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Thread: Protecting Yourself from the coming financial fiasco

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    Banned Melonie's Avatar
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    Default Protecting Yourself from the coming financial fiasco

    originally posted by Deogol in another thread

    The conversation definitely has changed from IS shit going to hit the fan.

    Perhaps it should be something along the lines of what can we do about it to protect ourselves, etc

    Yes this is definitely a priority topic.

    Obviously, one of the best ways one can protect themselves from being slapped by the coming dollar disaster is to relocate to a place where their incomes and costs of living don't necessarily have to be paid for in US dollars. Unfortunately, these days the only practical way to do this is to move outside of the USA. With that said, the following is one of the best treatises on likely US financial developments in the near future ...



    (snip)"In This Issue
    2009 Outlook, Part 2:
    Bonds
    Living a Lie!

    As economic activity and PONZI finance fall off the face of the earth, we enter the stretch run of the CON game known as the Bond and FIAT currency markets. Although both are headed for their ultimate demise, the path will be quite different. In 2009, these challenges will be headed your way. Prepare properly and thrive, or fail to do so and fall to your demise.

    Never before in history have so many investors made decisions based on PHONY data and false headlines. Most in the alternative information arena are fully aware and have reported extensively on the POLITICALLY correct but practically incorrect economic data emanating from G7 governments. This is nothing but PR for public consumption as the real numbers would spawn RIOTS in the streets. So the public are NEVER told the true story as it is too horrible to acknowledge. The public is fed FALSE data.

    GDP, inflation, employment, credit ratings, corporate profits, balance sheets and much more have been MANIPULATED to FOOL the vast MAJORITIES of the electorate that can read and write. But many of these same people are functionally illiterate of history, economics, common sense, logic and the critical thinking skills necessary to sift through the FALSE and misleading rhetoric of the mainstream media, public serpents, er ... servants and school systems.

    This politically correct, but practically incorrect data has also been used when making investment decisions, thus creating assumptions which are often false and misleading. Who can argue that when a ratings agency places politically correct ratings on any type of bond or debt offering investors are effectively DUPED into investment decisions which are contrary to their goals and risk tolerances, and then entering into mal investments with expectations that are not correct.

    Crop reports, unemployment reports, inflation reports, everything has now been colored by politicians and crony capitalists to create PR/illusions they wish to foster into the public at large in order to manipulate them. The MAIN STREAM media are willing facilitators of these FALSE reports. Many times the financial media make reports on companies' profits which do not reflect the true profits and losses which we find in a companies' tax return. Every investment and analysis made through the investment and commercial banks is BASED on these false OFFICIAL numbers and most have been massaged, thus any investment decision coming from this data is deeply FLAWED.

    These FUNCTIONALLY illiterate people DO NOT know from where wealth comes, how it is generated and accumulated, nor how it was by our parents and grandparents. Many have never understood that to thrive you must "produce more than you consume" and accumulate savings. This is what leads to rising middle classes and living standards. These truths and virtues are NEVER mentioned in school. People are taught that they can have anything now by borrowing and unwittingly becoming debt slaves of the banking community as the true PRICE (after interest and compounding) of the purchase is NEVER clearly explained to them. They believe wealth, as well as solutions, to their problems come from government, rather than from their own efforts.

    People are taught that they can rely on government for health care, food and welfare. They do not realize that government is invested in making them dependants rather than independent. As dependants, the power over their lives comes from their government masters and their crony capitalist partners. As independents, the power rests in their own hands. Let's take a look at the words of Ayn Rand, as this is where we have arrived TODAY:

    "You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else.

    When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it."

    John Gault/Ayn Rand


    A wonderful description of this individual can be found in an essay by Christopher Hedges entitled "America the Illiterate" (click on the link to read it and weep). It signals the fall of the America we have known for generations. This person is the SOMETHING FOR NOTHING citizen, and once Obama's Tax cuts for those who don't pay taxes are implemented, 'America the Illiterate' will constitute almost 60% of the US population. That is an enormous percentage of the population that will be completely illiterate in everything necessary to make good decisions. I refer to these people as CAPTIVE victims of the government and banking/financial systems. They have been and continue to be the sheep to be fleeced by the elites, public serpents, er ... servants and crony capitalists.

