Stock Market - Las Vegas

It is our fault that things like this happen.  Decades ago, the stock market was a place where one could buy marketable securities, the vast majority of which would pay dividends.  That is, they would share the profit among the company owners (which is what owning stock means).

But greed brought speculation.  Nothing is more absurd than having huge fluctuations on the price of stock due to supply and demand for the specific stock.  Fundamental analysis, the actual financial health of a company, should be what determines the value of its stock, but backed up by company assets, not just speculative price assesment. 

Most people who have lost their live savings on the stock market will agree that it is absolutely ridiculous to lose a total investment just because institutional investors decide that a company is not worth keeping and create a stampede.

There should be a market for the private investor, for the hard working man who wants to see his or her savings grow, not based on stupid especulation, but on the actual performance of the companies they own.   There should be a change in the way this market grows, making it mandatory to disburse at least a portion of profits among stockholders.

Although it is obvious that institutional investors bring big money into the table, it is also true that it is not THEIR money, but their investors money they are putting at risk.

There should be more education, more diligence on the part of the private investor.

Why does the government have to bail out Wall Street? 

How about making transactions reversible?  Sort of a roll-back the deal, if it comes to light that someone has manipulated the actual deal?

"The first rule of investing: buy low and sell high. If you haven't actually bought anything, get someone to lend it to you first, then sell it high and buy it back once the price has dropped. That's the first rule of short-selling — sell high, buy back low, and pocket the difference — and it's a trick that has been hastening market crashes for at least 400 years."

http://www.time.com/time/business/article/0,8599,1843255,00.html

What happens when a large financial institution does this?  Even worse, inside trading is one thing, but what if you're not inside, your'e outside and you have contact with a large institutional investor who tells you they are going to dump the stock?

The stock market is like going to Vegas with your life savings hoping to come out with a surplus. More often than not people lose.  And don't get me wrong, there have been years where many investors have had increased their wealth, pension plan investments, mutual funds, the whole works.  But life is not just a few years or a decade.

The stock market should net to zero, that is,  after all transactions are accounted for, sales versus purchases, there should net a zero.  

If that's the case, when you lose, someone gains.  Usually those that gain consistently are the pros.

If you had the winning lottery numbers today, would you give that away?  Exactly.  That's why investing in the stock market is like playing lottery with someone who has the numbers already.  They will let you play for a while, until they are ready to take your money.

Remember, nets to zero.  When people have lost billions of dollars, someone else has made them.

So in my humble opinion the solution isn't to close down the stock market.  Let it go for people who want to GAMBLE.  They get a thrill as they would do on a roulette in Las Vegas.

But life savings, pensions, are just too darn prescious to gamble away.  That's people's food on the table, school for their kids and grandkids, that's health, over all, that's dignity.

So create a securities market where stock that is negotiated there always pays dividents on their profit. Forbid institutional investors.  Let people invest their money in what they believe can be the next great small business growing into a medium or large business.  Share the profits.

We're in a credit crisis, banks are not lending money because they are still sore from the orgy of loans of the past two years.  

Forget deregulation.  That's what got us in trouble.  Make rules, make them tight.  Have strict oversight.  Those who invest in that new market know the companies selling their stock there ARE monitored and held accountable.    Is there risk? yes, there is.  But not risk for a total loss.  If we have the FDIC for banks, let's have something similar for this.   Make those companies maintain liquidity, and never reach insolvency.  

Then we have a real market, not a casino.

  

Save America, Buy American

And that means, MADE IN THE U.S.A. Many years ago, seeing that on a label meant having a quality article or garment at hand, meant getting top quality, at top price.

It has been a while since I saw something Made in the U.S.A. and quite frankly, I miss it, and I'm tired of the alternative.

I'm tired of the mega corporations taking profits from small town USA into billionaires pockets. Sorry Megastores, you know who you are. Everytime you guys open a store, a bunch of small businesses will dissapear soon in the neighborhood. Quit trying to give that "neighborhood friendly" face. You do not benefit America, you're pocketing our money, buying everything abroad, and destroying our way of life.
Same goes to the "Depot" that employes a dozen people, and leave hundreds without biz. Yes, those family-owned businesses that had to shut down because you sell everything AND the kitchen sink, those businesses stimulated local economy.

