Search results matching tag 'Retirement'

$700 Billion to make matters worse

Gen_Maximus57 — Sat, 27 Sep 2008 08:16:38 GMT

McDonalds has a lower risk of default, as expressed in the Credit-Default Swap market, than the United States Federal Government.

Think folks.

Think long and hard.

This is what the threat to blow $700 billion has done to America. We now have a higher risk of default on our national debt than a company that sells hamburgers has on their private debt.

Rick Santelli nailed it this morning. This is a man who is a trader on the floor of the exchange that provides primary liquidity to some of our most important capital markets in Chicago.

He said, and I quote, that "confidence has been shattered because the rules of the game keep changing."

That is exactly correct.

Banks and other institutions have been hiding the truth, they have claimed "protection" against events that is in fact not present (the other guy doesn't have any money to pay) and leverage in the system remains excessive. Then, when the correct bets made (being short those institutions) are paying off, Chris Cox comes in and literally destroys them on purpose.

As a result The Fed is literally holding up every bank in the nation but this is not because of a "loss of confidence"; it is because everyone involved is lying, including The Fed and Treasury.

Art Cashin, who has been on the floor of the stock exchange for a very long time, said that The Fed would cut today except that it would take pressure off our officials.

In other words Ben Bernanke is blackmailing Congress by spreading gasoline all over the floor of the US Financial System and then holding a lit match and chortling that if Congress doesn't do as he demands he will drop it.

I agree. The Effective Fed Funds rate has been trading 50 basis points or more below the 2% target for five straight days now, and for the last two days, it has traded 75 basis points under. The IRX is demanding an immediate rate cut. The Slosh has been intentionally drained by over $125 billion in the last week and lowering the water in the swamp exposed one dead body - Washington Mutual - which was immediately raided on a no-notice basis by JP Morgan. Not even WaMu's CEO knew about the raid until it was done.

Congressional response to this sort of blackmail should be a bill to repeal The Federal Reserve Act and/or to remove Ben Bernanke from office.

The Fed claims to be an "independent central bank." They are nothing of the kind; they are now acting as an arsonist. The Fed and Treasury have claimed this is a "liquidity crisis"; it is not. It is an insolvency crisis that The Fed, Treasury and the other regulatory organs of our government have intentionally allowed to occur.

There is massive stress in the credit markets because of this intentional mismanagement.

We can and must fix it but spending taxpayer money will not do so.

The Democrats claim they have the votes to pass the original bill. Then pass it Democrats. Bush will sign it.

The Democrats will NOT pass it without The Republicans because they are afraid that the plan won't work (and in this they are correct) and refuse to put their heads on the chopping block if they spend $700 billion or more and the economy collapses anyway. They demand that Republicans march into the furnace with them.

Republicans are wise to say NO.

The solution is simple, it is elegant, and it will work.

Force all off-balance sheet "assets" back onto the balance sheet, and force the valuation models and identification of individual assets out of Level 3 and into 10Qs and 10Ks. Do it now.
Force all OTC derivatives onto a regulated exchange similar to that used by listed options in the equity markets. This permanently defuses the derivatives time bomb. Give market participants 90 days; any that are not listed in 90 days are declared void; let the participants sue each other if they can't prove capital adequacy.
Force leverage by all institutions to no more than 12:1. The SEC intentionally dropped broker/dealer leverage limits in 2004; prior to that date 12:1 was the limit. Every firm that has failed had double or more the leverage of that former 12:1 limit. Enact this with a six month time limit and require 1/6th of the excess taken down monthly.

Once 1-3 are put in place then send in the OTS and OCC examiners and look at every financial institution in the United States. All who are insolvent and unable to raise private capital immediately are forced through receivership where the debt is converted to equity and existing equity is wiped out. With the CDS monster caged the systemic risk is removed, the bondholders provide the cushion for recapitalization (as it should be) and the restructured firm emerges with no debt while the former bondholders are now the owners (of the equity) in the resulting firm.

With a clean balance sheet the restructured firms remain in business and open the next morning able to raise and attract capital.

For the few firms that have an insufficient debtholder capital cushion to successfully complete this process, they are liquidated instead. There will be few of these and in fact each of those firms is a regulatory failure, as we should have never permitted a firm to become so far "underwater" that the bondholder's capital is insufficient to capitalize a restructuring.

