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Sunday, December 4, 2011

34. Bad Greed, Not So Bad Greed

I am amused by the current rants by liberals about Corporate Greed, yet they never comment on other types of greed, greed which is apparently acceptable. Only corporations are their targets.

First of all, I like the concept of greed in corporations. I’m not interested in working for nor investing in a corporation which seeks only to “break even.” I want to see profits and growth. But
then, I guess that’s greedy of me and doubtlessly, that’s bad greed. Let’s start with personal greed. I have yet to meet a liberal who has ever turned down a raise in pay or a new job because of more money. Isn’t that rather greedy? They leave a company who hired them, nurtured
them, trained them for another company just because they will make more money.
Despicably greedy, isn’t it? No, no, no – in that case, it is “not so bad greed.”

The lovely and perky and very liberal Katie Couric wanted so much more money on her job that CBS ammounced staff would have to be laid off to meet her demands. Did Katie care? Not really.
But then, I guess that’s “not so bad greed.”

Hollywood is a very liberal enclave with vocal types such as Barbra Streisand, Tom Hanks, Steven Spielberg and so on, yet Hollywood money is concentrated into the hands of a very few.
Julia Roberts might get $20 million for one film, yet the average member of the Screen Actor’s Guild makes less than $10,000 a year. Why doesn’t Julia spread the wealth? It’s because she’s GREEDY!!! But then, that also is “Not So Bad Greed.”

University professor’s are notoriously liberal, preaching at the altar of income redistribution. Yet,
in my book, they are about the greediest hypocrites in our country. They can make in excess of $200,000 to $300,000 a year while administrative staff makes less than $50,000. Professors have the power to effect change and redistribute their wealth to all employees of the universities, but they don’t. Mine, mine, mine. Greed, greed, greed. No one yells and screams
at them! Recently students marched and protested at California Universities
because of hikes in fees. This all the while the staff was receiving raises. No liberal staff member offered to refuse the increase to offset the rise in fees, but then, that’s “not so bad greed” I guess.

I recently visited New York City, twenty-five years after my first visit there. Little has
changed. Homeless people are still on the streets and in the subways. Why haven’t shelters been built in the Big Apple to house and feed these poor souls? Greed, that’s why! In a city with
an economy larger than most countries of the world, the focus is on personal and government greed, not on human suffering. Yes, shelters are costly to build and operate, but the solution is rather, just raise taxes. The average cost of an apartment in NYC is over $1 million. Raise property taxes by 1%, sales tax by 1% and entertainment and transportation taxes by 1% - very simple. But no, New Yorkers live by the rule of greed – not me!! The money and the solution should come from the federal government (unless, of course, that means Obama) or we
won’t do one damn thing about the problem.

What about government greed? Social security money is deposited directly into the general account and used to fund and buy votes for sitting politicians. Social Security is one big
Ponzi scheme. Washington just keeps hoping and praying that there will be more people paying into the system to keep it functioning. Like all Ponzi schemes, that never happens. The money
stops and the pyramid collapses. But to change the system, give people viable and profitable options for their retirement would mean the flow of money to Washington would be cut. “No! No! No!” the pols say – “we need that money to operate. People will suffer!!” People are already suffering, those who get their social security checks and wonder how they will live through one more month on such a small amount. But I guess those elderly people are just GREEDY!!!

As I have said repeatedly over the last twenty years, when I meet a liberal who lives the life he or she wants to legislate upon me, I will take his cause more seriously. But so far, that has not happened. In each case, he or she was too greedy to give up what they had for the cause of the common good. “Raise taxes” they cry – “just not MY taxes!”

Sunday, January 2, 2011

33. Bet Do Not Pass

"... as much money can be made from a civilzation's destruction as from its rise." - Rhett Butler, "Gone With The Wind"

No one at a Las Vegas craps table wants to bet "Do Not Pass." By placing this bet you are, in effect, betting against the shooter, the roller of the dice. This bet is considered "unlucky." Unlucky it may be, but statistically it is the best bet. This bet is as close to betting "with the house" as possible. Yet, it is a bet rarely placed.

Why is this? What is it about we humas that we would rather bet on what we would like to happen rather than what we know will actually happen? Why too do we ignore information which would empower us with the knowledge necessary to make prudent and profitable decisions?

Let's take a look at my friend Jake. Jake makes a little over $100,000 a year. He owns a condominium worth $250,000 with a mortgage of $80,000. His debt is heavy, yet it is manageable. Although prudent all his life, Jake begins acting foolishly with his money. He opens credit account after credit account and spends on new clothes, new furniture, electronics and trips. Soon, he has over $70,000 in credit card debt. He then takes out a second mortgage on his home for the full equity value of $170,000. He initially pays off his cards with the money but shortly thereafter he begins to spend again. He also begins paying one payment by borrow money from an alternate source. Before he knows it, Jake owes over $300,000.

Does anyone reading this not know what will happen to Jake? Jake can no longer "manage" his debt. His debt has grown so large that its weight is crushing Jake. At some poiont, Jake will be forced into bankruptcy. But Jake doesn't want to accept this and in turn make the sacrifices necessary to improve his situation. Jake wants to continue believing that everything will be alright. The solution is simple, but Jake does what is easy and ignores reality.

