gato

U.S. Household Net Worth Gains $2 Trillion

Sniff!...Hmmm!..Have you been smoking some bad weed.
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Is a Crash Impending?

Karl,
Congratulations,..you've kicked up some dust..that's the important point (to me) causing people to think. Not easy thing to do, with so many sleep-walkers unwilling to do the hard work of due dilligence before investing. Also, you've put your opinion "out there" no waffling (right or wrong ) unlike many economist who go: "on one hand this could happen, but on the other hand this could happen"..almost 90% are always wrong..yet they still keeping their (Ahemm!..so called) jobs.
The other point is, when investing, or getting "very logical information".. it helps to remember that :"there are no facts...only our interpretations of them.
gato

The U.S. Federal Budget in Pictures

What caught my eye in the first pie "right of the bat" was corp. income tax of 4.3 % ....(Duh??) and individual income tax of 27.3% a dead giveaway of who's calling the shots in the IOUS of A. However, it's safe to assume that these numbers were supplies by the Feds....'an we all know they gotta be ...Ahemm!...Right!
Bruce E. W.(comment above)
Makes some very valid points about how we are being "played" 'an it looks like we are following the script to the letter. The divide and conquer routine (Democrat vs Republican) is getting a bit thread bare though....since with a one party system that we have, they can all get a slice... just like the Soviets...(So,..why bother with a constitution). Still, many refuse to see what is staring them in the face.
gato

Clarifying America's No-Win Economic Dilemma

Duh!! you recommendation on wind power was "FLP" was delisted on 'Jul 28, 2000'....?? did you hit a speed bump..or what?
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The Top 5 Looming Financial Issues

Tick!...tick.....tick!

Economy..a ticking time bomb....tick.!...tick!
"Derivatives massively leverage the debt in an economy, making it ever more difficult for the underlying real economy to service its debt obligations and curtailing real economic activity, which can cause a recession or even depression". Is the view of Marriner S. Eccles, U.S. Federal Reserve Chairman from November, 1934 to February, 1948, too high a level of debt was one of the primary causes of the 1920s-30s Great Depression

My concern is about about all the talk on derivatives, and watch the destruction of the dollar, the sub-prime loans etc, etc....The main types of derivatives are futures, forwards, options, and swaps. (OTC) derivatives are contracts that are traded (and privately negotiated) directly between two parties, without going through an exchange or other intermediary. Products such as swaps, forward rate agreements, and exotic options are almost always traded in this way. The OTC derivatives market is huge. According to the BIS (Bank for International Settlements), the total outstanding notional amount is USD 516 trillion (as of June 2007)

According to the BIS the total derivative market in 2002 was $100 trillion dollars. Warren Buffet thought then that. that could be a problem because he had just acquired Gen Re Insurance company that had some derivatives and he wanted to sell them...Well, he couldn't find takers....He termed derivate as “financial weapons of mass destruction”. I think he was thinking that if the LTCH (Long Term Capital Management hedge fund )which had just gone " belly-up" with losses of $5 billion and nearly brought down the US financial system. So, he had to be thinking "what would happen if the $100 billion derivatives had such a problem". Fast forward to 2007 and the derivatives had changed to (according to BIS)...These amounts are hard (for me)to imagine...'cause we're talking “big bucks here” We not talking money in terms of main street every day shopping, but more in terms of petrol-dollars IOU's, etc., which fluctuates in value by the second. Never the less, to put it into context, so that a small time “investor” like me can "try" to get a handle on it, here are a few comparative monetary numbers to use "as economic land marks"....Take a peek!:

USA, GDP (annual gross domestic product)....$15 trillion
USA money supply................... trillion
USA Federal Budget (2007)................... trillion
USA Maximum "legal" debt..................... trillion
World GDP (all nations 2007)................$... trillion
Unfunded SSI (socials security) and Medicare.$60 trillion ****Uh...Oh, what's that?!
Total world real estate value...............$7... trillion
Total value of stocks and bonds..............$10... trillion
Total value of world's derivatives(BIS 07)...$516 trillion
Total war exp. Afghanistan $200 + Iraq $850...$1.05 trillion

Getting the picture?...not pretty!

