Are we so upset at the banks, that people are going to start ripping their homes down just to make a point to the banks?

I do understand the anger towards these greedy institutions… I have read all the stories about how they are turning people out into the streets and calling them deatbeats, when they themselves are the actual deatbeats, having taken BILLIONS in tax dollars either directly via Bailout, or indirectly via the Fed Window/TBill Scam, where banks were allowed to borrow money from the FED at almost ZERO PERCENT, then turn around and buy TBILLS with that same money paying 3% and higher… by the way, TAXPAYERS pay the interest on TBILLS, so, yes, while main street is being turned out on its behind… big banking was enjoying profit heaven, and they were writing themselves the bonus checks to boot…

your thoughts?

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I know that losers are not always savers, but are are savers always losers?

I saw a commercial the other day, where they were trying to sell the audience on the idea of foregoing saving for retirement and instead they were pushing the idea of spending money on nice and exciting things right now, ala their cool sports car.
In the commercial, the couple who saved all their life for a wealthy retirement die in a car accident on the day they retire. The newly retired couple die after a life of delayed gratification, frugality and thrift. They spent their entire life foregoing the finer things in hopes of a lavish and comfortable retirement. They took few vacations, and when they did, they scrimped on everything. They always drove an old car, never had the latest gizmos or gadget.

The point of the commercial was to tell you to live for the now. To buy that car you always wanted, to ignore the potential risks and liabilities of the future and instead have fun now, enjoy yourself today, to never delay gratification.

The point of the commecial was to make a statement, to state that saving is for losers. That savers are losers. Are savers losers? Is saving for losers?

First, lets take a close look at the basics of saving. You open a savings account, and you start saving by placing small amounts of money into it at specific intervals. The banking institution pays you a very small amount of interest in return for parking your money at their bank. After years and years of depositing to your account, and after compounding the interest – bamm, you have a little nest egg.

But, you have a problem. The interest rate you have been getting paid all these years has been significantly below the rate of inflation. This inverse relationship between the rate of inflation and the rate of interest being paid has resulted in a significant loss os savings over the years. In fact, the more you saved, and the longer you saved the more money you lost. Right about now, you are probably yelling at these words, and saying I must be crazy. How could I be making such a statement? How could I be stating that the more you save, and the longer you save, the more money you lose? How, you ask. Well, the answer is simpler than you might think. Lets imagine that you have 10 dollars today. Lets also imagine that one dollar buys you one gallon of milk and one dozen eggs. You decide to be a good saver, and you start saving 2 dollars each month. After 20 years, you have saved $657 dollars after a theoritical 3% interest rate. In 20 years ago buying power, you currently have enough money to buy about 325 gallons of milk or cartons of eggs. But, herein lies the problem, inflation has had a huge impact on the cost of food, and now a gallon of milk or a carton of eggs now costs 3 dollars. So, you can only buy approximately 108 gallons of milk or cartons of eggs.

Furthermore, you also paid taxes on the interest you were paid by the bank, thus decreasing your true savings rate, since in order to keep that full interest in the bank, you had to pay the taxes on the interest with real money.
Added to that, just to save the initial $2 – you had to make $2.40
Now, I know what you are asking right now… why would we care about details like that?
That is what brings me to the underlying point that I am trying to make here. Real estate.

Let me paint you a picture. You spend 30% of the asset to purchase the entire asset. Thus, giving you a better than 3 to 1 leverage on your cash. From here, we move to taxes. Investment real estate allows you to write off phantom loss. What this means in simple terms is, if your property is worth $390,000 – you can write off $10,000 per year via depreciation. What does this meant to you? It means that you can make $10,000 per year completely tax free on a $390k property. Now, lets talk about saving. Real estate can also be a great method of saving as well. This is where leverage comes into play and is what can defeat inflation. Take for example the above example, where you are leveraged 3 to 1. If you average 3% rate of appreciation, your actual cash rate of return ends up being 9% because you dont just average 3% on your cash, but on the entire property, thus acheiving the 9%.

