Friday, October 9, 2009

It's a MAD, MAD, MAD world


It's been a few weeks since my last post.

It's Friday and I'm sitting here in complete and utter dismay at how our government representatives, economists and pundits at large continue to want us to believe that the economic recovery has already begun. The recession is officially over. What planet are they living on?

Perhaps what they mean is that the first wave of economic disaster has past. I wonder why they aren't warning us now about the impending second wave. I believe that we've been sitting in the eye of the storm for the past 6 months and that the worst is yet to come but what do I know?

In fact, I know enough to tell you that the market for equities is completely out of control reflecting what I've been saying for months now that it's all being manipulated by a few for their own personal massive gains. Then, when they're ready to take their profits, they will implode the markets and we'll see a drop to 6500 in the Dow.

This is unavoidable as the US economy is going nowhere fast. People continue to lose their jobs, companies continue to lay off workers in huge numbers, unemployed citizens are running out of wage insurance, homeowners continue to lose their homes and consumers are still not spending money in any significant measure. So why is the stock market shooting up like this was 2007? Because it's about to crash again.

Wall Street puppet masters are having a field day and soon, it will be at our expense once again. Nothing that broke last year has been fixed yet investors are returning to equities as if stocks were on solid ground. Wrong. Earlier this week, Mosaic announced a 91% drop in net earnings along with a substantial drop in overall revenues but that didn't stop their stock from gaining over 3% that day. Is the world out of control or is it just me. When I was growing up, when a company reported a 91% decline in earnings, the value of their stock tanked. Today, that;s considered good news on the Street. It's an insane world and I for one can't wait to see it all go to hell in a hand basket. Once that happens, perhaps wew can rebuild the financial world differently and create some semblance of sanity within it...

What do you think?

Friday, August 28, 2009

21st Century Hitler: IRAN'S Mahmoud Ahmadinejad

Everything I read about this guy tells me that we need to be as concerned about him as some folks were about Hitler in the late 30s.

Appeasement appears to be in many country's vocabulary these days when it comes to dealing with the Iranian dictatorship and its extremist religious government structure. And they thought the Shaw was bad news!

Even in the US, the feeling was, for a while, that we should engage the Iranian government in contrast to years of antagonistic actions by the Bush administration. At first, I thought the new approach was a good one. After all, I believe that talking to your enemies is always a good position to support. Trust but Verify was always a good policy with foes of the past. This situation in Iran is more complex now that Ahmadinejad and the Iranian Supreme Leader seem bent on crushing any sort of opposition in the future. This has been made obvious by the Fix that was in during their last "free" election and the current bent on persecuting and prosecuting anyone and everyone with any influence in the opposition.

When Iran's destabilizing influence on their neighbors and on the Arab world as a whole are considered along with their obvious and continued spiritual, financial and military support for terrorist organizations in the Middle East, one must seriously consider if the West along with Russia and China are taking the threats posed by this regime as seriously as they should.

All of these parties should be concerned about the destabilizing influence of extremist organizations who will stop at nothing to sew the seeds of anarchy around the world. And for those groups, its as easy as bombing civilians at will, anywhere, anytime. How we respond as a civilization may lay the foundation for what our society's structures look like ten or twenty years from now.

When it became clear that the last Iranian election was a fraud perpetrated by the incumbent and his supporters, I felt that the door had been opened for Israel's government to take the kind of military action they'd been threatening for months. With the tyrant, Hitler like Ahmadinejad in power for another four years at least, I have NO DOUBT AT ALL that Israel will strike Iran's nuclear installations at some point. This will happen regardless of America's public position that diplomacy and face to face talks are what's needed and what's necessary at this time.

Israel will bomb and America will voice it's objections publicly while praising their actions privately. In today;s world, we must all realize that what one says publicly is often very different than what one believes or says privately.

What do you think?

The Politicalist

Tuesday, August 25, 2009

Real Estate Markets Still Heading for Greater Disaster

Here's a copy of a message I sent today to CNBC's Real Estate Reporter Diana Olick:

Dear Diana,

I enjoy reading your articles and I like your realistic approach to evaluating the housing market’s current state but, since I’m not a TV pundit, newspaper editorialist or on-line economic news show celebrity, I can tell you the straight story and not have to worry about being proven wrong (an unlikely scenario at this point) in my assessment.

The housing market will continue its catastrophic decline over the next several years for many reasons:

Foreclosures, both residential and commercial will continue to increase dramatically over the next 18 months as bad adjustable rate mortgages continue to reset, huge bond debt matures, real estate values, residential and commercial continue to plummet, owners walk away including the prime borrowers and the economy as a whole continues it downward spiral driven by lower industrial output, increasing unemployment rates, little or no credit availability and a worsening consumer spending pullback. (I’m not even including the real likelihood of seeing mad speculators (the usual suspects) driving up the prices for oil and gas in the near future to levels that guarantee another deep worldwide recession will follow)

Higher unemployment rates, the real rates, not the ones published by our government, will continue to increase resulting in higher default rates on loans of all kinds across the board. As more residences are foreclosed on and commercial debt defaults, hundreds of banks will be unable to shoulder the enormous write downs this will cause requiring perhaps more government intervention. Property prices will continue to plunge as the government’s first time home buyer program expires with the resulting effect that sales numbers will also resume their downward spiral as banks tighten standards even more and potential borrowers hoard their cash. Who wants to own when it will be much more cost effective to rent??? Prime borrowers are just now starting to walk away from their underwater home mortgages. The worst is yet to come.

Existing homes will rent well for a while as rental prices also go lower until those home values go upside down and over leveraged apartment properties also head for foreclosure. This is not your typical once in a decade recession, it’s the new great depression cushioned by an enormous infusion of government funded temporary stimulus cash (which was absolutely necessary initially to avoid a total and lightning quick planet wide economic meltdown) which once exhausted will reveal the true depth of this catastrophic economic event that will take decades to fully recover from (after we live through a period of post new great depression hyper inflation).

During the period of hyperinflation, the housing market will remain stagnant at its lowest level in centuries as adjusted for our current times. It doesn’t look good and all I had to do to come to this conclusion was use my common sense and an educated guess (the former of which the pundits all lack).