    Now they will be the instrument of the demise of the private sector as they provide the public servants with the ELECTORAL support to attack and rob the last of the productive and prudent parts of the G7 economies and transfer it to the morally, intellectually and fiscally bankrupt. As every government policy failure appears, public servants will stroke the fear in the 'something for nothing illiterate' and use it to nationalize and destroy more and more of the private sector. They will double down on the spending, borrowing, printing and taxing required to pay for the next absurd idea to come out of the G7's capitals. Look no further than Obama's "Economic Recovery and Stabilization" stimulus package which spends 12 cents of every dollar on economic stimulus and 88 cents for sustaining and enlarging government spending and programs. A perfect name to DUPE America the Illiterate.

    Morally, fiscally and intellectually BANKRUPT public servants and crony capitalists. Now we know why the banks and financial sectors were the greatest campaign contributors in the last election cycle and Obama's inaugural election. Decisions are being made upon political considerations, not economic ones. As the Speaker of the House so aptly put it, "We won the election so we wrote the stimulus bill." This from a woman who brought the approval ratings of the Democrat controlled congress to 9% shortly before they rode Obama's coattails to victory.

    The heads of Xerox, IBM and Honeywell applauded the stimulus bill; I guess they made their campaign donations appropriately... "Buy American" provisions are in the stimulus bill; these are shades of "Smoot Hawley" protectionism, which deepened the depression by many orders of magnitude. Smart gal and guy that Congresswoman and Speaker of the House Nancy Pel*si and Senate Majority Leader Senator Harry R*id; real students of history. It's only downhill from here.

    George "Pinocchio" Bush expanded government by OVER 60% and NOW Barack "Pinocchio" Obama is doing a 25% expansion in the first month. FEAR, FEAR, FEAR and economic illiteracy drives citizens to accept absurd proposals as wisdom and solutions to their problems. Terrorism, recession, bank failures all provide public serpents the cover for taking more freedom and income from the private sector under the guise of protecting you!! Central planning of the economy, galloping socialism and Marxism are descending faster than I ever could have imagined; having taken a huge leap in velocity...

    Now these realities will have to be priced into many investments/markets, and the adjustments are enormous OPPORTUNITIES for some and the demise of others. The greatest transfer of wealth from those that hold their wealth in paper to those that don't is unfolding in the G7 and the old European Union.

    As this process unfolds it will present you with unbelievable VOLATILITY in stocks, bonds, commodities, precious metals and all markets as they are ALL mispriced to what is unfolding. Buy and hold is DEAD and will continue to be for quite some time. In order to thrive, you must become nimble and be able to manage risk as the markets whipsaw around in trend and countertrend manner. To understand the enormous potential of this approach if properly implemented, you may wish to read an overview I wrote called "Turning Volatility into Opportunity". This is what I do for investors.

    Fannie Mae and Freddie Mac are back at the government begging bowl for an aggregated total of $50 billion, and you can expect it to reach AT LEAST $600 to $800 billion before the losses are COVERED. Foreigners have QUIT buying agency paper.

    The Bomb, er...Bond markets

    I will start by saying that this is the MOST toxic area you can be in at this moment. Every assumption underlying the creation of a bond, its value as a "store of value and wealth" and repayment is NOW FALSE. Corporate and consumer income, government income, tax receipts, cash flow, level of business activity, asset values, future business, profitability and every qualifying metric used for borrowing are now significantly LESS. In most cases it WILL NOT recover for many years, if not a decade from now. And government stimulus activity will DELAY any recovery in income for years. Therefore, the expectations for repayment are considerably diminished."(snip)

  2. #2
    Banned Melonie's Avatar
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    Default Re: Protecting Yourself from the coming financial fiasco

    and here's Chris Heyges' underlying time bomb that author Ty Andros was referring to above ...



