Less than 1/2 of 1% of books in print got censored by amazon over the last week. You could search, but you couldn’t find. You could look and it would take a LOT of work to try and find many wonderful books.
On first look it appears that amazon was censoring “adult material” that they didn’t want to show up in searches.

Among those books was Irresistible Attraction: Secrets of Personal Magnetism. This book has sold a LOT of copies and made a lot of money for amazon. I’m sure many other books that amazon had censored had done so as well.
Certainly the THEME of Irresistible Attraction is adult in orientation BUT there is NOTHING dirty or rude or crude in the book. It is a practical and scientifically based approach to attraction in the real world.

I still love amazon. They sell more books for me than anyone, BUT, censorship is a disaster. NO ONE has the right to say that you should or shouldn’t watch, view, read, or THINK XYZ.

In amazon’s defense they did come out today and say they had erred. They were sorry to the authors who were harmed.

OK.

We’ll see how this all plays out. It will be interesting.

I funded my 401 k today. 1/2 went into government bonds and 1/2 went into gold stocks. That said, most of my “non-retirement” assets are in CD’s at various banks that I think might not go under.

Three weeks ago I bought a LOT of Citibank at $2. I’ve been buying gold stocks for a few months. It’s hard to justify owning stocks in general, certainly very difficult to justify owning indexes or anything aside from bonds, metals and CD’s. Your home? Certainly, that is good.

Right now, there are no GOOD investments except starting a SMALL business from your home, with low overhead, preferably a table top/internet business.

As I explained at Wealth Camp, small business is the only way most people will ever build wealth. And I mean SMALL, where you earn perhaps 100,000 per year.

Buying a business (existing) is a risk I personally wouldn’t take right now. BUT starting a baby business is a VERY GOOD idea at this point.

Real life: The investments you make, unless you have hundreds of thousands or millions of dollars, aren’t going to make much difference in your life. A small baby business WILL. I favor the internet because it’s hard to screw it up and it’s relatively simple (plenty of effort but definitely simple) to earn an income that will ultimately turn you into a wealthy individual.

www.kevinhogan.com

It used to be that “the economy” was a part of life that you didn’t seriously have to think about. That’s been true for almost exactly 25 years.

And things have changed.

The stock market indexes just had an impressive jump up. They could jump up even more. So what’s the problem if there is one?

Why do people who used to think about their job or their career or their business now have to think *and* understand what’s happening on a much larger scale?

Here’s a few of the basics:

The United States government is rapidly shifting it’s power from that of tax collection, welfare agent and military power to that of tax collection, welfare agent, military power AND bank, insurance and auto industry *owner!*

Even five years ago, this would have been unthinkable.

What it means to you is that your government now has unprecedented access to not just your money, but to your medical (insurance) information and to your bank account…first hand.

But there is more.

The government has decided that they will partner with other failures (banks, insurance, auto industry) instead of successful businesses. That means the government is taking your money and giving it to people who not only didn’t earn it (as his been the case for 60 years) but now also to those who intentionally stole it and misappropriated it in the first place.

That’s impressive corruption and it’s been so out in the open that there is almost nothing hidden.

Certainly you don’t know where your future tax money is going specifically. The government won’t tell you that. There is no accountability to the taxpayer. That’s not just bothersome, it should strike a chord into the mind of everyone of similar governments in the past….one is reminded of the government that tried to take over the world in World War II…

Now “taking over the world” is not something that is on the US government’s mind. The government is simply focused on taking over the assets of American taxpayers.

If you pay taxes, you care, if you don’t then this is not as important. In fact their is always a beneficiary to criminal activity. Today, that person is the non-taxpayer.

A lot of people think that because they don’t earn that magical $250,000 per year number that President Obama keeps mentioning, that they are “safe” from the effects of the tax plan.

Nothing could be further from the truth.

To be sure, those who earn more money will pay a great deal more in taxes for decades to come….but…those in middle and lower tax brackets will get crushed as they have never been crushed before. Those who don’t pay taxes however will be rewarded for not working, not reporting income, not filing and not paying taxes.

Why do I care?

Because it affects my business.

My reader is concerned about what they can do. Coffee readers aren’t run of the mill citizens. They can see a lot more clearly than pretty much anyone.

