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Tuesday, April 28, 2009

The Brillance Of BIG Government!

BIG Government at Work

In this image taken with a cell phone by Jason McLane, the primary presidential aircraft, a Boeing 747 known as Air Force One when the president is aboard, flies low over New York Harbor, followed by an F-16 chase plane during a federal government photo op Monday, April 27, 2009. (AP)

I'm sorry to interrupt our series on Financial tools to bring this bulletin in incredible stupidity!

Apparently the Obama administration felt that photo ops could double as terrorist fire drills. They certainly were able to see how quickly buildings in NYC could be evacuated. From a sheer terror perspective this event probably could hit a solid 6 on the Richter scale. Did they really believe that a Low flying Boeing jet (AF one!) followed by a Fighter plane might not cause some concern for witnesses? Even if this would have been appropriately announced it is at best in bad taste. The reason it wasn’t fully announced is clearly no one in NYC would have granted the permission for this gigantic act of stupidity. Of all places to take a low flying plane, one would assume lower Manhattan would be off limits. Surely, a small amount of common sense would have suggested not to recreate something like this. While our incredibly ignorant leadership has debated torture, they go and do something like this which is in a sense torturous. It tortures common sensibility, and it causes undue duress on many who lived through a frightfully shocking event like 9/11. Now many of those very survivors are subjected to a PHOTO OP that basically recreates the event. Apologies on this are not even a remote reconciliation for such incredible stupidity. This one requires financial remuneration. Those who were victimized by this stupidity should ask the Government for financial recourse. Hs anyone considered the potential for injury, panic and even death as people raced around trying to evacuate buildings? If one person would have died from this incredible stupidity the entire Federal Government would have to be accountable. The lack of thought behind this is a real concern. What group of idiots could have possibly sat around a table and came up with the idea to do a low fly by in LOWER MANHATTAN! How could anyone possibly have a high level government position of leadership and be highly compensated to come up with ignorance like this? No apologies, terminations are in order, anyone who sat in the meetings and somehow thought this was a viable idea needs to be FIRED immediately. All of us need to question what kind of fools we are putting in positions of power. I can’t think of any CEO or business leader who would have thought this type of stunt to be acceptable. Even the most greed driven sociopaths would have backed off a stupid idea like this. As much as you say you have seen it all, believe me you haven’t, and I can’t even imagine what kind of stupidity is next.

Monday, April 27, 2009

Now is the time to be Selling ANNUITIES!

Now Is the Time to Be Selling Annuities!

Headlines like these swamp my email box. Also the magic silver bullet offers for agents, advisors etc… also do. What does this mean for the buying public? First let me say that Annuities are one of the great planning tools available and as long as the proper suitability factors are discussed and reviewed it is something that every senior should know about!

The fear factor though has taken over; first Dateline NBC ran an incredibly one-sided and poorly designed program on annuities. Again, they went for the so-called sizzle and left out most of the facts. Not to mention they ran a fixed game as they had ringers in the show. They did not take a totally non-biased fully objective observation of annuities. But quite frankly, that would have been a VERY boring show and certainly wouldn’t have done anything for ratings. Misinformation is always more glamorous and between NBC and incompetent sales people there is plenty of misinformation to go around.

The greatest danger in today’s ever changing market place is incompetence. By basing your decisions about important financial vehicles totally with misinformation basically gives you no chance of making a smart decision about money. And, the market place is ripe with myth, innuendo and misinformation. You would hope that the media would simply stick with facts and try to help consumers simply weed out bad information. Unfortunately in the race for ratings and sizzle most media has joined the ranks of the purveyors of misinformation (and I use that phrase lightly). The Insurance industry is under some tremendous strain with their bond investment portfolios and these for the first time have created a very unique challenge to the Insurance industry that has long been the beacon of GUARANTEES!

Annuities are wonderful contracts that offer guarantees of principal, guarantees of lifelong income and many tax advantages such as tax deferral. Those guarantees have long been backed by the wonderful concept of legal reserves. Amazingly the irresponsibility of the Banking institutions has even jeopardized the sanctity of the golden goose of Legal reserves within the insurance industry (I will expand this thought in a future blog).

For the first time Annuity contracts will be subject to the law of supply and demand. Yes, there are actually insurance carriers that have to limit the amount of annuity premiums they make available this year. For that reason, it is more important then ever which companies one chooses to have a life long contract with. There are IMPORTANT questions that every potential annuitant needs to ask. Due to this incompetent advice is NOW MORE DANGEROUS then ever before. A flim-flam sales person can put your entire retirement income at risk with poor advice and a poorly designed annuity contract.

Yet, this does not mean you need to avoid annuities, on the contrary you need to look more closely at this financial tool then ever before. This is the ONLY financial weapon in the arsenal that deals in GUARANTEES! For that simple reason alone you need to review this option closely.
In review though you will need to look for totally objective professionals to help you weed out the BAD players in this market place. There will be a surplus of bad players and their sales forces will be legion. Yet in the midst of it all will be sound, true and objective advice. I would like to think that sound information and the best interest of the client will win out.

Thursday, April 23, 2009

More Magic Silver Bullets!

Magic bullets and other Potions

Continuing on our search for the magic silver bullet please see the copy below. The average consumer has no real exposure to the manipulations in marketing and sales. The proof of this is that the average sales person doesn’t even recognize these manipulations, as is proved below. The copy you see below is targeted to Insurance professionals. Imagine how exposed the average consumer is when many so called sales professionals can be victimized by this type of marketing manipulation.

The human nature trigger to all these manipulations is greed. The process is simple, everybody fears poverty. As Napoleon Hill referenced there are 6 basic fears that everyone experiences. The one that leads to scarcity driven behavior is always the fear of poverty. The fear of loss is founded within this fear of poverty. What happens is that you begin to see the world in terms of scarcity as opposed to abundance. The law of supply and demand begins to shrink the world around you and slowly you begin to believe that there is not enough to go around and certainly not enough prospects in the market place for one to make a living. This is simply not true and never will be true. The truth is we live in a world filled with abundance and it is equally available to everyone. There is no need for a magic silver bullet to begin with. We all have free and clear our own magic silver bullet and it is between our ears. Your mind is the corridor to your successful ventures in life. Everything you need is right in front of you and can be tapped into FREE of charge. Now does that mean that people shouldn't trade goods, services, information? Of course not! There will always be need for good and meaningful information, solutions to specific needs that people have during their lifetimes. A society thrives upon the good will and commerce it creates among its people.

