What Happened? What Is Happening? What Bad Could Happen? What Good Could Happen? What To Do About It.
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Topics in this week’s show include:
This show was delayed because events are moving too fast. I am trying to take the time to understand them myself. And as soon as I think I have one thing figured out, another thing pops up.
What Happened?
Why is everyone saying we are in a financial crisis?
The government had for decades a broad policy of easy loans. The Fannie Mae and Freddie Mac acquired the loans from the banks that first lent the money to customers. Then FNM and FRE bundled the mortgages together and sold them as bonds to huge investors, such as China. House prices started to fall. Foreclosures by people who were upside down. Some mortgages didn’t pay off. Derivatives of mortgages were sometimes leveraged 30 to 1. Banks are failing. They don’t trust each other. They won’t lend each other money.
What is Happening?
Is this a failure of the free market?
Hahaha, that’s a funny one. A free market is characterized by diversity. Independent agents trying different things, competing against each other to provide the best product or service. What we have is a failure of a government run monopoly of the world banking system through over regulation, over stimulation, perverse incentives, and adverse taxes. The end result has been a horribly disfigured evolution of a system that got over exposed to risk and is now paying for that over exposure.
But what is worse is that their fix is likely to impose new regulations or stimulus on the markets that continue to distort.
Why are you afraid of the bailout?
1. Mistrust of the government in general. These are the same folks that gave is the Patriot Act, FISA, Iraq war, and created the mess in the first place.
2. Look at loyalties: Henry Paulson just came sfrom Goldman Sachs. Which investment banks still exists? JP Morgan and Goldman. JP Morgan handles a lot of the Treasury market.
3. Where exactly is the $700 B going? CEO Pay?
Shorting: No short selling of financial stocks.
Power: Secretary of Treasury is above the law.
Gold: Why is the US Mint stopping the sale of American Eagles and Buffalos?
Bonds: WHy are bond funds going down?
Money Markets: First one to break the buck
What Bad Could happen?
- Companies are not able to get loans to do business. Already happening on the docks.
- 1000 banks could fail.
- Shipping companies could seize up. Store shelves could become less filled, starting with produce and fresh foods.
- China could stop buying US Assets. Then they could start selling.
- Countries could depeg from the dollar.
Can stocks drop another 25%?
1. They have done so recently (2002-2003 for example)
2 P/E ratios are still high
3. Earnings are expected to go lower
4. Credit markets are tight
What Good Could happen?
- Can stocks rise 25% from here? Yes, look at January 1975.
- Congress could require an audit of the Federal Reserve Banking system and also of the gold reserves of the US Treasury.
- Congress could legalize competing currencies, specifically those denominated in gold.
- Congress could pass H. R. 2755 the Federal Reserve Board Abolition Act
- The public could be educated and awakened as to the fraud going on around them
- Liberty could thus be preserved
What To Do About It:
1. Read MMM and follow the links to Paul, Hebner, et.al.
2. Get some cash money out of your ATM machine. Credit cards should still work, but cash is king.
3. Keep your gas tanks full. And propane.
4. Buy some canned foods.
5. Do not pay off your mortgage
6. Extreme: trade some fiat dollars (Federal Reserve Notes) for gold and silver coins. Not collectible coins but junk coins.
7. 401(k) plans: make sure you match your risk capacity. Perhaps spread some money across bond index funds.
8. Non dollar investments. Diversify internationally
9. Bank accounts: make sure under FDIC limits.
Learning Earning: Should You Be Worried About Your Investments?
Music from music.podshow.com:
Runaway Train – Under Feather
Email me: feedback at Mad Money Machine dot com or call the Mad Money Machine voicemail line 206-734-4763
Sun, September 28 2008 » Podcasts » Comments Off on MMM-129: What To Do About the Bailout
Not subscribed to the Lew Rockwell podcast yet? Have a listen to this one at least. Then subscribe to all 34 of the previous ones.
To subscribe using iTunes, copy this link:
http://www.lewrockwell.com/podcast/feed.xml
and then in iTunes click Advanced -> Subscribe to Podcast and paste the link in there and click OK.
Episode 35 is a little different, instead of Lew interviewing someone else, he is being interviewed on the Michael Reagan show. He is talking about the current bailout scheme.
Sat, September 27 2008 » Blog, Reviews » Comments Off on Stop the Bailout!
Peter Schiff of Euro Pacific Capital does a weekly show (on shortwave radio or something, but anyway). The one he did on Wednesday the 24th is a must listen. He tells it like it is. For example, “It’s not the tax payers who are on the hook for any bailout: nobody is talking about raising taxes. It is the dollar holders who will suffer through higher inflation…. The dollar is going to collapse.”
