Is it just me or is it a little shocking that the United States Government just did the following:

1)  They basically fired GM CEO Rick Wagoner over the weekend

2)  President Obama guarantees all warranties on GM cars

3)  The Government forcing Chrysler to merge with Fiat (by the way, Fiat stands for “Fix it again Tony”)

If you have been reading some of the news articles throughout the day yesterday, nothing that I am going to write should shock you.   The Obama Administration is now deeply entrenched in the car business.  OK, Bush and his team definitely made a mess out of a lot of things last year.  However, the car bail-out is Obama’s baby.  He is going to save this terminal patient or else.

The last I heard we are roughly $13 billion in the hole with GM.  That money is gone.  It all went to pay for the operating expenses (I guess).  Now, President Obama is not going to give them any more bail-out money.  He is going to give them a “bridge” loan to tie them over.  Whether you want to call it a bail-out or a loan, the bottom line is that we are about to throw away another 16 billion dollars of taxpayer money straight down the tubes.

After 4 months and over who knows how many billions of dollars, finally the real solution will happen – bankruptcy.  This company needs to go through bankruptcy.  If it has any chance to survive, bankruptcy will be the answer.  At the same time, it is very hard to see whether this company will even make it through bankruptcy.  Confidence is key and has been destroyed.  Would you buy a GM car right now?  I don’t care who is backing it up.  The bankruptcy of GM could not be a good thing.  I really hope that I am wrong.   

The consumer is still in a hole and will probably remain there for a long time.  I cannot imagine the car industry getting any better any time soon.  This just looks like a bleak situation to me.  What’s worse is all of the potential jobs that will go away and the effect on millions of people’s lives. 

To be fair, I wouldn’t want to be the President of the United States having to make these decisions.  It is a no win situation.  However, President Obama, could you just make them in such a way that it doesn’t make our Government look like Big Brother?  It is a sad day in America when everyday capitalism appears to be going away.  What are your thoughts?

Tags: GM bail-out, President Obama, socialism

Dear Mr. Dodd,

I wanted to take the opportunity to write you regarding your meeting this week on credit card reform. Let’s face it!  You politicians haven’t made good choices with this financial crisis we are facing.  However, you do have the opportunity to do some good for the American people.   I understand you are meeting this week with your committee to discuss credit card reform.  This is a great opportunity for you to redeem yourself.    

The best part about this opportunity is the politics.  You cannot hurt yourself with any of your campaign contributors so you are free to actually serve the people. The credit card industry has never shown your party the money.  That is a Republican relationship.  The Republicans are actually responsible for all of the irresponsibility of the credit card companies.  During their long reign of power, they made sure that credit card companies were well protected.  

So, I think that you will agree that the Federal regulators didn’t do such a bang up job with their new rules for the credit industry that were passed December 2008.  After all, why pass all of these new restrictions and then give credit card companies 18 months to comply.  It is an open invitation for everyone’s rates to go up prior to these new regulations going into effect.  In fact, the credit card companies are taking full advantage of their 18 month window.  

So, you have the power to make new regulations that go into effect immediately.  Mr. Dodd, this is not rocket science. You don’t need to get real technical with this issue.  You just need to stop credit card companies from ripping people off.  

I have one last request.  If you do stick it to the credit card companies, don’t give them ways around the new rules like your politicians do when writing laws.  Please don’t do this half way.  Either do your job or just let us suffer through until the new regulations as passed by the Federal regulators go into effect July 2010.

Sincerely,

Bob Brooks

I know that I have been very critical of politicians.  Of course, I think with good reason. Let me stop and just pay a big compliment to the Obama administration.  This administration has to be the greatest marketing machine on the planet.  

So, we have the “I want to spend 3.5 trillion dollar” road show that President Obama has orchestrated this past week.  A Jay Leno appearance, a 60 Minutes appearance, a President New Conference (pre-empted America Idol) and then the White House live internet question and answer session.  The last one was especially interesting to me.  The news conference didn’t go so hot for the President this week.  He was asked unscripted questions and had to answer them on the fly without losing his cool.  Well, said another way, he had to answer unscripted questions.  He didn’t really get the “keep your cool” part down.  Media, don’t ask the President questions about AIG.  He might not have all of his facts together to give you an answer.

So, what makes the most sense?  Rally the American people and the media together and answer our questions that we e-mail to the White House.  This was ingenious.  It is as ingenious as the e-mail campaign he is running.  I really mean it.  This man knows how to market a message. 

