Not Your Grandfather's Wall Street

Wall Street, poster child of free market. The place where capitalist have gathered over the years, with one goal; create wealth.

This perception could not be more wrong. Since it's conception, Wall Street was an exclusive club and the game of control began. J.P Morgan was perhaps the master of this game, building a billionaires club and in 1907 building a monopoly for his firm, using what else; fear and the government.

Now fast forward to the present and the imagine of Wall Street today. Although it certainly has created billions of dollars of wealth for even the average American, Wall Street remains and thanks to the aid of the federal government, the controlling economic power of this nation.

Let's take a look at the recent bail out or TARP. It simply seems impossible to believe that Henry Paulson, the former Secretary of Treasury and Goldman Sachs Chairman just conveniently established a plan benefiting his firm. GS after receiving $10 billion dollars of relief, recently reported record profits, but perhaps even more telling is the fact that Lehman Brothers, a rival of Goldman Sachs was left to die, while Goldman Sachs and it's partners were bailed out.

Now the process continues. The House recently passed Cap and Trade Bill, which is aimed at controlling emissions from industry. Interesting, that a bill laced with regulation and back door tax increases, received the needed votes from East Coast Republicans. Of course this leads to the question of why would a Republican vote yes on a bill perceived as being a liberal concept? The answer again is Wall Street.

As the credits for polluting are stock piled by companies, a market will quickly emerge, a market built on selling and buying credits. Large industries will rapidly buy up the credits for two purposes. First, having will ensure production and second the more credits controlled, the less their competitors will have and thus the less they can produce.

As the stock pile grows, credit traders will form investment groups, many made up the some executives running the industries. They will buy the credits for a low price from the industry and trade them on the market, creating billions of dollars.

Many people will say so, good for them. Certainly that would be the case, if this wealth was created by the market and private money. The cost of the buying the credits from the government will come from consumers, that debate is over (as Al Gore loves to say). The middle class family, the same one all politicians proclaim to help, will suffer from higher prices on all goods, creating an economic burden on the majority of Americans. While the Wall Street traders, Goldman Sachs et al, will be reaping in the wealth on the backs of the people and with the aid of Washington.

Of course the idea for this bill is to eventually decrease emissions so dramatically that the above mentioned market will dry up. This will not happen, thanks to endless thirst for cash.

Let's not forget the lessons of the past, Wall Street has money, politicians need that money, Wall Street gives to both sides and therefore Wall State is controlling Washington. The dirty little secret that nobody is willing to tell is this.

The main players on the Street love larger government. Greater regulation means more tools to control the market. So the next time someone proudly declares Wall Street is the symbol of capitalism, correct them and proclaim that Wall Street is the center the centrally controlled economy, with Washington as their controlling arm.

Buying American Gold and Silver Eagles

Gold and silver continue to be a smart play. As the monster of inflation lurks, gold and silver prices remain poised for a big jump. There is an old saying in gold and commodities, sell in May and walk away. But looking at current spot prices, which are down today, they have remained steady. Now does this mean the price will remain steady, no, of course it could.

So what does this mean? Take advantage and use the lower prices to pick up gold and silver bullion, specifically American Gold and Silver Eagles. Admittedly, I have not purchased either recently and the last time I checked the US Mint was not minting Gold Eagles. So the availability may be limited, but looking at a few sites such as APMEX
Gold Eagles can be purchased.

Personally, I love the Silver and Gold Eagle, mostly because their value is found in the bullion of the precious metal, over the trendy collectible coins. The price is set by the price of gold or silver. Yes, a gold coin from 1689 is a wonderful piece of history but it does hold a bullion value. The problem lies in the fact that collectible coins are trendy, which can artificially inflate the price and eventually burst.

I enjoy the safety of the Eagles, paying a lower price, but still getting the value of gold and silver. Use the Gold and Silver Eagles as the foundation and build from there.

Insurance Compaines: A good short play for Investors?

Health care, it is the buzz word of the day for politicians. Of course, health care reform has been tossed about for numerous years, the most memorable being the early days of the Clinton, a battle that altered the Clinton administration and turned them right.

Now it is Barrack Obama's turn at health care and the debate is already on. The Senate has started the process, but not surprisingly it has already come to a grinding halt. Despite all the objections, all the talk, look for a plan that creates a government funded system along with the private sector health care insurance.

In the long term, any savvy investor understands that government v. private will end up being only government. However, in the short term, my spider sense is telling me that major insurance supplies will drown in a grand windfall.

The following is pure speculation, but it is based on observations of the past and a logical conclusion of the future. With those two tools, I believe the following scenario is likely to play out.

In today's business world of stock prices and stock holders, business has become about the short term, lifting up profits and the stock quote on Wall Street. CEO's have taken note of this, because an unhappy major stockholder means an unemployed CEO. When the government opens this new segment of health care, one created not to compete, but to supplement the private sector it will create an opportunity the big boys will simply be unable to resist.