What is not necessary is predator behavior and manipulative fear, greed driven practices. These types of practices will unfortunately always exist. The trick is to recognize it when you see it. You do not have to experience it to recognize it. You simply need the awareness of it, and when you see it you will know it! I am not the judge and arbiter of good and bad. I do however have knowledge and experience in the world of sales and marketing manipulation. Your financial health and well being is too important an aspect of your life to be victimized by predators and incompetents. If you are a sales professional it is even more important that you recognize and refuse to play this type of game. Integrity is the foundation of creating meaningful relationships that are based upon trust. In the end all you and I will ever have are the relationships we form over our lifetime. If we value those relationships and protect them we will be able to maintain an attitude of abundance and therefore create the very abundance we seek. All the while we will also create abundance for those relationships surrounding us. Please see below:

**We weren't sure that we should even have this free telephone seminar because of the controversy surrounding the topic. You see, there is an underground selling technique that is so powerful that, if used improperly, can be used to influence someone against their will. Traditional sales trainers don't teach it because most of them are unaware that it exists.
But we decided to have the call because our goal is to help you gain every advantage possible... and the simple yet powerful breakthrough sales techniques you'll discover will not only give you a HUGE advantage, but will help you close sales faster, and dramatically increase your commissions.
On this 70-minute call, you will discover:
How to plant thoughts in your prospect's mind!
Instantly know what your prospect is thinking!
Compel prospects to agree with you and say "yes!"
Discover one simple phrase that melts away prospect resistance!
Develop rapport with anyone in 4 minutes or less! Even in your marketing message.
Five easy steps to skyrocketing your sales!
How to subconsciously influence your prospects!
How to get qualified leads to respond to your advertisements as if they were in a hypnotic trance.
Why you should never disqualify people before using this simple technique... (You are losing a lot of sales if you don't do this.)
How to become a sales superstar who earns huge commissions with literally no extra work or effort!
If any of this sounds interesting to you... you OWE it to yourself to attend this upcoming free teleseminar, where I'm going to reveal every mind boggling secret about my little known, but amazing lead methods and hypnotic sales techniques that will Explode Your Commissions like a fireworks display on the fourth of July!During This Eye-Opening Teleseminar You're Going To Be Exposed To The Most Electrifying Lead Techniques And Astonishing Selling Methods Ever Created!Just by listening about these amazing sales and marketing methods, you will be liberated forever from the prison of high pressure, low success, low commission, low self esteem "sales methods" you've been taught by the "geniuses" at the Home Office!

The above message is filled with an attitude of scarcity. Start with the phrase “compel prospects to agree with you and say “yes” (PS How exactly is this any different from the high pressure, low self-esteem sales methods that the author seems to condemn?) I especially love the hypnotic trance line. For those who really have knowledge of the sub-conscious and the hypnotic state you already know that anyone in such a state cannot be compelled to do anything they wouldn’t do in their primary consciousness. The EXPLODE your commissions and having a huge advantage over the competition are simple sales motivators to get you in the sales process. This is the regular sales copy that has been around since the dinosaurs walked the earth and it continues on because it WORKS! It works because people want to believe it will work. $500-$2000 later you will simply be $500-2000 poorer. Scarcity always does this. There are meaningful self-development programs that rightfully require your personal investment in yourself. Magic silver bullet marketing plans are simply not one of these meaningful personal investments. Invest in yourself and your own human development, in this way you can deliver value to others and create the abundance that guarantees your success.

**Actual email solicitation received by licensed insurance agent

Tuesday, April 21, 2009

Life Insurance

Smart Decisions with Money

Let me first mention that I have over 25 years experience in both the Financial Services and Resort Real Estate Development industries. During that time I was able to win numerous sales awards and begin my own Sales coaching practice. That practice has been built around developing rainmakers who establish meaningful relationships with their clients which have been founded and built upon trust. I am willing to expose the myths and the manipulations in the marketplace because people’s financial health is second only to their physical health. The most important decisions made are those that involve money. Without money there is nothing a family or individual can accomplish. So gathering wealth and protecting wealth for the future generations is a life long venture. Those who have the social and financial responsibility of helping people in these areas need to start with personal integrity and work out from there. The decisions on investing, buying a home, retirement planning, family income planning, estate planning, tax planning and many others are paramount to the future success you hope to enjoy. So let’s discuss some of the key elements in this arena.

The foundation for any financial plan is protection. Just as building a house upon sand would be silly and wasteful; starting a financial plan without developing financial protection is silly and wasteful. The tools used for protection are insurance based products. These products have been developed with risk in mind. There are only 3 things you can do with risk, you can avoid it, you can assume it or you can transfer it.

Some risks are unavoidable such as death, it is a certainty. You cannot avoid death. Now you can assume the risk yet that would mean that you are undertaking the entire financial risk of your human life value. Simply figure how many years you would work until say 65 and multiply that by how much income you earn and there is a human life value. Now, this is the future financial subsidy you will provide for your family and loved ones. Impossible for you to undertake this assumption as time is not guaranteed. Therefore the most prudent way to handle this risk is to transfer it. (In essence you are purchasing time) By transferring it to an insurance company you are paying pennies on the dollar for the future financial subsidy to be guaranteed to your family upon your death. Of course this is commonly referred to as Life Insurance. Real simple concept you transfer the risk to the insurance company by buying dollars for pennies depending on you age and health.

Of course other risks include you home, auto, health etc… these all require protection of risk.

