The Stock Market Continue to Fall, Why?

You call your book THE PREDATOR STATE, what do you mean predator?

“JAMES GALBRAITH: What I mean is the people who took over the government were not interested in reducing the government and having a small government, the conservative principle. They were interested in using these great institutions for private benefit, to place them in the control of their friends and to put them to the use of their clients. They wanted to privatize Social Security. They created a Medicare drug benefit in such a way as to create the maximum profit for pharmaceutical companies.

They used trade agreements to extend patent protections for various interests or to promote the expansion of the corporate agriculture’s markets in the third world. A whole range of things that were basically political and clientelistic. That’s the predator state.”

That has been the way of previous governments, to enact laws that favoured corporate behaviour, corporate interests, corporate profits and extend the interest of the companies as much as possible.

Read this book: “The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too” Written by James K Galbraith.  We cannot remain in ignorance any more.

Read “The Crash of 1929” by John Kenneth Galbraith too. It shows just how closely what we are all living through parallels that time, but with some exceptions.

All around the world stock markets plummet, and there have been so many people thinking on this that some may end up with a headache trying to figure it out.

My own thinking, sans headache, is this. Banks, investment houses, lenders of all kinds as well as those who have bought into CDS and other hidden “instruments” are now being asked to repay, restore, and get the money back to those they owe. How can they do that? Sell off stocks,even at low prices, to pay up.

Remember there are a huge number of those hidden “instruments” now coming due. When the two investment houses, Morgan Stanley and Goldman Sachs both went to full-service banks, they cut out a huge amount of funding to those who were in the investments. That money is no longer there.

Shorter version, the debts are now being called, and demands for payment are here. This time there is no room for renegotiation, no putting off “paying the piper” so the markets are seeing pain.

Federal Deficits. There is a howling going around about them.  How can any country live with an increase in the national deficit. Well, the cold, hard truth is that there is NO other choice. A country can either refuse to go into debt and see the deficit rise regardless, or use the borrowing capacity to make decisions that will shorten or lighten the harsh reality down the road.  I am not alone here in thinking this.

It’s the dollar or nothing. So the United States basically can finance itself to the extent necessary to deal with this crisis. And I’m right now quite sanguine about that, quite confident that we won’t face a problem.

James K Galbraith

Tax the School Property, then Give 50% to Business?

It seems the plan here is to cut taxes for the wealthy and take 50% of the taxes on school property and give that away to business! Stupid idea! It will impoverish the schools, already underfunded, and do nothing to make our kids learn or be safer in crumbling buildings, teachers so over-stressed the good ones quit, and leave the money in the hands of people who are running businesses?

If this is passed here, I am going to be very very pissed off! Schools are already dealing with huge class sizes, violence from dealing with kids who need access to counselling and programs after school, and teachers dealing with a government that has absolutely no concern for families living on third world incomes. Rents are high here, probably the highest in the country, yet there is nothing here for any kind of support for low income earners at all!

As I put in another post, society grows from the bottom up! Apparently the bottom of this society starts at the line of business, not families, not children (find reports on the neglect here by the department dealing with abused and murdered children) or those who have to live in rooming houses infested with cockroaches, drugs and filth.

Does this sound like some place you would want to come to? Well, guess what? The 2010 Winter Olympics will show you homelessness that is growing by 50% each year with our government doing nothing whatsoever. Food banks are being drained faster than they get ANY food, with people coming more and more from working poor families. Sure, come, but know that you will find a place with underpinnings of misery.

Tax cuts are in the announcement, but only for those who have work that is higher paid, nothing for those who need to get a leg up and get onto solid ground. Phooey! Damn Stupid plan!

Other measures outlined in the premier’s 10-point plan include:

• Unlimited deposit insurance for deposits to credit unions in B.C.
• Rebate of 50 per cent on all school property taxes to light and heavy industry.
• Doubling the commission paid to business for collecting the provincial sales tax and hotel room tax.
• Speeding up public investments in capital infrastructure projects.
• Re-evaluating spending priorities and scaling back unbudgeted increases.

