Alternatives to Bailout Plan & More

The bailout plan is on a fast-track, and the legislators are being rushed through. Let's step back and look at it carefully.

A few recommendations that maybe worth considering by all concerned.

The taxpayers should not just be opening up the wallet and giving away a blank check.

America is a capitalist country right, and why not let the marketplace work. Let us not privatize profit, then democratize the risk and losses.

The US Government supports "private enterprise", does it not?

So the alternative to consider is one that delivers "liquidity" and does not take on the "risk".

Alternative:

The government entity, pays banks and other parties that can access its "windows", a payment and takes for "re-sell" on "consignment" - a portion of the "securities" which are not moving easily in the marketplace. This release of funds "unclogs" the financial marketplace and credit markets. Risk of loss is minimized and is still in the hands of the original owners.

The government then classifies, sorts and tabulates these securities and "systematically" on a time-delay basis invites "offers" from smart and informed private players. Since the buyers know that the Government entity can hold on to them instead of having to sell it in a "rush", the right buyers will come along at the right price. This could even be a "reverse auction".

For the taxpayer, this is a far less risky approach. For the legislators, it could be easier to sell and better for all concerned.

Additional steps to regulate the markets are necessary. A marketplace for trading these instruments, CDO's, CDS's, on an exchange. Hedge Funds and others who have speculated "wildly" will have to lick their wounds. Sorry - smart guys!

Another step, why should it not require "speculators" and others to "put up" more than 5% to trade commodities and other financial products. Equity(stock) margins are 25-50% and it should be the same for all players across all exchanges. This will make life a little less volatile.

Public Investing _ USA - After 27 Years and 15 months - We confess, we got out at the high.

After 28 years of following the US equity markets, and 15 months after the high, we are coming out of the closet. The high was October 9, 2007 from which according to CNBC the DJIA has taken a close to a 39% drop. Not October and November 2008, but 2007. October and November 2008 may prove to be bottoms, but that is just a guess.

Every conversation out there starts with the rant about the surprise massive downturn of the stock markets all over the world. This comes as a surprise to all but the few insider professionals in the marketplace, who sold out in 2007 and early 2008 to protect their gains. This club went into the last quarter of 2008 with 50 to 100% in Cash. The smarter, aggressive money actually went in with "short" bets into this period. Look at hedge fund results that are public in many places.

It is fair to note here that the information and decision making by the 'retail' investor is quite different from the opinions and actions of 'professionals'. I guess this is but fair and similar to all the other trades where 'insider secrets' are commonplace. It is also important to understand the definition of professionals. An important distinguishing factor is whether the decision makers have a 'stake' and 'sweat equity' in their decisions and results from the 'pot' of assets under management. Does the average mutual fund manager, 401K separate account manager, and the Madoff Fund of Funds Manager have anything at stake in the process?

The market indexes such as the Dow Jones and S&P 500, show negligible returns over the past 10 years. It is tough to figure out if this is the first US decade out of the two or three similar decades of downturn that Japan has already gone through. This is anybody's guess and the influencing factors are too many to discuss here. What makes sense is to collectively gather and find valuable lessons that can enable people to achieve reasonable returns to meet their financial goals. Achieving goals, requires time, attention and dedication to working at investing. I invite good investing insights here and welcome your response. The goal at this 'water cooler' is to figure out if there is a strategy that can achieve reasonable returns without the need to find and correctly call 'bottoms' or 'tops'. Achieving good returns whatever the climate is what 'true alpha' is about after all.

The marketplace forces us to continually evaluate the risk spectrum and place our investments accordingly. The collective wisdom of many can help all of us in the short and long term and hence my invitation to all.

The rewards of having "CASH" to invest when "CASH is KING", are many fold. Lower prices from which large gains can be realized are just two important ones.

HAPPY NEW YEAR and HAPPY INVESTING!

Visit again for more, as we have after all come out of the closet and are finally willing to speak out and also listen to your wisdom.

Alternatives to Bailout Plan & More

The bailout plan is on a fast-track, and the legislators are being rushed through. Let's step back and look at it carefully.

A few recommendations that maybe worth considering by all concerned.