Cave Creek, AZ

What do you think?

Monday, August 10, 2009

Health Care Reform the Republican Way!

Here are just a few of the outrageous quotes coming from the usual suspects: Republican politicians and their talking heads across the nation (don't laugh at these as millions of uninformed Americans will believe the statements):

Seniors and the disabled (SIC) "will have to stand in front of Obama's 'death panel' so his bureaucrats can decide, based on a subjective judgment of their 'level of productivity in society,' whether they are worthy of health care."

Want to guess who made this statement? Why, it was our republican ex Vice Presidential candidate, the little pig with lipstick on her lips, that's right, Sarah Palin. Would you still vote for her now? If you're a registered republican, you probably would.

Try this one: The Democrat-backed health care reform plan "will require (Americans) to subsidize abortion with their hard-earned tax dollars." That was the well informed Republican leader in Congress John Boenher. More tax cuts please.

And this one: The health care reform plan would set limits similar to the "socialized" system in Britain, where people are allowed to die if their treatment would cost more than $22,000.. That was posted as a fact by the right wing "Club for Growth" website.

The lies and scare tactics go on and on and I haven't even quoted Rush yet. When will Americans who are so ill informed and quick to trust their Republican idols take a few minutes to check the facts. There are so many places to do so without having to read the entire 1000 plus page proposed legislation, like , one of my favorites or .

In any event, we all know that the Republicans are anti change in any way shape or form unless it satisfies their elitist supporters who are mostly wealthy or at best, well off. What worries me are the millions of civil servants, government workers who enjoy the world's best healthcare programs at the expense of the rest of us. Were it not for their incredibly expensive coverage, there is the slimest of chances that healthcare could cost all of us a little less every year. So all of these people, liberals or conservatives, do not want to see any change to their healthcare status which makes real, hard hitting reform even less likely.

In the end, here's what I think will happen: Some sort of ineffective, watered down reform will pass, with some Republican support so that all politicians in Washington can return to their constituents and claim that they won by doing the right thing. Let's face it, it's not usually about doing the right thing that matters most to our politicians, it's doing the right thing in order to ensure reelection.

What do you think?

Wednesday, August 5, 2009 Sold on July 1, 2009

Dear Readers,

I am writing to inform you that I have sold the bulk of the assets and intellectual properties owned by my company Interactive Motorsports Entertainment a new owner as of July 1, 2009.

As most of you know, I spent nearly a decade working for the famed Skip Barber Racing School in Connecticut when it was actually owned and operated by Skip himself. I truly enjoyed the work there and had hoped that my career with the company would go on for many more years. In 1996, new personnel and a new push to centralize operations led me to resign. I had been there since 1988 and had survived many management shake ups over the years.

In 1996, the Information Super Highway was still in its infancy and most of us didn't even know what the heck that meant or what it was. I spent some time trying to understand what the new technology was about and what it's potential growth in popularity would mean to the business world in general. I figured out that there could be huge opportunities to use the Internet and the World Wide Web to launch a new business concept that had never been tried before within the still relatively small auto racing and high performance driving school industry.

So in October of 1996 I quit my job at Skip Barber and I incorporated as Interactive Motorsports Entertainment Corp.. The idea was to launch a website that would provide consumers with information and enrollment services for as many of the racing and high performance driving school operators I could track down at the time.

Back then, there were few well known operators other than ones we still recognize today: Skip Barber, Jim Russell, Bob Bondurant, Buck Baker and Bertil Roos. I figured that my many years of experience selling race car and sport car driving experiences for Skip Barber would allow me to convince many if not all of these independent racing school owners to let me sell their various programs from my new website location. Most school owners thought the concept would never succeed and some fought me for a while, but I felt there was enough interest in that industry and the sport of racing in general to make a go of it.

Originally, the domain was owned by a professional webmaster who lived in Washington state. Since I knew nothing about creating an "Internet website" on the World Wide Web, I contacted this person and asked him how I could get my services up on the Information Super Highway or the Internet. I felt pretty dumb at the time for asking so many questions about this new technology but my inquiries would pay off in the end.

The owner of the domain name agreed to add my company and its content to his site. That meant that my home on the Net, my web address would be and clients from anywhere on the planet with access to this technology could find me and my services listed there for years to come. Those were great times when the Internet was full of promise and entrepreneurs were working hard to create new business models and new revenue streams that had never existed before.

I was now a true maverick, a DOT COM entrepreneur before the term had even been coined. Within a couple of months, I had secured a sales relationship with a the latest of the racing school owners to join the industry, Derek Daly. For the next six months, I would be his company's sole sales representative on the WEB. In fact, I was his ONLY sales rep. for the first six months he was in business. Once he hired some people to work on site in Las Vegas, IME Corp. remained his only independent sales agent. That exclusive sales relationship existed until the school was sold in December of 2005.

All the while, I was using my faithful AOL Internet dial up service to scour the Web for more schools to add to my Sales Network. Within a few weeks, I had added several new and upcoming schools to the website. Five schools turned into eight and then ten and fifteen and twenty and pretty soon, if you weren;t part of my Sales Network you were passing up on some important revenue opportunities. Most schools still hadn;t caught up with the Internet. I added ON-LINE enrollment capability in late 1997 and in late September of 1998 I found an investor and $100,000 to help me fund the full acquisition of the domain name and expand our sales services to an even wider audience around the globe.

The site was gaining in recognition with every passing month, so much so that in the summer of 2008 a Canadian businessman by the name of Patrick Schwareb contacted me with an idea. He wanted to launch what would be the first authentic Formula One Driving Experience in North America. I was fortunate to play a small role in getting the program off the ground and, as a result, had the incredible good fortune to drive a 1994 Footwork Arrows Formula One race car several times that year and next. What a priviledge - what an amazing sensation of power and handling capability. Unbelievable, believe me.

Being the owner of had its perks. I was regularly invited to attend driving experiences at a variety of driving schools all over the country and at all the famous tracks. It was an exciting time of growth and new opportunities.