Here’s an example of what’s happening.

The Minneapolis Star Tribune reports this morning that there are “signs of a bottom in the housing industry.”

They point to significantly increased pending sales of homes. And then, they report the continuing drop in the prices of homes!

This is good?

We’re selling/buying homes at ever decreasing prices.

That is not a good thing.

But it’s reported as reducing the number of homes on the market as foreclosures get picked off by seemingly savvy buyers. Indeed I’ve looked at a number myself.

In my mind there are no illusions of prices increasing at a rate higher than inflation…at any time in the foreseeable future.

The same is true for the stock markets. 10 years from now, the chances that the S&P 500 is significantly higher than inflation is quite small. I’ll spare you the numbers, but there is no logical reason to invest in indexes or the market as a whole for quite some time. The gambler? Sure. There are plenty of opportunities to throw the dice.

The market (Dow) could easily be at 10,000 on August 1 and it could just as easily be at 6,000. To me it makes no difference. Anything that happens in 2009 or 2010 is not important to where we will be in 2019.

I enjoy gambling. I play the market, I play blackjack, bet football games when I’m in Las Vegas and so on. It’s entertaining and can be an adrenaline rush.

But to the scientific investor, the simple math points to. at best, an absolutely neutral return on the stock market over the next decade.

The science of the stock market however does NOT cover such things as the US government owning Citibank, AIG and giving money to corporations and their CEO’s at will and often. These things haven’t happened in the US…ever…so there is no data to be quantified.

In other countries where such things have been attempted, there are no long term successes.

So, maybe you don’t care about the science of the market or the history of the market. I can understand that inclination even though I would encourage you to begin that interest quite soon.

The fact is that the free markets are no longer free. Corporations are being given taxpayer (that’s you) money in any amount that the government, and not you, choose.

That’s personal.
It’s wrong.
It’s supposed to be illegal in this country.
But it’s happening apparantly by “necessity.”

Why?

“They are too big to fail.”

But they already failed. They stole their investors money and they went bankrupt morally and financially and now the President takes money from the taxpayer (that’s you and your kids) and gives it to the criminal and the business failure.

And if you actually sat down and did the math, it would scare the hell out of you as to just HOW MUCH this President is willing to take from your pocket and put into the security of…well frankly…. his own pension.

I can appreciate survival of the fittest…he is in very good physical and mental condition.

The point of course is that these massive and global shifts in how government is taking over businesses and stealing from people yet to be born or those that are mere children IS undprecedented in human history.

How you should proceed depends on a) what is going to happen next and b) what YOU believe will happen next.

People’s propensity is toward the status quo.

“It may be big but it won’t affect me THAT much.”

That belief will cause people to do nothing or to gamble without a bankroll.

And THAT is not only likely, it can have devastating consequences. And we’ll go there tomorrow.

The average U.S. government employee earns $79.000 annually including benefits.
($52,000+$27,000 benefits)

The average private sector employee earns $55,000 annually including benefits.
($39,000+$16,000 benefits)

Government employees include unspoken hero’s like teachers who care and are good at their job. But most government employees don’t produce anything from which there is a profit to actually get paid.

This is no “knock” on employees smart enough to have chosen to work for the government instead of a corporation in a similar position. That’s just being smart.

From a larger scale and time line there are some facts that you want to keep in mind…

Government employees are paid, in full, by the private sector.
Government employees are paid almost 50% MORE money than the people who are generating that income.
Government employees do not generate income or produce anything that can be bought. Therefore no matter how noble, the government must be a charitable institution that can accept a tiny amount of contribution from citizens but employees of the same government can’t ever be paid more than those in the private sector.

Now if you are a teacher, you have my biggest thumbs up. You know that. I would argue that great teachers are among our greatest resources in this country. (On the other hand, ask me about the scammy union of which GOOD teachers have been conned into joining…)

We need a police officer, we need the marine and we need the plants that keep our water clean.

There’s not much else we need and there’s not much reason for ANYONE who isn’t GENERATING income to be paid MORE than those who are generating it.

Obviously the above is not sustainable.

You can’t have employees of companies that produce value and generate income paying more to the government employees that don’t produce anything at all and don’t generate any income…at all…..
than they get paid themselves.

