Understanding YOUR Economic Alternatives With an Education in Alternative Economics

In the recent past we looked to professionals of the financial planning industry to help us devise a more informed plan that would take us comfortably into our retirement years. Unfortunately, the procedures and methods that most typical financial planners follow and suggest have become archaic and antiquated (even self-serving). Too often, this misguidance has led to diminishing returns instead of the large gains usually promised. As a result, and for good reason, we as a public have lost our faith in these so-called professionals and have lost the desire to save or invest for the future. Read the book, “Where are the Customers’ yatchs?” by Fred Schwed Jr.

To further the challenge, Social Security has published their prediction to be bankrupt (See your yearly Social Security statement page 1 top right paragraph) and the government is screaming at the public through almost every form of media to establish a personal financial plan that would not include government assistance. In other words, “you are on your own!”

Without understanding your economic alternatives or having a personal system of financial growth, the effects of social heredity during demographic and economic transition has proven to be devastating financially for most.

In other words it’s becoming more and more difficult to achieve any level of financial security if we make our financial decisions based on our inherited perceptions. As time goes on things change and the economic climate we live in changes too. Things are changing more rapidly now than ever before. Unrecognized changes expand the information gap between our perceptions and reality. The decisions we make have their result determined by how close, or far, our perceptions are to the reality of the world we live in.

For instance, did you know:

1. You can Self Direct IRA’s, 401K’s and other tax deferred retirement plans and use those funds to leverage acquisition of high performing real estate and watch your assets grow unhindered by taxation.

2. If you have stocks bonds or mutual funds you can often Pledge (Not Borrow) that asset as a down payment on real estate but never take it out of the funds they are in. In effect you can double dip!

3. Banks make money through something called Arbitrage and so can you.

4. You have hidden assets you didn’t know you had. In fact you have all the financial assets you need to achieve any goal you desire.

5. The Return On Investment for Home Equity is Zero.

6. The Effective Rate you are paying on a fixed rate mortgage changes from one year to the next.

7. Of the ways that the financial planning industry are allowed to report the performance of your investments under their management at least 9 of the 13 can make it look like you are getting a better return than you are. Sometimes you are actually losing money when they report a gain.

Through knowledge of truths like this, and much more, you can turn the financial table in your …

Wag the Dog – How to Conceal Massive Economic Collapse

"I'm in show business, why come to me?"

"War is show business, that's why we're here."

– "Wag the Dog" (1997 film)

The first week of August 2008, Fannie Mae and Freddie Mac had just announced record losses, and so had most reporting corporations. Unemployment was mounting, the foreclosure crisis was deepening, state budgets were in shambles, and massive bailouts were everywhere. Investors had every reason to expect the dollar and the stock market to plummet, and gold and oil to shoot up. Strangely, the Dow Jones Industrial Average gained 300 points, the dollar strengthened, and gold and oil were crushed. What happened?

It hardly took psychic powers to see that the Plunge Protection Team had come to the rescue. Formally known as the President's Working Group on Financial Markets, the PPT was once concealed and its very existence denied as if it were a matter of strict national security. But the PPT has now come out of the closet. What was once a legally questionable "manipulator" of markets has become a sanctioned stabilizer and protector of markets. The new tone was set in January 2008, when global markets took their worst tumble since September 11, 2001. Senator Hillary Clinton said in a statement reported by the State News Service:

"I think it's imperative that the following step be taken. The President should have already and should do so very quickly, convene the President's Working Group on Financial Markets. That's something that he can ask the Secretary of the Treasury to do. This has to be coordinated across markets with the regulators here and obviously with regulators and central banks around the world. "

The mystery over what was going on with the dollar the first week in August was solved by James Turk, founder of GoldMoney, who wrote on August 7:

"[T] he banking problems in the United States continue to mount, while the federal government deficit continues to soar out of control. So what happened to cause the dollar to rally over the past three weeks? In a word, intervention. have propped up the dollar, and here's the proof.

"When central banks intervene in the currency markets, they exchange their currency for dollars. Central banks then use the dollars they acquire to buy US government debt instruments so that they can earn interest on their money. The debt instruments central banks acquire are held in custody for them at the Federal Reserve, which reports this amount weekly.