In 1999 I successfully established a sales relationship with the Richard Petty Driving Experience and soon thereafter, began selling the iconic Super Certificates, an early version of the gift card whose face value could be applied towards the program cost of any one of over 35 racing schools all over the US, Canada and Europe.

By early 2001 sales had grown from about $300,000 a year to well over a million and much of the company;s income was derived from the sale of gift certificates. By 2003, sales were over 2 million annually and by 2006 we had exceeded the 3 million dollar mark. Times were great.

It was in December of 2005 that I made a deal with Derek Daly to buy his racing school in Las Vegas. Since my early days at Skip Barber, I had visualized what it would be like to run such a company. My dream of owning my own road racing school was about to come true. I was in heaven.

The Derek Daly Performance Driving Academy soon became the American Racing Academy and it belonged to me along with its fabulous purpose built Formula 2000 race cars and a fleet of 14 BMW Z3 Roadsters. The new business signs went up on the building located directly in front of the headquarters for the Las Vegas Motor Speedway, I was making deals with the track director for track days and I was putting together the best employee team in the business. I repainted the race cars and re-branded everything as quickly as cash flow would allow. Within 3 months of buying the school, I was rolling our first authentic Formula One race car into the garage bay.

The American Traffic Academy at the Las Veags Motor Speedway was THE ONLY LOCATION IN THE UNITED STATES where anyone could sign up to drive a real FIA Championship Formula One race car on track. No speed limits, no rev limiters, no pace cars. Just you and the 600 horsepower of a finely tuned F1 machine. I had struck a strategic relationship with a businessman from France to house and run the cars out of my school and facility. It was the best of times.

It was indeed the best of times. I must have completed the 5 hour one way drive between my office in Phoenix and the race track in Las Vegas over 200 times in 18 months. The school was renting a 3 bedroom condo just a few minutes from the track to accommodate longer stays in town and important visitors.

My wife and I flew to London in 2005 to oversee an important corporate program and I once again drove an F1 car at the Three Sisters Race Circuit. The following year we accompanied a group of clients to Monaco for the Monte Carlo Historic Races and stayed for the famed F1 Grand Prix. My life has been a virtual fairy tale since joining the Skip Barber Racing School in 1988.

There was even a brief time in early 2006 when the top executives at Automobili Lamborghini had informed me that the American Racing Academy and its Las Vegas location had been selected to be the North American home of the Lamborghini Academy. The announcement had been made by a top Lambo executive during a Lamborghini Ride & Drive at the school, in front of over 35 Lamborghini dealership representatives from all over the US and Canada. I had accomplished all of my stated dreams at that point and I was enjoying the fruit of my hard work over the past 15 years or so.

As the saying goes, "all things must pass" and by early 2007, I could sense an enormous shift was about to happen in the world economy. At first it was suspicions driven by the quickly increasing price of oil. I knew that wasn;t a good sign for businesses in general and consumer prices in particular. That was followed by a sense that the housing market was about to peak. I was beginning to get concerned about the effects of a bubble especially in Las Vegas where population and housing growth had eclipsed every other city in the country until that point. Life was getting TOO good.

I was smart enough to anticipate an inevitable drop in demand for racing school programs and driving experiences so I set out to find a buyer for the American Racing Academy. In July 2007, I sold the company to the owners of the Mario Andretti& Jeff Gordon Racing Schools. Just in the nick of time if I may say so myself. I turned a low five figure investment into a high six figure return.

I wish I would have been smart enough then to realize that the problems in the housing industry were going to affect the rest of the economy in ways that none of us had seen in nearly 70 years, going back to the Great Depression. Had I known, I would have sold at that time also. But I didn't and I waited, hoping that the worst would pass and that the economy would stabilize. I was wrong.

By the summer of 2008, it was now clear to me that the catastrophic economic downturn experienced by a few of the investment banks earlier in the year would spill over into every sector of the economy. I was predicting $50 a barrel oil for the end of the year when the price of the commodity was hitting its all time high in July. I knew then for certain that the outrageously high price of oil combined with an imploding housing market and failing investment banks marked the beginning of some very bad times for all of us. I still didn;t know how bad it would get. Who would have thought?

As the economy continued to worsen through the end of 2008, I understood that the unique business model and company I had created nearly 14 years ago was no longer viable and a recovery was unlikely in the near term. I would have to let go of my hopes for a comfortable early retirement and focus on keeping the lights on for the foreseeable future. Things were getting worse. I found an industry veteran who agreed to purchase many of the assets of Interactive Motorsports Entertainment Corp.including the AND domain names. It was effectively the end of a era for me as well as an opportunity for a new beginning.

As luck would have it, I was contacted back in January of 2007 by a District Attorney in Henderson, NV who had just seen a report on TV about the American Racing Academy's High Performance Driving School programs. He asked if I could produce a proposal for that city's traffic courts that would make it possible for judges to sentence young traffic offenders to attend a "Defensive Driving Program" in lieu of paying the usual fine. To make a long story short, I formed the American Traffic Academy to respond to this need and have now operated the program successfully for the past 18 months. We've processed nearly 1000 young traffic offenders during this time and I'm now looking to expand our market by offering our unique low cost hands-on car control & collision avoidance programs to Active Adults and Taxi Companies in the metropolitan Las Vegas area.

With all this said, I am certainly melancholic about loosing control of my prized domain names but the racing school and high performance driving experience industry was never a friendly environment to work in and nobody ever cared about anyone else in the business during the entire time I was a part of it. I am truly happy to no longer be a part of it and I will remember the good days fondly but set my sights on the better days yet to come.

Adieu and long live the American Traffic Academy!

What do you think?

Wednesday, May 13, 2009

Oil Prices - Here we go again !

Can someone explain to me how it's possible for gasoline consumption in the US (not to mention elsewhere around the world)to be down some 3% over the past few months while prices for a barrel of oil soared nearly 80% during that same period ????????

Today, the Organization of Petroleum Exporting Countries forecast that world oil demand in 2009 would be even weaker than previously thought.