Unwinding The Financial Mess

I had a discussion months ago with a student studying international finance and we got into the total debt in most of the US, with State, Personal, City, and Federal debt considered. We were amazed at how often people got solicitations for adding more debt, even personalized to a certain extent. Here, privacy laws forbid the use of personal information other than name and address, so we certainly did not see as much as others who joined in the discussion from the US.

What happened when we did some very basic math was astounding! If all the debt for all levels was taken into consideration, then put on each adult in the US., we soon realized that each person was actually in debt deeper than WE even imagined.  Every adult in the US was actually indebted to the tune of 300% of their income! (basic math did not get too complicated, so this is an educated estimate). Wow! Ouch!

This means that, even if there were no interest charges, it would take 3 years of absolutely no expenses to repay the debt! Now, take in the interest on things like charge cards (up to 28% annually) and it seems like a huge number of people are working in the new version of the “Company Town”.

How on earth to get out from under this? Tough measures and tough times are going to make it harsh. Even the banks have huge debts that they cannot repay. No consolation to know you are not alone here, and add in the federal debt in the US, it seems hopeless.

It is not hopeless, but it certainly means some pretty drastic measures. Burn the credit cards. Sell what you can to pay off those cards first, they will be the largest drain on your money. Talk to a credit cousellor, and follow that advice. Forget going on holiday to Disneyland or the Bahamas, and take what you can in holiday pay and use it to reduce your debt.

The picture internationally is getting clearer, but certainly not any nicer. Iceland is facing a national bankruptcy! Japan and South Korea are both losing jobs, and in Japan the suicide rate among men is rising. That is no answer, but hopelessness and feeling boxed in drives some over the edge. If that is where things are heading, time to find someone to talk to rather than isolation.

Britain is facing job losses, housing is losing value, and even the currency is dropping like a rock. The Canadian dollar falling, but job losses are fewer right now. Europe is also dealing with losses and economic meltdown.

What to do? Stress is often alleviated in positive ways or negative ways, but the choice is personal. Taking a walk along a fall path is a far better choice than drinking, for example.

Pennies may seem inconsequential, but even knowing there are some put away gives some mental relief. This may be the time to connect communities, be active in finding answers instead of concentrating on all the problems. Doing something constructive is far better than worrying.

The one thing no-one should be doing now is taking on reckless debt or borrowing for luxuries.

Cutting Costs At Home and At Work

A lot has been forgotten about saving money at home, apparently. With the new technologies available, it is virtually possible to light a home on the equivalent of 2-6 100 Watt bulbs! I have seen LED fixtures available on the internet that will light an entire room for so little power it boggled my mind.  Second choice are the lower wattage bulbs available in most home improvement stores at a much lower cost than when they were introduced. LED lighting is extremely cost effective, considering the bulbs will last 15 years if left on continuously, how long when lit and turned off, I really don’t know, but my guess would be a very very long time!

Wall hangings, they used to be used in those cold drafty stone houses, even castles, and for a good reason. They were a form of insulation and blockage of drafts, along with decorative enhancement. Today it is possible to make something close using a sewing machine, or even by hand, using either quilting techniques or turning a worn blanket into something pleasant to look at.

Quilts are no longer just something Grandma made to keep herself from being bored out of her tree, but for a warmth that can be made from all kinds of scrap materials. It means you don’t buy much more than needles and thread, along with a decent pair of scissors. Old blue jeans, t-shirts, curtains, whatever is handy can be used to make quilts. They don’t have to be fancy at all, but when made with a few layers, they are much cheaper and warmer than a lot of the newer blankets. Micro fibre can be used too, adding in more insulating factor. All you really need to remember is to use fabrics that have been washed several times.

Canning or making jam, especially right now, can give you some food during the winter that is not packed with chemicals, and you get to choose what you want! If you can get to a farmer’s market, or are near farms that grow veggies, orchards, or even have neighbours with excess, this is the time to get them. If you ask for bruised or damaged fruit (called jam fruit here) and veggies, you save a lot over buying them in the normal way. Consider gleaning fields too! Just remember to follow the recipe directions, no short cuts! Canning, if done wrong can make you very sick, so if in doubt, toss any that get cloudy.