The taxpayers should not just be opening up the wallet and giving away a blank check.

America is a capitalist country right, and why not let the marketplace work. Let us not privatize profit, then democratize the risk and losses.

The US Government supports "private enterprise", does it not?

So the alternative to consider is one that delivers "liquidity" and does not take on the "risk".

Alternative:

The government entity, pays banks and other parties that can access its "windows", a payment and takes for "re-sell" on "consignment" - a portion of the "securities" which are not moving easily in the marketplace. This release of funds "unclogs" the financial marketplace and credit markets. Risk of loss is minimized and is still in the hands of the original owners.

The government then classifies, sorts and tabulates these securities and "systematically" on a time-delay basis invites "offers" from smart and informed private players. Since the buyers know that the Government entity can hold on to them instead of having to sell it in a "rush", the right buyers will come along at the right price. This could even be a "reverse auction".

For the taxpayer, this is a far less risky approach. For the legislators, it could be easier to sell and better for all concerned.

Additional steps to regulate the markets are necessary. A marketplace for trading these instruments, CDO's, CDS's, on an exchange. Hedge Funds and others who have speculated "wildly" will have to lick their wounds. Sorry - smart guys!

Another step, why should it not require "speculators" and others to "put up" more than 5% to trade commodities and other financial products. Equity(stock) margins are 25-50% and it should be the same for all players across all exchanges. This will make life a little less volatile.

Comments invited. Spread the word.

White Trash - Right?

The Right Party has selected its' VEEPEE Candidate in Sarah Palin recently. The Bible Belt, Conservative party has blown it again. A mother whose daughter under 17 is pregnant for 5 months. No Abortion here - right- Mom is anti-abortion all the way. She could not manage a household and now let us give her the keys to the country - right! Lets' take this white trash, mobile home and camp it on the White House lawn. Occupants - POW of yonders ago, with his new white trash VP. Lets' see how low we can go, America, morally, diplomatically and every other way around the world.

ECONATIVES- A Blog on Finance, Economics, Investments is now ACTIVE!

Econatives - A Blog exploring Economics and Alternatives in the modern era- at the crossroads of Finance, Investments, Globalization, Ecology, Environment and sustainability. This blog welcomes your comments and attention as it relates to some important issues facing the world and this delicate planet of earth. We look forward to your best ideas to make a difference for the better.
Spread the word to the most important people you know and love. THANKS!

UNTRUE_PREDICTIONS

Investments _ USA

It is a pleasure to introduce a new column - Untrue Predictions - No guarantee of the viability of these predictions. I do not have a crystal ball. Nothing written here is any kind of financial advice or recommendation to buy or sell anything. Contact your own advisers for that.

Sallie-Mae fits well with Berkshire Hathaway. Berkshire is an insurance company and a financial player headed by Warren Buffet. Sallie Mae has many pluses for Mr. Buffet:

• Can employ large doses of capital (Berkshire has a lot of capital to employ) over long terms.
• Growing customer base (echo baby boom - goes to college)
  
• College expenses are growing faster than inflation
• More borrowing for college as savings are down.
• Long term loyal customer base - with cross-selling opportunities.
• Clean - economies of scale in technology, and other profit drivers
• Customer acquisition and servicing costs keep coming down due to technology(web), ala GEICO a major holding of Berkshire.
  
• Global expansion possibilities as the world populations expand the need for education worldwide - as they urbanize and move to service industries.
  

Sallie Mae is being re-priced and may be upto offers again. Rumor has it that Mr. Buffet is going after a position in Bear Stearns, while JC Flowers is abandoning Sallie Mae at the alter. If Mr. Buffet is reading this, a favor of some credit for the mention would be appreciated. As to Sallie Mae being a bargain or not, I will leave that judgement to the buyers or buyers to be. Bye, Bye. I do not guarantee any reply or moderating on this blog.

American Idol Aid - Africa and Charity

American Idol had its' two hour long Idol Aid show under the banner of "Idol Gives Back". A tremendous effort of prime time fund raising, which should be commended by all. Africa does need help, and needs help in MEGA DOSES. Contribute your heart away, please. It is very impressive to see a show of this position focus on such worthy causes.