Accountability? hahaha

From an investor newsletter - don't ask me which one - there are so many: "After receiving hundreds of billions of dollars in taxpayer-funded federal bailout money, the biggest U.S. banks say they can’t track how that money is being spent. Some of the banks are outright refusing to discuss the matter, a new study has found." Isn't this attitude just like the one that got us in this fine mess to begin with? Where's the government when you need it? Where is that famous bully pulpit I keep hearing about? Who is accountable? Hello? PLEASE. That photo shows a pressed wood violin. That's what the financial system is now made of - PRESSED WOOD. It used to be OAK.

Impure gold

This sounds very fishy to me: “Chris Weber, the editor of the excellent Weber Global Opportunities Report, makes the calculation in the most recent issue of his newsletter. He adds up the value of all the paper money in the world... and comes up with $100 trillion. Then he divides this by the total amount of "above ground" gold in existence – 5 billion ounces – and finds a fair value of gold at $20,000 an ounce. If Chris Weber's calculations are correct, the gold price would need to rise about 22 times to match the rise in the quantity of paper money in the system.” So, the question is, why aren’t all the other precious metals factored in???? This must be pure baloney. Gold is at about $850 an ounce right now (today). PLEASE. Even the girl at left knows better. Gold is not edible, remember?

Deficits and ham

Someone is definitely in a panic over the government’s spending so much on the bailouts. The deficits are mushrooming. Yes, of course. There’s also this guy peddling a video entitled IOUSA. Here's the quote: “It is difficult to know what impact these changes will have on stocks, but I believe, in general, they will drive up prices. In addition to buying the world's best businesses (the Cokes, Intels, and Microsofts of the world), I believe you should have hedges in place for the coming devaluation of the dollar. In other words, you should be buying gold: plain, regular bullion gold coins.” Sure – like the man said: “If I had some ham, I could have some ham and eggs, if I had some eggs.” The woman at left has nothing to do with the credit mess, but it does no harm to have a pretty woman to look at while you go hungry or while you write a blog.

Diamonds

From an investor newsletter – I don’t remember which one: “Russian stocks can make great speculations... The country holds the world's largest reserves of natural gas. It's the world's second-largest oil producer. It has huge amounts of diamonds, timber, gold, and base metals. So when commodities are rising, Russia is "en vogue." But the Russian government is as crooked as a dog's hind leg. One minute, a Russian company has billions in assets... the next, the government takes them. This corruption leads to lightning-fast market declines. We're in "lightning-fast decline" mode in Russia right now. Investors are scared the government will attack more companies. We advise them to be scared of further weakness in the commodity markets. If oil corrects down to $90, this new downtrend will get much worse.”

Well, well, well. Oil has actually corrected to $45. Isn't that amazing? That's not the Russian flag, by the way. It's the official flag of Mexico. One of these days, Mexico might discover diamond and gold mines somewhere - it already has timber, metals, oil, and gas - then it will be even with Russia.

Just maybe

From an abbreviated article in an investor newsletter:

By Tom Dyson: Less than nine weeks ago, I was in Singapore, at the headquarters of one of the fastest-growing, best-managed companies in the world. This company is the world leader in water treatment and purification systems. The name of this company is Hyflux. The CFO told me his company was on course to make 300 million Singapore dollars (SG$) in earnings over the next five years. He told me his order book is so full, the company is turning business away. The only problem was, I wasn't the only person who had figured out what a great company Hyflux was. The stock price – at around SG$2.75 – implied the company was worth more than SG$1 billion. I would never spend $1 billion to get $300 million in earnings over five years, even on this superb company."If only this stock was 50% cheaper..." I thought to myself as I left the company, feeling a little deflated. "Maybe someday." Now... after stocks have experienced one of the worst crashes in history, Hyflux is 35% cheaper than it was during my visit. It's amazing it's not down more. International stock markets have been destroyed. Ireland fell 80% during the crash. Russia fell 79%, China fell 74%, Brazil fell 72%, India fell 71%, and Korea was down 70%. In all, 43 stock markets have suffered even greater declines than the U.S. market, and only three did better (Switzerland, Israel, and Jordan).These stupendous declines tell me we're now living in a different world. This isn't just a standard bull-market correction like the crash of 1987. This is something bigger. Like a child who touched a hot stove, investors won't make the same mistake twice. I see a return to thrift and caution all over the world. Saving trumps speculation. Prudence trumps risk. And unfortunately, with this sentiment, it's going to be a long time before emerging-market stocks embark on a new bull market. In light of all this, I'm making cash the focus of my portfolio. Let me explain... First, the crisis we're heading into will have strong deflationary forces. Deflationary means prices fall. I expect we'll see a wave of bankruptcies, defaults, forced selling, and unemployment. Cash will be the most valuable asset around. It already buys double the real estate, the stock, and the natural resources it bought six months ago. I expect cash will be even more powerful in the years to come. I want to own Swiss francs, New Zealand dollars, and U.S. dollars. I'll also be buying safe stocks that generate lots of cash. I'll look to buy a stock like McDonald's or Wal-Mart. The crisis will also have strong inflationary force, as governments furiously pump in cash to revive the economy. These inflationary pressures could generate some spectacular "ripples" in the market. In a few years, we could see the rate of inflation get much higher. END OF ARTICLE

I disagree with almost all of what this guru has to say. Cash might be powerful but not for years to come - perhaps in the next few months to come. Inflation destroys the power of cash. You cannot have too much cash and assets at the same time. Use your cash to buy good, conservative stocks or real estate (not land). Real cash (paper currency) will sooner or later be outlawed anyway. Almost all investor newsletters are the same - they drone on and on about the same things. All they want to do is sell you something.

Hemlines coming down

So, what happens now??? This is turning out to be a bigger financial mess than anyone ever anticipated. The bailout bill has been approved, the Federal Reserve is stepping in with huge amounts of money to help bolster the credit markets (the banks), President Bush is making speeches to reassure the public and still the market tumbles. Am I the only one who has not panicked??? Fear is gripping the populace - big investors are playing it safe. Huge sums are going abroad. I have said it before - there is absolutely no reason to panic. What everyone of you should be doing is buying huge amounts of stock - now that they are so cheap. They can only go up. In the meantime, since the economy is drifting downward, so will hemlines. I don't know if I like that.

Never mind

Never mind. The fiscal-financial-economic-credit emergency is not over. I guess lots of representatives heard from the constituents. They voted the deal down. Amazing!!! Unfortunately, the bailout is still necessary whether we like it or not. Even Warren Buffett said so. Not that he knows anything, but still, he's older than we are.

Lehman Brothers

Lehman Brothers is a New York based financial services bank which is about to go out of business, like Bear Stearns and Fannie Mae and Freddie Mac before it. That's what happens when you play fast and loose with money, just because you want to maximize profits (i.e., when you get greedy). Lehman had been around since 1850 and had been buffeted by bad turns of events - including bad management and the Great Depression - many times. It had survived by merging or striking deals with other firms - Goldman Sachs, E.F. Hutton, and American Express among others. Now this. It's up for sale if you're interested. I predict another Federal bailout. Who will bail out the Federals?