Layering winter clothes is a cheaper way to keep warm if you cannot afford new clothing this year. Start with a summer t-shirt as a substitute for the undershirt, then put on a shirt, then a sweater, then maybe a vest, then your coat. You can do the same with socks, two pairs will keep your feet much warmer.

Knitting may be something Grandma did, but if you can, learn to do it! You can make slippers for the kids without them costing too much, and if you get the “wool” (which is usually now made from poly-cotton fibre) from a second or thrift store, you save more. Hats are relatively easy to make, as are basic mittens. If you get proficient at it, you can make some money with your knitting and also avoid boring yourself silly watching television.

Power, we all use it more every day it seems. If you are not using your television, unplug it. Televisions often draw power all the time to keep the “instant on” feature going. Same thing goes for computers, shut them off, unplug them if you know you only use them occasionally anyway.  Consider buying a small fan heater for moving from room to room, so that you can keep the thermostat down and still not turn blue.

Insulate! Even if you buy a bundle (called a batt) per month, put it in the attic to keep heat loss from going literally through the roof. Get some double-sided tape and put plastic sheeting over the windows you don’t open in winter. Just make sure you have at least one clear escape in case of a fire.  If you have drafty doors, you can use tape and light cardboard to cut down the loss of air, or keep cold air out. Tape the cardboard to the door itself, making sure you extend the cardboard over the edge of the door.  Wide masking tape can be used where the hinges are, if you run the tape down the door. Yes, it looks tacky, and yes, it is not the best choice, but if you are on a tight budget, it does work.

Induction cooking is much cheaper to use if you get the counter-top units. They work using the metal in your cookware to heat food, and the drawback is that they don’t work with glass or ceramic cookware. I have seen units that have two “elements” in a store for less than $100.

Take your lunch to work, it saves a lot over time! Eat breakfast at home, skip the take-out coffee and learn to bring an insulated container with your own coffee. Cheapest and probably healthiest breakfast is rolled oats. Not the small packaged, flavoured kind, but the ordinary quick oats or even the large oats, with brown sugar and milk. It is filling, has fibre, and will keep you going a lot longer than any prepared cereals on the market. Add dried fruit, fresh, even canned fruit and you have a good start to your day. Yeah yeah, it means you have to bail out of bed a few minutes earlier. Put a full pot of coffee on when you make it, then when you want a cup during the day, use the microwave (if you have one) or warm the cup with water from the tap when you wash dishes.

Powdered milk, not the tastiest stuff, but when you need to keep a family going, it is cheaper than buying the jugs. What a lot of people have done is make the milk using the powder, but using warm water. If you mix in even 25% pasteurized milk, it tastes tolerable. You can probably tell powdered milk is not one of my personal favourites, but it comes in handy for cooking, and can save quite a bit over time. Let the mixed milk, either totally powdered with water or powdered+water+liquid milk to stand overnight.

Cheap meal using canned tomatoes, rice, weiners, celery and onions can be made for even those who have trouble looking, nevermind eating, weiners. Chop the onions, celery, and put them in a pot with the canned tomatoes, bring to a simmer, add the weiners (or smokies if you have a bit more money) and let this simmer for roughly half an hour. Cook rice normally. When you are just about ready to eat, thicken the tomato mix with some corn starch disolved in water. Put the rice on plate, then dig out the weiners, put them on the side, then ladle the tomato mix left over the rice. For 4 people you will need 2-3 large cans of tomatoes, a small onion, celery (chop the leaves too) 4-6 stalks, and if you have to be thrifty, a pound package of weiners cut in half.  Rice should be at least a cup per person.

Make your own pancakes and baking powder biscuit mix. It is relatively simple to do, and when you are down to the tough part of the month, the smell of fresh baking biscuits is wonderful. They can be warmed in the microwave without turning into chewing gum like a lot of breads do.