The system will collapse.

And it is.

Pensions in private and public sector are funded by about half. They are/were run by people who don’t understand economics or investing. They are run by people who don’t understand Ponzi Schemes and actual return on stock markets nationally or abroad.

The system collapses because the Scheme is coming to a head.

It was predictable. It happened.

People believe they will “get a pension.” And of course because the “pension system” is the dictionary picture of a Ponzi Scheme, it will fail. By definition it must. Not a 90% chance. A 100% chance. It simply WILL.

People can’t be paid what they are told they are going to be paid. Don’t misunderstand that. The first 50,000,000 people (many of whom who have long since died) DO/DID get paid, that’s part of the definition of a Ponzi Scheme. But those who got in at the end….that started their employment in the work force after 1985 or so, well,…they can’t get paid….

The BEST they can hope to get paid upon retirement age is inflated dollars that are worth a tiny fraction of the dollar figure they have been promised. The worst case is that they simply won’t be paid.

From a point of logic, you can’t pay someone to not work. a system that does that will fail.

You can’t create a “system” (scheme) of social security, medicare, pensions to people who don’t produce income, even if they are people you love. Once you begin such a mess, it’s a Ponzi Scheme.

A Ponzi Scheme is any scam where people are promised a specific amount of money in return for “investing” in the scheme. The perpetrator then pays the people who get into the scam early giving the appearance of paying everyone at some point. But it folds under the weight of lack of funding at the bottom of the pyramid.

Bernie Madoff did nothing the government hasn’t done since the 1930’s. He simply got caught. The government will get caught too…I’m just not sure what their punishment will be….

At least two people yesterday, asked about diamonds.
Diamonds are a bit of a conundrum.
They certainly are the most portable form of convertible wealth I can think of. But this is not the time to be investing for profit.

In other words, if you buy a $100,000 diamond, you probably paid $110,000 for it.
If you bought a $1000 diamond you probably paid $3000 for it.
If you bouth a $200 diamond you probably paid $2000 for it.

People ooooh and ahhh over large diamonds, but in reality the larger diamonds on the girls hands are rarely worth…anything. Diamonds bought at a store for a guys girl are gifts of the heart and not investments. That said, if you DON’T buy a diamond for the girl you have invested in your casket….

I haven’t found quallity diamonds in stores around here. I guess they must have them, mostly they specialize in larger diamonds that are terrible quality. But you and I can’t typically see the quality of a diamond without knowing what to look for and where to look for it. Diamonds are graded like coins and baseball cards. The grading process is more extensive and it is relatively precise.

A 1 carat diamond bought at the Jewelry store will be worth perhaps $500 and sell for $5000. A diamond that is of nice, cut, color, clarity will be worth perhaps $4000 and sell for $5000 on the markets.
More interesting is that a TWO carat diamond at the store is worth perhaps $2000, will sell for $20,000. On the market, a nice 2 carat diamond can be bought for say $40,000 and be worth say $35,000.

Jewelry stores generally stay in business because the low grade diamond business is a hell of a profitable business. And selling certified diamonds is also profitable but it’s an entirely different game.
I bought a diamond two years ago and I shopped like I hadn’t shopped in years. I spent too much diamond but got a reasonable price on a high quality diamond.

Diamonds can be an investment in inflationary times. In other words, if you want to sell your diamond, email me and I will happily buy it from anyone. We are in deflationary times and the value and prices of diamonds has come down.
ALL of that said, diamonds are a good insurance policy against the craziness of the future. But don’t even CONSIDER buying ANY diamond without a certificate and don’t even CONSIDER buying a diamond without knowing the person you are doing biz with.
We are in a time when diamonds can be synthetically replicated to such a degree that gemologists can’t instantly tell them apart.
Will diamonds and precious stones hold their value in the future?
Don’t know.
I do know that when a currency dies, I’d rather have the stones.

The market broke through 8000 for the first time in awhile. Optimism in the light of incredibly bad news…

And when the IMF said they were selling gold, the spot price of gold finished below 900.

Is gold still a logical hold?

A few facts about gold bullion and gold coins:

1) It’s a logical element of your life and portfolio as all paper money eventually is burned. Gold may not be the ideal investment as it is not interest or divident bearing.

