Global Economy Bursting?

[Randolph Kinney]

Feds Force State & Local Government Insolvency

http://www.financialsense.com/contr...s-force-state-and-local-government-insolvency

For decades, state and local governments were encouraged to make binding pension promises which relied heavily upon the (deeply flawed) academic theory that the lucrative compounding of investment wealth over the long term was close to guaranteed.

The future value of a dollar compounded at 0%? As risk goes up on the loss of principal?

Balancing a spending budget requires the layoff of employees to pay future and current benefits. That free healthcare is very very expensive. That pension benefit becomes a negative amortizing loan from the taxpayer.

All things are tied to GDP. When the GDP doesn't grow or fast enough, population must not grow. Exporting dollars will be followed by exporting population. What is critical is the ratio of GDP to population.

 

[Couch Potato]

Perspective is critical.

No question about it much of the change in stock market prices over time is inflation related. In other words stocks do just fine combating the effects inflation. The only sure way to make money in the stock market is through commissions on sales of securities to others, the house always wins. I prefer to go with divided stocks for my specific investing. I use a very simple system for investing. My favorite is where I pay the electric bill every month, and they send the money back to me quarterly with a little extra. I buy my gasoline with funds from oil royalty checks, so I don't worry about the price of oil. The wells should last beyond my need for the money.

I don't much worry about the current value of the investments because I am not planning to sell. The value only matters at two points in time, when buying and when selling. I will let my daughter sell most of my portfolio after I'm gone so I really don't care about anything other than the health of the companies. I don't depend on my investments making me wealthy, I depend on the tried and true, "spend less than you earn over a long period of time" that always works. Even if the global economy goes in the toilet, I expect to be just fine.

I am personally convinced the best investment available right now in most of the country is residential real estate. It's a rare opportunity to buy with prices artificially depressed by the temporary glut of REOs. Twenty years from now those will be long gone and inflation will make current prices look like down payments. If you're looking for something to flip in six months, it would be a disaster, but buying with a fifteen year loan and positive cash flow is a no brainer to make money with a twenty year perspective on property in a good location.

 

[Randolph Kinney]

Stone Prepares for Upcoming California Secession Proposal

http://murrieta.patch.com/articles/stone-prepares-for-upcoming-california-secession-proposal

"As a result of these thousands of jobs leaving our state, those citizens waiting for this economic cycle to turn are in for a very big disappointment,'' the supervisor wrote. "It has been estimated that many businesses can relocate to Texas and expect to save 20 to 40 percent! What will remain here is a 'welfare state.'"

 

[Randolph Kinney]

The business cycle, as it is known, is prompted by interest rates. When interest rates fall, money flows out of bonds and cash to real estate and stocks. When interest rates rise, the flow is reversed; money flows out of stocks and real estate into bonds and cash.

The government dictates which investments are favored by monetary and fiscal policies and the tax code.

The tax rate on dividends and interest can affect the value of the principal, along with changes in the interest rates.

Inflation (or the expectation of it) is the biggest driver of value. It will set interest rates by market forces.

The government is already considering changing the way the CPI index is applied. One way to take money from entitlement recipients is to adjust less than the real rate of inflation.

Inflation increases tax receipts and pays off debt with dollars worth less than what was borrowed.

What was considered to be a good investment today will be impacted by inflation, taxes and intrest rates in the future. California is a good example.

 

[Couch Potato]

Stone Prepares for Upcoming California Secession Proposal

http://murrieta.patch.com/articles/stone-prepares-for-upcoming-california-secession-proposal

"As a result of these thousands of jobs leaving our state, those citizens waiting for this economic cycle to turn are in for a very big disappointment,'' the supervisor wrote. "It has been estimated that many businesses can relocate to Texas and expect to save 20 to 40 percent! What will remain here is a 'welfare state.'"

Imperial, San Diego, Riverside, Orange, San Bernadino, Los Angeles, Ventura, Kern, Santa Barbara, and San Luis Obispo would make a nice, smooth cut. If they want petition signatures from property owners, I will gladly sign.

 

[DTB]

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I am personally convinced the best investment available right now in most of the country is residential real estate. It's a rare opportunity to buy with prices artificially depressed by the temporary glut of REOs. Twenty years from now those will be long gone and inflation will make current prices look like down payments. If you're looking for something to flip in six months, it would be a disaster, but buying with a fifteen year loan and positive cash flow is a no brainer to make money with a twenty year perspective on property in a good location.