So, lets take two theoritical portfolios. The first is a cash savings account, the second is a real estate portfolio.
$117,000 in cash, plus an additional $250 per month placed into a savings account earning 3% after 30 years ends up over $433,000 dollars.

As opposed to the same $117,000 invested into a piece of real estate worth $390,000. In 30 years, the property is fully paid off, and its worth more than $958,000. Plus, with the $250 per month that you were socking away each month, you also have another $145,000 in cash saved that you could use to purchase another property. In addition to all this, you now own a property that nets you an income of $4,000 per month. Not to mention the fact that all these years your tax burden has been nominal. In the early years, where you made little to nothing on the property, you were able to save money on other income, and then over the years as it started to cash flow, you paid little taxes on it with the depreciation.

More to come…

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WHY? – Why not just STEAL THE MONEY FROM THE AMERICAN PEOPLE?
Why not just get the government to steal the money from the American people and hand it to you on a silver platter like the banks just did?

Don’t understand what I am talking about? By all means, let me explain…

I was quite shocked to hear that the banks that were on the brink of bankruptcy just a few months ago, were suddenly making BILLIONS of dollars in profit… yes, the same banks like B of A, Wells Fargo, Goldman, etc. that were likely to go out of business like Lehman Brothers, Wachovia, WaMu, and the rest of the hundreds of banks that actually did go under or were bought by these new mega banking institutions… they are now making a PROFIT again… wow, that was FAST, real fast.
Then, after reading a very informative article written by Ben Stein, I went out and did a little research, and I found some very interesting things about how these wonderful caring banks made all this money…

For starters, the government gave banks money… they were GIVEN – yes, GIVEN BILLIONS of dollars(your money that is, since the government doesn’t have any of its own money… ALL of the government’s money is the United States Taxpayers money… in other words, the governments money comes from you the taxpayer)  in exchange for stock in their companies to help keep them from going out of business from all the bad loans that these degenerates wrote over the past 8 years… nice, very nice… too bad furniture, travel, retail, and every other business in this country didn’t get a similar deal… FREE MONEY to stay afloat.

NEXT, the banks were then given access to the FEDERAL RESERVE lending window and were allowed to borrow BILLIONS, yes BILLIONS of dollars at near ZERO percent interest rate(oh, did I forget to mention that this once again is just you the taxpayer lending this money to the banks… hey at least you are not just GIVING it to them this time)… wow, that sounds nice… can you imagine if your business was allowed to borrow virtually unlimited funds at near ZERO interest?

FINALLY, comes the kicker… with all of these BILLIONS of dollars (from YOU the taxpayer, via the government in the form of equity capital to purchase stock, and then finally in the from the FED window at near ZERO interest), the banks then went and invested BILLIONS of dollars (again, important to remember that these billions care from you, the taxpayer) into US TREASURIES at HUGE interest rates (compared to what they are paying for the money)…

THE RESULT – BILLIONS of dollars of YOUR MONEY STOLEN from you and your fellow Americans and just handed to the banks… its a very simple game here – BORROW at zero, take that money and invest it in US Treasuries that pay a few % of interest EQUALS FREE CASH… think of it this way – someone says they will GIVE YOU a MILLION DOLLARS for ONE YEAR, but you have to pay it back in ONE YEAR. So, you go to a bank and you open a CD at 5% – and at the end of the year you pay back the million to this mystery donor, and you keep the $50,000 in interest from the Certificate of Deposit. Its really that easy… its PRINTING MONEY… and guess who had the money stolen from them? YOU, AMERICA, the United States TAXPAYER… you were fleeced, you were stolen from… and what’s even better… you THANKED them for stealing from you… when the economy didn’t completely fall of the cliff, you thanked the government for stealing your hard earned money.

So the next time you hear about the MILLIONS of dollars that are being paid out in bonuses to these really really deserving, smart individuals… ask yourself if these Robber Barons should be getting away with what they are doing. Where is the outrage, where are the trials, the indictments for fraud, where are the concerned advocacy groups… not a sound, silence.