This is what most people don't realize. Any of those large corporations take our local money to their out-of-state bank accounts. They employ few people locally, so they can't really say they are helping the local economy.

Small businesses, family owned, employ far more people. Yes, they may not have everything on a single location, but that's what free market is all about, finding what is needed and providing it. But the huge difference is that small biz, locally owned, spends LOCALLY. Their profits stay in town, that money ends up circulating in our local economy.

So how about we bring back Made in U.S.A.? How about we tell those huge corporations to take a hike, and urge our law makers to pass laws that will not allow companies to grow so big that they hurt the local economy?
Sure, there are companies such as utilities that benefit from large scale, and that makes sense, but anything that has to do with retail, should be gone.

Let's bring back our manufacturing power. I'm willing to pay more, if I know that the extra dollars end up in American worker's pockets, in our roads, in our schools.

Where is MY JOB?

Alright, let's be honest here. How can an AMERICAN company close down a division, layoff hundreds of employees screaming cost reduction, and open the very same division abroad, paying half the money, and still have the face to come and sell us their products and services?

Here is another huge finger pointing: those companies outsourcing who have cut US jobs to increase their profits have contributed, in a very big part, to turning the American people into poverty. SHAME ON YOU.

So maybe the answer is not so much creating NEW jobs, but getting our jobs BACK. I find it funny how there are the so called minuteman protecting the Mexican border from those who come to pick tomatoes, but say nothing to those large companies that fired middle and upper management jobs, professional and technical people who were making a comfortable living, just to give the same jobs abroad for a fraction of the money.

And it is not just that the government will stop receiving taxes from those workers, but the actual people, their families, will NOT be spending the money here in the US. Everyone talks about a slowdown in the spending. Well, if you have no job, how are you going to spend money? If your $70k/year job was shipped to Asia, how are you going to spend the money?

Perhaps it is time to stop being so naive and tell those companies that shipping jobs abroad threatens national security.
Everything from back office and call centers to management, even interpretation of xRays have been shipped out. There are very few factories left in the U.S. We have lost our capacity to manufacture, the expertise is not here anymore.

And the gap keeps growing. Soon the American people will not be able to afford many things because we are all getting poorer as time goes by. What we once knew as the world's leading economy will come down crashing and we will lose the respect of the financial community.

Bring the jobs back. Take away any tax credit and benefits to companies that layoff US workers just to hire abroad. Put taxes and tariffs to those products and services so they will not be so attractive anymore for employers to go hire abroad.

Sure, this is very unpopular, but the truth is that if we keep going at this pace, the US will have a financial breakdown, and we can swallow our American pride because we let it happen.

Those who have free trade agreements, well, they are the lucky ones, but we should not continue to export jobs. They should make it as hard to export a job, as it is to bring someone with an HB1 visa to work in the U.S.

So dont' worry about the mexicans picking tomatoes, worry about the guy with a Masters or a PhD who can't get a job because someone else, thousands of miles, has taken his position.

The Three Car Makers - Sure, let's BUY THEM.

This I don't understand. We will give taxpayer's money to auto makers who haven't presented an effective plan to show how they are going to REPAY that money. By the time the government wants to collect, the money will be spent, covering labor, materials, even executive perks.

Here's how that game should be played:

The car makers get their money, in exchange for company stock. That stock is distributed to taxpayers (whose money, after all, is the one bailing them out), proportionate to the amount each person has paid in taxes in the last 2 years (suddenly it makes sense to pay taxes, we can get a bonus uh?) Each taxpayer will hold the stock for 10 years, but will receive dividends.
Now, car makers get their money, and the American people get something they never had before: a good reason to buy American cars. After all, we all want to see those dividend checks in our mailbox dont' we?
Sure, current stockholders will scream, but their alternative is less pretty: the largest bankruptcy in U.S. history. I wonder if they want to go that way.'
Think about it: people will see GM, Ford and Chrysler as their own. They will reconsider buying American cars because it will definitely help their own income. And maybe for once we will realize that in this new millennium there is no reason why we could not match quality to that of foreign cars, especially if we all pitch in and buy.

So yes, let's give them the money, and let's ask for something in return. NO MORE FREEBIES to corporations. They didn't share their profits with us in the past, why are we going to share our hard-earned money with them now? Let's become partners and make things the right way.