Today, I just want to stay on topic with life Insurance as this is a greatly misunderstood and often times manipulated protection. I am not here to argue the virtues of types of Life Insurance, as surely that argument has created more myths and innuendo then religious wars. Let’s simply say that every person’s situation is unique and there are many different scenarios and solutions all of which require a strong personal reflection.

I just want you to know that everyone needs to be protected! The only reason that you would not be protected is that you intend to EARN NO MONEY whatsoever. In this case then you do not need any Life Insurance. Now the frightening facts are that over 65% of our population today has NO Life Insurance coverage whatsoever. Why you ask? Well the answers are many yet I submit that most people are scared to speak with an agent for fear of being ripped off. How sad is that? The greatest financial product in the world is undersold because most people fear the sales force.

Of course when you see information like I exposed yesterday, you can certainly understand the consumer’s fear. I understand it and am quite familiar with it. In reference to yesterday’s marketing silver bullet pitch it referenced what is termed LIFE SETTLEMENTS.

This has a major impact on those who are 70 years and older. Understand that a Life Settlement is a estate planning tool that has functional use for those families that may have a pressing need for immediate revenue and are transferring a future death benefit for dollars today. In other words one is selling their Life Insurance contract. Again, this is a specific type need that is unique in each individual case and there are times that this type of transaction is advised and useful. Yet the predators (magic silver bullet marketing) have found a way to manipulate this meaningful concept into a one size fits all speculative greed based transaction. The way this is done is to approach 70+ people and advise them as to their “hidden asset” which of course in this case is their insurability. Remember the purpose for large amounts of life insurance say 2 million and more was due to estate planning. This would be for a small percentage of people who have accumulated a large enough estate to be subject to the estate taxes. This is a small percentage of the population anyway you cut it. So this planning is a type of success planning. Yet many agents have now been taught to manipulate the financial need for these substantial death benefits and simply create a need for the vast majority of those who might like to cash in their hidden asset. So, you are asked to be insured for several million by simply putting up a small percentage of assets against a loan for the premiums on the policy. You wait 2 years (beyond the contestable period) and then the people who lent the premiums will take your policy to the market place and sell it, of course they will recoup their loan plus a percentage of the proceeds and you who had the hidden asset will get a reasonable payoff for living the two years and hopefully dying within your life expectancy (PS there are reports which are now generated that take into account your present health and genetics and determine roughly how long you life expectancy will be. ) These reports are very valuable when it comes to determining how long you income needs will be.

While all of this appears to be a minor abuse, it in reality is jeopardizing the entire sanctity of the Life Insurance Industry. You see one of the great benefits of Life insurance is that if it is properly set up and applied it pays out a tax free benefit to the beneficiary, and most importantly can be used to create a TAX FREE income for the insured. NO OTHER Financial product can do this. For many years one of the great staples of Life insurance is what is called the inside cash build up. A life Insurance contract can grow dollars tax deferred and can then have those same dollars come out TAX FREE. How this is done is again a uniquely individual situation and requires prudent planning.

Those maverick agents who have been manipulating your “hidden asset” have put the life insurance contract in jeopardy. Congress has long looked at the inside cash build up in these contracts and salivated at getting their hands on some more tax revenue. The Insurance industry has been successful at keeping the sanctity of tax deferral and tax free benefits alive, yet the speculative nature of an abused Life Settlement market place has caused potential difficulties for the industry. That affects everyone in the market place both young and old. It affects premiums that you pay; it affects tax benefits that you and your family enjoy.
All this because of sales manipulations that are driven by personal greed. None of this is done to benefit clients it is all done to benefit the agent.

The Advocacy Network was created to watch over your best interest in all decisions about money. As a totally objective 3rd party observer, we simply want you to have the true information, full disclosure and clear transparency in all the circumstances and situations you face. This gives you the necessary due diligence to make smart decisions about money.

Monday, April 20, 2009

Brother Love and the Insurance potion!

Brother Love’s traveling Salvation Show
(The Life Insurance Version)

*And now, for the first time ever on the planet, this amazing system is available for use; completely systemized, and ready to sell monster amounts of life insurance almost automatically for a few select life insurance agents.
This system is unlike any other ever created in that it has the ability to create large sales forces of enthusiastic clients that will eagerly and consistently give you referrals, encouraging their friends and family who qualify to seek you out and ask you to sell them life insurance.
No one else in our industry knows how to do this or knows that this system even exists.
This IS NOT fantasy.
It is reality. I've created the ultimate "easy button" for life insurance agents.
No more begging for business.
No more multiple closes.
No more attorneys or accountants killing deals.
No more tough and ugly prospecting. Instead, you will have eager, interested prospective clients calling you, asking you to complete a life insurance application for them.
ATTENTION: Discounting what I'm about to tell you could be one of the costliest mistakes of your financial services career. Before you finish this letter, you'll know beyond any doubt that what I'm saying is true and can instantly transform the way you do business, allowing you to quickly and easily reach the ranks of Millionaire Advisor at ZERO risk to you.
I'm allowing a limited number of advisors in your area to preview and license this system, and because this system is so powerful and so easy to use, the results are fully guaranteed. (Qualifying life insurance agents and advisors can license this system at no net cost to them. Complete details of this unmatched guarantee are covered completely at a free preview and business building seminar. You'll receive $2,308.95 in free gifts just for attending.)

*Taken directly from email solicitation.