Finally, drop the silly shorting restrictions. Liquidity in the market right now stinks and this is a big part of why. Start prosecuting aggressively the rumors and other manipulation that leads to stocks both rising and falling.

This plan will work, it will instantaneously stabilize the credit markets as balance sheets will be transparent, the CDS monster will be permanently de-fanged, leverage will be returned to reasonable levels and the forcibly restructured firms will have no debt on their balance sheets and be able to immediately access the capital markets.

Best of all, it will require exactly zero taxpayer dollars.

Get on the phone and fax machines now - this is a solution that addresses ALL of the outstanding issues and most importantly WILL WORK.

Please visit www.FedUpUSA.org

Re: Retirement Advice

MoneyTalks — Thu, 01 May 2008 15:57:19 GMT

Hey Nummer. I agree. ETF's are great way to build a core portfolio. Just do your due dilligence and look inside to find out what exactly the ETF's are made of. Again, just a suggestion and anyone correct me if I'm wrong, but, I've found that sometimes an ETF will be too overweight on one particular stock. Example: IBB (iShares Nasdaq Biotechnology (IBB) ETF) Notice AMGN will be 8.55% of the index. It's been a dog as of late. But then again Gilead Sciences represents 9.94% of that ETF. Just making the point that you should look inside and see what that ETF is made of before throwing down on it

Re: Retirement Advice

MoneyTalks — Tue, 08 Apr 2008 20:22:53 GMT

BTW MadeoMoney. Type in "Retirement" into the search engine on this site. You can pull up some great info as well.

Take Care

Re: Retirement Advice

Buzzard — Sat, 05 Apr 2008 20:00:35 GMT

I'm just an Old Buzzard, so you can take this for what it's worth. Currently all assets seem overvalued on the fundamentals. Nonetheless, you need to accumulate assets for your retirement. But I would advise first getting out of debt except for your house. In this environment, there is no surer thing than paying off any credit card or student load or car loan debt. This will free up cash later when assets are priced much cheaper (which I think they will be). Having said that, I began accumulating at about your age and at the time I thought maybe $500,000 would do it. I did not understand how the financial geniuses were restructuring our economy by overleveraging and pushing paper as is it were gold. Had I known, I would have bought a lot of gold at less than $300 an ounce and less of the market in the late 90s. Oh, well. Make allowances for what you cannot know by saving more than you think you can. If you don't have a good pension, a half-million depreciating dollars doesn't make for the retirement of your dreams. I think you're wise to go with the Roth. You can find easy access to foreign currencies via EverBank (I'm not into it, maybe because it didn't exist when I started investing. Plus, I don't know how to properly evaluate relative asset-claim instruments). Gold now is pricey but still the ultimate stable value fund. No more than 10 percent of a prudent portfolio ought to be in gold in my opinion. Easiest way to invest is with the many ETF funds. You might want to consider GoldMoney.com. Fees are high on gold in general and it produces no income. Stocks based on their P/E ratios are probably overvalued but getting resonable. Still, the faltering economy is likely to hit stocks hard and you must consider the possiblity that a Total Market or S&P 500 index (the cheapest way to invest) could lose considerable value. Nonetheless, you need stocks because this is the most dynamic, most resilient asset you can buy. My opinion. I'm just an Old Buzzard. Bonds are not likely to make you money. Interest rates are almost certain to go up along with inflation. Nonetheless, you must also buy bonds because they can reduce market risk. Safe government bonds can be bought directly for your Roth with as little as $1,000 apiece at TresuryDirect.gov. Not wise to go very long at the moment, I think. Bond funds have certain drawbacks but a bond index, with Vanguard, say, have very low costs and that's what you want in an income fund. Managed funds are supposed to protect you in down markets but history suggests that they don't. You can get stocks and bonds together in a balanced fund. Balanced funds force you to pay high costs on the income portion of your portfolio, but do consider the very consistent performance of Vanguard's Wellington fund. It's fees are around 30 basis points. Why pay more?

Retirement Advice

MadeOmoney — Fri, 04 Apr 2008 18:41:45 GMT

I'm 31 years old and I am trying to decide how I should be saving / investing for retirement. I don't have a 401k, but I'm looking at a Roth IRA. I am also thinking about a foreign currency IRA. Not sure what goes into selecting investments for the IRA, very unsure which ones to pick.What fees should I look out for?Could anyone here give me some advice or get me in touch with an advisor so I can figure this out. Thanks.