Financial News: Cyprus In Layman’s Terms

Cyprus In Layman’s Terms

cyprus bank runIn case you’ve heard it and didn’t understand or have been living under a rock, in terms of financial news, not that everyone pays attention to financial news, the tiny nation of Cyprus is doing something unprecedented. They are stealing depositors money.

The news is reporting it and the most casual way possible. If they told you exactly what was going on, and what other options were available, a widespread panic would ensue.

So here’s the basics of this report. The tiny nation of Cyprus, basically serves as the offshore banking for much of Europe. They are the Cayman Islands of Europe. People deposit their huge sums there, and pay very little taxes. Because the island’s banks gets huge sums of money, they thought to make even more money by investing it themselves. Who did they invest in? Greece. Wait, are you thinking what I’m thinking? That’s right, Greece is insolvent and can’t pay its creditors, including Cyprus.

Continue reading Financial News: Cyprus In Layman’s Terms

Mike Maloney on Why the Ben Bernank is Inflating the Money Supply

Why the Ben Bernank is Inflating the Money Supply

ban bernankeMike Maloney of gold & silver inc goes over charts and shows how the fed stopped all deflation since 2007. Deflation would have meant that prices and wages would have gone down. The democrats fear this because they never want to hear wages going down, and the republicans don’t want to hear that prices are falling, due to lower margins.

for you the public deflation would be a godsend, because that would mean, while you might make less, milk, cheese, eggs and lettuce would cost less and less each month.

the ben bern hates deflation and loves inflation. inflation means everything goes up and up. however, if you’re poor, it virtually kills you.

The bottom line is, that the US is the world market. Other than the closed and lower class economies of China and India, the US is the largest consumer market. These manipulations of the currency and monetary supply fights against the very market forces he’s trying to curtail. It is a losing battle at best, if you believe he is actually to do anything other than to make he and his european and zionist investors money.

Charities Left Out in the cold in Cash for Clunkers Deal

Cash for Clunkers What is it?

I’ve mentioned before that the stock market it is a zero sum gain, I win at your expense, not a win win situation. In the cash for clunkers program the government is footing the bill for $2 billion. Now when I say the government is footing the bill, I mean US. But the cars that qualify for the trade in program are perfectly running cars; can’t be too old; can’t have bad emissions; can’t have great emissions; have to be paid off.

Now I thought on its face that those criteria were just awful. Why would a rational thinking American turn in a car and burden themselves with more debt? This is why were are in this mess to begin with. This is insanity. This makes me mad.

Not only does the cash for clunkers program make me mad, but now I’ve found out that these idiots fell for it hook line and sinker and the program is an “overwhelming success”. Idiocy is running rampant in America. They should have an intelligence quotient for people to call themselves American.

Now I am totally ballistic. I am so fuming mad I could spit.

BUT WAIT …

THERE’S MORE …

Enter the Charities

In the stimulus package, that Barrack Obama signed into being, you’ll see how in that bill, charitable donation tax write offs were lowered. I don’t know how a peace loving, hippie acting, granola eating, president could completely shaft charities like that.

Regardless of what some idiots who stick their heads in the sand say, charities do benefit heavily due to people wanting a tax write off.

As if that weren’t enough, let’s take a look at the Cash for Clunker stimulus package, i.e. car industry bailout.

The cars being turned in for vouchers are the cars that previously would have been the exact cars donated for a tax deduction. Car donations were left completely out of the entire cash for clunkers program, even though both the Congress and Senate were told of the problem months and months before.

Apparently, charities are not a big enough lobbying group. [ I guess they didn’t “donate” $1 million like Goldman Sachs did… ooops did i say that ]

And, Obama is gloating over the plan, and hoping it will get renewed. So once again, this president is shafting them.

I just don’t get it.

I say donate your car. If you really need a new car so badly, you can get dealer incentives to buy upwards of $4,500 anyway. Give your old car over because I’m not liking to foot your stupid bill in this $2 billion car bailout, because that’s all it is anyway.

Don’t misunderstand me, I am not a desocialistacrat nor a repukeblican. Both are the same thing.