    (snip)We live in two Americas. One America, now the minority, functions in a print-based, literate world. It can cope with complexity and has the intellectual tools to separate illusion from truth. The other America, which constitutes the majority, exists in a non-reality-based belief system. This America, dependent on skillfully manipulated images for information, has severed itself from the literate, print-based culture. It cannot differentiate between lies and truth. It is informed by simplistic, childish narratives and clichés. It is thrown into confusion by ambiguity, nuance and self-reflection. This divide, more than race, class or gender, more than rural or urban, believer or nonbeliever, red state or blue state, has split the country into radically distinct, unbridgeable and antagonistic entities.

    There are over 42 million American adults, 20 percent of whom hold high school diplomas, who cannot read, as well as the 50 million who read at a fourth- or fifth-grade level. Nearly a third of the nation’s population is illiterate or barely literate. And their numbers are growing by an estimated 2 million a year. But even those who are supposedly literate retreat in huge numbers into this image-based existence. A third of high school graduates, along with 42 percent of college graduates, never read a book after they finish school. Eighty percent of the families in the United States last year did not buy a book.

    The illiterate rarely vote, and when they do vote they do so without the ability to make decisions based on textual information. American political campaigns, which have learned to speak in the comforting epistemology of images, eschew real ideas and policy for cheap slogans and reassuring personal narratives. Political propaganda now masquerades as ideology. Political campaigns have become an experience. They do not require cognitive or self-critical skills. They are designed to ignite pseudo-religious feelings of euphoria, empowerment and collective salvation. Campaigns that succeed are carefully constructed psychological instruments that manipulate fickle public moods, emotions and impulses, many of which are subliminal. They create a public ecstasy that annuls individuality and fosters a state of mindlessness. They thrust us into an eternal present. They cater to a nation that now lives in a state of permanent amnesia. It is style and story, not content or history or reality, which inform our politics and our lives. We prefer happy illusions. And it works because so much of the American electorate, including those who should know better, blindly cast ballots for slogans, smiles, the cheerful family tableaux, narratives and the perceived sincerity and the attractiveness of candidates. We confuse how we feel with knowledge.

    The illiterate and semi-literate, once the campaigns are over, remain powerless. They still cannot protect their children from dysfunctional public schools. They still cannot understand predatory loan deals, the intricacies of mortgage papers, credit card agreements and equity lines of credit that drive them into foreclosures and bankruptcies. They still struggle with the most basic chores of daily life from reading instructions on medicine bottles to filling out bank forms, car loan documents and unemployment benefit and insurance papers. They watch helplessly and without comprehension as hundreds of thousands of jobs are shed. They are hostages to brands. Brands come with images and slogans. Images and slogans are all they understand. Many eat at fast food restaurants not only because it is cheap but because they can order from pictures rather than menus. And those who serve them, also semi-literate or illiterate, punch in orders on cash registers whose keys are marked with symbols and pictures. This is our brave new world.

    Political leaders in our post-literate society no longer need to be competent, sincere or honest. They only need to appear to have these qualities. Most of all they need a story, a narrative. The reality of the narrative is irrelevant. It can be completely at odds with the facts. The consistency and emotional appeal of the story are paramount. The most essential skill in political theater and the consumer culture is artifice. Those who are best at artifice succeed. Those who have not mastered the art of artifice fail. In an age of images and entertainment, in an age of instant emotional gratification, we do not seek or want honesty. We ask to be indulged and entertained by clichés, stereotypes and mythic narratives that tell us we can be whomever we want to be, that we live in the greatest country on Earth, that we are endowed with superior moral and physical qualities and that our glorious future is preordained, either because of our attributes as Americans or because we are blessed by God or both.

    The ability to magnify these simple and childish lies, to repeat them and have surrogates repeat them in endless loops of news cycles, gives these lies the aura of an uncontested truth. We are repeatedly fed words or phrases like yes we can, maverick, change, pro-life, hope or war on terror. It feels good not to think. All we have to do is visualize what we want, believe in ourselves and summon those hidden inner resources, whether divine or national, that make the world conform to our desires. Reality is never an impediment to our advancement. "(snip)


    While I have always tried to restrict political content in Dollar Den, we have now reached the point where the future of the US economy, and the future of individual US taxpayers, no longer primarily depends on hard work or good judgement or financial responsibility. Instead it now primarily depends on government policy decisions - with those decisions being heavily influenced by mainstream media and 'financially illiterate' US registered voters.