Use sour cream, even the stuff that has turned sour in the fridge, to make things like macaroni and cheese. The sour cream will keep the cheese from “curdling” or lumping.

Credit Default Swaps and Banking Screwups Killing Economies

60 Minutes on These

I finally got some information on these and now perhaps it is time to make someone aware of how totally unregulated these were and are. The show “60 Minutes” put up one very simplified but complete explanation of what CDS are and how they were used to make some banks and people millions on the backs of mortgages, loans, and other money transactions.

In layman’s terms the CDS is essentially an unregulated insurance policy. It guarantees the performance of a security instrument , e.g., a mortgage. The buyer of the CDS pays the maker a fee or “premium” (think insurance) for protection against a loss. Historically the US Treasury has not classified derivatives as “insurance,” and therefore they trade free of any government regulations. Because of that, the firm selling the CDS is not required to set aside any reserves from the premiums received to insure against possible future loss claims. This obviously makes the sale of the Credit Default Swaps extremely profitable and default loss payments very expensive.

These were made against banks themselves, by banks, and if the Swap moves around, banks may end up with Swaps against themselves as well as having other banks “owning” Swaps against each other!  With no regulation, no means of tracking these, they remain hidden, still able to take down corporations, banks, and virtually everything with a loan on it, including mortgages still being paid today!

Basically the banks, Bear Stearns, Lehman Brothers and Citibank, along with virtually every bank in the US, along with a few international banks got caught with their hands in the cookie jar, bringing down a really nasty recession on everyone.

Swaps ARE insurance, but because insurance IS  regulated, the banks and investment houses used the term “Swap” to blatantly circumvent insurance regulations.

On September 23, 2008, Christopher Cox, Chairman of the U.S. Securities and Exchange Commission, placed the worldwide CDS market at $58 trillion, and stated it was “completely lacking in transparency and completely unregulated.” The U.S. Office of the Comptroller of the Currency reported the notional amount on outstanding credit derivatives from reporting banks to be $16.4 trillion at the end of March 2008. (For reference and perspective, the U.S. GDP for 2007 was $13.8 trillion, while the world’s GDP for 2007 was estimated at $54.3 trillion)

See the problem here? Playing high stakes poker, literally, put the bets beyond the ENTIRE world Gross Domestic Production!

What happened is that the mortgages were turned into “Swaps”, even good mortgages, the resold over and over again, until the hidden market was well over the actual value of the entire world GDP. What is truly scary is that there is absolutely no way of knowing EXACTLY how much of this toxic paper is out there, or the true value of any of it, BECAUSE it is a hidden, secret market.

Why am I reiterating this now? Well, those very “instruments” are now being put on the market this week, and there are still no regulations on creating more right as I am posting this!

“It is an insurance contract, but they’ve been very careful not to call it that because if it were insurance, it would be regulated. So they use a magic substitute word called a ‘swap,’ which by virtue of federal law is deregulated,” according to Michael Greenberger, a law professor at the University of Maryland and a former director of trading and markets for the Commodity Futures Trading Commission.  The deregulation of the swaps market is thanks to provisions in The Commodity Futures Modernization Act of 2000. Who was President and Secretary in the US at this time??

One large difference between credit default swaps and insurance, is you do not need to own the bond or instrument being insured in order to obtain insurance on it. If the bond fails, then, theoretically, you get paid, possibly along with many others. Yet the “insurer” of the bond is not regulated and the transaction is beyond federal or state regulation. This allow speculators to make money by purchasing insurance on a company’s bonds and then shorting the stock of the company in great quantity and getting a payoff that exceeds their risk of shorting if the price of the company’s stock increases. The fact that you need not be a party to owning the bond also explains why the total value of credit default swaps is so high, indeed higher than the total value of the bonds issued.

Translation of bafflegab to ordinary language? You and I do NOT even have to put any money or have a stake in this to be paid off! Speculators all cashed in here!

AIG sold them, bought them, moved and split them, and some banks are still making, moving, splitting them right now.

Until the banks can declare openly what they have in CDS, what they risk, and where their money is being invested in, this will be open season on the government funds, central banks all over the world, and I have yet to see any demands on ANY banks to disclose their swaps.