I cannot find a way to subscribe to his show through iTunes. So what I do is download the .mp3 file, import it into the music section of iTunes, then add it to a Playlist that gets it onto my iPhone. Of course you could always just listen on your computer.
Fri, September 26 2008 » Analysis, Blog, Gold, Predictions » Comments Off on Another show to hear
I am having trouble keeping up with all the economic news. And why should I, really, if I’m a buy and hold investor? Oh yeah, I do a podcast in the investing category. Well, like my momma told me, if you don’t have something nice to say, don’t say anything at all. Therefore, show 129 will be delayed a few days until I can bring together something coherent and informative.
In the meantime, visit Ron Paul’s Campaign for Liberty and see what he has to say.
Also, visit IFA.com and read Mark Hebner’s sidebar called The Invisible Hand and Why Prices Change?
Fri, September 26 2008 » Announcements, Blog » Comments Off on Tumult
I actually recorded some stuff for show 129 today and I’m going to delete most of it and instead let you get the info directly for yourself. I wanted to focus on three people I respect get their opinions of what is going on with the financial crisis and what we should be doing right now. The three people are Ron Paul, Mark Hebner, and Jim Cramer. Please visit these links yourself instead:
But like I said, instead of doing that on the show, I’m giving you the direct links to discover for yourself.
Wed, September 24 2008 » Announcements, Blog » Comments Off on Get Show 129 Extras Right Here
So shorting financial stocks was outlawed last Friday. The little guy is not allowed to make money off of the financial collapse. SKF is the ProShares UltraShort ETF that has the objective of being 2X short the S&P Financials index. When XLF goes down 1%, the SKF is supposed to go up 2%. The rules have changed. ProShares says they are not creating new shares. IndexUniverse says SKF is not functioning normally. Investors can still trade the existing shares, but they don’t reflect reality. For example, as of 11:20 this morning the XLF is down 5.6% while the SKF is also down 2.1%. On the other hand, the thinly-traded RFN is up 3.6%.
Even the SDS which is 2X short the S&P 500 index is out of whack. With the .SPX down 2.2%, the SDS is only up 2.7% (instead of 4.4% expected) possibly due to the fact that the SDS managers cannot short financial stocks.
Things are changing rapidly so as this post uploads it will probably be wrong, but I’m sickened that the little guy is getting shut out of opportunitities to hedge against the downturn. What’s next, confiscation of all of our gold coins, gold bars, gold ETFs, and gold rings?
Mon, September 22 2008 » Analysis, Blog » Comments Off on Relationship of XLF, SKF, and RFN today
Running stop signs. Schwab commercials. S&P 381. Soccer jerseys. Thermite demonstration. Amendment X. Virtual Reality. Save your 401(k).
Mad Money Machine named as one of the 10 Top Investing Podcasts by US News & World Report.
I ENCOURAGE you to Download this show thru iTunes!
But, if you just cannot deal with that then go ahead and Play the new show right now
The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com
Topics in this week’s show include:
- Please VOTE for MMM in Business at PodcastAwards.com. Apparently you can only vote once. Please do.
- Running stop signs? Cops want to go to court: It’s Overtime!
- Schwab commercials (rotoscoped): squint your eyes really tight and they go back to looking real again.
- The S&P 381 index?
- Soccer jersey changes: West Ham (XL), Manchester United (AIG) (include images)
- Lehman: The roughly 25,000 workers at Lehman, as well as many of the 60,000 at Merrill, face a double whammy: Many will lose their jobs and the companies’ plunging share privvces likely wiped out much of their net worth.At Lehman, stock and options could make up as much as 60 percent of an executive’s pay and share awards vested over five years. For most employees, stock and options were about 40 percent of pay, with the same vesting schedule.
- Constitution Minute: Amendment X
- Thomas Woods defines Constitution Day: (n.) Observed on September 17, the day on which federally funded American educational institutions, themselves unconstitutional, are unconstitutionally required to teach about the Constitution.
- Tool: Constitution for iPhone and iPod Touch
- Any tech ideas left? SekaiCamera
- Learning Earning: Your 401(k) will be a lot happer with 0.3% expenses than 2.0% expenses.
- Chevy Volt described on EconTalk
- Guru: Lew Rockwell. Read his article The Social Imperative of Sound Money.
- Thermite collapse on a car.
- New look to WSJ.com
Music from music.podshow.com:
ALTA PLAZA – XRAY DOGS
Money Control – Voide
Runaway Train – Under Feather
Email me: feedback at Mad Money Machine dot com or call the Mad Money Machine voicemail line 206-734-4763
Fri, September 19 2008 » Podcasts » Comments Off on MMM-128: Thermite Collapse
Now that AIG has been taken over by the USA, the Barclay’s English Premiere League soccer team Manchester United has revealed their new kit. The uniforms will retain the same colour scheme, but will have their new sponsor’s logo prominently displayed on the front.