I have maintained my registrations and licenses in the Financial Services industry, but that has been to become an advocate to clients not an advisor, agent or representative. As an advocate I seek the best interests of those I serve. (in so doing I have foregone selling product) it is about protecting clients from predators and incompetents in the Financial Services industry. Above please see what has happened to a once proud and meaningful industry. The entire Life Insurance industry is at risk due to gimmicks and tricks like the above fore mentioned. (above is direct copy from an organization selling a silver bullet marketing program to licensed agents and registered reps) ( I will expose what the silver bullet is in the coming posts, beware of the "Your Hidden Asset " phrase from an insurance agent) The industry has no one but themselves to blame. I research over 14 industry periodicals monthly and can tell you that these so called educational and industry promoting publications are all guilty of taking advertising revenues from predators who offer so called silver bullet marketing gimmicks to unsuspecting agents. There is more money being made selling useless information then there is in actually serving the needs of clients. If there was room here I would post for you the postcard this organization uses to lure agents into their game. Needless to say it is done with the allure of sex. Imagine in a professional field such as impacting people’s FINANCIAL well being, we have to be subjected to the same kind of marketing that was once used in Times Square to promote peep show palaces. Not exactly what I would call professional. Of course as you are not licensed or in the industry it has no concern for you, right? Wrong, over the coming days I will be writing a series on annuities, life insurance and other very important financial tools that you need to be aware of. In this series I will expose the realities and truths of these important vehicles and I will also expose the myths and sales manipulations you must avoid. (MOST IMPORTANTLY I WILL NOT BE SELLING YOU ANY PRODUCTS!) That is why I gave you a simple display of what agents in the industry are being taught. Of course you must believe that insurance companies and the industry as a whole doesn’t educate their agents this way, unfortunately as they take the advertising revenues and allow this to be pitched to the agents, they are culpable in this gimmick driven environment. Let me say right up front that all of this is TOTALLY legal and allowable, now as to whether it is moral and ethical is a totally debatable issue. I want to educate you on the importance and the realities of these financial tools and help insulate you and inoculate you against the manipulative techniques and myth pitches out there. Send you family, friends and associates to this blog so they can get the real scoop on financial services.

Friday, April 17, 2009

Pleadge of Integrity

Pledge of Integrity

There is a sense of change coming, yet it is not the change that many thought would come about. No, this change is the ground swell for holding politicians accountable for their actions. Forget their words; it is their actions that need to be focused upon. I offer a simple challenge to all: pledge to not vote for any politician who believes and votes to raise taxes and increase spending. Also refuse to vote for any politician who doesn’t back term limits. Make these two actions the litmus test for election. Now this means forget party lines period! This means any leaders from any party who decide that spending money we don’t have by arbitrary printing of more money and carrying use deficit balances into the future is totally unacceptable and make this known by our refusal to send them to Washington.

The time has clearly come to STOP career politicians in their tracks. Term limits would assure the end to career politicians. No more 20 year Senators or Congressional leaders. New and fresh ideas need to come from fresh leaders who are held totally accountable for serving the needs and desires of their constituencies! Gone should be the days of power hungry committee chairmen who simply disregard the leadership from new representatives.

Our so-called leaders have become drunk with Power and are regularly abusing this power to line their own pockets and propel their own ideologies. If a third party is what it takes to stop this abuse, so be it. Our great nation is a society of mostly moderate believing people. A population of people who believe in the sanctity of human rights, the freedom of entrepreneurial spirit, the common good for all who want to create a better life for their families, their employees, their friends and associates. The vast majority who believes that we are the strongest nation on the planet and that has come from a doctrine of faith and belief in something more than our own self-interests. Those who pledge to first do no harm, yet also make sure that there are incentives for doing the best one can and striving to achieve the best possible solution in all endeavors. The majority of who believe that our government is a platform to serve the desires of the people, with mandates set out by the people. Not a government that seeks to control people and mandate to people what they should be doing with their families, businesses and many other personal agendas. We are a people who believe in the sanctity of laws which are enacted and enforced for the welfare of the society, not to functionally control the society but simply enable the society to seek the fundamental liberties and rights provided by a declaration of independence that has served this nation proudly for well over 200 years.

Can we have these fundamental rights once again, you bet we can, yet it takes personal and group sacrifice. It will take being a strong voice in light of opposition. It will take a commitment to hold leadership accountable at all times, not simply some of the time. It will also call upon everyone to be involved, at least to the level of understanding what is happening. A sense of awareness, not simply believing everything you read or hear. Hold information to a high standard of reasonableness.

Each and every individual has the opportunity and social responsibility of becoming an authority on their local issues and also becoming aware of what is happening nationally and how it impacts all individuals. This is the civic duty of citizenship. We can no longer afford to sit on the sidelines and let the loudest take control of our personal and daily lives. It is time to stand up and use the power of one. Be counted in all things and be active enough to make a difference everyday.

I fear that if people do not take this great opportunity and simply sit back we will sadly measure our loss in many different facets. Most of those will be the loss of civil liberties and being subjected to a runaway government that has taken the abuse of power to be the norm. Pledge today to make a difference and keep your leaders in total accountability to you and the needs of your family, friends, business etc…..

Tuesday, April 14, 2009

The Fantasy Slows!

But Steve Moore of The Wall Street Journal said that while profit statements don't include taxpayer money, profits wouldn't exist at all if the government hadn't stepped in.
"You have banks that are reporting several billions of dollars in profit. These are the same companies that we poured tens of billions of dollars into. ... I think that these could be phony profits, people. I do not think a lot of these companies would be awarding the profits if we were not pouring our money into these banks," Moore said.
Bevins said it's more telling that the large banks have not returned the money yet.
"It would be a much more powerful statement to return the money than just say you will," he said.
Ely predicted that as more banks return bailout money, those that don't will be marked with a scarlet letter in the form of an "F" for failure.
"What's happened is the government has shot itself in the foot," he said.
Obama said Tuesday that the program has been essential, but his administration has been wrongly criticized for not intervening more into the workings of private lending firms.
"We believe that preemptive government takeovers are likely to end up costing taxpayers even more in the end, and because it is more likely to undermine than to create confidence. Governments should practice the same principle as doctors: first do no harm," he said.

This is the first I have seen of others debating the sudden surge in banks so-called profitability. And now even the Obama administration is lightening the rhetoric about the transition to recovery. They pushed the envelope as far as possible and now that the investing public has questions they are backing off the peddle. Even koolaid has its limits!

The coming weeks are going to tell a very interesting story. We will soon see how many lemings there are to race to the troth and whether the government is successful in selling their fantasy package. I dare say that main street is to smart to be duped a second time and this next rally wit hthe so-called stress tests will show limited results.