"On July 16, 2008 the Federal Reserve reported holding $ 2,349 billion of US government paper in custody for central banks. In its report released today, this amount had grown over the past three weeks to $ 2,401 billion, a 38.4% annual rate of growth. So central banks were accumulating dollars over the past three weeks at a rate far above what one would expect as a result of the US trade deficit. The logical conclusion is that they were intervening in currency markets. They were buying dollars for the purpose …

The Economic and Social Consequences of Money Laundering

It can be easy to understand the impact of money laundering on the initial victims – those who lost funds as a result of the predicate crime – but there can be an even deeper, more lasting effect on society as a whole.

While some fear that Anti-Money Laundering (AML) efforts can have a damaging effect on commerce, especially in developing nations, let us take a look at a number of ways money laundering hurts us all. We'll focus on emerging nations as the impact there can be magnified to extreme proportions.

The first, and most obvious, impact is the increase in corruption and crime. In many jurisdictions that are havens for successful laundering one often finds lax concern on the part of government and / or regulators – few predicate crimes, little or no reporting, enforcement, penalties or provisions to confiscate illicit funds, etc. Those conditions can then foster bribery of government and bank officials, lawyers, accountants and others. Once that beachhead is established, it is not long before bribery turns eyes away from other, even violent, crime.

The second impact (valid in any jurisdiction) is on legitimate businesses. Where a launderer uses a front company to hide his illegal funds, it is possible, even probable, that the operations of the front company may be subsidized. This can enable the front company to sell products at or below cost, driving their legitimate competition out and opening the door for expansion by the front company. As the front company grows, it provides a greater opportunity for the launderer to move even more illicit funds. In a developing country, it would not take long for the criminal / launderer to gain control of an entire industry.

However, it must be emphasized that the launderer does not share the same objectives of legitimate business owners, who strive to maximize their returns through the profitable, ongoing operations of their enterprises. The launderer's primary concern is not his return, but the successful cloaking of the origin and ownership of the funds he controls.

It is in this disregard for normal business practices that leads to another area of ​​concern – economic distortion. Launderers often invest their money in assets or activities that are not economically beneficial to the countries where the funds are located. For example, right now, in a world where real estate prices have dropped sharply in the last few years due to the mortgage bubble bursting and other global pressures, property prices in Nairobi, Kenya are soaring – increasing 2-3 times in the last 5 years. And is it any wonder? With lax money laundering laws and a 500-mile shared border with Somalia, it is easy to guess where much of the Somali piracy ransom money has gone. This has taken home ownership right out of the hands of many hard-working Kenyans.

Such distortions can, in turn, lead to governments misinterpreting economic data. Without seeing the true economic trends of their country, leadership is prone to make decisions that are not …

Renewed Questions About Capitalism and the Laissez Faire Economic Model

The US mortgage crisis has seriously challenged the idea of ​​laissez faire (free market) economies. What was once regarded as the soundest and progressive economic model is now suffering a crisis of confidence. No one seems to have the answers.

The free market economic model in a nutshell dictates that a government must not interfere or be involved in any economic activity. On the other extreme end you have communist economies where government owns, controls and directs all economic activity. What is important to note is that no country is fully capitalist or communist. Most countries are mixed economies defined as capitalist or communist depending on how far they lean either way.

In the early 1990's the World Bank and International Monetary Fund (IMF) came up with a series of programs known as Structural Adjustment Programs (SAP's) designed to help third world economies spur economic growth and get out of poverty.

The main thrust of these programs was:

o Third world economies were to liberalize their economies, that is, sell state assets and corporations to the private sector. In other words, governments were asked to reduce their involvement in economic activity and become free market economies.
o Reduce public spending mainly by reducing the workforce on government payroll. Third world governments were forced to downsize their work force significantly. They were also required to reduce spending in healthcare and education by removing subsidies in these sectors. In a nutshell they were to require their populations to pay for these services.

To ensure that third world governments committed to these programs; aid, grants and loans were to tied to how successful a government was in implementing these programs. The US and Europe followed suit and tied their financial support to commitment to SAP's.

The argument then was that the free market economic model was the only route to economic prosperity. We now know better given that since 1978 China's GDP has grown an average 9.9 percent a year. China's per capita income has grown at an average annual rate of more than 8% over the last three decades, drastically reducing poverty. It is now almost unanimous amongst economists that the SAP's nearly destroyed third world economies. In fact, most countries have since abandoned them completely.

