posted by NASHVEGAS

agree and not to step on toes but I actually spoke with not just people on this forum this week but many (who say they are businessmen/women) and they did not know supply from demand moreless microeconomics from macroeconomics....I suppose I should not have been shocked but I was!!

I hear ya man...and I feel the pain...well you already know that though...LOL,,, I think it boils down to the way that most of them were taught economics, if they actually were,,,the text books need to definitely be re-written as the global commerce market has merged into arenas never crossed or impacted before by such microcosms that can cause such a trickle down effect no one realizes it's coming...

[NASHVEGAS]

I reallocated almost all my investments this week. Also having been very much a part of the S&L crisis plus Tax Reform of 1986 when the ability to write off passive losses against ordinary aka active income was taken away with no one being grandfathered (and somehow survived where I saw some aquaintances--mostly in syndication deals--go to bed worth millions and wake up broke the next morning) I am cutting back including my BandM gambling trips. Better safe than sorry!!

[RobWin]

Couldn't agree more Nash...time has come for the Ole Belt to start tightening up a couple notches...I was actually doing some research this week on "Survival Mode" during times of economic collapse and other scenarios and there were some really great articles that I read that were written by some of the old timers that actually lived thru the meltdown of 29 and also articles written by their kids too...

Some of the other stuff I've been reading lately basically has to do with general survival techniques that can apply to your life and situation in general...real interesting stuff,, how to stock up on supplies,, what types last the best,, areas to stay away from,, etc. etc....some good reading there,, but not for the faint of heart.....

[lauriejim]

Originally Posted by NASHVEGAS

I reallocated almost all my investments this week. Also having been very much a part of the S&L crisis plus Tax Reform of 1986 when the ability to write off passive losses against ordinary aka active income was taken away with no one being grandfathered (and somehow survived where I saw some aquaintances--mostly in syndication deals--go to bed worth millions and wake up broke the next morning) I am cutting back including my BandM gambling trips. Better safe than sorry!!

...youve always given me good advice on how the construction market was going and i didnt take it to heart, NOW IM LISTENING!!!!!.

[NASHVEGAS]

Originally Posted by lauriejim

...youve always given me good advice on how the construction market was going and i didnt take it to heart, NOW IM LISTENING!!!!!.

On the micro side I good preach about the housing market forever but the macro side is more unpredictable, mix the credit crunch (where if you knew how to breath you could borrow money that will go full circle to those who are your best credit risks and seek to borrow for example $ 1oooooo to build a few homes at a 50% LTV, that same banker NOW even on a solid deal with proper much tougher underwriting will look at you like you just asked to borrow one billion dollars not one million dollars) with inflation which for some reason the government claims barely exists (hello, the drop in the dollar, 700% or so increases in commodities like oil,silver,copper,etc. all which trickle down) with deflation in housing which has always generally been Americans primary appreciating asset..... Not sure without research if all 3 of these have occured at the same time. I know we had "the misery index" of 1981 and 1982 of 21% including inflation and unemployment. Hope we do not have "the jump off the building index" in our future but we came real close this past Monday if the Fed did not make the unprecredented move of opening it's discount window to not just banks as always but now Wall Street....Maybe the Fed could open it to failing online casinos