The Credit Crisis - The Real Solution

So years ago some huge infusions of capital coming from Venezuela triggered a market-hungry speculative race that ended up hurting most homeowners and created a worldwide economic chaos that does not seem to end. Of course no one wants to look back because we are very worried looking how investments and home ownership crumble in our eyes.

Let's point fingers. BANKS. What happened to your lending policies and procedures? What happen to credit qualifications and information verification? Since when does a bank lend money based on speculative market prices vis a vis realistic values? Why thousands of people got loans way beyond their monthly payment means? Yes, let's say it, it is YOUR FAULT for not following your own rules. And now you want the government to give you money so you will not go down?

By the way, this is a quick update, I'm extremely upset at the following news:

AP study finds $1.6B went to bailed-out bank execs

http://news.yahoo.com/s/ap/20081221/ap_on_bi_ge/executive_bailouts

While Americans are losing their homes, their retirement funds, these CROOKS are taking our money and sustaining their luxury lifestyles. I'd say let's make them responsible for what's going on and enforce SOX, but with a twist. Forfeit all their assets and set an example on how hot to steal taxpayers' money.


I propose an alternative solution:
Let's have the government buy loans at a discount, deep discount, and following these parameters: the more time a homeowner has hold his property, the higher the priority in getting his/her house saved by the program, then individuals who purchased homes recently and live in their homes. Last would be those who purchased properties for investment, although they should take the loss because as in any investment, they took the risk.
This way, the banks will get liquidity, and people would have peace of mind that they will not be railed by greedy bankers who want to have it all.
After all, banks haven't been fined or penalized for their absolutely outrageous lending practices.

Giving money to banks who have been clearly irresponsible on handling their own funds doesn't make sense. They would become liquid AND keep the mortgages. Should they be entitled to the profits of their ill credit practices?

By the way, there is no such thing as "government" money. Last time I checked we lived in a democracy, and the governments' money is really taxpayer's money, our own money.

Why we are in a Depression and why people are in denial

From http://www.statesman.com/opinion/content/editorial/stories/insight/11/30/1130depressdef.html

"Though there's little agreement on how to define an economic depression, many economists point to two indicators — a rise in unemployment and a drop in economic output — that are far larger and last far longer than most Americans have seen in their lifetimes.

In a recession, a much less severe downturn that typically lasts a matter of months, "the unemployment rate increases to perhaps 8 or 9 or even 10 percent," said Michael Brandl, senior lecturer in economics and finance at the University of Texas McCombs School of Business. "An economic depression, on the other hand, is when the economy contracts year after year after year. The unemployment rate in a depression is closer to 20 or 25 percent."

The U.S. jobless rate is now less than 7 percent."

Let's face it, the government can continue printing money, but sooner or later someone, or some international communities, may challenge what is backing up the U.S. dollar, and we're going to be in big trouble.

In 2009, the government will realize that revenues from taxes are going to be way less than they expected. With thousands of business having tremendous losses, there will be very little to tax. We live in a economy of reaction.

So by the time the press starts talking about depression, we will be already to the neck in a really nasty economic situation. Just look at what happened to the "recession", the government admitted we are in a recession way after everyone realized and felt it in their pockets. Well, same thing will happen again, except there are measures that could be taken to prevent this. Check my other postings for my proposed solutions.

Why am I so pessimistic on this downturn of economy? Well, probably because I have witnessed the disastrous management of government, its late and inadequate response, the absolute irresponsible corporate behavior, and the increasing greed of investors.

There is truly a lack of common sense. So unemployment is at 7%. If the auto industry doesn't deliver (and why would they deliver? a money infusion will only sustain the machinery for so long, if sales aren't there, they will eat up the money and have nothing to show for), we will see a huge jump in unemployment. Assuming 2 million jobs lost, that would take unemployment to a 11-12%, with its domino effect in other industries. So a 20% unemployment is not too far unless something is done.

Large corporations that have outsourced everything they possibly could have killed America. Sure, more profit for them (have you noticed how products and services have not come down in price, but their profits skyrocketed?) but same or higher price for us. However, those Americans that lost their jobs will not be buying and spending. It is like a huge twister that is eating up everything on its path. So for those companies that have outsourced AMERICAN JOBs, thank you, you have greatly contributed to the downfall of our economy.

The Depression is knocking at our door.