What is going on in the US and now Europe is an example of what runaway, unbridled, unregulated capitalism can do. The US $ 700 billion bailout plan recently passed by congress is a slap in the face of what used to be sound economic policy. The events in the US and Europe should serve as wake up call to all; that the best economic model is not necessarily the laissez faire 'hands off' model but rather that countries should strike a balance between the capitalist and communist models. China appears to be doing rather well. Being too far on one end clearly has its hazards.

Source Article

When The Socialist Forces of Central Banks Collude Global Economic Stability Is Doomed

Presently, the ECB wants the power to dictate to all EU member states' banks of any size or specializing in any sector their reserves, interest rates, and policies. In Germany many smaller banks are not going for the idea, and yet, if Germany does get on board other EuroZone nations are economically doomed without a bailout or ability to get credit. An ECB upgraded central bank which is established without regards to fiscal responsibility cannot succeed. Let's talk.

If and when the socialist forces of the European Union decide to upgrade the European Central Bank, giving it more power to oversee all of the member banks, and try to set it up similar to the Federal Reserve in the United States, we are bound to see problems because it is starting out on an unsound socialist foundation. If however the ECB can put its best step forward using a free-market economic principle approach, then they can get this done for Europe, save the euro, and keep at least most of the European Union intact.

Of course, no member state wants to lose its authority, and no bank wants to be governed by some international entity. The more socialist leaning nations are happy to use the Euro, at least for the time being because it shows a sense of stability, and a façade where none exists. Throwing together a bunch of nations, banking systems, and economies which aren't working in with a few that are is no way to start anew.

What I'm saying is this; even if the ECB gets its act together, and the member nations perhaps out of economic duress agreed to it all, that does not mean this will solve the problem, or guarantee the future of the European Union into the next decade. There are so many problems behind the scenes, and this socialist theory which seems to be ingrained in the minds of the masses, that the government owes them everything, and that money grows on trees is the real future challenge they face.

Sure, it's easy for someone who's an economic analyst to look at the European Union from outside the box, and in hindsight of history, I don't deny that. And yes, I am an observer from the outside, shaking my head at some of the nonsensical meetings of the minds going on with the concept of restructuring the ECB. Nevertheless, until such questions are answered, or such responsibility is taken, I don't believe it can work. And even if it works in the short term, as socialism usually does, it's just prolonging a larger inevitable crash of epic proportions.

We should know better than this as we continue to blow up bubbles in our economy, and the world's economy only to watch them burst, or deflate in short order. We can do better than this if we will merely study our history, and then understand it in a global economic context. It should be quite evident that this just can't work the …

Economic Current Events and the Environmental Bail Out

The recent economic current events in the global financial markets has prompted a response that is both too late to avert the crisis and does not address the root causes of the problem, which is selfish and greedy behavior of people who are not held accountable for their actions . This is a worrying situation in its own right, but also points to more serious concerns about the approach of governments around the world in regards to environmental issues.

The bail out of the financial institutions threatened by the economic collapse was effected quickly and the resulting small increase in market performance was virtually instantaneous, though the long term effects of this situation are still far from clear.

These decisions have been made based on the advice of expert economists that have had the trust and ear of both the financial institutions for many years, though governments have been reluctant to act unless forced to do so by dire circumstances.

What hope then do we have for the environment? Despite equally dire warnings of impending troubles with the environment, governments have either been slow to act or have avoided acting to reverse environmental degradation. Will this trend continue until it is blindingly obvious that we are in the middle of a catastrophe? If so, throwing any amount of cash at the problem will not be able to fix it. We are treating the environment as if it can be fixed with a click of the fingers, just in the nick of time as the disaster is looming.

We need to get out of this short sighted, greed centered view of our impact on the planet. We need to take a longer term view of our effects on the planet and adopt clean energy strategies on a global scale with the technology we have available now. We cannot afford to wait until we are either drowning or choking, because by then there will be no way back. If this happens it is we humans that will become extinct.

It is time for governments to do what they are supposed to do: provide for the wellbeing of their people both for now and for the future through well considered long term planning in both the financial and environmental arenas.

Source Article

Iran’s "Major Economic Surgery" Now a Reality

Iran, as a country between globalization and isolation, tradition and modernity has had an utmost importance at the international arena. TVs, newspapers, magazines, columnists, journalists, reporters almost all media have been trying to understand, monitor and interpret the developments since the 1979 Islamic Revolution. Recently, this increasing attention has focused almost on the same issues such as nuclear program of Iran, UN sanctions, diplomatic efforts, President Mahmoud Ahmadinejad as a highly controversial figure of Iran. Nevertheless, economic performance of Iran with its cautious approach to globalization has attracted respectively less attention of international media. In this performance, long-lasting subsidies given by the Government of Iran to energy, food and some services have an important role in terms of its effects to country’s budget, monetary policy, development plans and social welfare.