DO NOT BELIEVE anyone that utters the words: Supply & Demand" to explain the recent runup in prices. The truth supported by the obvious facts are that once again the big boys are manipulating the value of oil and doing all they can to get the price of a barrel back up to around $75-$80. Why? Because at that level, the profits are HUGE.

Never mind that high oil prices in this economy are unsustainable. Never mind that in this great recession, any increase in the price of gasoline further cripples the world's economy. Never mind because a handful of people, companies and countries are reaping huge rewards once again at the expense of the planet's population.

The scariest part, not withstanding the economic crush on people and businesses already at the brink of financial disaster, is that these high prices are shoring up the economies of some less than friendly countries like Iran, Russia, Venezuela, Iraq and Nigeria to name just a few.

So while the usual suspects are getting richer off the backs of the world's oil dependent population, our government is allowing this speculation to continue, pushing the price of a barrel of oil to levels which are inexplicable given the current oversupply of the soupy stuff. I am predicting right here, right now that oil will be back down to $35 within a couple of months and that will once and for all confirm what we already know: Oil prices are being grossly manipulated on a daily basis by the few who can and are jury rigging the antiquitated system that keeps our world turning...for now.

What do you think?

Thursday, April 23, 2009

Toll Brothers President is out of touch

Bob Toll told Mad Money's Jim Cramer yesterday that he sees 80% of the country's real estate market's improving over the course of the next 8 months.


Maybe someone should take Mr. Toll on a cab ride through such cities as Compton, CA, Las Vegas, NV, Phoenix, AZ or Miami, FL after he spends a few minutes driving through Detroit. For anyone, especially the head of a publicly owned luxury construction company to say that real estate markets will be improving anytime soon is disingenuous at best and an attempt to shore up his company's home sales and stock values at worst.

With over 8 million mortgages about to see their interest rates reset over the next 18 months there is NO WAY IN HELL the market is about to recover anytime soon. I suspect it will take at least 3 years to clear up the inventory of foreclosures and about the same amount of time to bring down the inventory of existing homes back down to sustainable levels.

It will take 5-7 years or more for prices to begin increasing again and by then, we should be right in the middle of a hyper inflationary cycle which means mortgage rates will be mostly unaffordable to the average buyer.

The situation is completely without any positive indicators at this time and for Mr. Toll to go on CNBC to try to give his company';s sales a bump is, well, like all the other big businesses lying to us about how rosy things will be again by early next year. It's bullshit at best and criminally misleading at worst.

I have many friends that had been working at Toll as middle managers for years. All but one lost their jobs and Toll is still cutting. In the meantime, the company is offering huge discounts. You don't discount unless you feel the need to do so. His words and expressed opinions as the head of a publicly held corporation must be considered carefully by the SEC as do so many other CEOs who have made ludicrous comments about the state of their businesses over the past 12 months.

If you're in the market for a house - WAIT. Prices will continue to drop and so will interest rates. Wait until the late fall or winter of 2009 when the markets usually slow down naturally. The deals will be even better 8 months from now given the continued steep decline in the economies of the world.

What do you think?

Wednesday, April 22, 2009

Bank lobbyists still control Washington

Even on my birth day, I feel the need to express my outrage.

I am getting soooooooooo tired of hearing how the lobbyist still control our Congressional representatives in Washington. After you read this article at posted on CNBC' website today you'll immediately understand my outrage of the day.

Here's the first few lines of that article. It reads:

"They may be held in low esteem around the nation, but the country’s largest banks still wield considerable influence in Washington. The banks have made it difficult for Congressional Democrats and the White House to give stretched homeowners a stronger hand in negotiating lower monthly payments on mortgages and to prevent credit card companies from imposing higher fees and interest rates.

Having won some early skirmishes by teaming with Republican allies, the banks now appear to have the upper hand and may wind up killing — or at least substantially diluting — both pro-consumer measures."

Once again big bank lobbyists are linning up their Republican pals and some conservative Democrats in Congress and in the Senate to radically dilute several key provisions contained in an upcoming bill (the legislation is called the Credit Cardholders' Bill of Rights). This legislation would give credit card issuers more than a year to make changes designed to limit the massive fees and charges all the banks currently levy on consumers. And they're winning the battle.

Never mind that the industry collected over 15 BILLION dollars in such fees last year. Taxpayers bailed out the banks in October and now the same taxpayers will be providing the very income the banks will then use to pay down the TARP money they all received. How completely absurd is that?

I once took a negotiating course that taught me several things about the process but what I remember most from that seminar is this: NEVER give up anything without receiving something in return. What are we as taxpayers going to get back? Nothing. We provided the initial bailout funding and we're now also the main source of bank profits(record profits in some cases. I.E.: Bof A).

What's more offensive is that banks are borrowing money at near 0 percent then charging customers usuriously high rates to borrow that same money back. It's the American Taxpayer bailing out the banks and the bank lobbyist making sure they have Congress including the Senate water down the very bills intended to give borrowers a needed break in these impossibly difficult times.

Democrat and Republican Representatives and Senators are being targeted but it is the Republicans in the Senate that are most willing and prepared to help the lobbyists get what they want. Republicans ARE NOT YOUR FRIENDS. Throw the bastards out!!!!

The original bill was introduced months ago. It was to limit many of the ugly practices used by lenders to jack up interest rates by 50% or more, increase fees with only a mere 30 day notice and generally make all our lives even more miserable in the process. Unfortunately, the bill doesn't take effect until mid 2010 so the banks have plenty of time to adjust to the new rules. In the meantime, the banks are raising rates and fees on just about every customer and only giving them 30 day notices. How absurd is that? Lobbyists are making headway in getting the bill watered down to nothing and may even succeed in delaying its implementation until mid 2010 despite the efforts of some lawmakers to accelerate the process.

Enough said. Want to have your voice heard by the banks, call them and demand they lower your interest rate or threaten to stop paying them. Yes that will hurt your credit but if you're unemployed, underemployed or just plain upside down on your debt to income ratio, bail out now, stop paying and wait for the bank to call with an offer to settle for pennies on the dollar. Choose to help yourself first, not the banks.

What do you think?