Note:The BIS notes that the $516 trillion is “notional value” which really means the melt- down-value, or a complete wipe-out of the world derivate market, they also state that "only" $11 trillion was the nominal financial risk in 2007....Oh...geees!..n... I feel better!

Some of us, think that the FED. (U. S. Fed. Reserve) is a US Government organization who's function is to protect the nations economy. The term "Federal Reserve"
(I think) prefixed with U.S. leads us astray. In reality the Federal Reserve is a private, not public institution, representing the interests of the US banks through its 12 regional branches. Therefore, the nature of the Fed is that it is a banking system insider. The Fed's first and foremost defends the banking system and "only" secondarily represents broad economic interests as mandated by the US Congress. These two objectives are not necessarily always in harmony with each other, because the bankers can bring "heavy" pressure by lobbying and with reelection donations. For example, the most profitable cycle for the banks started during the 2001 recession as a result of the Fed’s super loose monetary policy eventually leading to today’s disaster in the housing market.
Today, we are in the midst of "a worldwide financial system crisis". That is why, even more so than before, the greatest priority for the Fed is an immediate rescue of the banking sector. The most pressing need for the Fed now is to "buy more time," which is desperately needed by the banks in order to continue their de-levereging process. To date, this de-levereging process has been happening way too slowly and with huge losses for the banks. In April/May, many banks recapitalized their balance sheets by writing off bad loans and issuing long term noncumulative preferred stock (at 7.75% – 8.50%..but not available to "average" stockholders..(actuall... doing them a favor)..Hmmmm?) to bolster their cash positions and support their diminishing lending ability.

My concern is that this entire unregulated market "only needs a small jolt" to set off a unstoppable global domino type collapse, similar to Bear Sterns fiasco, which almost sent us into the abyss. Bill Gross (US. bond guru) has said “what we are witnessing is essentially the breakdown of our modern day banking systematically, these (derivatives)are not just risk management tools, they are a new way to make money...outside, the normal Central Bank's liquidity rules. It's “a shadow banking system”...How?...becau... they are private contracts (promises to pay) between two (or more) institutions”.....AND,... this!.... A complex of leveraged lending, so hard to understand that the Fed. Reserve Chairman Ben Bernanke required a "refresher course" from a hedge fund manager in mid August (2007) trying to understand them. In short, Warren Buffet, Bill Gross and Treasury Sec. Henry Paulson and Ben Bernanke couldn't figure out what's going on in the derivative market or world markets.

My take on this ('an, I'm not an economist...Thank heavens!) is: that the world economic system is out of control and the World Central Banks are looking at each other wondering "who's going to blink first". We, ....as in "us"...you and me...are on our own, we can't relay and wait for things to get better we have “self-protect” as best we know how, for our families. Ben Bernacke (who is the designated fall guy)has been handed "a hot potatoe" and now, plain a simple, doesn't know what to do. So, he's doing the only thing he can do, keep his fingers crossed, jaw-bone the public into thinking that he's in charge. But, there's no-way we can clear away $615 trillion of derivatives without a complete rearrangement of the world's finances. Even the $11 trillion is too big of a nut to crack. "If"....or I should say "when" the general public lose faith in "fiat" currencies (such as the US dollar, Euro, etc... which is happening) they...(and we) will panic and push gold, silver, and "hard" assets into the stratosphere. And, economic order will only be reestablished after we learn that those hard assets are "not" the answer. Can you imagine having a lot of gold/silver when no one else has any and trying to buy bread, milk etc. ....??.
Solutions? The economic philosophy has to change, "paper pushers" who do not produce anything should not get special tax breaks like hedge fund managers who only pay 15% on trading income this includes investors like me. On shore "producers would have to be encouraged and off shore co. who now pay zipp in taxes such as GE would have to pay a minimum amount. Savings have to be encouraged instead of discouraged, real estate "house flipping" discouraged. Houses are places for people to live in not trading not speculating. Gas conservation by increasing the minimum mileage and "flex" vehicles,done NOW..not 20 years from now and be able to run on gas or ethanol. Finally the currency will have to be tied to something of value...silver/oil /etc as a means to try and keep the governmental kleptomaniacs from causing more inflation. Keep the faith!
gato.