The opportunity for investors is this; an astronomic rise in profits. It will play out like this. Person A is a risk, they have a pre-exisiting condition, health care bills are high or could be high. This person will be delegated a high risk and pushed off to the government plan. How? By creating skyrocketing premiums that the company or individual is unable to pay and left with no choice. While person B, the healthy 30 year old, will continue paying the same premiums, but seldom if ever taking benefits. The end result will be the same amount coming in for companies, but far less going out.

When this begins to happen, and IMO it will, profits will soar, stock prices will follow and investors will reap the windfall.

Of course the common person, the one politicians are so concerned with helping will be getting hit twice. Their premiums will remain the same if they stay in the current policy, yet taxes somewhere must go up. Those that are forced out, will suffer through the bureaucratic nightmare that is Medicare or any government program, while paying higher taxes. Higher taxes will happen, ignore those saying otherwise.

In the end the government will eventually liquidate private insurance companies, but not before creating this initial windfall and then dropping billions of subsidies into the hands of private insurance companies to ease the crunch of high risk patients being pushed to the new government medical system.

So the purpose of this column? Pay close attention to the health care debate. Watch how the the insurance lobbying groups act (if they don't the above is even closer to happening), investigate the insurance giants (for the biggest, best and the ones closely connected to Obama) and consider jumping in on this potential windfall. But buyer be ware, the long term position of holding insurance companies is a bad play.

Sharing A Post

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What is shameful is the fact that for the last 50 years, Ohio and Dayton has probably picked billions of dollars off NCR. They treated them like crap, used rhetoric like Noker, slapped them around and still asked for more. Ohio's treatment of business is ridiculous and shameful, it is the government which has the looter sense of creed. They take, no demand money from business, accuse them of slave labor, destroying the envirornment, killing the elderly, use them as an election platform and still walk around with their hands out. Then when the business dares to stand up and say no more people are stunned, shocked, disgusted.

NCR saw what was happening in Ohio, the continued growth of government, the continued increase of taxes, the flooding of businesses out of Ohio and made one conclusion. They can continue to pay more taxes, be treated as scum or go to a state that will welcome them and the economic boost they will bring. They concluded the future is no future for Ohio at this current rate.

I have said over and over Ohio is dying and the proof is in the pudding...We can either continue to act like Noker, with a higher sense of morality or stand up and demand enough is enough and learn to compete with other states.

Unemployment Map

I heard about this unemployment map when listening to Rush Limbaugh...Yes, I listen to Rush and why not. Shows such as this are an intellectual exercise...I also listen to NPR.

Anyhow, this is a great map to coincide with my post concerning jobs and business.

Money Flooding Out of Ohio

I currently live in Ohio, a state that is for a lack of better terms; a wreck. Like many of its neighbors' Ohio is struggling economically. The tax burden continues to increase, groups point fingers at each other and many people believe that business is destroying Ohio.

This is an interesting concept; business has destroyed Ohio. Yet, when businesses were numerous in Ohio, manufacturing was rampant, Ohio was a booming state. After so many years of demanding, taking money and lobbing personal attacks, the free market opened a new sector of competition, while become ever more increasingly a close market. With new options, businesses flooded out of Ohio, running for environment's that offered more freedom and room for progress. This has left Ohio a barren land and the people very disgruntled.

So what is my point? Business are the single must important commodity for any community, state or nation, Ohio's current situation is the proof in the pudding. This seems to have been lost on disgruntled masses and politicians. Now the mob is taking the entire nation down a disturbing road.

As individual investors, it is prudent for us to investigate states and communities' and the business environment they have created. There is money to be made, but finding business friendly environments is becoming increasingly more difficult.

For those like you, buy gold and silver :)...Oh yeah consider moving.

Snatch up Gold and Silver, Before It's too Late

What is going on in the business world? It was recently announced by the Obama administration that executive pay would be limited. The details rotate around stock holders setting/voting on executive pay. Regardless of how we are getting there, the fact remains the government has made the step towards regulating pay. The foot is in the door and history tells us, when businesses get around the standards, the government's entire body will soon be kicking down the door.

The break neck speed towards socialism is stunning. First both Chrysler and GM were lost, taken by the government. Now the executive pay is being set, a number of financial institutions are on the verge suffering the same fate of GM and Chrysler. Of course the largest of all leaps is looming; national health care. The latter will have an explosive effect on not only the economy, but civil liberties of all individuals.

There simply is no better time then now to move into commodities such as gold and silver. Make no doubt about it, capitalism is under attack. The old standards we were taught will no longer be valid. Gone will be the reliable big chip stocks, the safety of treasury bonds and safety of the American free market. It will be replaced by a group of intelligentsia centralized in Washington D.C, attempting to control economic forces. The results are sure to be disastrous.

Gold: The Secret Investing Weapon

Franklin D. Roosevelt and his economic advisers understood that gold was the 800 pound gorilla in the room, standing in the way of his New Deal. For his plan of centrally controlled monetary system to succeed, they must cage the gold beast. They eliminated the gold standard for the dollar and begin confiscated gold from individuals. Thus began the demise of gold and the thirst for it.