Does anyone want to loan Jake even more money? Will that make his situation better?

Debt is never a good thing, althought debt can sometimes be a necessary tool, if used wisely. But crushing, debilitating debt is always foolish and there never will be a good outcome no matter how much we wish otherwise.

In 2006 I sold my house after only six years of ownership. The prices of homes in Southern California skyrocketed during that time. "Starter" homes exceeded $500,000, putting them out of the reach of a typical family trying to enter the market. My house was purchased by a first time home buyer as well. I calculated that he would have to make over $70,000 a year just to cover the mortgage, taxes and homeowners fees. This doesn't include necessities such as food, car payments, gasoline and so forth. Loans were being made to high risk investors all with the guarantee of the federal government. After all - shouldn't everyone, even our friend Jake, be allowed to buy a house? As home prices rose and mortgage payments exceeded people's abilities to pay, creative loan packages, such as interest only loans, became the rage. There was no doubt in my mind that this house of cards would soon collapse. Yet even as I sold, neighbors scoffed at me. One lady said, "You will lose your shirt! Home prices in this area will never go down!" At that point, they were almost guaranteed to go down and go down they did, losing to date, almost 50% of their value. Two years later in 2008 the banking industry also collapsed.

I didn't know exactly the date or time the banking collapse would happen but I knew it was coming and I knew to get out of the way. Sadly, I could have made even more money if I had then bet "do not pass" on the banking and mortgage industry after I sold. But, Barney Frank assured us, right up to the end, that mortgages and the banking industry were sound investments.

The US national debt grew steadily during the 1900s. Although not wise, the debt level was nonetheless, manageable. It could have been turned around, just as Jake could have made wise decisions to pay off his original mortgage rather than go deeper into debt. Instead, the US government under Obama, Pelosi and Reid decided to take advice from those like Jake and tripled the national debt in less than two years. Like with Jake, is there any doubt as the outcome of this debacle?

Although the federal government cannot, in effect, go "bankrupt," the outcome will be seen in the value of our currency. It becomes worth less and less until, just like the banking industry, it collapses. Once again, I hear the naysayers, "This is crazy, it will never happen!" It is already happening yet people choose to ignore reality and trust that keeping their fingers crossed will restore economic stability.

There is money to be made in the collapse of a civilization, just as stated above by Rhett Butler about the South in 1861. Mr. Butler bet "do not pass" while others, those who believed in "the cause" invested in Confederate bonds, bonds which later became worthless.

Rhett Butler is a fictional character yet the message is anything but fictional. It is time to bet "do not pass" and to bet heavily. In fact, it is really no longer even a bet. A bet implies risk. The collapse of the dollar is inevitable. What is necessary to stop this debacle will never be enacted by Congress or even, if passed, would never be signed by Obama. America will simply don their rose-colored glasses and watch our country go off a cliff.

Sadly, those wise enough to protect themselves and even profit from the demise will be demonized. Just as FDR confiscated gold from those smart enough to purchase it, those who profit over the next several years will be subject to attacks from our concerned, caring government, so that they can ensure the economic misery is suffered by all. In fact, the attacks have already begun. Those in media who dare suggest such a scenario are regularly demonized. I and those who think as I do did not create this situation nor are we responsible for its eventual outcome. I have warned people for years, just as I am warning you now of what will happen and how to protect and profit from what is to come. Yet I, and those who think as I, will later be persecuted, primarily because we paid attention and acted on that information rather than sticking our heads in the sand and pretending that all will be well.

I have bet heavily on "do not pass." I am aligning myself to profit from the upcoming destruction of the dollar, the euro, the yuan, the ruble and the global economy the left so desperately has worked to establish.

If you disagree with me, if you choose to ignore the obvious, I urge you to put your money where your mouth is and invest heavily in US government bonds. I also wish you good luck, as it is only luck which will save you.

Update: After posting this blog I received several comments regarding "Do Not Pass"-type investments. My first recommendation is to buy commodities such as gold and silver. Buying and holding physical silver is a very good idea but also not practical if you have a very large portfolio. You can also buy these metals via ETFs (Exchange Traded Funds) which trade exactly like stocks. Their symbols are GLD (gold) and SLV (silver). You can also buy mutual funds and ETFs which are the inverse of various stock indices. In other words, as the S&P500 drops, for example, the value of these funds rise. These ETFs include RSW and QID. An example mutual fund would be Rydex Ursa.

I strongly urge you to read "The Great Super Cycle" by David Skarica.

Another approach would be to buy Swiss annuities. Switzerland was smart enough to stay out of the EU. The Swiss franc and been steadily rising against all other currencies. Buying a Swiss annuity provides protection since as the value of the dollar continues to fall against the Swiss franc, the value of your annuity payments increase.

Who should you believe regarding advice? Well, I can tell you who NOT to believe and that is almost anyone in the media or any "expert" interviewed on television. I have been listening to said experts for ten years telling me that gold and silver were, and continue to be, bad investments yet their return has exceeded any other investment vehicle.

The more you read and investigate options, the more you will learn what is available to you to protect yourself.