The DEFICIT just rose by $180 BILLION in the month of JULY… I wonder how many BILLIONS of that number were simply STOLEN from the American people and deposited into the coffers of the banks, and then swiftly paid out in “performance bonuses” to the executives of those same institutions…

Wake up America, find your voice – or you could find it silenced by an oppressor.

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So, let me get this straight… since the depression began in Decemeber 2007, we have shed a NET total of 5.1 MILLION jobs… that is NET PEOPLE… that means that 5.1 million more people are currently out of work since December 2007… and here is the most striking part of this horrible statistic – almost 2/3 of those job losses came in the past 5 months… for those of you who don’t see the significance of this, let me break it down: We have been in a depression for 15 months now – the first 10 months only produced about 1.6 million job losses… meaning, the sub-prime blow up, hedge fund crash, etc… only can really account for about 1.6 million jobs lost… now, the logical result of all this is more job losses, ala in the next 5 months (previous 1/3) of the depression we lost around 3.3 million MORE jobs (about 2/3 of the job losses in 1/3 of the time)… now, lets back up here for a second… does anyone know what the result of job losses is to a capitalistic economy? – The answer is clear, simple, and shockingly reliably predictable – ECONOMIC CONTRACTION! Economic contraction is what we are going through right now… and what does economic contraction produce? – MORE JOB LOSSES. And so the cycle will continue until some major catalyst stops the cycle and turns everything around. So, I ask you… what MAJOR CATALYST can you point to in the past 30 days has stopped the cycle and is turning things around? The answer is NOTHING… there is NO MAJOR CATALYST! How dare the liar press run around spewing lies about things turning around when it clearly isnt turning around… absent the major catalyst, there is not going to be a change…
At what point are people going to realize that a family where one or two of the breadwinners have lost their job – and are on unemployment or have given up working or have taken part time work – SPEND LESS MONEY!!! – Spending less money does NOT create economic expansion! Hello! Looking back at the vicious cycle above, as households spend less money, private employers SHED MORE JOBS! This cycle will continue forever, until something happens to stop it… I am sick and tired of this simple, kindergarten level economic principal being completely ignored by the American JOKE of a FREE PRESS…

So, I repeat, THIS IS NO RECOVERY! This is NOT A RECOVERY PEOPLE! Stop buying the BULL. Stop drinking the POISON COOLADE… you are fooling yourselves…

So, the DOW is all the way back to 8000, and here come the same idiots that told us to buy buy buy all the way down from dow 14000 all the way down…  here they come… spouting such diahrhea of the mouth as this is the best buying opportunity of a lifetime… and stick with your long term strategy, and don’t change your strategy now… why? simple, it is in their best interest… they work for brokerages, news networks, or other financial related industries that BENEFIT from idiot America simply following their advice like lambs being led to the slaughter… BEWARE of advice givers that have an interest in you taking their advice… in other words, when a loan broker says – yes, choose the option ARM, it will save you money, get you into the house you want, and you can always refinance later… think about how much more money he makes when you choose this TOXIC ASSET. Or how about the real estate agent who advises you to make an above asking price offer on the house of your dreams, as they state that real estate is the best investment you will ever make, and prices are lower than they have been in years, and housing prices can only go up from here, and other TOXIC spewage, as they have only one desire… to get the deal done so that they can cash their commission check (oh yeah and they referred you to that expert loan broker, who will take them on a vacation later on that year as a kickback for sending them so many sheep to be slaughtered)… and a year later, as you sit in your dream home – and you stare at a foreclosure notice… your home now worth $100,000.00 LESS than what you paid for it… your loan payment about to TRIPLE, and you call your loan broker and your real estate agent for advice on what to do now, and what do you know… they are together on a 5 STAR VACATION in an exotic location somewhere, SPENDING your money that they fleeced from you – without mercy, without a heart, without ever caring about what is happening to you, as you crash and burn and go down with the ship and lose it all… they sip champagne and laugh at your stupidity and say to each other – “we didn’t hold a gun to their head and make them buy the house, or sign on the dotted line, they have to hold themselves responsible for their own actions”.