Monday, April 13, 2009


NEW YORK (AP) -- A number of bank stocks bucked the broader market Monday, plowing higher as investors placed bets on which banks might report better-than-expected earnings in the coming weeks.The KBW Bank Index, which tracks 24 of the nation's largest banks, rose more than 6 percent. Citigroup Inc. and Bank of America Corp. shares led the gains, rising more than 17 percent and 14 percent, respectively.Analysts said much of the buying was fueled by investors trying to determine which other banks could be the next Wells Fargo & Co., which wowed the market on Thursday when it said it expects to report a record quarterly profit for the first quarter.The surprise announcement buoyed bank stocks and helped send the overall market sharply higher ahead of a long weekend. Markets were closed for Good Friday.

Sorry, I am not a chicken little, yet this type of manipulation appears to be so obvious that I have to step back and question the integrity of the markets. As a believer in the Free market concept I want nothing better than a bull market to surface. In the end however that Bull market needs to be based upon some reality. How can any Bank (especially any of the top ten) post record breaking profits in this economic climate? Of course you can get the books to say anything you like, I however any referring to some logically based factual evidence that this could even happen. Citi falls beneath a dollar and suddenly has Q1 profits of 8 Billion. Possibly with TARP funds in the books you can cook them for the appearance of profit. Yet with the credit markets still stalled and unemployment still rising as a lagging indicator, exactly where does this sudden surge of profitability come from? As an investor you have ask the question before you leap into the pool.

By simply racing to the troth in another greed driven motivation you risk getting caught up in allowing your wealth to be gobbled up by those who are looking to regain their losses. Could this possibly be a simple market run to pull in profits quickly? Is this a bigger gambit by the Fed to capture the personal wealth that has wisely sat this game out? Maybe it is simply a speculative day trader’s game to pull back losses. Any way you slice it, the same stench comes from it. Banks that over leveraged and gambled the house on high risk, illiquid mortgages are now somehow rebundling and packaging these very same derivatives and once again asking you to fall victim to your own greed weakness for some very quick profits. This is hardly the way back long term. I also doubt seriously that any of this market manipulation will be able to last.

Let's review; we have watched speculators drive the price of oil beyond $150 a barrel, thus driving the costs to the consumer to all time highs of over $4 per gallon at the pump. Remember this was totally SPECULATIVE; it had nothing to do with the principles of supply and demand. While this happening we watched as Land and House speculators drove the price of Housing through the roof once again with no basis of supply and demand only pure speculation. This housing boom led to a over speculation of the leveraged credit markets (mortgages) again all based on pure speculation. Now, the cycle is starting again this time hyped by the government in the form of the Federal Treasury taking the lead. In the end we must have stupid stamped on our heads!

In order to better understand what speculation truly is please read the following:

When Too Many Think Alike"As a general rule, it is foolish to do just what other people are doing, because there are almost sure to be too many people doing the same thing." -- William Stanley Jevons (1835-1882)

"In speculation, as in most other things, one individual derives confidence from another. Such a one purchases or sells, not because he has had any really accurate information...but because some else has done so before him"-- J.R. McCulloch 1830.

This is the first cycle when all asset classes have risen ranging from stocks to commodities. Everyone has had a taste of success. The explanation for it all is "the world is awash in liquidity". Everyone is also feeling rather complacent & secure. It reminds one of the Red Indians...."It was autumn, and the Red Indians on the remote reservation asked their new Chief if the winter was going to be cold or mild.Since he was a Red Indian Chief in a modern society, he had never been taught the old secrets, and when he looked at the sky, he couldn't tell what the weather was going to be.Nevertheless, to be on the safe side, he replied to his tribe that the winter was indeed going to be cold and that the members of the village should collect wood to be prepared. But also being a practical leader, after several days he got an idea.He went to the phone booth, called the National Weather Service and asked "Is the coming winter going to be cold?” It looks like this winter is going to be quite cold indeed," the meteorologist at the weather service responded.So the Chief went back to his people and told them to collect even more wood in order to be prepared. A week later, he called the National Weather Service again."Is it going to be a very cold winter?" "Yes," the man at National Weather Service again replied, "It's definitely going to be a very cold winter." The Chief again went back to his people and ordered them to collect every scrap of wood they could find.Two weeks later, he called the National Weather Service again. "Are you absolutely sure that the winter is going to be very cold?" "Absolutely," the man replied. "It's going to be one of the coldest winters ever.""How can you be so sure?" the Chief asked. The weatherman replied, "The Red Indians are collecting wood like crazy."

And so it is with SPECULATION, please don't get duped!

Saturday, April 11, 2009

The Banks, The Fed and The Easter Bunny!

The Banks, The Fed and The Easter Bunny!

Thursday, April 9, 2009
Wells Fargo predicst $3B profit

The banking sector received some welcome good news today, as Well Fargo predicted a $3 billion profit for the first quarter. The announcement caused the bank's shares to climb nearly 32 percent in early market trading, according to reports. Wells Fargo issued guidance for the first quarter, saying it expected to report net income of approximately $3 billion, or 55 cents per share, significantly higher than analysts' estimates of 28 cents per share. Among the reason for the bank's resurgence are its traditional banking and mortgage businesses. Mortgage applications reportedly increased dramatically to start the year, and Well Fargo funded over $100 billion in mortgage loans through the first quarter. Finally, Well Fargo also attributed their success to the fact that customers concerned about Wachovia's health after the bank was purchased by Wells Fargo have been returning, helping to drive both loan and deposit growth.

The Fed has now taken over the Banks and in so doing is creating fairly tales in order to regain public confidence. Think about it, during the 4th quarter of 2008, we watched the Bear Stearns hedge fund implode, then watched as Lehman Brothers fell like a 100 yr old building being demolished and the parade of buyouts including such icons as Merrill Lynch, Washington mutual and Wachovia to name a few. The Market lost over 50% of its value an early in the first quarter of 2009 Citi-Bank fell below one dollar. Now any big board company that falls below a dollar is (according to the rules) to be taken off the board. Of course the rules were relaxed for Citi and then the chief fairly tale writer Timothy Geithner released his plan to save the Banks. Of course coincidental to his pained plan Citi (who was trading at penny stock prices) came out with a projected Q1 profit (this by the way was long before any so-called upsurge in the housing market could have possibly taken place). Of course the market rallied on this news and Citi jumped over the $2.50 range (now trading in the $3 range, can you say ENRON).

