Tuesday, May 23, 2006

Trade Adjustment Will Affect US Dollar and Economic Prospects

OECD warns rebalancing of US deficit may drive dollar down sharply - Forbes.com

I had some hestitation about posting this article as it's thick with financial and economic language that's difficult to decipher. OEDC stands for the Organization for Economic Co-operation and Development. It is a international organization of industrialized countries responsible for the study of economic and trade issues. Notwithstanding the thick language, it contains information of a serious nature that could have a broad impact economically.

Long ago, our nation sharply curtailed manufacturing and has increasingly sought to purchase goods that would otherwise be manufactured here abroad. To the extent by which we as a nation import more than we export, we create what's known as a trade deficit. Many of the countries we're carrying trade deficits with (i.e. China) are flush with dollars after they sell goods to us and they have to do something with these dollars.

Since oil is priced in dollars per our 1970's agreement with OPEC, many countries keep some of our currency on hand for the purpose of purchasing oil. Excess amounts over and above that needed for transactional purposes are often invested in dollar denominated investments like US government bonds or other investments. This works well for our trading partners as long as our securities markets offer attractive returns and they can convert their dollar holdings back into their currency at a reasonable exchange rate. If the dollar weakens versus their home currency, they lose money on their US demoninated investments.

The possibility of a sharply weakening dollar is the concern of this article. Since foreign investors stand to incur sharp losses on their investments, there's a strong possibility that they'll exit their US investments. A sharp sell off in US treasuries would result in longer term rates sharply increasing. Higher interest rates on an economy already heavily indebted would be very problematic. Our standard of living could drop dramatically. This is the elephant sitting in the room that absolutely no one talks about.

Pay Day Loans are Popular

Borrowers keep returning for payday loans - U.S. Business - MSNBC.com

A story about pay day loans, which like refund anticipation loans, are quite popular. Many who borrow via pay day loans do so repeatedly at usurious interest rates in a never ending cycle where they dig themselves a financial hole in the ground.

Basic financial literacy is something that's very much needed in America.

Sunday, May 21, 2006

GOP Scrutiny of NAACP

Immigration: High Paying Jobs American's Won't Do

Many Forced to Retire Early

Friday, May 12, 2006

Unlucky Lottery Winners

MSN Money - 8 lottery winners who lost their millions

Here's a story about how one's relationship with money can be very destructive regardless of how much money one has. This is a sad story about 8 lottery winners that wound up being broke even after winning millions.

I'm convinced that the ability to have money is really not a function of how much one has. It really is related to what you see money doing for you. If you believe that the function of money is to buy everything your heart desires, you'll have all of your desires but no money. If, on the other hand, you believe money should work for you and create a future of financial independence, then that's what you'll have. The bottom line for most of us is that you can't spend it and have it too.

Unfortunately, for some people, coming into a bunch of money is just like having more rope to hang themselves.

Strange Bedfellows-Rupert Murdoch & Hillary Clinton

What's" in a Murdoch-Clinton Alliance? Something for Both Sides - New York Times

For those who are unfamiliar, Rupert Murdoch is a conservative media mogul and owns, among other media outlets, the New York Post and the Fox News channel. Heretofore, both of these media outlets have basically been mouthpieces for the Bush administration.

Murdoch is now supporting Hillary Clinton with a fundraiser to build her campaign coffers; something that's entirely out of character for both of them.

It just goes to show that politics makes some very strange and unexpected bedfellows and the liberal/conservative dichotomy is often a nothing more than a fiction. Money always plays both sides of the fence.

Monday, May 08, 2006

A Very Interesting Video

Hot Talk On Iraq

The link above is to a very good eye opening video regarding the decision to go into Iraq. It features Karen Kwiatowski, a fomer Pentagon desk officer and vocal critic of our government's engagement in Iraq (and what appears to be sabre rattling in preparation to go into Iran). It reveals how the neocon elements within the current adminstration arrived at this decision through subtefuge and outright lies. It's highly disturbing. You'll need about 15-20 minutes to watch it.

Below is some background information on Kwiatkowski from Wikipedia for those who are unfamiliar with her.


Karen Kwiatkowski
From Wikipedia, the free encyclopedia

Karen U. Kwiatkowski is a retired Lieutenant Colonel in the U.S. Air Force whose assignments included duties as a Pentagon desk officer and in a variety of roles for the National Security Agency. Since retiring, she has become a noted critic of the U.S. government's involvement in Iraq. Kwiatkowski is primarily known for her insider essays that denounce a corrupting political influence on the course of military intelligence leading up to the invasion of Iraq in 2003. She has said that she was the anonymous source used by Seymour Hersh and Warren Strobel in their respective exposés of pre-war intelligence.

Sunday, May 07, 2006

The Real Oil Story: The Oil in Iraq

The Real Oil Story: The Oil in Iraq

One of the things that's not commonly discussed in the press is the concept of peak oil. This term refers to the point where the world's production of oil output peaks and then steadily declines as supplies dwindle in the face of constant or increased demand. I believe that we've either reached or will reach peak oil in the very near term. The author of this article believes that peak oil concerns were some of the main reasons behind the administration's foray into Iraq.

Friday, May 05, 2006

The $2-Trillion War

The $2-Trillion War

Harvard researchers now estimate that the Iraq war will cost approximately $ 2 trillion dollars; an astronomical figure. If we had to actually pay the extra taxes to cover this, I assure you there'd be howls of protest. Everyone would be anti-war at that point.

IMO this will be paid for by monetizing the debt; in other words the federal reserve will effectively print the money to pay for this. You and I will pay by dealing with the inflation that arises from that.

Welcome to the dead zone-Housing Bubble is Deflating

Real estate survival guide: Welcome to the dead zone - May. 4, 2006

An excellent article from regarding the deflation of the housing bubble.

Wednesday, May 03, 2006

Student Loans-A Life Sentence

Student loan: a dowry in reverse? - May. 2, 2006



An interesting article on students struggling with student loans.

I had no debt upon coming out of school with my bachelors. When I graduated with an MBA in 1982, I had only $ 6,000 in student loans and was worried about paying $ 80 a month over the next seven years. Of course, my education cost me nowhere near with a lot of these kids are contending with today. Education costs have spiraled out of control.

One has to really look at the cost benefit of college nowadays. The days are long gone where one could just matriculate and engage in learning for the sake of learning alone. Now you have to really comtemplate whether the cost is justified based on potential post college earnings. Otherwise, one may not make enough to service the debt incurred. The same cost benefit analysis has to be worked through when evaluating a state school versus an ivy league institution. Is the incremental cost incurred to go private justified. Are you going to earn anymore than you would by going to a less expensive instituton?

These are very important questions for students and parents to raise, especially if it will require a life long struggle with paying student loans.

New Jersey is worried about the lost of it's competative edge

CourierPostOnline - South Jersey's Web Site

There are a few things I miss about New Jersey, however, insane auto insurance and real estate taxes are not among them. New Jersey, like California and other expensive areas, is experiencing outmigration and there's some concern over losing its competative edge

For at Home Mothers

There's" no work force like home - BusinessWeek Online - MSNBC.com

An interesting article on the growth of home based customer service employees. This is projected to be a growth industry over the next five years and it looks like at home mothers who are highly skilled are being targeted for recruiting.