This American Lifestyle: Why Are We in This Mess

Why are You in Debt?

Peter Schiff comes on to CNBC and they all have a good laugh at him. Of course Peter Schiff has a 1 minute 30 second spot to deliver his message of doom and gloom, competing with the idiot host who wants to give you the “THE RECESSION IS OVER, THE RECESSION IS OVER,” mantra they always spew.

Let me explain why we are in this situation, since I [and you] have all the time in the world.

Preparing You for a Life of Debt

Let’s start with you and I’ll get to your parents in a second and tie it all in. Your first taste of true economic freedom is clamped down and you’re straddled with debt immediately. How? College! You take out massive loans, not secured by anything other than your I.O.U. You are then strapped with this debt fresh out of college. You must secure a job immediately to start paying it back.

But, wait! These college loans afford you a lifestyle change unlike, what you would have had, had you paid for college yourself. I’m not talking rich people. I’m talking average middle-class America, paying for college with their own money. “Well, no one would go to college,” you might say. Not true, and this is where Peter Schiff, Ron Paul and the Austrian Economic School of thought come into play. If everyone in America stopped taking college loans, or begging for government grants, college tuition would plummet and we all could afford it. Colleges would have to compete with each other, to offer an affordable price to gain student dollars. Colleges right now are not run like businesses, the are run like governments, wasteful. Colleges rely on the fact that the government is going to continually bailout the students. They no more reign in spending than the city or state or federal government does. If they have waste, they just raise tuition to pay for it. What do they care?

Conditioning You for Debt

The point is, you are now conditioned to accept massive debt, to afford you a certain lifestyle. This is where your parents come in. Instead of them saving, I’m talking on a massive scale, and paying for college out of their pocket, they do stuff like take out home equity loans. It has become to common place,that banks now advertise for it. “Take out a home equity loan for your kid’s college tuition.” 80 years ago, that would have been unthinkable. People would have called you mad. So, immediately, your parents first financial lesson to you is, go in debt to afford you a certain lifestyle. Nice lesson dad.

This lesson is repeated over and over. People were relying on the equity in their home, with the notion that housing prices would continually climb, so they could borrow on it. Now, Barrack Obama and Ben Bernanke, is trying to continue this farce by propping up housing prices. They are fighting the recession with every ounce of strength they have. And, believe me, they have an entire treasury to do it. They have the sheep, that is the American public to give away their money, and no one asks a question.

“More than three-quarters (77 percent) of Americans with pre-college age kids, however, have saved less than $20,000 for their children’s college expenses; 62 percent have saved less than $10,000, and 43 percent have saved less than $5,000. Twelve percent have saved nothing at all.”

Your house is not worth $125,000.00. I’m sorry to be the one to tell you this. Go back and see what your house would be worth in 1970, and maybe then you’ll have an accurate picture.

What people are failing to understand is, housing prices are predicated upon the scarcity of housing. Unfortunately, there was a housing boom in construction. There is an over abundance of housing. So your house is worth far less now, than when you first bought it. There are parts of the country with entire huge condo buildings sitting empty. I don’t have the numbers, but I guarantee there are at least 10% of empty real estate in every city. That means your housing price, should be lowered.

So this notion of borrow on equity… You have no equity. You have nothing. You were being propped up by the government the entire time. Why do you think you can deduct the depreciation of the value of your house annually? The government knew the real story.

So we have a failing economy, lowered housing prices, what’s next? Unsecured debt! Besides all the lending done on real estate, people still took up debt that was unsecured, like college. The lenders knowingly were doing this, but we were still borrowing. No one forced us to sign on the dotted line.

We just had the FBI raid TBW based on fraud. Stories like that should show you. I guarantee the FBI could probably raid every bank in the land for nefarious lending practices.

No one wants to swallow the pill. I bet you’re sitting here muttering, “I don’t want to lose my equity”, “I don’t want the value of my house to go down.” Or, you might be a banker saying, “I don’t want my clients defaulting on their loans.” So everyone is hoping Obama will bail them out, prop up this farce of an economy and keep it, business as usual.