Now do you really think that President Obama saw those questions for the first time or that those questions were randomly selected or maybe even scripted?  Some of it seemed to be prepared answers for hand selected or maybe even scripted questions.  It all flowed together too well to support his message.  I will say that he is the master of selling a message.

Then we got this news release yesterday.  

Financial Experts See an End to the Recession by Year End 

Well, call me relieved to know that the worst recession since the Great Depression is going to be over by year end.  I just find all of this strangely coincidental.

A Chicago-basedcompany gathered the experts and hosted the event.    Hmmm…a Chicago-based company…President Obama pretty much owns Chicago… Sorry, I was thinking out loud.  Well, as I wrote in a previous blog, the experts rarely get it right.  The timing of this news seems pretty convenient.  It is released right in the middle of the “I’m going to fix everyone’s problems…just rely on the Government” road show.   Don’t get me wrong – I hope that they are correct and I hope that everything I am writing right now will appear to be foolish in 9 months.  Just in case, I want to keep you informed.

This country is firmly entrenched in, at the very least, a horrible recession and maybe even a light depression.  Besides some construction worker jobs (who all have to be part of the Union if they want to work Government jobs) created by all of the building projects, I don’t see a whole lot of jobs being created.  Can someone seriously solve this job problem with real programs and stop needlessly spending money we don’t have? 

The stimulus program might start to give some stimulus in a few years from now.  The experts say that credit will start flowing again.  I have an e-mail question for the President.  Who can borrow the money?  Who wants to borrow money?  How about some more debt?  Who would like some more debt right now?  Credit scores are shot and people are without jobs.  It doesn’t look like the beginnings of a borrowing binge to me.

The article that I read made a point to announce that this declaration by the experts was made on the 64th day of his Presidency. 

So, where does all of this marketing get us?  Well, it keeps an American population believing that politicians will save the day.  Thus people remain entitled and continue depending on the Government.  That just continues the building of an enormously Big Government. 

The worst part is that Americans go back to sleep because of the illusion that the Government is going to take care of them.  They don’t do the things that are needed.  They don’t take the steps that are necessary. They just let the agenda live and allow their quality of lives to diminish. 

The sad thing is that most people don’t realize that there is hope.  There is opportunity.  However, no one will ever see it without taking that control back and focusing on the only thing that matters.  How do you take control back?  You give it to…God.  

Tags: entitlement, President Obama, recession, Unemployment

Someone asked me the other day how I had time and material to write two blogs a day.  The material part is easy.  Politicians are giving us things to write about on a daily basis.  The motivation is easy as well.  I am extremely motivated to make sure that you understand what is happening today.  I think that people in America want to believe that good things are happening in Washington.  They want to believe that these politicians really do have everyone’s best interest in mind.

I realize that I run the risk of running off listeners when I write about these issues.  There is a good percentage of my listenership that really does stand behind Barack Obama.  I am sure that the vast majority of my listeners are in agreement with me about the politicians in Congress.  The problem is that there is no difference between what is happening in Congress and what is happening the White House.  My opinions don’t come as a result of being a Republican or a Democrat.  Frankly, I don’t consider myself either.  Both parties disgust me. 

My opinions come as  a result of being a concerned American as I watch these politicians, for whatever motivations, take actions that are going to eventually ruin this country or at best reduce us to a socialistic society.  Whether you agree with me or not, you have to know that these politicians are out to do one thing and one thing only – CREATE A BIG GOVERNMENT WHOSE SOLE PURPOSE IS TO CONTROL EVERYTHING.  If you are OK with that, then you are probably not spending your time wisely by reading my blogs.  If not, I hope that you will agree with me that we have to find a way to stand up as voters and put a stop to this once and for all. 

Let’s take a look at the latest to come out of Washington:

1)  Obama wants to reduce the  tax break on charitable contributions for the top income earners - President Obama stated that he wants to take away tax advantages for the rich when they contribute to charity.  In his speech, he used the word “equalize” (see socialism) when referring to the tax benefit given to the lower income worker and the highly paid income worker.  I am sure that the struggling charities and ministries in this country are excited about this new equality.