Economic realization of Iran has mostly been dominated by its energy reserves. With its 73.6 million population, $828 billion GDP (PPP), 1.6% real GDP growth, $154 billion trade volume, $66.2 billion oil & gas exports (75.6% of its total exports), Iran was the 18th largest economy in the world in 2009.

Iran, as an OPEC Member, holds the world’s third-largest proven oil reserves and second-largest natural gas reserves. It is also OPEC’s second-largest oil producer and the fourth-largest crude oil exporter in the world. With all its massive potential, Iran, according to the World Energy Outlook of International Energy Agency (IEA), spent $66 billion in 2009 to fossil-fuel subsidy, which ranks it first in the world. This subsidy has been a huge burden on the shoulders of economy which creates inefficiencies in energy sector. In total, it is estimated that subsidies including the ones for food and various services are thought to cost Iran up to $100 billion a year. Considering the GDP of Iran, which was $331 billion in current prices in 2009, one could imagine the magnitude of saved subsidies would run up to 30% of GDP, which has a significant impact on Iran’s GDP.

History of subsidies in Iran goes back to 1970s, when high inflation rates and price instability particularly in the fossil-fuel products caused Government to establish Consumers Support Fund with a view to controlling prices and distributing subsidies. This was replaced by Organization for Protection of Consumers and Producers in 1977. Government believed that subsidies were the best way to distribute national wealth. During Islamic Revolution in 1979, Government had to increase subsidies because of decline in oil production, continuing high inflation and growing black market. In fact, while Iran was among the most energy-efficient countries in 1980s, it is now one of the wasteful. However, with regard to food and medicine subsidies, the picture was vice versa. These ones have played an important role in increasing child nutrition and lowering child mortality. During the first and second presidency of Mohammad Khatami, between 1997 and 2005, although government was assigned to prepare the necessary subsidy reform through Economic Development Plans, attempts were unsuccessful owing to the economic, social and political risk of consequences arising …

Current Economic Crisis (Bailout Or Buyout)

Lately, it seems as if we are living through history every day. Not since the Great Depression has the United States seen such turmoil in the financial markets. What started in the subprime mortgage industry has now bled over into Wall Street.

When investment houses that have been around since the Civil War close their doors, it's a sure sign that something's gone terribly wrong. First Bear Stearns, then Lehman Brothers and then Merrill Lynch and Washington Mutual.

We all can't help but be a little rattled by what's going on. But while I and others have been pointing out that the markets are only going through a "correction", you may be asking, "Denise, how much of a correction do we need to make?"

Obviously, a big one. Too much money lent to too many people who couldn't afford to pay it back is a surefire recipe for disaster. Now it's time to pay the price.

Some analysts are even comparing what's going on now to the stock market crash of 1929. However, there is one major difference between then and now-we aren't even close to being in the same economic hole our great grandparents fell into back then.

Case in point: The $ 700 billion bailout (or is it a buyout?) Being debated by lawmakers as of this writing is a giant sum of money, the equivalent of which was not available in 1929.

Today, we are better prepared to handle such challenges as they arise-partly because we've learned from history. When the Great Depression began, there was no backup. The US Government was in a much more "hands-off" position than today.

While some like to argue it's a good thing for government to stay out of the free market, the new and upcoming legislation promises to bring at least some security back to the United States economy. The time for argument from political principle is over. Something has to be done-and thankfully our leaders are finally stepping up to actually do something about it. The question is will these leaders help the problem or add to it, only time will tell. As of this writing they still have not been able to get it together.

After four (or more) years of unsupervised lending, exotic loans, predatory practices, and the ensuing subprime mortgage meltdown, the government is finally taking measures to step in before it all spirals into oblivion.

Of course many are asking why Treasury Secretary Hank Paulson and Fed chair Ben Bernanke didn't do something before this mess happened. While it's true that nobody could predict how bad the fallout would be, it's clear that when banks start handing mortgages out like candy, something is amiss.

Two to three years ago, every time I heard a mortgage ad on the radio touting low numbers for adjustable rates, I winced. I wondered how long this could last. During the boom, it seemed like we could never run out. Now we're suffering from a huge reality check.

So what …