3 weeks later the market surge was once again falling back so right on time the above announcement is made, just in time to have an Easter break rally for the market (can you say ENRON!).

To really core down on this, you have to understand what the TARP deal really is and why the Banks have to be subservient to our friend Timothy Geithner.
Please see the following:

Federal regulators have told the nation's largest banks to keep quiet about their performance on government stress tests. They fear investors could punish companies with nothing to brag about.
In letters to the 19 banks undergoing tests of their financial strength, regulators told the companies not to disclose their performance during upcoming earnings announcements, according to industry and government officials who requested anonymity because they are not authorized to discuss the process.
The order was the latest in a series of government moves designed to keep good news about strong banks from dooming others to a downward spiral of falling share prices and financial weakness. If banks receiving the highest marks trumpet their results, the fear is investors might push down share prices of those companies that make no such announcements.
Government officials want to announce the results all at once, at the end of the month.
The stress tests are a centerpiece of the Obama administration's ongoing effort to stabilize the banking industry. They subject the banks' books to a series of negative scenarios, including double-digit unemployment and further drops in home values.
The test results will help regulators determine which banks are strong enough with current subsidies, which need more money from the government or private investors, and those not worth saving.
The letters follow public statements from bank executives about the tests, including Wells Fargo & Co. Chief Executive Richard Kovacevich's calling the process "asinine." Bank of America Corp. CEO Kenneth Lewis and Citigroup Inc. CEO Vikram Pandit both have alluded to strong performance on separate, internal stress tests in recent memos seeking to build employee confidence.
Lewis also told reporters last month he expects Bank of America to pass the government's tests.
Wells Fargo has received a $25 billion government bailout; Bank of America and Citigroup each received $45 billion.
Spokesmen for the Federal Reserve, Bank of America and Citigroup would not comment on the issue. Wells Fargo spokeswoman Julia Tunis Bernard said the company doesn't comment on discussions with regulators.
The letter echoes earlier government moves to use strong banks as cover for those that need more help. For example, then-Treasury Secretary Henry Paulson forced the nine largest banks to take capital injections all at once last fall so the neediest banks wouldn't be stigmatized.
The Securities and Exchange Commission on Wednesday opened a public debate on how to prevent downward pressure on stocks from investors betting against their performance -- a practice called "short selling." Critics of the practice, including many in the financial industry, blame short sellers for causing much of the panic that engulfed financial markets last fall.
Industry groups also have groused about regulators forcing healthy banks to take bailouts. Some smaller banks already have returned the government's money -- plus interest -- because they were unhappy with new conditions Congress had imposed. Large banks, including JPMorgan Chase & Co., Morgan Stanley and Goldman Sachs Group Inc., have said they want to return the bailout money as soon as possible.

Can you say ENRON! Once again there is a market manipulation with fixed accounting information. How can the Banks be profitable at this moment? If anyone could possibly believe this then they have to believe in the Easter Bunny as well. In fact there is more credible evidence of an Easter Bunny. This is an obvious money grab and now not only does the government want us to fund its excess with our tax dollars, it also wants us to fund the total bailout of the Banks with the last of our own personal wealth! The government wants us all to be greedy enough to believe that the incredible economic mess created by the banks and housing industry is somehow a recession. It is not a normal recession, it is a failed ponzi scam that fell apart when as bond market (more debt then necessary) was falling apart (still is by the way, and is possibly the BIGGEST bubble yet!) Do you understand that AA bonds (formerly platinum in their guarantees) are now no better then a JUNK BOND was 7 yrs ago! These very same bonds are the basis of the Insurance companies’ investment portfolios. Insurance companies have long been the financial staple of our economy due to their reserve basis (they actually have to have more assets then liabilities, imagine a financial institution that actually has to play by REAL accounting principles!) and now they are crippled with investment portfolios that are leaking a potential bond implosion. Yes, there is some bad news still to come. The present money grab is simply to get the wealth back into the market before the bond markets collapse. Please start reading between the lines and protect your personal wealth or whatever is left of it. I am a free market believer, yet I also believe the market should not be fixed by the government to make over their incredible mistakes!

Thursday, April 9, 2009



For those who believe, no proof is necessary. For those who don’t believe, no proof is possible. The essence of faith is the belief and acceptance of that which cannot be seen. Of all the measurements in our lives, faith is the one component that is freely given and freely received. Our very co-existence as a society is predicated upon a foundation of belief. We cannot as a whole go unbelieving into a world of doubt and fear, it just doesn’t work.

Today, one day prior to Good Friday in the Christian faith and Passover in the Jewish faith I ponder what has happened to our foundation of commerce and trade. Of course these are not tied to faith directly; however I would like to make a case for a sense of faith in the expansion of any nation’s commerce and business growth.

There are several types of capital, the most prevalent form of which is MONEY. Wall St has forever measured companies by quarterly financial metrics all of which are defined in monetary forms. This has led to CEO’s and other corporate boards to place the entire focus on the derivative of money. Borrowing, lending, venture, revenue projections, margins, profit projections, sales projections etc… all represent plain black and white numbers on spread sheets. Money comes and money goes, it is gained and lost every minute of every day of every week of every month of every year. It is replaceable, it can be recovered. What have we created with this focus? We have created an overburdening sense of greed with this focus. We have created a scarcity based mentality that is driven by fear of loss and no apparent sense of creativity nor ability to maintain a sense of accountability and responsibility.

The world we live in has always been one of great abundance, there is no shortage of resources for our society (there never has been). Yet during the speed and chase of that which we do not have and that which we believe we must have we have overlooked the grand ideal of abundance. We have zeroed in on scarcity and it has led to the position we sit in at this very moment.