However, like so many government efforts to control economic factors, the anti-gold movement has failed. Savvy investors around the world held no misconceptions that a few a egomaniac politicians would wipe out history. Today gold remains the secret investment weapon of the wealthy. They are still compiling gold with the full knowledge that through out the history of human kind gold holds a guaranteed amount of value. Take a look at the google search trends and take note of the cities generating the highest volume of searches. To name a few Richardson TX, Dallas TX, Phoenix AZ, and Las Vegas, all wealthy cities.


Now gold is quickly rebuilding popularity among common investors as represented by the U.S Mint and Gold Eagle. The evidence of this see this page. It notes the production of the Gold Eagle has been suspended. The reason could be two fold; one gold is limited or two the government is concerned about the amount of gold flooding to the individuals, which would decrease the value of the dollar, by decreasing its demand. The answer is likely a combination of the two.

Regardless of the reason, it clearly points to a high demand for the precious metal and signaling that gold despite years of attacks by the government and its minions in the investment world, remains a highly desired commodity.

The question is how long will the government allow the market to expand upward, before action is taken? That is a question nobody can answer.

Interest Rates

High interest rates are stumbling around the neighborhood, so it is time for the common investor to start preparing. I posted the following article on eHow and wanted to invite readers over to read it.

The bottom line is inflation and interest rates could both be showing up real soon. That means items such as gold and silver will gain an even higher demand. Take a look at the eHow article for some tips on what to do.

Inflation Knocking at the Door. Gold and Silver Looking Better Each Day

The bond market is in panic and it is all because of one word; inflation. The reason for the panic is inflation. Higher inflation destroys the return on the bond, because the dollar is less valuable.

That's a very simplistic explanation, but cuts to the core of the situation. Bond investors see the risk of inflation growing the day and a government unwilling to control it, because doing so would to curb consumer spending, which would sour the perception of the economy.

As the minting presses roll out the dollar, the money floods the market, the value of the dollar will go down. This will sink the bond market as their potential return falls. This in turn limits the money available to the government, who it appears will simply print more money. The other option is a crushing blow to staggered housing market; raise rates to lure investors back into bonds. However, the increase in rates will stymie consumer spending, refinancing and mortages, not too mention the political ills of bad consumer spending reports.

It is a nasty cycle with every action causing a reaction and a perfect example why the concept of central economic planning is purely abstract.

So what does this all mean for the common investor? It means keep collecting the gold and silver, because with the meltdown in the bond market, all sectors are now unstable at best. The rush for gold and silver has only just begun.

Buying Silver

Let's face it, the economy is struggling and the dollar has been staggered, times are difficult. So what does this mean for the common gold investor? It means that gold and silver are becoming even more critical.

So many people still see gold and silver as an oddity, an option that should be left for graduation presents or baby gifts, but this is simply wrong. This false perception of gold and silver has been driven into the minds of the Americans for one purpose, Keynsian economics. FDR understood that for Keynesian economics to succeed people had to be taken off gold and silver, allowing the government the ability to control the value of the dollar.

Now seventy plus years later, that process has been completed at least for the masses. But what many fail to realize is the wealthy continue to invest and compile gold and silver. Savvy investors use gold and silver bullion to protect against inflation and they understand both will always hold a tangible value. The price will not controlled by printing presses and interest rates.

Back to the topic, buying silver bullion. Silver is the perfect hedge for the common investor.

Silver bullion is cheap, compared to gold and therefore can be easily massed. The spot price of silver has been around $12-15 for an ounce. This allows for most people to pick up large amounts of silver for a decent price.

Silver, if an economic crisis hits can easily be turned into goods. With a lower value, silver coins could purchase groceries, shoes and clothing. Unlike gold, silver's value translate into everyday use, making it a practical metal.

Finding silver to purchase is simple. There are so many forms that silver fits any investor's needs, including coins and bars. Most coins are one ounce and bars normally come in 5 and 10 troy ounces.

After deciding on what type of silver to purchase, find a respected dealer. This really isn't hard as many places, including banks deal in silver, especially the American Silver Eagle. Do a little research and test the dealer with a small purchase, testing their customer service and quality of the silver.

China: America's New Owner

Treasury Secretary Timothy Geithner announced today that China has expressed confidence in the United States dollar. The announcement was praised as great news for the United States and it certainly is. However, think about the consequences of this statement and the fact it holds so much importance.

Geithner is in China attempting to soothe the ever growing Chinese fears about our economy. Failing to understand the possible consequences of the need for Geithner's visit is failing to understand the situation we are spiraling into in.

For those that do understand, this is yet another red, glaring warning light concerning the condition of this nation's economy. As individual investors it is becoming ever more critical to re-think our portfolios and honestly, holdings in this nation.

It is time for the common man to build up silver reserves. Silver is cheap and available. The one set back is price, which is racing upwards. But by becoming a bargain shopper, deals can be found by any potential buyer.

The prudent move is to now start looking for those deals and start turning the weak dollar into a tangible item with a tangible value.