    My point in posting this article was to amplify the most important economic development of the past week ... the easy passage by the US House of Obama's 870 billion dollar so-called stimulus bill over the objections of a 100% united opposition. It is guaranteed that the US Senate will follow suit next week thus the so-called stimulus bill will become law. This is likely to result in the following worldwide economic actions

    - foreign buyers of US Treasury bonds needed to finance this additional deficit spending will run for the hills, and as a consequence the international 'purchasing power' of the US dollar will fall

    - world commodity prices for gold, oil etc. are likely to rise significantly in US dollar terms

    - the protectionist policies embedded in the so-called stimulus bill (as well as the same protectionist policies borne in the auto bailout, Tim Geithner's comments to China etc.) are likely to prompt WTO complaints and/or retaliation against US export products.

    - federal income taxes / capital gains taxes / dividend taxes / Alternative Minimum Taxes etc. will all be increased as soon as it is politically possible to do so, as a means of limiting America's incredibly fast-growing foreign debt to a level that the international bond markets are still willing to support.

    - US private sector business failure rate will quickly accelerate due to the rapidly rising difficulty in financing their future operations (i.e. rapidly rising interest rates). The exception of course will be US gov't sanctioned private sector businesses, those which the gov't deems worthy of being granted access to 'cheap' US gov't bailout loans and/or subsidies.

    - Americans at all economic levels will see the 'purchasing power' of their savings erode quickly, as the 'spread' between interest rates being paid and interest rates being charged will widen to unprecedented levels. This is almost guaranteed since the FDIC has recently announced that it's own insurance of deposits at high risk financial institutions is creating a 'moral hazard' re CD interest rates etc. Translation ... if ING or GMAC wants to receive bailout funds, it must drop the interest rates it is paying on CD's in order to avoid the creation of a huge insurance payout risk for the FDIC (which is already nearly broke itself)

    - with foreign investment in US dollar denominated assets rapidly declining, the only real choice left open to the US gov't / FED is to begin 'monetizing'. The first large scale examples of this started to become public in the last couple of weeks, with the FED directly purchasing agency paper from Fannie / Freddie / Sallie, and with the leaked revalation that the reason that many of the bailed out banks are not making consumer and/or business loans is that their bailout money has been used to support the continued purchase (thus pricing levels) of US Treasuries !!! When the international community comes to terms with the concept that the value of the US dollar and US Treasuries is in actuality being supported by the fresh printing of additional US dollars for the purpose of bailed out US banks purchasing and 'sequestering' freshly printed US Treasuries, the game will be over for the US dollar !

    ~
    Last edited by Melonie; 02-01-2009 at 07:47 AM.

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    Default Re: Protecting Yourself from the coming financial fiasco

    Hey Mel, what's going on in your new country?

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    Banned Melonie's Avatar
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    Default Re: Protecting Yourself from the coming financial fiasco

    it's warm, it's cheap, it's reasonably friendly, and the country itself beckons further exploration. Unfortunately, I'm still bogged down with mundane details ... but that situation is improving by the day. And I have to admit that the slow pace, the beaches, and the available social scene are BIG impediments to getting my work done !!!

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    Veteran Member anelia's Avatar
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    Default Re: Protecting Yourself from the coming financial fiasco

    Melonie, you are the shit....
    As they say in the USA (a shining beacon of illiteracy to the rest of the world)
    "I'm teaching fools some basic rules. / I believe in the Golden Rule. The man with the gold rules. / I made a little money.
    And like the Bible says, I was enjoying the fruits of my labor. This is my comeback. This is me doing what I love to do." -- Mr. T

    "In the street I am my divine self. In the club I am a stripper, portraying a fantasy.
    That's not to say anybody can do or say anything to me but it's acting. Playing a role. That simple." -- Pure


    [SIGPIC][/SIGPIC]

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