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Microwavable economic epiphany for the lazy or ADD February 23, 2009

Posted by Jeff Nabers in : Money, Personal Enjoyment, Personal Productivity, Precious Metals, real estate, Self Directed IRA Solo 401k , add a comment

I’ve written several times about what I believe is one of the most important films ever produced: I.O.U.S.A. The film is 80 minutes long and came out in August of 2008. It’s a project of the former Comptroller General of the United States (our government’s chief accountant). He resigned to make this movie to warn our country about the coming financial train wreck of the government.

A few months ago, I linked you to a shorter, free 30 minute version available on YouTube. If you haven’t taken the time to watch the 30 minute or 80 minute version, then here’s the 2 minute, 24 second version;

[youtube=http://www.youtube.com/watch?v=gGgjU-h_xQw]

^— The hidden track record of U.S. deficits as told by the U.S. government’s chief accountant!

[youtube=http://www.youtube.com/watch?v=-FSoXKapKQs]

^– If you can watch this video and (more…)

The impossibility of bailout success and the guaranteed alternative success plan that depends on you November 7, 2008

Posted by Jeff Nabers in : Health, Money, Personal Enjoyment, Personal Productivity, Precious Metals, real estate, Self Directed IRA Solo 401k , add a comment

This is a message of prosperity rather than doom and gloom. Read through to the end.

A tremendous amount of homeowners are facing foreclosure. CNN Money reports foreclosures are up over 70% from this time last year. Banks are failing left and right, but let’s just take a look at the bailout concept in the most direct and extreme fashion for purposes of illustration.

The largest bailout possible

Imagine that every single homeowner that has less than 30% equity in their house at today’s prices receives from the Fed a check payable to their mortgage company that will pay their balance down to bring their equity to 30%. There is no more of a direct way to address the foreclosure and housing problem. What would the result be?

  1. Equity doesn’t matter. People got into mortgage loans that have payments higher than their income will support, and rising food and energy prices are lowering the household budget for mortgage payments. You could lower interest rates to 0% (forget about the market chaos that would create for a moment) and many people still wouldn’t be able to afford their homes.
  2. Home prices would fall because many would use the 30% equity in hopes of being able to sell their home and buy a less expensive home. This would accelerate the downward pressure the median home price. Many families would return to renting after touching the hot stove of home ownership. Of course, they would be seeking affordable rent which would also put a downward pressure on median home prices.
  3. I can’t estimate how many trillions of dollars would have to be created by the Fed for those types of bailout checks to be written… but you can be certain it would have a HUGE direct impact in raising inflation to levels unseen in American history. Injecting new money into the economy makes all prices go up. In this scenario, Americans would literally not be able to afford to eat if they stayed in their home. Home prices would crash almost to zero because three bedrooms and two bathrooms would become less important than food. There would be much larger social problems because, with this magnitude of inflation, food would become so expensive that theft, robbery, and violence would be the only viable means of survival for some.

A direct, swift bailout to cure economic symptoms would create very difficult times.

The smallest bailout possible

The smallest bailout is one that (more…)