2) We have no facts to prove that gold will be seen in the future as it has in the past…as the “final form” of “money.” Perhaps it will lose it’s attraction in the context of jewelry. That’s certainly possible.

3) Gold has sustained around 900 even in the light of the Dow rising 1500 points in a month. 

There’s much more but the fact is that gold is still a logical hold. Do you want all of your paper money invested in gold? Of course not. Like money, you can’t eat it or live in it. Be sensible.

It seems sensible to have 10% or more of your net worth in gold.

What about gold stocks? They got pounded this week and it hurt.

Yes it did and yet gold stocks continue to look strong on the charts. Short term anything can happen but wouldn’t you anticipate a rebound this week? I would.

Are gold stocks a good long term investment?

I don’t know. I’m significantly invested in gold stocks at the moment and will get out again if it is prudent. But until the trend reverses, I’ll personally keep mine….

Kevin Hogan

www.kevinhogan.com

The Obama Administration and media influence they hold, is far superior to the Bush administration in every way.

Yesterday the markets rallied on a job loss of only 650,000 people. Analysts expected 740,000.

However the real numbers were 1,100,000 jobs lost and then 375,000 coming on as part timers.

The parabolic curve of the last 30 days will fall like a rock soon.

There was one piece of real good news in the economy. Those people who do kept jobs actually made a little bit more money last month.

My “Eye of the Storm” partner, Steve Chambers www.stevechambers.com pointed out that the IMF was “talking about” selling gold.

And that kind of “talk” is always good for a market rally and gold stocks and the price of gold to be depressed. And it worked. 

The G20 had a funky funny picture of all the guys hanging together but that was more spin as they really agreed on nothing except a) to print more paper (at least in most countries) and b) go after tax havens.  The tax haven is another red herring of quality spin. The amount of money in tax havens that was supposed to go to governments around the world is minimal and pales in comparison to what really matters (printing paper at the rate that makes counterfeiters envy).

The other beautiful piece of spin this week was making sure that the bailout plan gave ANOTHER $300,000,000 in bonuses to executives at banks. As my friend Rob Northrup pointed out, 300 million dollars is less than 1/10 of 1% of the beginning of the paper printing. (My paraphrase)

We live in fascinating times.

Richard Russell, the  80+ year old genius behind The Dow Theory Letters  says to be very wary of the current market.  He called the recent rally in the market to the T and he now says to back off and focus on cash and gold. (My paraphrase) Russell is one of the most astute observers of market behavior and it’s interaction or not with the economy.

Other market observers are quite bullish pointing out that no bad news can make this market drop.

Precisely as it was a year ago….

www.kevinhgoan.com

OK

So it’s not.

But the Dow is at 8000. The market has put 1300 points on the board. Optimism is everywhere….sort of.

Could the market go to 9000 now? 10,000?

Answer: You bet. And it could happen quickly. Weeks. Months.

Would it be a surprise?

Not at all.

It’s EXPECTED.

In a “normal” bear market you would expect the market to regain 1/2 of it’s losses at some point before reaching new lows.

This isn’t a “normal” bear market though.

We have deflation waiting for hyperinflation.

But the hyperinflation isn’t likely to kick in yet (as far as prices, I’ll save money supply for later).

There is actually no data that would indicate anything is “normal” or “good” or anything similar.

But the economy and the stock market don’t correlate perfectly…and perhaps not at all.

 Some people believe the stock market “discounts the future” or “predicts the economy.”

Neither of these things are true.

So what happens when I see the market at 8000?

Do I get all excited inside and want to take everything and put it into the SP 500 or the Dow.

Not at all.

But if the market were going to 10,000 wouldn’t I want to be in the market?

Sure, if I KNEW the market were going to 10,000.

And here’s the thing.

At some point, it SHOULD because of inflation. 25% inflation from today puts the DOW at 10,000. Obama’s plans are to increase the national debt by 50% in the next few years. That should do the trick and you certainly want to keep up with inflation.

But you can accomplish the same goal by laddering CD’s or bills with dramatically less risk.

Now, will you miss out on the great bull market that might come?