The greatest asset of any company is the people that make up that company (human capital). This human capital is the key resource to any future success for any entity. This goes right to the bottom line, as the cost and loss of revenue in re-training, research and development is one of the major liabilities of all companies. Study after study has shown that employees, workers, laborers (whatever name you put on HUMAN CAPITAL) create increased revenues and profits when they are well trained and placed in desirable work environments. Yet, with the advent of arbitrage and such other financial gimmicks the boardrooms see human capital as mere pawns to be moved around a spread-sheet. The intrinsic cost related to this mistake is mind boggling. It is comparable to walking down a street and stepping over hundred dollar bills in order to scoop up several pennies.

I give you one small example; let’s look at a sales force. There are many benchmarks that show a direct cost of $100,000 to replace a sales professional (account executive). You would think that a company would take this cost into account before they make silly decisions such as cutting back a sales executive’s territory and then lowering their commissions or bonus structure. In the end the sales executive leaves for greener pastures (new company assumes the costs of recruiting and developing this dissatisfied sales professional) and the company spends 10’s of thousands recruiting a replacement and then invests another $100K plus in training and development of the new sales executive. Here is the shocking intrinsic cost that goes unnoticed, on average if takes a company 2.5 sales executives to replace the one they lost due to a scarcity mindset. The bottom line is that the company made a boardroom decision to increase profitability by taking it out of the pockets of successful sales force only to find that it cost 3 times more to find, recruit and train a replacement. Talk about your stinking thinking. It is short-sighted at best, morally and ethically bankrupt at worst.

The answers are simple; the focus needs to be on HUMAN DEVELOPMENT. The ROI on human capital is ALWAYS going to be far superior and vastly more profitable then burning human capital. By investing time and money into the self-development of all human capital (if the company won’t invest then the individual must invest in themselves), companies would start showing incredible improvement in the quarterly projections and statements. This is commonly referred as having faith in your people. We need more humanity in the boardrooms and less bean counting mentality. We need a strong commitment to an abundant mindset driven by the capacity and desire for development and maintenance of all human capital over all other sources of capital. Please enjoy an abundantly blessed holiday season.

Sunday, April 5, 2009

Ed Norton

While recently watching an old episode of the honeymooners I witnessed the following insight from Ed Norton. To set up the scenario, Ed and Ralph were at a Raccoon lodge meeting and Ralph as secretary gave a financial report that showed the lodge had a deficit of $439. As the dicussion went forward on how to reduce the deficit Norton came up with this gem: "Seeing our members are not paying their $2 monthly fees, I recommend that we reduce the fees to $1 and now if the members don't pay we have cut the deficit in Half!

I now realize where the present administration gets their budget ideas. Tim Geithner is a modern day Ed Norton. He believes that we should bail out all the banks and by spending trillions of dollars more we can in essence cut the deficit in half. In fact the Obama budget actually suggests that by increasing spending to over 3.5 trillion we can cut the present deficit in half over the next ten years. Please forgive me as surely I am not brilliant enough to understand how spending can reduce deficits.

Over the history of the US the highest the debt to GDP ratio has been in the 40% arena. Now Congress and the President are telling us that we can increase that ratio to the 80% area and by doing so the deficit will be halved. Just like Norton this represents upside down thinking. Understand that this ratio is in reality a debt to income ration. Years ago you couldn't qualify for a mortgage with a debt to income ratio of more than 25%, that was increased to approx 35% and then when the mortgage bubble was blowing up just prior to the burst you could see mortgages approved to people with debt to income ratios of nearly 65%! Any wonder why the bubble burst. Now this type of debt to income ratio basically bankrupted a vast majority of banks and it totally took out Fanny Mae and Freddy Mac. Can you imagine what a debt to income ratio of 80% and perhaps even higher for the country would do to us?

Printing trillions of dollars and increasing the debt ratio well beyond what can potentially be earned is a simple formula for bankruptcy, it is also the pathway to hyper-inflation and all types of other unintended consequences. The Bush administration was far to willing to placate the left side of the isle with their spending excesses, of course some were necessary yet there was still too much spending expecially from a so-called fiscally conservative administration. So, now the present administration is trying to sell us a Norton plan. Of course the rhetoric is that "we inherited this deficit" and thusly the only way to reduce it is to go on an unprecedented spending spree. It is comparable to you deciding that it is now time to max all all your debt options and then try to pay that off with 50% less income then you now have. Would you run your own personal finances this way? Of course you wouldn't. So why would you sit back and simply allow the government to do this for you? If you do, then you have a lot in common with Ed Norton.

Friday, April 3, 2009

As the World Turns

Nothing like a real life soap opera. Obama spends more time on tour then most Rock groups. How many Presidents have had this much media? How many have spent more time on Letterman and Leno then they do in the White House. For well over 200 years America has maintained its sovereignty and the Obama administration is working hard to give it all up in his first 100 days. Between tanking the economy so the government can become the biggest business in the US, and now bowing to Europe as to become subservient to European control. I can't imagine a worst scenario. Yet I have lived long enough to know that there is nothing as strong as the American spirit and this country is and always will be a moderate majority. The radical right and the radical left do not represent the core of this nation and they never will. I sense that the present political climate was what had to happen in order to get moderates to finally stand up and say "ENOUGH already." It will be moderate leadership that gets our country back on track and in hindsight many will look back at these days with the same clouds that existed during the Carter regime. I heard President Obama tell the French and German audiences that the US is in the worst economic crisis since the 1930's. This is another of the misconceptions this administration loves to pitch and the media usually backs it up. The worst and steepest recession in our history was 1980-1982 when unemployment reached over 10.5%. As this is a fact it is something that this administration knows nothing of. They only profit from misinformation and if anyone brings up something as inconsequential as facts they are immediately dismissed. Facts are soon to become annoyances in this Adminstrations race to change our entire foundation of free markets, entreprenurial spirit and personal accountability.