Friday, March 20, 2009

Bear Market Rally and other thoughts

I haven't posted any comments lately because my mother died recently and I've had other more pressing issues to deal with. Having said this, life goes on and so does the economic downturn.

We've been on a pretty wild ride in the stock market since last September. With most of the movement on the DOW and S&P being of a downward nature, long term investors have had little news to cheer about recently. That is until the recent bear market rally of the past several days. Is this the bottom? I don't think so. Not a chance - no way.

My common sense tells me that with most consumers feeling like their financial stability is precarious at best, with about 8 million more mortgages set to reset to higher rates in the coming 12-18 months, with demand for goods and services still down 20-50% and with small businesses closing by the thousands every month, we haven't seen the end of this very deep recession.

With every passing day where businesses fail to get back on track, more pain gets created and the domino effect continues - forget the DOW or the S&P!

If you are working for a company that produces goods or sells services that rely on consumer disposable income for its survival, brace yourselves, it's gonna get worse for you. If you have work skills that are still in demand then make the most of it by saving more and reducing your daily expenses to build up a higher economic security buffer in case you do find yourself out of a job at some point. Deep recessions such as the one we are currently battling don't resolve themselves in short order. They drag on for years.

I realize that my predictions for a long lasting economic downturn are mostly negative but then again, so is the shape of the world's economy. The banks and financial institutions still have secrets they're keeping and the financial industry overall will continue to reel from irresponsible bets made over the past 8-10 years. Buckle up because we're not even close to getting out of the woods on this one. Be prepared to spend the next 3 years adjusting your lifestyle to new standards because I believe that it will take 7-10 years for the economy and personal wealth to recover from the trouncing the commercial and investment banks have spent a decade creating.

What do you think?

Wednesday, March 11, 2009

Can things get any worse?

Yesterday we enjoyed a near 5% increase in the value of the DOW. Big deal! Most people long invested in the stock market have lost 30-40 and 50% or more of their investment value.

Anyone that believes this is anything but a bear market rally, and a short lived one at that is kidding him or herself. Look around at any of the main economic indicators:

Home prices continue to drop as do existing home sales

New home construction hits new lows

Unemployment numbers continue to increase

More large companies announce massive job layoffs

Losses at Freddi and Fannie keep mounting - now in the tens of billions of dollars

GM could be forced into bankruptcy as soon as April

And the list goes on and on. Only when employment increases and once home prices have stabilized can we begin to feel somewhat safe again.

The rally in stocks might last a few more months as speculators try their best to regain their losses through shear manipulation but the house of cards will come crashing down again, I am sure of it. When it does, it will send consumers into a near panic as they realize how tough their lives will be for the foreseeable future. Hang on, it's going to be a scary ride.

What do you think?

Thursday, March 5, 2009

The End Of The World As We Know It?

Today the DOW index dropped another near 300 points. With no bottom in sight yet, what is the average American to think about the future?

Well we all know that the "lower the lows", the "higher the highs" right? The problem is that when we finally get to that magical turnaround point, there may not be many of us left standing to take advantage of it.

I've been through many recessions of varying degrees but like many of us, I worked hard all my life to reach a point where I became my own boss. Thirteen years ago, I founded The first couple of years were difficult as starting any new business can be. We experienced some highs and some lows particularly immediately following the 9/11 tragedies. The next few years were great for business and we were all busy making money

In late 2006, my business volume began waining. I wondered if this could be a sign of the beginning of a massive economic adjustment. The decline in sales continued and accelerated towards the end of 2007 and through the first three quarters of 2008. And then, WHAMO, the financial markets collapsed followed by even more dramatic and continued drops in the value of homes nationwide. Consumers were now maxed out and loosing equity and wealth faster than anyone could keep track off.

That meant near disaster for my company and for millions of small business owners during the last holiday season. The beginning of 2009 has seen the catastrophic decline in consumer confidence continue along with the dramatic slide in just about every industry I can think of .

Deep breath. So where do you go from here? If history is any indication, it could take up to a decade for our standard of living to return to 2005 levels. That means that we all need to re evaluate our priorities, tighten our belts and put away as much of our income as possible to weather the storms ahead. In the meantime, don't sweat your credit score. Put your money under your mattress and tell the credit card companies that as soon as you recover your losses, they can look to recover theirs. Put your family FIRST - not your creditors. Why? They're the ones singularly responsible for creating the deplorable conditions we'll have to live under for years to come. That's my story and I'm sticking to it.

What do you think?

Tuesday, March 3, 2009


The next time your credit card statement rolls in, just say no.

No to paying the bill. Just tell your credit card company that until they repay you the taxpayer, you want to renegotiate your own payment terms with them. Be specific: you want to reduce your monthly payment to say $25 or $50 and you also request that they not report you to the credit agencies as delinquent. If they say no (and I GUARANTEE they will), then I urge you to tell them to take their unsecured debt and write it off because you're not going to be sending them any more money.

After all, you'll never see most of the taxpayer's bailout money again. Don't kid yourself, these companies receiving the bulk of the TARP & TALF money (Citi, BofA, AIG) are BANKRUPT companies that will never bounce back from their bottomless losses. If you as a taxpayer are more concerned with how your family will survive and pay your rent or your mortgage or your electric bills, STOP sending these criminal enterprises your hard earned money.

I call these banks and insurance companies criminal enterprises because although they apparently broke no laws bankrupting the world's economy, they all lied to investors about the enourmous nature of their exposure to risky investments and bad loans. Six months ago, most were telling investors that their fundamentals were sound (kinda like John McCain telling us the fundamentals of our economy were sound, remember that?).

Well unfortunately for these executives, there are laws that govern what executives running publicly held corporations can or cannot say about the state of their businesses. It's simple, they ALL mislead us right up until the total collapse of the financial markets in the last quarter of 2008.

For this, they should all be prosecuted to the fullest extent of the law. Since that means that the SEC would be involved, I wouldn't count on this scenario playing out so:

The only way for you as a taxpayer to recover some of your money that's being dolled out to these criminal enterprises is to STOP paying them. After a few months of collection calls, they'll be willing to negotiate a lesser payoff of your balances. That's when you can make your best offer and potentially save thousands of dollars in principal and interest payments. Just do it.