2) The Obama administration wants to give more control to the US Treasury - Treasury Secretary Tim Geithner showed up at Capital Hill for the latest blame game finger-pointing session by the politicians.  In his session before Congress, he was due to get the riot act read to him about his involvment in the AIG bonus mess.  Instead of dealing with the blame, Geithner has the moxy to tell Congress that the administration needs more power to regulate companies outside of the banking industry.  They want to be able to step in and take control of companies that would pose a risk to the system in the event of failure.  That is the answer.  Give these politicians more control of our free (or what was once free) market system.  That would be a dangerous precedent if granted.  

3)  Why did we save AIG? – Yes, one of the elected officials from his grandstanding seat in a Congressional hearing really did ask this question.  Are you kidding me?  No, I don’t agree with the whole bail-out process.  Yes, AIG was too big to fail.  Like it or not, think of AIG as the glue that holds everything together.  We would have had a catostrophic financial crisis on our hands if AIG went under.  That is the honest truth.  Now, could they have gone about this in a different way?  Of course, it could have been done better.  It is just unbelievable to me that a politician would actually have to ask that question.  The scariest thing is that I truly believe that he really didn’t know.  

At least phrase the question this way – “I know the answer to this question. For the sake of the American people, please explain why you think that we took over AIG.” – Politics 101

4)  Contrary to White House sound bites, WE ALL WILL BE PAYING MORE TAXES – I had the opportunity to interview tax expert Dan Pilla this week.  As I read how aggressive the IRS is becoming in the collection of past due debt, it dawned on me.  We have not seen anything yet.  The IRS is the chief bill collector for the US government  If the Govenment is going to spend money in the trillions, the IRS is going to have to aggressively collect as much as possible using any tactic possible.  The statistics are already showing it.  Then yesterday, President Obama said that they will be looking into overhauling the tax code.  Said in another way, we are going to figure out ways for everyone to pay more taxes without changing the tax brackets for the middle and lower classed income earners.  The best way to make sure that we pay more taxes is do it where the average American cannot see it.  Just do it through the tax-code.

President Obama has been working overtime (Jay Leno, 60 minutes, Presidential Press Conference) to convince you that he knows what he is doing and that his 3.5 trillion dollar budget needs to be passed.   It is turning into Obama Overkill.  To make matters worse, his news confidence to tell me the same thing that he has been saying in all of his other media appearances forced American Idol to move to Wednesday night.   At least on American idol the American people’s vote really counts. 

All of the arguments for the largest budget in US history are based on the assumption that we will have mild losses this year and rebound next year and have strong growth for the following 3 years. 

This week, Christina Romer, head of the White House Council of Economic Advisers, said she was “incredibly confident” the U.S. economy will recover within a year.

Wow, the worst economic crisis since the Great Depression and just like that it will recover and everything will be OK.  I thought that Obama said it would take time.  That isn’t much time to me when considering the scope of things.

Here are some quotes from another time when politicians and economists desperately wanted you to believe everything was going to just fine.

 “We will not have any more crashes in our time.”
- John Maynard Keynes in 1927

“There will be no interruption of our permanent prosperity.”
- Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928

    “There may be a recession in stock prices, but not anything in the nature of a crash.”
- Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929

“This crash is not going to have much effect on business.”
- Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929

“We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices.”
- Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929

“This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.”
- R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929

“Buying of sound, seasoned issues now will not be regretted”
- E. A. Pearce market letter quoted in the New York Herald Tribune, October 30, 1929

“Some pretty intelligent people are now buying stocks… Unless we are to have a panic — which no one seriously believes, stocks have hit bottom.”
- R. W. McNeal, financial analyst in October 1929

“…despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation…”
- Harvard Economic Society (HES), November 2, 1929

“… a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall.”
- HES, November 10, 1929

“The end of the decline of the Stock Market will probably not be long, only a few more days at most.”
- Irving Fisher, Professor of Economics at Yale University, November 14, 1929

“In most of the cities and towns of this country, this Wall Street panic will have no effect.”
- Paul Block (President of the Block newspaper chain), editorial, November 15, 1929

“Financial storm definitely passed.”
- Bernard Baruch, cablegram to Winston Churchill, November 15, 1929

      “I see nothing in the present situation that is either menacing or warrants pessimism… I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.”
- Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929

“I am convinced that through these measures we have reestablished confidence.”
- Herbert Hoover, December 1929

“[1930 will be] a splendid employment year.”
- U.S. Dept. of Labor, New Year’s Forecast, December 1929

  “…there are indications that the severest phase of the recession is over…”
- Harvard Economic Society (HES) Jan 18, 1930

 “There is nothing in the situation to be disturbed about.”
- Secretary of the Treasury Andrew Mellon, Feb 1930

 “The spring of 1930 marks the end of a period of grave concern…American business is steadily coming back to a normal level of prosperity.”
- Julius Barnes, head of Hoover’s National Business Survey Conference, Mar 16, 1930

Between 1929 and 1932, the stock market lost 89%.  The greatest stock market decline on record marked the beginning of the beginnings of the Great Depression which lasted until 1937.  The entire time politicians and economists were working to make the American People believe that nothing was wrong. 

Tags: bear market, Great Depression, Obama

It is absolutely amazing to me that every time anyone from Washington delivers a new “solution” to the financial crisis, the word “trillion” is used.  It is so bad that I think we have become de-synthesized to the word.  As the bill continues to add up, we need to make sure that we understand what “a trillion” really means.

·    The country has not existed for a trillion seconds.
Western civilization has not been around for a trillion seconds.
One trillion seconds ago – 31,688 years – Neanderthals stalked the plains of Europe.

·    Million: $1,000,000
Billion:  $1,000,000,000
Trillion: $1,000,000,000,000 (12 zeros)

·    A million seconds is 12 days.
A billion seconds is 31 years.
A trillion seconds is 31,688 years.

·    Republican Senate Minority Leader Mitch McConnell once said that if we started spending $1 million the day Jesus Christ was born, and spent $1 million every day since then, we still would have not spent $1 trillion! (Unverifiable but interesting)

·    If you laid a trillion one dollar bills end to end, you could make a chain that stretches from earth to the moon and back again 200 times before you ran out of dollar bills! One trillion dollars would stretch nearly from the earth to the sun.

OK, you get the picture.  A trillion dollars is a lot of money.  So, why is it important?

President Obama wants Congress to pass a $3.5 trillion dollar budget (the largest in history).

This might be an outdated number due to the latest announcements.  The total debt obligation of the United States now exceeds 46 trillion dollars.  

After you have picked yourself off of the floor, ponder the following questions:

·    Do you honestly believe that we are ever going to escape this debt problem?

·    President Obama is a smart man and can do the math.  Does he care that he is going to destroy the economy with this spending?  It seems to me that his main priority is building a huge Government that Americans are dependent upon and that the health of the economy is not even a concern.

·    Every aggressive spending plan that he has proposed has been forced down the throats of America and Congress and bullied through to passage.  What is he really up to?

·    What will American look like in the future?

Tags: Debt, Obama, trillion

I read a disturbing article yesterday about protestors showing up at the homes of AIG executives and holding protests.  Just to think that Barney Frank wants to expose everyone who received money from AIG so that they can all be targets for radical protestors.  

Then I read another article about how Politician Shelby is trying very hard to get rid of Timothy Geithner.  Congress wants you to agree with them that this whole AIG mess is the fault of Timothy Geithner.

This is what politicians have done for decades.  They create the mess by protecting those who get them re-elected and then figure out who to blame.  First it was Wall Street.  Then it was the CEO’s of the big 3 automakers.  Of course, it has always been President Bush.  Finally, we have these evil executives of AIG, a CEO who makes a $1 a year who wasn’t even around when the mess was created, and Timothy Geithner.  In Geithner’s defense, he was handed one of the biggest messes in the history of this country.  How about giving the guy a break?   

Now there are people harassing the families of AIG executives for taking bonus money.  Well, Congress has you fooled.  Americans are demanding the resignations and the heads of the wrong people.  These protestors are harassing the wrong people.  

How about demanding that Chris Dodd and Barney Frank be fired?  How about harassing the families and homes of these politicians who have acted at the very least irresponsibly and at the worst unethically?  Obviously, I am not suggesting that anyone’s family be harassed.  I am just making a point.

Are you outraged that AIG gave out 165 million dollars of taxpayer money?  If so, then how outraged were you that the President wants to spend $650 million on Digital TV coupons or $150 million on maintenance of the Smithsonian?  Of course, that is $800 million that will definitely pull us out of the economic hole.  

Until this country gets in touch with reality, these irresponsible politicians will continue to take advantage of the very people who elect them to office – you and me.  We need to ban together by the millions and demand that heads roll in Washington.  Sending tea bags by the millions to Washington DC is a good start.  However, these politicians don’t care.  They are the power and they are arrogant enough to continue in their self-serving ways, knowing they will get re-elected.  

The scariest part of all of this nonsense is that there are still a high percentage of people that feel like Congress is doing a good job.  Has America been brain washed?

I have been out of the office this week and posting pre-written blogs on various subjects.  With everything that has happened, I had to post some thoughts on this AIG mess.  As a recap, AIG gave out 165 million dollars of bonuses to executives. Of course they were using taxpayer money to pay these bonuses.  Further, some of these executives were the very ones who were involved in the financial crisis.

So, we get the “outraged” politicians who put the current CEO (Edward Liddy) of AIG on the grandstand and proceed with a public flogging.  On a side note, it is absolutely ridiculous that the very people who are the most responsible for this financial crisis are the judge and jury in America’s court.

Even more embarrassing are their actions.  One politician prior to the Senate hearing says “they (the executives) should commit suicide.”  Honestly, I am so disgusted with these politicians that I don’t know what to write.

What’s worse, they put a guy (Liddy – AIG CEO) on the hot-seat who took over AIG in September at the Government’s request and is making $1 a year.  Here are a few thoughts on this case.  Ironically, these politicians, most of  whom were attorneys, appear to be extremely clueless.

The bonus payment was part of a contract.  It would be unconstitutional for Congress to get involved and attempt to void these contracts. .

The politicians told Liddy (CEO of AIG) that he should have not paid out the bonuses and just told the executives to sue AIG.  Oh, there is a good answer.  The lawsuits alone would have cost AIG and US much more than the original amount paid-out.

Another bright idea from one politician was to let them have the bonuses but that money was going to be deducted from the bail-out money set aside for AIG.  Yes, he was serious when he suggested it.  Let’s face reality – AIG could use all 30 billion dollars of what is left in the bail-out money set aside for this company.  If they need more, Congress will give it to them.

Then Barney Frank  - you know the guy that said Freddie Mac and Fannie Mae were just fine – wants the names of everyone who received money. That is a great idea. Let’s make those names public so that the executives and their families can be harassed.

Then there is my favorite politician – Politician Dodd.  The original stimulus package had a strong provision in it that would have prevented this AIG bonus from ever being given.  However, Dodd weakened the provision making this sort of thing at AIG possible.  Oh and by the way, Dodd is also the LARGEST recipient of AIG campaign contributions.  Where is the outrage from campaign contributions given to Dodd with tax payer money? 

Besides what is a million or even 165 million?  You have Citigroup about to pay $10 million to dress up executives offices when they are one of the biggest financial train wrecks out there.  Of course, we the people are propping that company up as well.

Then you have 100’s of millions of dollars of taxpayer money going to pay for pet projects that these politicians have cooked up so that they can take care of those who paid for their re-election.

How about the most disturbing part of this story?  It has now been reported that Obama and the Congress knew about these bonuses months ago.   I mentioned that Dodd was the largest recipient of campaign contributions from AIG.  Obama is the second largest.

More and more keep coming up with where the real corruption lies in this country.  It lies within the halls of the so called lawmakers.

I know that you have probably received this e-mail at some point.  I think that this is a great idea and I want to encourage you to send a message to Washington.  If millions of people take this action, politicians might start to feel a little vulnerable.  They might realize…gee…voters can actually remove me from office.  

I did not write the following –

A little protest about where our tax $ are going.  Just send a tea bag April 1st to the White House to register your concern.  If you are so inclined.

There’s a storm abrewin’.  What happens when good, responsible people keep quiet?  Washington has forgotten they work for us.  We don’t work for them.  Throwing good money after bad is NOT the answer.  I am sick of the midnight, closed door sessions to come up with a plan. I am sick of Congress raking CEO’s over the coals while they, themselves, have defaulted on their taxes.  I am sick of the bailed out companies having lavish vacations and retreats on my dollar.  I am sick of being told it is MY responsibility to rescue people who knowingly bought more house than they could afford.  I am sick of being made to feel it is my patriotic duty to pay MORE taxes.  I, like all of you, am a responsible citizen.  I pay my taxes.  I live on a budget and I don’t ask someone else to carry the burden for poor decisions I may make.  I have emailed my congressmen and senators asking them to NOT vote for the stimulus package as it was written without reading it first.  No one listened.  They voted for it, pork and all.   

O.K. folks, here it is.  You may think you are just one voice and what you think won’t make a difference.  Well, yes it will and YES, WE CAN!!   If you are disgusted and angry with the way Washington is handling our taxes.  If you are fearful of the fallout from the reckless spending of BILLIONS to bailout and “stimulate” without accountability and responsibility then we need to become ONE, LOUD VOICE THAT CAN BE HEARD FROM EVERY CITY, TOWN, SUBURB AND HOME IN AMERICA.   There is a growing protest to demand that Congress, the President and his cabinet LISTEN to us, the American Citizens.  What is being done in Washington is NOT the way to handle the economic free fall.   

So, here’s the plan.  On April 1, 2009, all Americans are asked to send a TEABAG to Washinton , D.C.   You do not have to enclose a note or any other information unless you so desire.  Just a TEABAG.   Many cities are organizing protests.  If you simply search, “New American Tea Party”, several sites will come up.  If you aren’t the ‘protester’ type, simply make your one voice heard with a TEABAG.  Your one voice will become a roar when joined with millions of others that feel the same way.  Yes, something needs to be done but the lack of confidence as shown by the steady decline in the stock market speaks volumes.   This was not my idea.  I visited the sites of the ‘New American Tea Party’ and an online survey showed over 90% of thousands said they would send the teabag on April 1.  Why, April 1??  We want them to reach Washington by April 15.   Will you do it?  I will.

Send it to 1600 Pennsylvania Ave. Washington, D.C. 20500.
  
We want TRANSPARENCY AND ACCOUNTABILITY.  Remember, the money will be spent over the next 4-5 years.   It is not too late.

In my upcoming book, Deceptive Money, I write extensively about these so called “Debt Solution” companies.  Actually, it is a warning more than anything.  I will be writing a lot about these companies so that you can pick up the scam artists.   Are there good companies out there in the debt solutions business?  If they are, I haven’t come across them.  I am sure that there are some good companies.  The bottom line is that even the good companies make implied promises that are very tough to fillfull. 

Who makes up the debt solution industry?  Anyone in the consumer counseling arena, any company who offers debt management programs, and any company that wants to “repair” your credit.

It was just reported that the Federal Trade Commission has just charged seven companies as deceiving companies.  The report states that:

“the Federal Trade Commission has charged seven related companies with violating federal law by falsely promising to remove negative information from consumers’ credit reports,  even information that is accurate and current, and by charging an up-front fee and failing to provide written disclosures. The agency seeks to make them stop the violations and pay restitution to consumers.”

This is happening all the time.  Here is the bottom line with the debt “solution” companies.  They cannot just make your problems go away over night.  They cannot defy the law.  Remember, if it is too good to be true, it is too good to be true.

If you are enrolling in a debt management program, you need to know and investigate the following:

(1)   When you first work with a counselor, they take a look at your debt and then present you with a proposal of how they are going to lower your payment, interest rates, and save you money.  In reality, it is more like something that they derive out of thin air to meet your budget.  They have no way of knowing or guaranteeing it will work.

(2)   Credit card companies do not have to accept the terms of the program.

(3)   Even if the credit card companies do accept the terms and conditions, they can also, at any time, change those terms and conditions.

(4)   You still can get sued for debt that you owe.

(5)   A perfectly good account could end up in collections.

(6)   Penalties and interest can be charged against you and can accrue.

Watch the proposal – often times they come up with the savings from the program (that they cannot guarantee will even work) from funny math.

For instance, one debt management program’s proposal that I recently reviewed states it will take until 2042 to pay off $11,737 worth of debt, paying the minimum payment of 2.5 to 5% of the balance.

Actually, that is not true.  If you were paying 29% interest and 5% minimum payments, it would pay off in 28 months.  Incidentally, that is quicker than their program.  If you were to pay the 2.5% minimum payment, it would take 12 years.  There is not a shred of truth in the statement that they are using in the proposal to motivate the individual to make a decision.  They are just trying to make your situation look hopeless.

If you are considering this as an option, always determine what it will take to get out of debt on your own the right way, considering your current payments and rates. What you will find might surprise you when you compare it against the funny numbers that are being proposed to you.  

In the research for my book, Deceptive Money (which is scheduled to come out in 3 weeks), I looked at many debt proposals from these debt solution companies.  Unfortunately, I could not find one that wasn’t misleading or did not have huge mistakes in their calculations.  

An interesting scam I will bet you never thought of!

MOBILE PHONE

I never thought of this….This lady has now changed her habit of how she lists her names on her mobile phone after her handbag was stolen. Her handbag, which contained her cell phone, credit card, wallet, etc. was stolen.  Twenty minutes later when she called her hubby from a payphone telling him what had happened, hubby says ‘I received your text asking about our pin number and I’ve replied a little while ago.’

When they rushed down to the bank, the bank staff told them all the money was already withdrawn. The thief had actually used the stolen cell phone to text ‘hubby’ in the contact list and got hold of the pin number. Within 20 minutes, he had withdrawn all the money from their bank account.

This is really why you should always be careful about the information that you put into your phone.  Further, if you can put a security lock on your phone (you can do this with an iPhone), make sure that you do.

There have been rumblings again about the safety of money market funds.  If you recall, one of Pri-America’s money market funds went below a $1 per share last fall, creating a loss for anyone who had invested in that money market fund.  Investors were rattled because money markets are supposed to be safe.

Last week, FDIC chairman, Sheila Bair, said that if the FDIC didn’t get an increase in funding, the fund might be insolvent.  Politician Dodd came to the rescue with the “Dodd” bill which raises the “line of credit” from $30 billion to $500 billion.  After which, Sheila Bair said in a morning show interview that they really just need a little “cushion” and everything will be OK.  A $500 billion dollar cushion should do the trick.

So, what is safe?  The FDIC is supposed to save us (up to the FDIC limits) from bank failure, yet they have their hands full dealing with the 41 banks that have already failed since this crisis began.  They are going to the Government for help in the event that there is a funding problem. 

Money market funds have a limited amount of coverage that was created last year. 

Is there any safe place for your money?

I have thought a lot about that question.  FDIC insured money should provide a safety net for anyone who falls within their guidelines in the banking system.  Although the Government doesn’t fully back money market funds, I believe that you have an implied Government backing on this as well.

Now before I go through my reasoning, I want to stress that this is only an observation.  I am not saying that money markets are without risk nor am I saying that the Government is guaranteeing money market funds.  So, please do not read that into what is strictly my opinion.

There are two things that the Government cannot allow to happen and both of these events would be equally devastating.  Big banks cannot fail and money market funds cannot lose money.  It would destroy confidence and lead to runs on banks and money market funds which would have horrible consequences.

My best guess is that the Government would step in and rescue a big money market.  Ben Bernanke in so many words stressed the importance of money markets and banks in his latest speech.  In my opinion, banks are the safest place because of FDIC insurance and money markets to some degree are protected just due to the fact that Government cannot afford to have even one fail. 

Keep in mind that in this environment there is no true safety. Safety is a relative word!  

No denying it, yesterday was a strong day in the stock market.   It was a welcome sight to see considering the market was stuck in what looks like a free fall.  So, what was the reason that was assigned to such a strong day? 

A memo written by the head of Citigroup “leaked” yesterday morning.  It is amazing how these things happen.  What better to stop the free fall of a stock than to leak some unofficial good news.  Prior to the news leaking, you could buy a share of Citigroup and cheeseburger at McDonalds for $2. 

The news was that for the first time since 2007, Citigroup was making a profit during the first two months of the year.  Of course, they left out one little detail that the media seemed to overlook.  That profit was BEFORE any losses were taken into consideration.  Of course, Citigroup conveniently didn’t know what the impact of that loss would be on profits. 

I have an announcement I would like to make.  I have $100,000 in my bank account.  I also have $120,000 worth of expenses that need to be paid for.  That is the equivalent to Citigroup stating they made a profit.  The sad part is that the news sucked in a bunch of investment money as the stock went up 30% plus.  The problems with Citigroup have not changed nor has the potential takeover by the Government.  Any type of nationalization by the Government would potentially wipe out the stock price.

The market put in a great day yesterday because the stock market was due.  That is how markets work.  In a bear market, the stock market doesn’t fall in a straight line.

I received this e-mail from a client yesterday.  I cannot verify whether the statement below is true.  There is no denying the authenticity of the video.  I cannot verify the part about the video not being allowed in America.

Regardless, this video is disturbing and only further highlights that the problem is our elected politicians.   

Beginning of e-mail:

Watch this video which was not allowed in America.

This video shows that George Bush tried to warn Congress in 2002 that this economic crisis was coming, if something was not done.  But Congress refused to listen, along with Barney Frank.  This video says it all. 

Also that the liberal AMERICAN media did not want this video on You Tube, so they had Time Warner threaten a law suit (proprietary rights) if it was not taken off.   

This link is of the same video but is routed through Canada.  Everyone in America needs to see this!

http://www.youtube.com/watch? v=cMnSp4qEXNM&NR=1