Obviously this has yet to come out with any transparency, any real idea of what kind of real trouble we are all in, all because of some sneaky, coniving, greedy banks, investment houses, speculators, and the government officials who KNEW these were out there and did absolutely nothing.

Fading Out

Up until a week ago, I had not seen much effect from all the turmoil here.  There were few signs of anything really changed.

This week the news here was broadcasting an item about a series of condominium towers that are now in receivership because the developer from Korea had used Lehman Brothers for financing. The owner has now been put in the position of declaring bankruptcy with the sub-company building two of four towers.

The developer had created a company just for those buildings, so the permits, etc. could all be done with local authorities and laws.

Housing prices are still very high, and there have been few here even close to foreclosure, yet. I do know other cities around have seen a slight rise in foreclosure, but those numbers are still in the hundreds, not the thousands.

Linens and Things is the other company that has disappeared here.  They were based in the US, so I gather the finance and company structure was weakened, then went under.  Another sign that some companies went over the capacity for expansion and put themselves into a bad financial position.

I am still confounded by some of the business practices in the US. Take WalMart for example. They tried and almost succeeded to bust unionization here. There was one store they opened, which after the employees did get unionized, WalMart promptly closed. I know of some of the business practices that Wal Mart use, and here they are against the laws. Discrimination against women, refusing to pay for holiday pay, firing with no reason, all kinds of very bad business practices.

Personally I will NEVER spend a dime there. I have no use for any company that will deliberately abuse the public, the courts, the laws, and especially their employees.

Some of the companies that wanted to expand to this country found themselves in lawsuits both from their former employees and from the federal and provincial laws. Most who ran afoul of the laws closed their businesses instead of trying to live up to our standards.  Minimum wages, tax, health care payments are all paid by every business here. I guess those who closed up shop did not realize that we are more “social” here, and our idea of the common well-being is much deeper.

With the disastrous down-turn in the US economy, I am still trying to figure out how on earth someone who is a parent, who has a child with a long-term medical condition like diabetes, can possibly deal with the cost of health insurance. It certainly gives me a stronger appreciation for the one man who started our “socialized” health care system. It may not be perfect, but from watching what others have gone through, even going without seeing any medical services because they cannot afford them, I shudder to think how this is going to work out.

Each person does have choices, every moment, to either get into the quicksand with those in trouble, or to stand on solid ground and put out a hand to help others get out of the quicksand. Mentally that means being strong, being able to maintain a healthy perspective, being someone who recognizes that we must take care of ourselves, otherwise we are basically useless to anyone else.  Jumping into the misery, diving into the quicksand, is no help, and those who are in the quicksand will definitely NOT thank us for doing it. Strength comes from within our own beliefs, and support is something everyone will need at one time or another. If I have strength to spare, then I guess I “socialize” myself enough to help someone out.

If you see a theme here, yes, there is one. Socialization is something every society does, and I am confounded that some would see banking regulation, knowing what is going on in the financial world, as a bad or unwelcome thing known as socialization. Sorry, but I believe that all of us have to depend on honesty, and if greed is going to wipe out integrity and honesty in business, then regulation, socialization, is necessary.

This is the End of an Era

The Government is NOT doing what is necessary, there is a better way.

Well, after watching a huge number of news broadcasts, reading until I feel like putting every written word into a huge pixel black hole, I have come to see that the way things have been working for the last 25-30 years is over, done like our Thanksgiving turkey this weekend.

People have had the expectation that they could borrow up to 6% over their income and still keep going. That is bizarre to me. Spending 106% of your income and expecting to keep things going is expecting yourself to become more than you can ever be!

Housing prices have risen so fast that the costs have ballooned way over the true price, the real value, of those same houses. Speculators, agents who took fees to sell off the bundled mortgages managed to make the whole market balloon to the point where things went BANG!

