a believer

Playing the Market in Difficult Times

The local paper's October 10 front page news, ‘Nothing stops stock plunge,’ about the 679 point plunge in the stock market on Oct. 9, was juxtaposed with: ‘They all filled up for $20, and now they’re all wanted,’ and article about ‘possibly hundreds’ of criminals stealing from a local company by participating in a gas card scheme.

Both articles are actually about the same thing: how far we have fallen, and how much farther down we have to go.

In hindsight it is easy to see what has happened, but this chronology points clearly to what you should be doing next:

1) Someone decided that instead of providing goods and services with real value, they could Get Rich Without Much Effort by tricking financially uneducated people into mortgage obligations called ARMs.

2) This was so successful that many, many other people noticed these people Getting Rich Without Much Effort. They formed corporations that would buy, repackage, and sell these mortgages, Getting Rich By Not Really Doing Anything That Produced Value.

3) These corporations were so successful that top financial people in The Leveraged Debt Industry noticed. They devised ways to profit even more by creating and trading derivatives on the packaged debt, Getting Far Richer By Not Really Doing Anything That Produced Value.

4) This was so successful that nearly every 'bank' and many corporations devised schemes to buy and sell these derivatized instruments, Getting Even Richer By Not Really Doing Anything That Produced Value.

5) Fast-forward to January 2006, The Housing Music Stops, and sales and prices start a precipitous decline.

6) Over the next year, many poor people with ARMs experience at least one interest rate reset, and start missing payments.

7) Now, three things happen in quick succession in 2007/08: housing prices decline by 25 - 40%, poor people start losing their houses to foreclosure, and the real estate market essentially stops functioning.

8) This changes the whole game for the ARM persons Getting Rich By Not Really Doing Anything That Produces Value, which by now has grown to be the size of a small army and includes nearly every bank:

a) They are now seen by the populace as liars and thieves
b) They have NO MARKET into which to sell their products
c) There is NO MORE PROFIT from their existing mortgages because a hefty chunk of each package isn't even returning the prinicpal

9) The Dow 14,000 market, largely based on and supported by this army of ARM purveyors falls by 90% before slowly recovering (we are 40-45% of the way there, as of today). Don't believe it? Just look at the 85% drop in the NASD 100 in 2000-2001.

What to do next:

If you are in the army above, it is time for you to find a new profession. I am dead serious about this. If you insist on continuing to try to sucker poor people, you will now fail. Try something that uses your strengths to produce something with real value for someone; go back to school. Industry is STARVING for good workers, engineers, nurses, etc. And you will feel alot better about yourself.

Stay in cash if you have any - Cash Is King, as they say.

We are in for a good whipping, and we all deserve it, but we can come out stronger for it.

In his prophetic vision in the early 1990's regarding the world's financial future, Rick Joyner saw that "everyone...was going down on their knees." No one was spared. He saw an ocean full of two kinds of ships - the hospital ships (churches, missionaries, orphanages) that were helping the wounded, and the warships. The warships were the banks. The amazing thing about the warships was that one would pull up alongside another ship and fire point-blank at it, destroying it. The banks were destroying each other. However, "somehow the banks will survive." - From "A Prophetic Vision for the 21st Century," by Rick Joyner, 1999 (a great read by the way).

Ezekiel 22:12 NIV

'In you men accept bribes to shed blood; you take usury and excessive interest and make unjust gain from your neighbors by extortion. And you have forgotten me, declares the Sovereign LORD.'