Couldn't agree more. I thought by now I'd be putting the portfolio on auto-pilot but too many deals are out there.

I started with 2 flats when I was 16 (35 years ago) and still have many of them. Now I grab every 4 flat that fits the criteria. Cash flow now and capital gains someday.

People who have pigeon holed themself into thinking they are appraisers rather than valuation experts have done themself a disservice IMO.

 

[prasercat]

This is pretty much the mindset of the left. It is totally inane. How can any enterprise operate at a loss? The consequences of not operating at a profit are to operate at a loss which the system has been doing and is the very reason why health insurance cost are through the roof. This is like saying if gravity was not so strong we would all weight less. 60 years of TV propaganda has obvious paid a heavy dividend.
Not to be left out: There is no abuse in hospitals that operate at a loss? Sheesh!!!! The local doctors don't even use the local hospital. Why you ask? 60% of the patients pay nothing, they operate at a loss and the medical service stinks.

It is about a priority. You can run a business (that means, a profitable enterprise) with a priority higher than profit yet make good profits. If you make profit the priority, then even though you put yourself out as a medical institution, the medical part is only a "front" to what is really important. When that happens, instead of making a good profit or respectable profit or a great profit, you make an obscene profit.

Wall street loves businesses where the public is vulnerable, which allowes them to fully exploit their "resource" [without regulation or interference].

Vulnerable people come in many forms; like those that hand over their life savings to an "investment advisor" without much knowledge of the market, or the typical buyer that wants to buy a home because they are going up and want to own a piece of the "American dream", even though they don't qualify. The person on the street with no financial wherewithal (and likely a number of other serious problems that would not allow them to hold a job going forward) taking the burden of a very large education loan from a "for profit" Wall Street school.

I don't see things as a left or right, I subscribe to myself, my own party. Thank you.

 

[Couch Potato]

Everyone is vulnerable in one way or another. That is just part of being human.

There is no such thing as an "obscene profit." There are only obscene actions by people.

"Wall Street" is not an entity, it is a place where various entities congregate. Lumping those entities all together is a blatant example of prejudicial behavior.

People are free to do stupid things. If you do not have room to fail, success becomes meaningless.

 

[Terrel L. Shields]

I am personally convinced the best investment available right now in most of the country is residential real estate

I am convinced that bare land is much easier to managed and if leased for agriculture usually has low taxes. Purchasing land near a city where speculative prices have collapsed will be very profitable in 20 - 40 years....but I will have returned to room temperature before then. If I was under 40, i would hop on it... in fact at 30 I purchased 2 parcels of ag land that cost $500 and $630/acre respectively. I still have some interest in buying mineral rights in old oil fields of days gone by with the expectation that those areas will be revived by horizontal drilling in the future... Expect oil to top $130 within a year or so unless the economy tries to tank again...

 

[prasercat]

Everyone is vulnerable in one way or another. That is just part of being human.

There is no such thing as an "obscene profit." There are only obscene actions by people.

"Wall Street" is not an entity, it is a place where various entities congregate. Lumping those entities all together is a blatant example of prejudicial behavior.

People are free to do stupid things. If you do not have room to fail, success becomes meaningless.

I obviously disagree.

However, I should define what I mean by "Wall Street", as I currently define it specifically or as a metaphor:

Definition of Wall Street:

"Wall Street" is a close association and inter-relationship of extremely large corporate entities, which is epitomized by the "too big to fail" entities. This massive power is controlling our markets, stifling competition and innovation. It has largely taken over our media and our political parties and congress. They cannot fail, they cannot be subject to the market, they are above the law, and in fact, create law.

Therefore, because of these huge distortions, everything "Wall Street" does is "obscene". It is not good for our country, it is not good for capitalism, our nation of people, or for our economic interest long or short-term.

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Capitalism, in its true form, controls excesses and from human greed and exploitive tendencies from getting out of control. When capitalism isn't allowed to work or creates companies that dominate markets, they become the "Frankensteins" of capitalism, which end up destroying capitalism because the controls break down and it leads to a downward spiral of concentrated power. We become an oligarchy or dictatorship by a few.