“It is business as usual for us,” said a spokesman for the Glazer family.
The new logo features the new sponsor’s initials “USA” in the same font and inside the same white rectangle as the previous sponsor. The spokesman dismissed reports of a completely new logo featuring the image of Federal Reserve Bank chairman Ben Bernanke.
Wed, September 17 2008 » Blog, Fun » Comments Off on New Manchester United Uniform
The most important thing I ask of you is to nominate the Mad Money Machine for best Business podcast at PodcastAwards.com. Type in “Mad Money Machine” in the podcast name box (under Business the 3rd one down on the left), type in “MadMoneyMachine.com” in the Podcast URL box. THEN…. go down to the bottom of the page and enter your name and email address (and a comment if you like) and then press Submit.
To get nominated is my reward for doing the show. Thanks for helping me.
Mon, September 15 2008 » Announcements, Blog » Comments Off on Do me a favor? Nominate MMM at PodcastAwards.com
New song. Yu got his wish. Freddie and Fannie. DEFLATION. More Representatives? Apple, meh. Vixy.net YouTube ripper.
I ENCOURAGE you to Download this show thru iTunes!
But, if you just cannot deal with that then go ahead and Play the new show right now
The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com
Topics in this week’s show include:
- “Debtors Prison Blues” inspired by Johnny Cash’s “Folsom Prison Blues”
- Looks like Yu Yongding got his wish, eh? Good for you, Yu.
- Comment on Freddie and Fannie:
- Why did foreign markets rally so big after the bailout? It is because they were the ones bailed out!
- FDIC Bank Failure count: 7
- Small US banks may fail though.
- Bond King Bill Gross wanted the bailout,
- and here’s an interview of Gross with Tom Keane,
- and on CNBC he said PIMCO made billion$ on the day the gobmint took over FNM and FRE.
- Jim Rogers: US is more communist than China now
- What is going on with commodities? DEFLATION!
- Ron Paul says gold can defend against aggressive government monetary policies that threaten to inflate away the value of your life savings.
- Constitutional Minute: Article 1, Sections 1&2. I wonder what the Founding Fathers would think of the representative to citizen ratio of 1:689,655 we have now versus the 1:60,606 they had back then?
- Apple announcements. meh. iTunes 8 with Genius. meh. No new MacBooks. No iTablet.
- Tool: Vixy.net (YouTube ripper)
- Liking Google Chrome!
- Cover art is the Second Bank of the United States in Philadelphia
- Learning Earning segment: Historical stock price databases, like CRSP
- Guru: James Turk see his article about Gold (also listen von Michael Badnarik, look for show #352 on 20080902)
- Nouriel Roubini says we are now the USSRA
Music from music.podshow.com:
ALTA PLAZA – XRAY DOGS
Money Control – Voide
Runaway Train – Under Feather
Email me: feedback at Mad Money Machine dot com or call the Mad Money Machine voicemail line 206-734-4763
Thu, September 11 2008 » Podcasts » Comments Off on MMM-127: Debtors Prison Blues
Easy way to One Million. Don LaFontaine: In A World. IFAMobile.com. eBay says stay away gobmint. The EYE on a Dollar. Index investing not for you? Frank Curzio? Bloomberg. Tax Loss Harvesting. More on Do It Yourself.
I ENCOURAGE you to Download this show thru iTunes!
But, if you just cannot deal with that then go ahead and Play the new show right now
The Mad Money Machine is proud to be sponsored by Index Funds Advisors at ifa.com
Topics in this week’s show include:
- Remembering Don LaFontaine
- Got a mobile browser like an iPhone? Check out IFAMobile.com!
- eBay is saying big retailers are lobbying politicians to crimp Internet sales.
- Symbols on Money: The Eye of Providence
- Four Reasons Why Index Investing May Not Be For You
- Is Frank Curzio’s podcast not so bad after all?
- I do like Bloomberg on the Economy podcast
- Learning Earning: Tax Loss Harvesting
- More information on how to Do It Yourself.
- QUICK! Sign up for IFA’s online workshop on How to Invest in Recessions and Volatile Markets. It happens on 10 September.
- Portfolio Smackdown results
- FDIC Bank Failure count: 6
Music from music.podshow.com:
ALTA PLAZA – XRAY DOGS
Money Control – Voide
Runaway Train – Under Feather
Email me: feedback at Mad Money Machine dot com or call the Mad Money Machine voicemail line 206-734-4763
Fri, September 5 2008 » Podcasts » Comments Off on MMM-126: How to Make One Million Dollars
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