If it came…yes. But what earnings will support that hypothetical market.

Investor psychology + economic  reality + earnings + other minor stuff = Market Price

If you have 401k in the market, today is a bit of a relief, in fact the last few weeks are. Good for you! That’s cool. But in the near term it is MUCH more likely that the market will go up AND down by 1000 points. I find risk fascinating. I have a high tolerance for self inflicted risk and a low tolerance when I can’t control or predict with some degree of certainty.

The Dow is at 8000.

Had we said one year ago, “The Dow will be at 8,000 on April 2, 2009,” you would have said, “oh my god….what do I do?”

But because we were at 6500, we FEEL excited.

Don’t let your feelings run your wallet or your future.

If you love to gamble, shoot have fun becuase this market is a crapshoot and it is definitely exciting to watch.

The G 20 will tell you of their progress tomorrow. The fact is the world is ticked off at the US for driving the world into a deeper recession than was necessary. The banks shouldn’t have been bailed out. Obviously the same is true for insurance, auto and everyone else. You can’t take money from those who work (penalizing good behavior) and giving it to those who are corrupt, greedy and/or lazy,  (rewarding bad behavior) and have long term success with that formula. It won’t work.

And what will happen tomorrow? 9000? 7000?

Not a clue. Those kind of swings are NOT predictable. The TREND is against INFLATION the market will not sustain, and cannot sustain. But that trend is a 10 year trend. That doesn’t mean the market will go down, it just means it isn’t going up significantly higher than inflation over the next 5-10 years.

So if the trend is predictable and IT is, it’s often best to have your money in the most LOGICAL place, even in an irrational world.

Kevin Hogan

The problem was that
a) Banks were loaning money to people who should not be getting loans.
b) Banks, funds and governments were creating their own form of money called derivatives and trading them…. but there was/is nothing to back up the currency…just like in a nation.
c) Investors got greedy putting pressure on companies to report earnings that were not there, etc.
d) companies, esp. banks, insurance companies and auto mfrs. became corrupt and ran your money into the ground
e) the government acted without representation of the people and authorized the IRS to take more tax payer money, more than tax payers will be able to pay.
f) charitable institutions that were actually impacting lives in a positive way are now failing because those who used to contribute can no longer afford to.
g) the government has put a focus on loaning money instead of healthier spending and saving.

OK, those are a few of the things that have happened. Each is a top quality disaster all by itself.

None of the above can be repaired with the current courses of action being taken and they will continue because in the short run (until the 2 year notes come due from the Fed) it will look like the government has impacted the problem.

Nothing can be further than the truth.

All that has happened and is going to happen is the Fed will print money.
IOU’s will be issued from you and me, to the Fed by the government and it will be collected by the IRS.

So what CAN anyone do?

You can’t save more money than you will be additionally taxed.
Every time the government prints an additional $300 bn, that’s $1000 for every man, woman and child in the country, and remember only 55% +/- of households pay taxes. So now that’s $2,000 per man, woman and child….and that’s just on $300 bn.! The government is authorizing the creation of trillions (tn) of dollars, not billions.

Most people can’t save in a year what the government is going to take from you from one “small bailout.” They are authorizing money to be created (technically counterfeited) weekly, that which shouldn’t even be approved annually.

In short you can’t save more than you will be taxed in excess of what you currently are taxed, forget the amazing situation happening now.

If you can’t save it, you can generate it.

And that is essentially the sole long term solution.

The generation of wealth (not money) becomes necessary. The individual who doubles their income will be taxed on about half and they can save the other half and THAT, properly spent on wealth (gold for example, but also some land, some housing, some STUFF…) will create a bridge to the future through this mess that is going to hit.

Does this mean people shouldn’t save money?

Not at all.

But saving money in amounts less than a bare minimum $10,000 annually, is going to become evident as almost pointless.

Over time we’ll look at the current situation, to the moment and consider what can be done.

Sure, we’ll comment on what should be done in case we get to an election before hyperinflation, but the focus will be more on the small chunk, your life, and the biggest chunk, the global picture.

If it turns out that www.vox.com is down for more than a few hours, just drop a comment on my www.kevinhogan.wordpress.com blog and we can work from here. (had to get over here eventually!

Kevin