Make no mistake, just like Milken, et al , the agents had no compunction about taking the fees, and putting ordinary mortgages into a highly risky place, leaving those who were the original lenders and the house purchasers in a position where it became impossible. There became a distance between the lender, the mortgage and the purchaser. The agents did not care, do not care, and will not care who the purchaser is or was, and furthermore the agents have their money and can walk away without even blinking.

The Paulson idea of taking out the toxic sludge is never going to work. Why? Because it is impossible to put a value on paper that is basically completely impossible to unwind again.

The markets should go down again this week. Why? Because the toxic sludge from the collapse of Lehman Brothers is going to be due. Those who were tied into that sludge are going to have to take some huge losses again.

There has to be a complete understanding from main street here. No longer can we use credit to solve problems, no longer can anyone expect to have a charge card without realizing they are literally borrowing money at exhorbitant interest without that interest being a huge balloon that also goes BANG! The worst thing that older people can do right now, in my opinion, is to take out a reverse mortgage. Why? Because they may end up with a home that is never going to be worth what they are borrowing against, and end up being forced to repay instead.

Whether this all ends up being a very long, very harsh road, or a bumpy ride that is shorter depends on how banks deal with the mortgages that are not in default, yet, and the people who have taken those mortgages out rewriting the mortgages to reflect the true price of the houses in THIS current market.It also truly depends on how the various administrations in the US, Europe, Britain, Hong Kong, Australia and others deal with this. They can either make it a hell of a lot worse or shorten the drop. My gut feeling is that, unfortunately, the advice that most of the governments, administrations and other are getting is wrong, totally wrong.

Unfortunately I have been watching this all happen and, some years ago, realized the way things were going would end up dropping like a huge boulder on house at the bottom of the hill. In other words, although this seems surreal, I am not all that surprised. The idea that capitalism is self-regulating is just flat silly. Greed cannot be regulated, only controlled, using laws and regulations. Yes, there are flaws to what humans do, but at least we all SHOULD be learning WHAT NOT TO DO!

This could get very, very ugly.

Too Simple Solution to Mortgage Credit Freeze?

Someone is usually correct when they say to keep things simple, tackle a large problem in smaller pieces.

So, here is one idea, maybe a solution for those banks with homes about to foreclose. Talk to the Fed, or some agency with some money to allow, then take that money and put it equally against the principle on the mortgages. Why? It cuts the amount of debt and thereby cuts the payments, even reduces the overall interest payable.

Small steps, but if Paulson could manage to get into the books at Fanny Mae and Freddy Mac, then apply federal funding to mortgages that way instead of risking banks reintroducing those toxic debt items back, the overall economy would likely benefit better.

The way I see this is simple too. Any naturally growing thing needs to have the roots, the inner basics strengthened before any plant or animal can produce healthy growth. Like making the roots of a tree strong will keep the entire tree in better shape.

Actually the same principle can be applied to most things. Take care of the solid ground, feed the basic inner system and the rest will weather storms.

Example: Bank of Snow has 30 mortgages on it’s books, with at least 20 heading toward or in default. Fed or state funds are provided to the bank to be divided amongst the entire set. ($300,000) Bank of Snow writes down each mortgage by $10,000 meaning each mortgage is now in a much healthier position.

Example 2: Family of 6 has two adults, 4 children. Going out less, perhaps working part-time for babysitting or other services, the family is able to collect $2000. Then the two adults approach their bank and seek a penalty free payment on the principle. (Principle is the actually purchase price)

Not huge ideas, but with the way things are going, maybe one of the simplest ways to get more people staying in homes, cutting down debts and providing the banks with some room to move again.

There are a lot here that are using skills they have brushed off to make money on the side. Making furniture, sewing and mending clothes, working on cars, painting, babysitting, even gathering pop bottles (they are refundable here for recycling) and working in gardens, using their cars for neighbours to run errands.

Strangely enough, tough times are often when people become the most creative in finding solutions, and when things get tough, breaking down tasks to simple, relatively easy bits, often gets the job done.