No One Wants to Swallow the Bitter Medicine

This is what Peter Schiff, Ron Paul, and the Austrian Economic School of thought is talking about. Everyone is sitting quivering in their living room, hoping they won’t have to be the ones to pay for all this excess. And, when I say excess, I mean all the loans.

Imagine for an instance, that you had no debt, at all. Imagine the only expenses you had were your power bill. *GASP* I bet for some of you, that is nearly impossible to imagine. This is what the recession needs to cure. This is where this recession needs to go. Not, bailing everyone out. Not, propping up housing prices.

If we could go back in time, I would be for Obama saying,

“Today I’m wiping out all the toxic real estate assets. I am wiping out all current housing loans. I am declaring a banking holiday.”

Housing prices would have plummeted, but no one would care, would they? If your house was paid for, but only worth $10,000 would you care? However, no toxic assets were removed from the system, not a single one. And, you are still in debt.

How to Really Study the Cash Flow Statement

Cash Flow Statement

black guy studying cash flow statementThe cash flow statement provides information:

  • about a company’s cash receipts and cash payments during an accounting period
  • about a company’s operating, investing and financing activities
  • about the impact of accrual accounting events on cash flows
  • to assess the firm’s liquidity, solvency and financial flexibility

An analyst can use the the statement of cash flow to determine whether:

  • regular operations generate enough cash to sustain business
  • enough cash is generated to pay off existing debts
  • firm is likely to need additional financing
  • unexpected obligations can be met
  • firm can take advantage of new business opportunities as they arise

Continue reading How to Really Study the Cash Flow Statement

Real Life Economics: Do You Need to Keep Upgrading Your Computer

Do You Need to Keep Upgrading Your Computer

black man shoppingI got into a rather heated 5 vs 1 debate about the issue of are console [gaming systems] better than the PC. The chief argument proposed against me, the PC champion, was that in order to play brand new games you have to constantly upgrade your PC, vs a console you do not.

A couple of things hit me immediately when confronted by this argument:

1. the person assumed that anyone that plays video games, always has to buy new video games

2. the person consumed PC equipment constantly, i.e. once a new system came in, they threw out the old PC system

This struck me as not only wasteful, but rather consumeristic.

I stopped arguing with the people but, I write this hear to show you a proof against consoles and against constant PC consumption.

What is a video game for? A video game is one source of entertainment. It is like music, movies, tv shows, books, etc. It is just a source of entertainment. The generation coming up now, and the one that grew up in the first decade of this century are indoctrinated with rampant consumerism, that you must constantly buy new things.

Continue reading Real Life Economics: Do You Need to Keep Upgrading Your Computer

How to Spot a Polly Peck or Bernie Madoff: What is a Balance Sheet

How to Spot a Polly Peck or Bernie Madoff

balance sheetCFO flees to Romania to his beach house, where he will live the rest of his days in exile. Clearly he is guilty of fleecing thousands of shareholders of money. The shareholders clamor for the government to arrest him for fraud. CNBC reports that he is guilty. MSNBC and Bloomberg report that he is guilty. A small financial analyst takes a retrospective look at the evidence and concludes that the CFO is not, in fact, guilty of anything. In fact, according to the small financial analyst, the CFO did nothing wrong whatsoever.

How can the two be right? Or, can they both be right? No, they can’t, and the answer is the balance sheet.

When people lose money, it is often the case that they want to blame others. What is well known, though, is that in order to offer stock, a company must do so to “sophisticated” investors, i.e. people who know better and do their homework. Long story short, if someone loses money, ultimately the investor is to blame, for not doing his homework. These people that want to blame others for their own faults get heard though. The government tries to rush in and save the day. Ultimately the government gets it wrong, because … that’s what the government does best.

So how could a small time financial analyst get what massive media outlets and huge governmental agencies miss? The balance sheet!

The financial analyst simply takes a look at the balance sheet and sees that the CFO was doing nothing to “fleece” investors. More than likely, it was the government that was to blame for the loss, if anyone needs to be blamed.

Scenario: