An article posted on cnbc.com stated that a great depression round 2 was averted based on the actions of the Obama administration. The article states:

“The economists argue that without the Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration’s fiscal stimulus program, the nation’s gross domestic product would be about 6.5 percent lower this year.

In addition, there would be about 8.5 million fewer jobs, on top of the more than 8 million already lost; and the economy would be experiencing deflation, instead of low inflation.”

This is what you have to love about economists. Are they really looking at this realistically? The take away from this article is that this is a good thing and maybe that the Obama administration should be commended. The reality is that any financial problem can be averted if you throw enough money at it. This is like the terminal cancer patient that is being kept alive by taking doses of chemo. The chemo helps keep the patient alive. It only buys time.

The Obama administration through their irresponsible spending has just made this situation worse and pushed the inevitable into the future. Yes, through their irresponsible spending and printing of money they have put a band-aid on the situation. What are they going to do when the band aid no longer holds the festering wound?

The white paper states that they have saved 8 million jobs. Now, is that based on the fictitious government unemployment accounting or the real numbers? The paper also states that we have been able to avoid deflation. I am not even going to pretend to be smarter than these guys. I just don’t see how you can state that when the indicators are screaming deflation. Like cancer, it is a slow moving process.

As I have said before, you can look at tainted government statistics all day long and claim that things are working and the worst is behind us. Those are just numbers. Ask the small business worker and the average citizen. The recession or whatever you call it as yet to go away.

Tags: Bob Brooks, deflation, economists, recession, Unemployment

The politicians have a fund called the Members Representational Allowances Account which pays for operating expenses for their office. As you can imagine, it is unbelievable what they do with taxpayer money.

There are 441 members (435 voting members) of the House and 100 members of the Senate for a total of 541 members. From June 2009 until March 2010, the politicians spent $1,013,162,955 to run their offices. Now, if you do the math, that comes to roughly 1.8 million dollars and change of expenses per member for a mere 9 months. Really? It is not tough to see why we are trillions in the hole.

Let’s take a look at what expenses we are flipping the bill for:

$114,925 for a get away to a resort for a planning meeting for the Democratic Caucus
$552 million for payroll for all staff members and interns
$34.9 spent on health insurance
$854,000 spent on life insurance – that is a lot of life insurance which they could easily get on their own dime
$18 million on computer hardware
$5 million on computer software
$7.5 million spent on office supplies – that is $1540 per member per month
$565,000 on new carpet
$317,304 on new drapes
$2.6 million on food and beverages – These guys are living like rock stars
$604,000 on bottled water
$84,794 spent on companies that specialize in coffee
$9,450 on coke products
$11 million spent on newspapers and resources
$9,809 for paper shredding – thought that would be much higher – that comes ot to 7.4 million pages shredded
$12.5 million spent on travel

And that is just a sampling…

And still my favorite expenditure that I just feel so good about every time I pay my taxes…

$18,000 a month for Nancy Pelosi’s office….It doesn’t get any better than that.

I don’t know whether, to laugh, cry, or get angry. The waste is sickening.

Tags: Bob Brooks, budget, politicians

I wanted to share with you today a post from one of my favorite Christian writers Dr. Jim Dennison. You can sign up for his daily e-mail at www.godissues.org. I hope you enjoy!

Have you heard about the woman who has won the Texas Lottery four times? This morning’s USA Today tells us about Joan Ginther, a Stanford University Ph.D. and math teacher who has done just that. She first won in 1993, splitting $11 million. She won $2 million in 2006 and $3 million in 2008; her latest winning ticket brought her $10 million last month.

What are the odds? Depending on how many tickets she has purchased over the years, her chances of winning four times are as low as one in 18 septillion. What’s does a septillion look like? 1,000,000,000,000,000,000,000,000.

Joan lived in Bishop, Texas before moving to Las Vegas. She has never spoken publicly about her winnings, but she is known around Bishop for her generosity—buying the church a van and giving money to the family who runs the local hotel. When she moved, she gave her home to charity. She drives a Nissan sedan but once bought a nicer car for a person in need. Don’t try texting her or calling her cell phone—she doesn’t own one.

If I could speak to Joan Ginther, I would suggest that she consider Jesus’ encouragement to “store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal” (Matthew 6:20). The only safe investment is that which we entrust to God, using our resources as he directs us.

If money on earth were safe, the Egyptian pyramids would have protected it. But within a generation, thieves broke into the most elaborate safes ever constructed and made off with everything they found. Jacob Hammer was wealthy from birth as the result of a large family inheritance. His investors stored his money in salt domes along the Caspian Sea, where it would be impervious to the shifting changes of world economics. But a freak typhoon swept it all way, turning him into a pauper in a day.

Alexander the Great left instructions that his body was to be buried with its hands outside the casket, to show the world that its conqueror’s hands were empty. The Spanish have a saying: a burial shroud has no pockets. I once asked a funeral home director if he ever buried money with the deceased; he laughed at the idea. You’ve never seen a U-Haul attached to a hearse.

A man gave several thousand dollars to help build a church. Then came the 1929 Great Depression, and he lost all he had. A friend said to him, “If you had the money you gave to start the church, you would have enough to set yourself up in business again.” He replied, “I would have lost that money in the crash as well. As it is, it is the only money I saved. It is now in the bank of heaven yielding interest which will accumulate for eternity. Hundreds have come to Christ through the church it helped build.”

How will your resources serve eternity today?

The commercial starts off with a lady going through her mail. She had just lost her mother. Her friend visits and asks how she is doing. She finds the death benefit from her mom’s guaranteed life insurance in the mail and says that she is fine. Her mom had guaranteed life insurance from Colonial Penn.

The marketing pitch is that anyone can get life insurance through this product regardless of their health. They can offer this type of coverage because the policy has a two year non-accidental death exclusion. In other words, the policy will not pay the death benefit if the insured dies in the first two years from a health related condition.

Is this a good deal? I will not make the blanket statement and say it isn’t a good deal for everyone in all cases. I am sure that it could be a good deal for someone who was close to terminal state and wanted to bet on surviving for two years. Let’s look at where this isn’t a good deal at all.

A 60 year old could get $7,456 worth of life insurance for $79.60 a month in this guaranteed program. If the 60 year old were in good health, he could get $50,000 at a locked in rate for 20 years from another life insurance company at $48.24 a month. Further, he could take the difference between the 79.64 premium for the guaranteed coverage and the 48.24 premium for the other coverage and save it for 20 years. At the end of the 20 year period, his $50,000 term policy would go away. However, he would have saved $7,526 which is more than the $7,456 in the guaranteed program.

Moral of the story? The end of the commercial has the visiting friend making the comment – Maybe I should get some of that insurance. I could use some additional insurance. Just because the marketing makes it look like a good idea, doesn’t make it a good idea. Always check your options. Rarely are there great deals….especially from insurance companies.

If you haven’t had a chance, listen to my interview with Brian Sussman on his book Climategate and you can get the real story of our energy “problem.” Below was something interesting that his PR person sent out.

One of Hollywood’s most notorious purveyors of conspiracy theories is curiously uncurious about the “mass scheme and Marxist motives masquerading as environmentalism,” says the author of a book offering new revelations on global warming.

While promoting his latest film on Venezuelan socialist President Hugo Chavez, director Oliver Stone recently argued for the nationalization of energy.

“We shouldn’t make this kind of profit on oil or on health or on war or on prisons,” the Associated Press reported Stone saying. “All these industries should be public industries. This BP oil spill is typical.”

What should we expect from the “minister of propaganda” for a “tin-pot dictator,” asks Brian Sussman, author of the new WND Books title “Climategate: A Veteran Meteorologist Exposes The Global Warming Scam.”

In Climategate,” Sussman produces ample evidence that the architects of the environmental movement remain intent on consolidating national wealth under the guise of “saving the planet.” Individual energy consumption, says Sussman, is “Public Enemy No. 1 in the bogus case” against carbon dioxide.

“Stone has it backwards,” says Sussman. “The BP oil spill is the result of militant environmentalists and their lackeys in Congress who have forced the oil companies to drill for oil miles offshore, in water that’s a mile deep.”

“Climategate” reports “there is no reason to drill in such risky waters when the largest oil reserve on the planet lies beneath federally owned land in the Rockies,” says Sussman.

“Geologists estimate there may be 1.8 trillion barrels of oil sitting beneath land that ‘we the people’ own,” he says. “Politicians have given in to the environmentalists and have placed that resource-laden land off limits for exploration and development. Besides cheap and abundant oil and natural gas, the amount of money the federal government could make by leasing the property to the oil companies would help reduce our national debt.”

Sussman’s reporting has earned high praise for its insight and effectiveness. Minnesota Congresswoman Michele Bachmann recently credited him with informing the public outcry against President Obama’s controversial cap-and-trade legislation which many fear will decimate the already hobbled economy.

“It is because of patriots such as (Sussman) that the climate change agenda has been called into question by the American people,” Bachmann says.

But that agenda needs spokesmen like Stone, says Sussman, who describes Stone as yet another example “of a high-profile, useful idiot whose role as Marxist mouthpieces have proven historically essential to advancing totalitarian regimes.”

“Oliver Stone is a clever Hollywood director, but he’s the minister of propaganda for goons like Castro and Chavez,” says Sussman. “He doesn’t talk about the poverty, energy shortages, and food and medicine shortages in Cuba and Venezuela.

“And how can a filmmaker like Stone support a government that takes over independent newspapers, radio and TV stations, and arrests journalists both foreign and domestic?” he added. “The guy’s an imbecile whose favorite past-time is sucking up to tin-pot dictators.”

Stone admitted his film on Chavez, “South of the Border,” refrains from criticizing the Venezuelan dictator.

“You hear all the criticism, all the exceptions to the rule, but generally speaking the economy has surged in Venezuela from 2003 to 2008. … This is a story that people don’t know,” he said.

Tags: Bob Brooks, Brian Sussman, Climategate

One trillion dollars: the figure is almost incomprehensible. That’s a dozen zeros. The Congressional Budget Office reports that during the first nine months of fiscal year 2010— which ends September 30—the federal government spent $1 trillion more than it took in.

To help you wrap your head around that mind-boggling number, and to try to put deficit spending into perspective, Kiplinger.com slideshow translates $1 trillion into terms we can all understand:

Among the 13 ways to visualize the buying power of the current national deficit:

· LEBRON JAMES’ SALARY FOR THE NEXT 50,000 YEARS

· 1.33 TRILLION CHOCOLATE BARS

· 1,333 CELEBRITY DIVORCE SETTLEMENTS

· 40,816,326 NEW CARS

· 5.6 MILLION HOMES

· 140 BILLION HOURS OF WORK

Just think, that is only 1 trillion. We are looking at trillions of dollars worth of debt in this country.

I received a call from a friend of mine and he was in a panic. We will call him Sam. Sam received a letter from a group that stated that his home had been foreclosed on and that they now owned the deed to his house. He quickly started to go through the possibilities of how this could happen. He didn’t receive any foreclosure notices in the mail. He was current on his mortgage.

With some phone calls, he found out that he didn’t pay his homeowner association dues. In Texas and 34 other states, a homeowners association can put the home in foreclosure for non-payment of HOA dues. The deed is sold to someone who buys the house in a foreclosure proceeding. They then turn around and hold you hostage and sell your title back to you for some outrageous amount of money. Of course, they can evict you if you don’t comply.

There are people whose primary business is looking for home foreclosures in this form. Now it is a legitimate business. However, there are those in the business of buying deeds that are also taking advantage of the situation. In my opinion, they create a form of extortion by asking for a very large amount of money way above and beyond the actual fees and attorney’s fees.

On the Prudent Money Show a listener called in and told how this happened to him. The guy actually showed up at his house with the sheriff, kicked in the door, and evicted him and his family.

If you live in a homeowner association make sure that you are paid up, verify they have given you credit, and understand what the HOA will do in the event that you don’t pay your dues. In addition, tell your neighbors and make sure that they know.

Incidentally, when my friend met the man to buy back the deed to his home, he was told to bring cash and asked to place it in a very large black bag that had a ton of cash in it. He said it was like being in a gangster movie.

Tags: Bob Brooks, Foreclosure, homeowners association

Borrowing money from the Government is a little like borrowing money from the Mafia. It is the only debt where they can strong-arm you if you default at any point in your life and a debt that if in financial crisis, can never walk away from. Now, don’t get me wrong. I am not advocating walking away from a debt by any means.

My point is that this is the only type of debt that to where if life happens, you have a health emergency, you have a financial problem, etc. there is no way out or any chance of help. You can’t seek protection from bankruptcy with student debt. There is not a limited period of time in where they can use legal tactics or harsher collection efforts. They can come after a defaulted debt and garnish your wages until the day you die. They can even garnish social security benefits if they choose.

What’s worse, if you do default on the debt or they give you additional deferment on the payments due to hardship, the penalties and fees just add up. I talked to a lady on the Prudent Money Show who had a $40,000 school debt from the 70’s and now has over $70,000 worth of student loan debt because she defaulted on the debt. You cannot settle student loan debt and pay a lesser amount.

Leave it up to our government to give out money like it is candy and then stick it to you in the midst of financial hardship. At least the mafia will accept a few broken legs.

Tags: Bob Brooks, Debt, default, Government, student loans

OK, call me a conspiracy theorist. It is tough not to be one these days. In fact, the Obama administration is a conspiracy theorist’’s dream. These days it doesn’t take much digging to come up with a theory. The politicians are blatantly doing everything out in the open.

On March 16th, I had the opportunity to speak at a conference at Christ for the Nations. I spoke about God’s provision during a financial crisis, where we are now, and how we got here. During that talk, I made the statement that Goldman Sachs was so intertwined with the Federal Government that nothing would ever happen to them (as a reference to companies that might fail). I said that they would always be protected by the government because of all of their ties.

I got in the car after the presentation and the breaking news on CNBC was that the Federal Government was filing charges against Goldman Sachs for securities violations. Wow, I didn’t see that coming. Initially, it didn’t make sense to me at all. Why would the Government go after its own partner in crime? It didn’t take long to figure it out. Within hours, Barack Obama was telling the American people that this is why we need financial reform and this is why the politicians need to pass his financial reform regulatory bill (aka huge Washington power grab/control bill).

In a May 3rd client newsletter, I wrote the following:

The timing of this is very convenient for the politicians. They are trying to pass financial regulation and reform legislation (read: power grab for the politicians). So vilifying Wall Street helps create the reasons why we need financial reform. The Republicans will get a lot of backlash for not supporting financial reform when Goldman Sachs looks so bad. Once again, this is most likely a PR nightmare for Goldman Sachs and probably nothing else.

Last week the politicians passed the financial reform package. Within hours, the SEC and Goldman Sachs reached a settlement with Goldman Sachs not admitting any wrongdoing. What’s even better, they had to pay a settlement of 550 million dollars. In 2009, they had over 13 billion dollars in earnings. Do you think that they are going to miss a measly little $550 million?

Vilify the biggest investment house/bank on Wall Street. However, make sure that you don’t hurt them too much. Make the acquisitions strong. Push the need for financial reform using that bank as the reason we need it. Pass financial regulation. Then let them off of the hook with a slap on the wrist. You scratch my back and I continue to scratch yours.

There are tons of ties between Goldman Sachs and the Government. Just read this article and you will get the idea.

Tags: Bob Brooks, Goldman Sachs, Obama

Not since 1916 have we ever had a year where the wealthy could pass away and not owe a dime in federal estate taxes. George Steinbrenner, the New York Yankees owner and billionaire, passed away this week. Normally the estate would owe federal estate taxes. It is tough to estimate the estate tax that would be due. However, you could easily estimate 100’s of millions of dollars that would have flowed from his estate in the form of taxes into the federal coffers. That would have covered Nancy Pelosi’s $18,000 monthly office rent for a long time.

The estate tax, which taxes estates larger than $3.5 million, expired in 2009. It was left up to the politicians to do something to get it reinstated for this year. It does go back into effect in 2011.

Tags: Bob Brooks, estate tax, George Steinbrenner, Nancy Pelosi

FICO just completed a study looking at consumer credit scores pre-financial crisis and post-financial crisis as of April this year.

Credit scores trend from a low or the worst score of 300 to the best case of 850. Here were some of the results of the study.

• 599 and lower increased from 15% to an alarming 25% – large jump
• 600 to 649 decreased from 12% to 9.5%
• The better scores of 800 and above went down slightly from 18.7% to 17.9%.

So why the big increase in the lowest range of credit scores and then the smaller increase for people with better scores?

The larger increase of those who have fallen into the lower category of credit scores probably represent those who are being affected by unemployment and the high rate of foreclosure.

Then the people with the higher credit scores are paying down debt as fast as they can.

The Federal Reserve said last Thursday that the total outstanding credit to U.S. consumers fell $9.15 billion. They were originally only expecting a 2 billion dollar decrease. April’s reading was revised to a hefty $14.86 billion drop from the originally reported rise of $1 billion.

Get used to these numbers. This is part of a long process of detoxing debt in America which is a double-edged sword. It is good for people to get their debt handled. It has negative implications for the economy.

If people are lowering their credit scores then they are unable to get what little credit is being offered and they are spending less. People who could spend money aren’t spending money because they are paying off debt. All of this is bad for economic growth. Two-thirds of our economic growth is driven by consumer spending.

As far as your credit score goes, it is more important than ever to know your credit score and do everything possible to keep it in good standing. My book Deceptive Money tells you everything that you need to know to improve your credit score.

Tags: Bob Brooks, Credit Score, Debt, Deceptive Money, Federal Reserve, financial crisis

This is pretty typical of a post-crisis environment. Prior to the financial crisis, lenders had no boundaries or guidelines and were lending money to anyone who could fog a mirror. Now, they aren’t lending money even to people who have good credit.

The Wall Street Journal ran a story about a guy with great credit who was trying to refinance his house and was turned down. If he had good credit, why was he turned down? His income tax showed that he took a loss on a small, family owned business. This was enough to raise doubts for the lender and cause them to have concern about his overall financial situation.

Then there was the guy with a very high credit score and a large amount of home equity. His credit report showed a $14 missed payment to a credit card company back in 2001. The lender insisted that he provide proof he paid it. What is even more ridiculous than making a big deal over a $14 missed payment is that it shouldn’t have even been considered in the first place. It was past the 7 1/2 year reporting period.

Banks are paranoid about financial crisis part 2 happening all over again. Maybe it is another reason. Maybe they know all of the debt that is out there, they know all of the mortgages that are headed to foreclosure, and they are just hoarding cash for their own survival. I think that is a more plausible reason.

A recent report stated that foreclosures were not only hitting the little guy. Now, the homeowners with mortgages greater than $1,000,000 dollars are now showing up to be in trouble. The report stated that 1 out of every 7 homeowners with mortgages greater than $1,000,000 were walking away from their homes allowing them to go into default and ultimately into foreclosure. Contrast that statistic to homeowners with mortgages under $1,000,000. Only 1 out of every 12 homeowners with mortgages under $1,000,000 were walking away.

It really does seem that we are in the calm before the storm.

Tags: Bob Brooks, Credit Score, financial crisis, foreclosures, Mortgages

Over the past few months the economic data has fallen off a cliff. Personally, I think that we are seeing deflation really start to settle into the economy. Over the past few years it has slowly infiltrated everything. Deflation occurs when the prices of everything decline. Inflation occurs when the prices of everything rise.

When I say the prices of everything I mean the prices of investments, real estate, etc. I also think that gold will be a good indicator to watch for deflation. Gold should not do well in a deflationary environment. Gold may have seen its high.

A debt crisis is also one of the primary contributors to a deflationary environment. Think of deflation as the process of wiping out excess debt.

It seems like the media is slowly catching on to the deflation theme that has been in the numbers for a long time now. I happened to catch a series of articles in the Wall Street Journal’s Ahead of the Tape column that I felt served as a great example.

June 10, 2010
Deflation is Worrisome but not a certainty
“Yet investors shouldn’t confuse current conditions with outright deflation.”

June 17, 2010
Deflation isn’t a concern, at the moment
“But it is only if the recovery stumbles that outright deflation becomes a real concern.”

June 30, 2010
Deflationary Mindset Makes Itself at Home
“The bigger worry is that a deflationary mindset has taken hold in the housing market.”

What we have been seeing in the housing markets for 3 years now is classic deflation. It was the first part of the economy to get hit. Deflation should be a real concern and should be here in full force in the event that we do fall back into a recession. The media and most of Wall Street will not recognize it as a problem because of one huge issue. There is no cure for the cancer of deflation except time. The Fed has no weapons against deflation.

Tags: debt crisis, deflation, inflation, recession, Wall Street

Ok, the moment of truth for the SEC. Are they going to be tough regulators or just sweep “little” violations under the rug? The Wall Street Journal reported over the weekend that Bank of America admits hiding debt on their balance sheet last week. In other words, they would conduct transactions to make items on their balance sheet look like sales rather than debt. This of course makes their books look better for investors at the end of the quarter.

Lehman Brothers was doing the same thing before their demise. In fact, it is believed that this process of cooking the books was a major factor in their demise. BOA said its incorrect accounting for the six trades wasn’t “intentional.” Yes, I can see this not being intentional. You don’t have to show much intent to cook the books by classifying a transaction as an entirely different one.

Better yet was their official statement –

“We believe that our efforts to manage the size of our balance sheet are appropriate and our policies are consistent with all applicable accounting and legal requirements.” The intent of the transactions, it said, “was to reduce the specific business unit’s balance sheet to meet [the bank's] internal quarter-end limits for balance sheet capacity.”

Let me restate that into the original “intent” of what they were trying to say.

They believe their efforts (their efforts in their eyes based on their interpretation of the legal requirements that beset much their needs) were appropriate. Their intent was to reduce the specific business unit’s balance sheet to meet the bank’s internal quarter-end limits for balance sheet capacity (their intent was to do anything possible to make their quarter end numbers look like that they thought investors wanted to see which matched with their internal quarter-end limits).

Really? The reason that there is no sense of ethics on Wall Street results in the fact that we don’t have anyone regulating the laws and cracking down on the big boys. By the way, what they did isn’t illegal, which is even more amazing. In fact SEC Chief Accountant James Kroeker said “in May that the inquiry hadn’t found any widespread inappropriate practices.”

Well, maybe I am looking at this the wrong way. The bottom line is that the SEC is looking the other way while companies are classifying transactions that are not true. I guess a few of these trades here or there isn’t any big deal. Right? Like Bud Fox said about insider trading in the movie Wall Street – “Come on, everyone is doing it. If you don’t know, you just don’t know.” Of course in the movie he was convicted.

You wonder why we have problems?

Tags: Bank of America, Bob Brooks, James Kroeker, Lehman Brothers, regulators, SEC, Wall Street

The questionable stories that come out of Washington never cease to amaze me. The Wall Street Journal reported that several politicians invested into stocks of the companies that they were overseeing. The Journal also stated that members of Congress also made bets that US stocks would lose money in 2008.

This should be no surprise that members of Congress have relatively few restrictions on what they can do regarding investments. However, Government officials are prohibited from making certain types of investments. The politicians just do what they want to do. The Journal does say that there is no evidence of insider trading. However, it would be tough to know what information that they are privy to as politicians with supervision responsibilities.

Then there is my favorite politician of all…Nancy Pelosi

It must be tough for Nancy. Poor thing has to slum in a downtown office with rent of $4,300 a month. Well, a woman of her stature shouldn’t roll like that. Apparently she felt the same way. To remedy her dreadful office situation, she leveraged 4 times more of taxpayer money, moved a couple of blocks from her old office, and pays rent of $18,376 A MONTH. Of course, all of that luxury is provided by you and me.

Really? Is it just pure arrogance that a politician thinks that they can just waste taxpayer money when we are trillions of dollars in the hole? Or do they live in such a fairytale world that they think they are just plain entitled?

There are 469 employees in the White House with an average salary per employee of roughly $82,000. Rep. Jerrold Nadler (D-NY) uses just under $10,600 a month of taxpayer money for his office in SoHo. Can you imagine the amount of money that is wasted by the politicians because they think that they are entitled to live large?

Pelosi’s spokesperson offered up a “valid” reason. He said, “The new office space is 3,075 square feet, nearly a third larger than the old space, which was of inadequate size.”

So she needed to spend $14,000 more a month for an additional 1,000 feet or so extra of space? As an American taxpayer, I would rather be lied to and told she had a mold problem rather than have my intelligence insulted.

Once again, you just cannot make this stuff up.

Tags: Bob Brooks, Nancy Pelosi, politicians, taxpayer