Toxic Debt, Banking, Greed and Stocks

Well it seems the banks who currently have toxic debts on their books want to keep them. Why?  Apparently the upper echelon want to make sure they keep their fat pay cheques, their bonus structure, and their ability to use “golden parachutes”. If the Secretary puts up a reverse auction (bidding starts high, then goes down) that would allow the government to be involved with the banks and cut the income, collapse the “golden parachutes” and put a limit on the bonuses or pay cheques.

What happens when the banks keep the toxic debts? The depositors have their money in an unhealthy bank, the stability of the bank is undermined. All in the name of greed, apparently.

Last night the candidates were asked what they would do first when they got into office. Personally, my agenda would be to find those very upper echelon people, investigate them using these refusals, and if possible persue charges. The other thing I would do is go into the books of Fanny Mae and Freddy Mac for some of the information on shady trading that is documented there and follow that up. Names of companies, traders, etc should be there, so find them, follow the paper trail and do what is necessary to take those same greedy, self-centered, narcissistic people out of the system, if only by taking away any licenses etc they may have.

Second on my agenda is those damn lobbyists. Kick them off the fat-cat train, get them out of the halls of the House of Representatives, the Senate, and off capital hill.  If necessary, create a law that makes lobbying highly limited. Yes, there are some lobbyist for education, schools, social issues, and they need to have a voice somewhere, but there are some lobbyists that want to promote greed, capitalism and money interests and those must be dealt with severely.

The entire world has now been sucked into this whirlwind. I can bet that a lot of people around the world are looking at the very shady business practices and cursing out loud. This is one mess that must be cleaned up, starting with those who pushed for the change in regulation in congress, in the banks, in the investment houses, and put those people out of power. That will include Paulson, because as an executive in Goldman Sachs he pushed for the opening of the door to creating some of these same toxic financial papers now choking the entire world banking system.

I can bet a lot of the people who played this pyramid scheme, ponzi game, whatever you want to call it, are now becoming aware of just how much damage they could cause. I can also bet that the impulse to find those people is growing. Let the law, the FBI, do that job.

I have read so much financial information in the last two weeks I almost feel like a banker myself. Good grief! Maybe this will, pardon the pun, pay off later. What I have found out is that putting trust in the stock market, the investment companies, is often betrayed. That betrayal is fast turning to anger, outrage, and frustration.

Obama needs to alleviate some of the frustration as quickly as possible. Find the players who played with lives, played with jobs, played with the stock markets by selling empty, toxic papers bundles, and abusing the trust of not only the American people, but the banks and people over the entire world. This will not be easy, mostly because the banks will demand privacy. Phooey! When you wreck an economy, cause people to loose homes, put self-centered greed and interest ahead of anything else, you have become a public figure, in my opinion.

Economists have no clear idea where this is going, mostly because this is unique. Yes, banks caused some recessions, Savings and Loan fiasco caused some serious losses, but this has become unique because it involves the world now. It started in the US, it started with the CEO’s and upper echelon, but it is going to finish off a huge number of jobs, good companies, and maybe a far longer list of decent neighbourhoods too.

Hang in there, this is going to be going where no man or woman has ever gone before, without the spaceship. We all live on one small planet, so maybe this is the time to truly become neighbours.

Stock Markets falling, Recession is here

Random notes here, but they may tie in later.

People are all looking at the stock markets and the falling prices. Some are trying to figure it out, some are just scratching their heads in wonder. I had a though today that makes sense to me, although I may be the only one. Perhaps people are looking at the stock markets and saying, ” You want your cake and eat it too” by demanding government bailout money and investors too. So people with investments, like retirement funds, are taking that money and putting it into bonds. They are basically saying, “You may be getting my money from the tax rolls, but I am taking as much as I can back. You will not get a double benefit from me.” I may well be off here, but it makes as much sense as any of the explanations I have heard elsewhere.

Keeping your head above water in these situations means some creative solutions. One that struck me today was using your home to make money. It means you don’t have your total privacy, but it may just save your home from being foreclosed on. What am I talking about? Renting either a room or part of your home. It may mean you allow someone to share your home, but with the increase in income, you may benefit not only yourself but someone else.  If you do decide to do that, make sure you are asking for a reasonable rent, not because you want to be seen as a sucker, but because you need to try to ensure a long-term renter. Make it decent, not a rat hole, and make sure you do get references. If you would live in it yourself, and consider the rental space a decent deal, then you will likely fare better than someone who wants the money but not the tenants. Those days are soon to be over anyway.