What do you think?

Thursday, February 26, 2009

Citigroup's still cheating all of us

A few weeks ago I was "RATE JACKED" by this most irresponsible and arrogant of banks. I received a notice informing me that my credit card rate would skyrocket to almost 17% from under 10%. As a former banker I understand very well the games the banks play so I called them and after speaking with a couple of representatives, I managed to get my interest rate lowered back down to 6%. That's right, 6% FIXED for another 6 months.

But that's not what I wanted to talk to you about today.

Just as Citi is about to absorb BILLIONS more tax dollars into the enormous financial black hole that this enterprise has come to be, another complication has emerged. One of Citigroup's most profitable holdings is in Mexico. Grupo Financiero Banamex. Some Citigroup executives are worried that an increased U.S. stake might subject the bank to pressure to relinquish some or all of its ownership of Grupo Financiero Banamex, the No. 2 bank in Mexico by assets, the Wall Street Journal said today. Really?

This is yet another outrage. Now there's talk that Citi and the Fed could consider "negotiating" with Mexico through diplomatic channels to have them "waive" this requirement in their laws. That's incredible. As the economy has worsened and my business revenue has declined dramatically, I have been forced to put some of my most treasured personal assets up for sale to pay my bills. But Citi is not being asked to do the same.

So while more of my tax dollars are being poured into this virtually bankrupt enterprise, I'm being forced to sell assets while Citi just keeps sucking up Fed money with no pressure to do the same. How is that possible??? Is it actually better to strong arm the Mexican government than to force Citi to unload some of its valuable assets? Apparently so.

I am just about ready to tell Citi to take my $24,000 credit card balance and stick it where the sun don't shine and I'll gladly take the hit on my credit score. It's gotten to that point.

With the economy in such bad shape I need to start looking out for myself and saving $24,000 is the first step in ensuring that I put my family and my financial well being in a position to survive the very crisis that Citi is responsible in great part for causing. I hope other courageous consumers that also have credit card balances with Citi will decide to do the same and send these bastards a clear message. What do you think?

Tuesday, February 24, 2009

AIG - Need I say more?

Today, Congressman Elijah Cummings said on CNBC that in a meeting with the CEO of AIG in mid January he was told that AIG planned on beginning to repay the money they had borrowed very soon. Yesterday, the Street began suggesting that AIG would report the world's largest ever quarterly loss, 60 BILLION dollars. How in hell will AIG repay taxpayers when their losses continue to mount at this rate??????? They can't. That's the simple answer.

It seems to me that taxpayers still don't know how AIG has used the funds it has already received and that a lot more money will have to be pumped into that irresponsible company to save it from complete collapse. Are we as taxpayers ready to sink more of our limited resources into AIG?

With CEO's of publicly held corporations misrepresenting the soundness of their businesses' financial health on a daily basis, shouldn't the SEC start looking into these officer's misleading statements? Where is the SEC anyway?? And where is Tim Geithner while these financial institutions continue to implode while they hide the true miserable state of their balance sheets and regularly mislead investors???

I suggest that AIG be forced into bankruptcy and the sooner the better. Why? Simply because a bankruptcy filling will force these deadbeat companies to reveal the true nature of their sad state of affairs. Without a bankruptcy filling, taxpayers and our government representatives are having the wool pulled over their eyes and nothing in the short term will change that.

CEOs of these "banks gone bad" have ZERO vested interest in telling us the truth. Let bankruptcy, the truth serum of failing business, be the medicine that sheds light on the current and real state of these enterprises and let the chips fall where they may. What do you think???

Friday, February 20, 2009

Biggest fraud perps stay out of jail

Are you amazed that the perpetrators of Americas largest financial frauds remain free and out of jail? Me too.

Get caught stealing a few hundred dollars worth of goods from a retailer and assuming you get caught, you got straight to jail. Not these guys. Madoff and Stanford and many others yet to be identified are still enjoying the comforts of their multi million dollar homes and the privileges that go with it.

In the Madoff case, it was disclosed today that Maddoff didn't register a single purchase of securities for his long list of client investors in over 13 years. He was able to do this despite having certified accountants review his books annually. Where were the regulators that were warned many times over the past 10 years!!!!!!!!!! that Madoff's business was a fraud?????

How was Madoff able to administer this fraud by himself? He wasn't. Yet despite the obvious involvement of dozens if not hundreds of co conspirators, not a single one has been identified publicly so far. WHERE ARE THE REGULATORS even today???? Where's the FBI???? Where was the NY state attorney general????

What a bunch of incompetent civil servants. Shouldn't they be charged as negligent co-conspirators??? Shouldn't the auditors be charged with a crime???? Don't hold your breath. Even Arthur Anderson's guilty verdict was eventually overturned. That's the firm that audited Enron's books for years before that company imploded.

Our entire regulatory system is in shambles and has never really worked as it should have to start with. Oh, I forgot, the SEC did nail Martha Stewart for selling a couple of hundred thousands of dollars worth of stocks on an insider tip and lying to the regulators. I say bring back Spitzer and I'll pay for him to sleep with prostitutes. At least he was doing something about the corruption on Wall Street.

Our government is no longer on our side and hasn't been for years. Obama may have the best of intentions but the Congress still maintains their right to cozy up to big business at the expense of the taxpayers.

We need to start waking up and publicly objecting to what's going on. Wake up America, your future is being wiped out by your representatives in Washington. What do you think?

Thursday, February 19, 2009

No to more bailout money for Detroit

These days it seems as though the taxpayer's ability to provide funding for broken companies is unlimited. This week, GM and Chrysler presented their restructuring proposal to Congress. As I see it right now, shoring up the auto industry in Detroit could add up to $130 BILLION. Are you kidding me?

That number includes bailout money for the manufacturers, parts suppliers, dealers and consumers. For my money, I would rather have the government send me a check for $20,000 (since its our money anyway) to enable me to purchase a new, fuel efficient US made car of my choice. What's the point of lending BILLIONS to the auto manufacturer and other related automotive businesses if consumers won't buy cars??????