BEWARE I say.

Mandrake

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Well, let’s consider Obama’s first couple months on the job… how is he doing? How have his new policy statements, etc. panned out so far? Has he calmed or riled the markets? Are people more confident with Obama at the helm? And where do we go from here?

Let us first consider where we are and where we go from here.

Where we are now – we are DOWN… way down, and for very good reason. The stock market is priced on future earnings and more specifically earnings growth. What this means simply is that if a company is growing fast – the market likes it and prices it high… if a company is no longer growing fast or worse, not growing, or god forbid, contracting – the market will destroy the stock price and pummel it into the ground. We have been in a 6 year BULL market, which means stocks are rising, and more importantly, earnings have been growing – FAST. Stocks like Google taught us that earnings can almost double every single year for many many years in a row… and this sort of earnings growth can mezmerize and hypnotize the market into believing that the party can last forever. But nothing lasts forever. More importantly, the market almost always shoots far past a stocks fair value in bull markets and then almost always dives down below its fair value in bear markets. So, stocks can cyclically be found both way overbought (too high) and way oversold (too low)… this is where the bargains are, this is where you get rich… you short the over bought conditions, and you buy buy buy the oversold conditions. How do you know when either of these conditions are met? Well, you don’t ever really know, but a very good indicator is when everyone and their mother is either in or out of the market. So, where are we right now? Well, we are probably near or at oversold. Why? Simple, almost everyone and their mother has cashed out of the market, and moved to cash and bonds… and they are waiting on the sidelines with baited breath to jump back into the market and buy up all the bargains… this will create a massive rise in the market… but sometimes this is only temporary, thus a bear market rally… this is what I feel we have just experienced – a very simple bear market rally. We are not heading for a rebound… all that happened was a few big buyers came into the market, with most of the sellers already out of the market and in cash already, there was no one to counter the onslaught of order volume, and they were able to crush the shorts… of course, we are probably near the end of that, and probably read for another full on leg down into the depths of the lows and beyond… from there, we will need to know for sure that we are going to rebound in this economy, and then when that happens, expect a massive rebound… with the  bulk of it coming in the first six months. This is just my opinion of course, I have no crystal ball.

So, how has Obama done throughout all this? Well, it’s hard to say yet… probably give him a C at this point, since he has kind of gone back and forth and hasn’t really rolled out anything serious yet.

More to come.

Mandrake

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I don’t pretend to know… but, I do believe in America… I believe that no matter what… given a long enough period of time… if you invest in America during a downturn, I believe you will probably make money!

I believe in America!

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I don’t want to get into the mumbo jumbo of all the details of the 700 BILLION Wall Street Bailout plan… but, what I do want to say is… come on people… let’s get some simple common sense here…

THE only thing that is going to stop all this pain is an IMMEDIATE and COMPLETE STOPPAGE of ALL NEW FORECLOSURES… PERIOD. That’s the ONE SINGLE thing that can make a difference right now today…

So politicians… please please… do something to stop the foreclosures… that means do something for the average joe… stop giving buckets of money to wall street CEO’s, and start giving some money to average people.

Mandrake

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The Certificate of Deposit Account Registry Service is a service that allows people with a lot of money (more than me) to keep their cash safe in FDIC insured deposits… by sort of “gaming the system”.

It works by splitting up your deposits into more than one $100,000 or less deposit, etc… here is more info on CDARS.

I only wish I had that kind of money

Robert Mandrake.

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Mandrake

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CreditHelpJournal.com has one purpose and one purpose only… to give Free Credit Help to the American Consumer.

The site addresses issues that American Consumers face with credit, credit cards, banking, loans, etc.

The site is brand new, but I am confident that it will soon grow into a great source of assistance for American Consumer.

ManDrake

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