Your car. Do you need it for work or can you get to work by transit? If you can cut down on your car expenses, or even sell it, then you will save a lot of money over time. Most people living in the urban centers usually can manage to get to work with transit, and yes, I know it takes longer, but when you are getting down to the necessities, then maybe this is the time to change your habits.

Second hand stores. These may be the boom area in the next few years. Yes, it means you shop for things that are not brand-new, but it also means you are not spending money on new things. That money can go into savings. In the short or median term, money in the form of cash is going to be king. Saving on things like cell phone calls, even high priced cable, internet, may well be the difference between eating and living within your means and finding yourself in deeper water.

Borrowing. Unless it is an absolute necessity, don’t. If your family is one of the millions that have lived decent, honest lives, maybe consider pooling money into a larger savings. Not to borrow, but to have funds growing for crisis that may happen, and if you manage your lives well, then you can have a pool of money. The reason for doing this? Bonds can pay interest, and if your pool puts enough money into bonds, you can all get some interest back. Building a pool like this means you all need to keep track of the money in it, who put it there, and be able to return the money at a later date.

Renting or moving down in property size and level. This is one time when you really need to take a hard look at the markets around you. If rents are higher than what you are paying on your mortgage, there is really no reason to move out, but if you can find a cheaper house that can be something you know you can live in, then perhaps look into that. Remember you do have to find a buyer for the one you have now, though.

Community Kitchens. These can be a very efficient use of energy (cooking a large amount of food on a stove or in an oven) than cooking small meals at home. The kitchens also can be a place where several families or people can combine ingredients to make meals that each person would not have the ingredients for, ie: stew. One person may have potatoes, another may have carrots, another may have access to cheap meat, etc. Combining them will provide families or the senior citizens with meals they cannot afford to cook themselves by sharing the costs.

Plan on gardening. If you have access to a 10 foot by 20 foot piece of land, you can grow a fairly large amount of food. Potatoes, peas, carrots, and a few others that are easy to grow will all fit in that space. If you don’t have a continuous area, using raised planter boxes is just as effective. Peas can grow up above the other plants if you put up netting for them to follow.

Internet. Most people now need to have access to it. Libraries have them in most areas, but if there is a place either in your home or in your community center to set up several computers with an access, then you can get together within your community and operate this center. What that will do is save most people the cost of the internet connection and still allow access. It may mean a small monthly charge to cover the use of the connection, but certainly not as costly as individual connections.

Computers. There are free operating systems available. These can be used by people who have had problems with their computers on paid operating systems. What you can do is take one computer, clean out the hard drive, then install the free systems. Ubuntu, a version of linux, is free to anyone, anywhere. In fact, if you contact them, you can get up to 20 free disks. They have no problem with you copying the disks, sharing them, using them, and even giving the disks to others. Linux has drivers for accessories, word processing which does “talk” to other operating systems, as well as a huge variety of other options. It may mean you need to download them, but as of right now, linux has no viruses, trojans or other malware problems. Europe is turning to Ubuntu and linux for commercial purposes too. When a demand for an application, accessory, or user need appears, then a world-wide network begins immediately on developing the solution.

Recycling. It is amazing what people have done with items out there, from using pop bottles for automatic watering (fill the bottle, turn it upside down and bury the neck into the soil) to making houses out of old car tires. Imagination is the only restraint here, but remember to keep things like mercury, lead, and other toxins out of your life. Recycle old batteries, flourescent light tubes, because they do have toxic chemicals in them.

Cleaning. Vinegar is cheaper than most of the store cleaners and also is an effective anti-bacterial agent. Dissolve vinegar in water, use it to clean glass. Add in some soap (dish or even hand) and make yourself a decent floor cleaner.

It is time to look at what we all CAN do, rather than see all the limitations.