I am getting really tired of talking about one multi BILLION dollar bailout after another. How much more can this country borrow. How much more debt and leverage (the very behavior that got us in this mess in the first place) can the taxpayer silently agree to provide???

With any government expenditure, waste, corruption and outright theft are primary components and we can expect these bailouts to be NO DIFFERENT. Billions will simply disappear and / or be wasted by unscrupulous civil servants and greedy recipients.

Once again, enough is enough. Unless we decide that America is now fully committed to developing into a full blown socialist republic we need to put the brakes on this spending right now. Consumers and corporation, including the worst of all of the corporate citizens, our big banks, who all made bad decisions in the past decade DO NOT DESERVE to be bailed out.


There is no way given the current state of the American Auto Industry that these loans can EVER BE REPAID. Any suggestion to the contrary fully ignores the fact that GM and Chrysler cannot compete with the foreign manufacturers many of whom build their cars right here in America. Chrysler is a PRIVATELY held corporation whose shareholders are all rich, greedy churn and burn specialists that got caught up in a very bad investment. Let them fail. There is no hope for Chrysler unless they are acquired by another manufacturer. If that happens, WE SHOULD NOT PROVIDE the capital to make that happen. Why should we as taxpayers be burdened with the responsibility to save these bad investor's investment from going bad?

Jobs??? Those jobs are doomed and have been for decades as the top executives paid themselves huge salaries while their businesses were slowly dying. Let them disappear into the sunset of corporate failures and let this be a lesson to other large corporations.

Years ago when I took a course on the art of negotiating, the most important thing I took away from the class was that when you give up something, you must get something in return. What is the taxpayer giving up and what will he get in return? I submit that the answers are: everything and nothing. Let's pass on bailing out two of the worst managed companies in our country and let new blood purchase whatever assests are deemed to be useful and let's move on. What do you think?

Wednesday, February 18, 2009

The Banks win again - The homeowner bailout

Obama's latest government bailout program aimed at stabilizing the housing market is called the Homeowner Affordability and Stability Plan. It should be renamed "Taxpayer money to line the pockets of the same bad banks that made billions in profits funding bad home loans".

This program is primarily designed to help homeowners who made bad mortgage borrowing decisions and bought homes at the height of the housing market bubble and secured adjustable rate loans to finance 100% of those purchases. The banks that made those original bad loans: BofA, Citi, JPMorgan Chase, E-Trade and many others (Washington Mutual, Wachovia, Countrywide etc.) made billions of dollars in profits when they took these worthless loans and sold them to the investment banks: Bear Stearns, Merrill Lynch, Lehman Bros and many others as well. Those "investment banks" then packaged these very bad loans and sold them off to unsuspecting investors around the world as being backed by American homeowners, the most trusted borrowers on the planet after the US government itself. Problem is that these bad mortgage bundles went bust last year and these "investors" stood to loose billions if these securities went under.

In any event, the point of this article today is to point out that the very banks (see above) that created these worthless mortgage loans and made BILLIONS of dollars in profits when those loans were resold on the secondary markets (and then caused the enormous financial crisis and economic implosion of the past year) are now poised to have those bad loans guaranteed by taxpayer money. What an outrage.

Why should taxpayers, after providing $750 billion in TARP funds to the financial industry, now have to fork out another $275 BILLION to rescue them from the remaining mortgages still out there that will default in the coming months???

It was their inability (or unwilligness) to properly asses the initial risks that led to this economic crisis and the initial TARP bailout. Now we're going to put another $275 Billion dollars of taxpayer money into their pockets to bail them out of the very policies they initially created to generate BILLIONS of dollars in profits. Where did all those profits go???? Where's the BILLIONS they made from the sales proceeds of these bad mortgages to other institutions? Who knows.

All I know is that this is really making me mad. The same banks that created ways to lend TRILLIONS of dollars to worthless borrowers and then made BILLIONS selling these worthless investments to other unsuspecting investors are now going to be bailed out for their outrageous actions over the past 5-7 years.

Its time for people like me to think about defaulting on credit card debt. It's the only way I can punish these banks for putting me and my lively hood in jeopardy. It's not enough for them to raise my interest rates, lower my credit limits and curtail future lending, no, now they're taking federal tax money to stay in business while I'm potentially going to be forced out of business.

These outrageous banks will receive $1,000 up front for each and every modification they start regardless of whether or not the modification works out. If the target is to modify 9 million loans, that's a 9 BILLION dollar windfall for the banks.

Enough is enough. Let the big banks fail and let the government return these tax dollars to me to do with that money what I need to do to keep my family housed and fed. What do you think?

Tuesday, February 17, 2009

Pay the big fine but deny any and all wrongdoing!!

Here's one for you: Large corporation does a bad thing and the government investigates. Government finds sufficient grounds to support its claims that the offending corporation has in some way broken the law and defrauded the consumer so it begins the "negotiation" process to "resolve " the dispute. Negotiations usually result in a big fine (never big enough) being assessed and the corporation paying the "get out of jail" fine, admitting no guilt and insisting it did nothing wrong. Sound familiar?

A few weeks ago I was reading the WSJ and noticed that over an area of two pages of stories, various companies were identified as having paid over 1.3 billion dollars in fines to "settle" government allegations of wrongdoing. What? That's right, do wrong and just pay a relatively small fine to sweep the crime under the rug. It happens almost weekly. A big company defrauds you and the government settles the dispute by "working out" a fine that lets the perpetrator completely off the hook.

Unlike drug busts where the cops seize any assets (house(s), cars, boats, planes, cash etc.) you own that "might" have been associated with ill gotten profits from dealing in illegal drugs, big pharmaceutical companies (the biggest of the world's drug dealers) pay relatively small fines for breaking civil law and they NEVER have their "crime producing" assets seized. So small are most government imposed fines that they barely make a dent in the ill gotten profits resulting from these breaches of the law. The DEA seizes assets even before a suspect is ever found guilty. For the big corporations, life on the dark side is much more manageable.