The simple difference is that the vast majority of our nation believes that the individual is capable of making their own decisions. Government is to serve the people (the individual). A minority of the population believes that Government should make the decisions for the individual and thus the government knows better than the individual. Sadly this minority has been making the most noise and has gotten a power grab that allows for this small minority to speak for everyone. This happened because the moderate majority sat idly by and let the squeaky wheel get the grease. Now we are all going to pay a price for allowing both lunatic fringes to control power over the last 20 years. I clearly state that both parties (Republicans and Democrats) are totally accountable for the mess that has been created and the necessary change is a move to the middle not the another move to a radical fringe. In less than 90 days our government has moved futher to the left than Sweden! Many of the socialist governments in Europe are now seen as more conservative then us, this is seen in the fact that many of those European nations don't want any part of the Obama administrations platform of change. Be honest, how many of you ever thought you would find the day you would say the US is more left then Europe?

In order to placate Europe, President Obama decided that he would give them control over our business markets. This panel of regulators in Europe are now going to make the regulatory decisions that will decide how business is run in OUR capitalistic society. How do you think that is going to work out?

So it is time that the moderate majority speak up and rally the troops. It is now mandatory that you vote and that you preach TERM LIMITS, the moderates cannot let organizations like ACORN over take them. Elect moderates, refuse to vote for incumbents if they don't support TERM LIMITS. Get involved as it is a crucial time in our history and your voice needs to be heard. Of course do so in a logical, intellectual manner and make the leaders realize the yspeak for you and me, not for their own best interests. In closing I will mention how incredibly hypocritical we have become, imagine a group on ANTI-WAR protesters waging war on the police with rocks and bottles! How meaningful is that? Do as I say, not as I do.

Wednesday, April 1, 2009

This is what happens when anything goes meets enough already!

Today the global brain trust met to solve economic conditions. Much like the little Dutch boy our economy explodes a new hole with each attempt to stick the finger in the previous hole. In the future I would like to refer to Timothy Geithner as the “little Dutch boy, it is a fitting title for his role in attempting to solve the economic woes here in the US. Remember the little Dutch boy is the ONLY mind in our entire society who can solve our problems (this character portrayal was hammered home directly by Pres. Obama).

However today I would like to discuss Health care as it remains a staple of change in the new administration’s plan. As with any apocalyptic and fundamental change one must start with a villain (remember just recently how AIG was villainized while the Treasury used the misdirection to print 1 trillion dollars to give out to the banks) and in the case of health care the portrayed villain is the Insurance industry. This falls under the category of it is successive repetitions that do the work. A falsehood often repeated gets to be believed.

I will show you how incredibly deceptive it is to hold the insurance industry in contempt for the present state of health care. The following are real facts (something neither the administration nor the media are fond of using) and said facts are from the Health Insurance trade organization (AHIP) “Factors Fueling Rising Healthcare Costs survey, published by PriceWaterhouse Coopers.

If you have any experience with small businesses or employers of such then you would know that claims represent about 85% of the overall costs to the business. According to the survey, the 2007 figure was 87%. Physician and clinical services grew by 5.5% in 2007 and accounted for 33% of all health care expenditures the largest single segment. These services also accounted for 1.8% of the 6.1% increase in private insurance premiums. So 1/3 of each health care dollar spent covers the cost of your doctors and the testing they perform.

Hospital inpatient costs were the second largest segment, representing 20 cents of each dollar; in 2007 these costs grew at 7.5% and made up 1.5% of that 6.1% increase in private premiums.

Coming in a close third, and representing 15 cents of the dollar, were hospital outpatient costs, which grew at an annual rate of 8.2%, the highest growth rate of any of the segments. This is consistent with the down lining of many procedures that once were completed in large multi-specialty hospitals and which required admission and those nasty additional costs that are associated with overnight stays. From the consumer viewpoint this trend is a good thing. However the trend did represent 1.2% of the overall growth in premiums.

Remember we are at the fourth largest portion of the health care dollar and we still have yet to discuss insurance companies (the perceived villain of the Obama, and Hilary Clinton camps). Overall prescription drugs’ spending occupies this fourth largest segment. In fact the report points out “Prescription drugs had, in the past few years, been the fastest growing component of health insurance premiums, reaching well into the double digits.” (None of the administrations past or present wants to create a more competitive environment for prescription drug costs) Any audit of annual claims reports zeroes in on prescription costs. Even with the slowdown in overall spending, drug costs still grew by 5.7% in 2007.

The next 5 cents of the health care dollar were spent on what the survey calls “other medical services.” While these costs were relatively modest and grew at a reasonable 3.8%, they still accounted for more than our villains the insurance companies took in.

Government payments, compliance costs, claims processing, and other administrative costs account for the next 6% of spending, with an additional 4% to consumer service, provider support and marketing.

If you are keeping the math only THREE cents of that dollar is left. And that is the amount pocketed by the insurance companies. Of course the administration wants us all to believe that these are the villains in health care costs. Does anyone reading this really think that saving 3 cents is going to somehow solve the problem of rising health care costs? Of course it won’t!

Premiums continue to rise as they reflect cost increases in the other 97%, thus the insurance companies stay at the 3% spread. The study gives this perspective: “While premium increases have lowered, there are still major concerns about underlying health care cost increases continuing to outpace inflation.” In conclusion, both utilization and price increases in excess of inflation contribute to health care spending increases. Those factors are the Cause of the increased premiums. So insurance companies are simply staying inside the 3% margin they have always worked at.

It is difficult to refute nonsense that is repeated constantly by media and government leaders, of course unless it is refuted by the facts. Deception is never truth no matter how long you tell the same lies; of course people need to be aware of the facts as they are not going to be produced by a self-serving ideological agenda. You must ask yourself if you want the government to supply your health care. Can the government truly deliver a better and more cost effective product? When has the government EVER delivered a better and more cost effective product (just look at Military appropriations and ask yourself is this really who I want providing my healthcare?) Better yet look at the Postal Service now there is a monument to a Federal Government run business, would you like your healthcare delivered with the same magnificent competence that the mail is delivered with? That reminds me, it’s almost 3pm and my mail should be here at any minute.