No jail time (in the overwhelming majority of cases), no public trial, no witness testimony, no real embarrassing disclosures and NO asset forfeitures. Just a small fine to be negotiated between well heeled friends.

Imagine if you could agree to pay your traffic fine but admit no wrongdoing. There would be no record of your offense, no DMV demerit points and no ensuing increase in your insurance premiums. Alas, this option is only reserved for corporations.

I believe that ANYTIME anyone agrees to pay a fine for WHATEVER REASON, the law should be such that you have to plead "guilty" to committing the offense as charged. As a result of pleading guilty, a criminal record is established whether you're an individual or a corporation. Enough is enough.

Why should corporate crime punishment boil down to paying fines that are usually not even high enough to deny the offending company the ill gotten profits it generated from its transgression let alone punish them for doing so? THIS MUST STOP!

You commit the crime, you plead guilty AND you pay the fine or, in America, you always retain the right to fight the charges in court and let a judge or jury decide the outcome. If you did nothing wrong, you pay nothing - what a concept! If you are found guilty, then you pay the fine.

Don't be fooled: NO ONE EVER CASUALLY PAYS A FINE FOR AN OFFENSE THEY DID NOT COMMIT. They pay the fines because its a good way of doing business. It's cheaper than going through a trial and no one has to admit any wrongdoing. You even get to keep all the money you made defrauding people by your planed actions. What a deal!!!!

Just today we heard that the top executives at RIM the maker of Blackberry phones committed fraud over several years by manipulating and back dating huge stock options that enabled them to make millions in illicit gains. They agreed to pay more than $1 milliuon in fines but were never compelled to admit any wrongdoing whatsoever!!!!!!!

I say enough is enough. No more letting the bad guys off the hook so easily. If you agree to pay the fine, you must also plead guilty as charged! What do you think?

Friday, February 13, 2009

Bankruptcies, business vs individuals

Have you noticed how many companies are lining up to file for bankruptcy lately? It seems that in many cases, the failure of these businesses was the result of making bad investment decisions and taking on way too much debt. This debt was assumed for a variety of different reasons but in most cases, it was taken on to buy other businesses or expand their own.

These companies bought into the concept that the economy would just keep expanding and that the value of their investments would continue to grow. Sounds an awful lot like the same reasons under which the average consumer loaded up on cheap credit over the past decade to buy new homes, cars and other consumer goods.

Here's the big difference: when a big business makes poor investment decisions and takes on too much debt, they can file for bankruptcy protection, reduce their outstanding debt and, as a result, become more competitive. All this is done with the help of outside financing to fund the costs associated with the bankruptcy filling. If a company can't pay their current bills, how can they secure more debt? Good question!

After a company files for bankruptcy protection, they'll usually continue to operate and do business as usual. There's little stigma associated with a business filing for bankruptcy and suppliers are usually eager to return to doing business as usual with the bankrupt entity.

If you are a consumer however, the rules appear to be much more unfavorable. You certainly can't really borrow money to cover the cost of hiring an attorney to represent you. A judge decides what debts you must repay and which can be eliminated (you can't negotiate directly with your creditors as companies can) and your credit standing is destroyed for years to come. Forget about getting loans or credit for seven to ten years as punishment for your bad past credit behavior.

Not so for companies. In fact, if you're big enough, the government will actually step in and provide capital to keep you in business. The source of that capital is taxpayer money. Hummmmm! Let's take a look at that: company makes bad decisions and gets rewarded by being allowed to restructure their debt and collect taxpayer money as life goes on as usual. Consumer files for bankruptcy and immediately becomes a deadbeat, a bad risk, an irresponsible consumer.

Businesses shun bad consumers while consumers continue to do business with bad companies??

Here's my take: If consumers are going to be saddled with the negative implications of filing for bankruptcy, so should businesses. Consumers should avoid doing business with bankrupt companies and refrain from buying their products. Don't support a company that's in bankruptcy. It's the only way to express your outrage at their irresponsible past behavior.

The average consumer is always on the receiving end of rules that make their lives more miserable after a bankruptcy filing while businesses continue to operate with impunity after their filing. The very executives that led these companies into catastrophic failure are rewarded by receiving big salaries and bonuses and, worse, are typically allowed to remain in charge? How is that possible. The very people responsible for bad decisions, get a second (and sometimes a third and fourth chance) to get it right. Not so for the average consumer that must lose everything before starting over again under the most difficult of circumstances.

In many cases, the individual's bankruptcy is caused by the failure of his employer to make sound financial decisions in the first place, leading to a loss of their job.

Bankruptcy laws must change again (our Congress made bankruptcy more difficult for consumers several years ago at the insistence of big credit card issuing banks) to remove the stigma associated with this action and to make it easier for individuals to get out from under their debt burdens, just like businesses can and to make a faster and simpler fresh start.

That's my outrage of the day. What do you think?

Thursday, February 12, 2009

Why are gas prices so high?

With the price of a barrel of oil dropping 20% in the past month, why has the pump price increased by 20%? Hummmmmm!

The simple answer is that refiners are reducing their output to control the supply of refined petroleum and therefore, the final price of the product. This is outrageous. Cutting back on our consumption does not in and of itself cause the prices to decline. Speculators at the commodities exchanges in the US and abroad really control the price you pay at the pump. Some of the players include the big oil companies, Goldman Sachs, Morgan Stanley and many other entities that have a vested interest in fixing the price of oil artound the world.

Enough is enough. It's time for government to nationalize at least one of the big oil companies to help control prices and to keep the rest of the industry honest. Speculators should not be allowed to own oil contracts unless they actually take possession of the oil they purchase. Right now, only about 20% of those future contracts end up with actual oil being delivered. That's nonsense.

Drive your brains out because no matter what you do, cutting back on consumption only leads to more cuts in the supply chain, be it exploration, extraction or refining.

Based on the current price of a barrel of oil today, the average pump price should be closer to $1.25 than $2.00. We are being charged more than a 50% premium for gas right now.

Write to your congressional representatives and give them a piece of your mind and stay on them like a Chihuahua on a pantleg.

That's my outrage of the day. What's yours?