Economic failure impacts even kiteboarders

[jono]

Posted to an internet security mailing list -- I figured my reply might be funny so I repost it here for your enjoyment.

----- Forwarded message from "Jon O." <jono@networkcommand.com> -----

On Tue, Sep 23, 2008 at 06:21:36PM -0800, Rob, wrote:
> I'm sorry, but this *is* relevant to security: you can either file it under bad social
> engineering, or really, really stupid ways to deal with an emergency.
>
> Even psychologists can tell you this doesn't work. The way to get people to buy
> into a risky proposition is to reduce the apparent adverse consequences for the
> position you want people to take, not to increase the negative effects on the
> other side. And we know (we have just had yet another example in the United
> Airlines "old news" case) that the "market" reacts very, very badly to rumours.
>
> http://www.cbc.ca/world/story/2008/09/2 ... -push.html


Rob:

Consider this -- things are so messed up there isn't an option if it all goes
1929 or not. The only option is how much money do the firms get to dump all that
bad debt and therefore their stockholders see a faster recovery. This is classic
pump and dump on a HUGE scale. It's been combined with the standard 419 too --
"I need your assistance with a transfer of great funds..."

Don't forget, Bernanke is chairman of the FED RESERVE who is OWNED BY THOSE VERY BANKS:
http://www.referenceforbusiness.com/enc ... mg0094.jpg

Here's a great radio interview about this:
http://www.npr.org/templates/story/stor ... d=94928783

Below is a sample of the 419 -- this Paulson and Bernake guy are pushing it and it's
being spammed out to congress, the media, etc.:

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury Paulson

[jono]

Here's the scary part -- DO NOT trust the FDIC, this is too big a crisis for them to deal with:
http://www.nytimes.com/2008/09/26/busin ... ref=slogin

Federal regulators had been trying to broker a deal for Washington Mutual because a takeover by the F.D.I.C. would have dealt a crushing blow to the federal government's deposit insurance fund. The fund, which stood at $45.2 billion at the end of June, has been severely depleted after suffering a loss from the sudden collapse of IndyMac Bank. Analysts say that a failure of Washington Mutual would have cost the fund as much as $30 billion or more.

[OliverG]

Always good to be advised of all possibilites!

My advice (don't necessarily take it), is that there's no reason to keep more money in the bank than you need for your regular and ongoing living expenses in addition to a reasonable and liquid cushion. If you have additional funds, you have a couple of prime choices as far as what you can do with your money.

For long-term gain and max. tax savings, maxing out your annual contributions for 401k or IRA contribution is wise, and with those funds you can invest in the stocks, funds, bonds, commodities, etc. of your choice. Or, alternately, or equally, put money in real estate, either your principal residence, or an income property. Lots of options out there beyond banks, gold and silver. Think long-term!

[OliverG]

http://www.nytimes.com/2008/09/26/busin ... ref=slogin

"Customers of WaMu, based in Seattle, are unlikely to be affected, although shareholders and some bondholders will be wiped out. "

As long as you weren't holding positions in WaMu. 8-[

[jono]

I suppose you mean holding long positions since no one can SHORT IT ;).

I'm a firm believer in employee stock purchase programs (ESPP) (if you have such a thing) and not 401k. Some people's 401ks are getting wiped out right now, along with Money Market accounts that fell below the 1$ mark (there's a term for this I can't recall).

With ESPP you get a 15% discount on the stock and sell it as soon as it ends up in your account. Or, you can use a sell stop to set the sell mark and watch it continue to go up. I've ended up with 40%+ in 8 months before I decided I shouldn't be greedy, it goes into cash, which I use to buy gold and all is well ;). 15% for sure is good for me.

Back to the issue at hand, did you see what Bush said today:

http://www.nytimes.com/2008/09/26/busin ... ref=slogin
“If money isn’t loosened up, this sucker [the economy] could go down,” President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes, according to one person in the room.

[elli]

The problem with 401K/IRA is that you cannot short, which is probably what you should do now :) :) :)

[jono]

This thread started 1 month ago. I said WAMU was next (there were rumors, but no buyer so it was going down) and I said buy gold.

Here's a chart showing the Dow index vs. gold vs. silver over the past month of carnage:
http://finance.google.com/finance?chdnp ... GLD&ntsp=0

Dow down 21%, even silver is down 6% -- gold up 7% in the second worst month in history.

Who's your daddy? ;)

But, I don't know what's gonna happen with gold now. With everyone covering calls, and lack of loans for people to use leverage, it could tank too. I'd say buy the essentials (for you, not on the market): guns, food and fuel ;). I think we are going with Yuri's plan...

What's up with the price of diesel going below the cheapest gas? Can someone explain that to me?

[OliverG]

Much of this is a testament to what many of us already know - people are irrational and make panicky and emotional decisions. If everyone would just be cool and call the f&^% down, things would be much better. Thinking is such short-term views perpetuates the problem and you're adding to it. Based on rumors like what you posted earlier, customers withdrew more than 16 billion from wamu in a matter of two weeks. It's possible they may have been OK if not for that. On the news, a woman was shown closing here account at wamu for fears of its security, who knows, maybe she read your post here. Want to know how much she had in her account? $3,000....

The dow rallies to gain 900+ points Monday, loses 76 Tuesday and drops 700+ today? It's based on press releases and reports and people reacting on an hourly basis. It's tiring, irrational, speculative and in a way, plain stupid of the public at large.

I promote independent views and everyones right to free speech...but can we chill? Put your money in gold, food and fuel if you want, but anyone with positions in the market would be unwise to sell anytime soon. If you have positions, ride it out, which is what all the analysts are advising. Do not sell, if anything, now is the time to buy! In 1,2,3,5 or 10 years you will be glad you did. 7% on gold in the short term means nothing to me, who has time to watch metals daily? Go long-term, be cool and enjoy life. Adopt a panicky, anarchist view if that's your choice, but don't we already get so much of the sky is falling coverage in newspapers, tv, financial and news sites?

[windhorny]

I've taken this opportunity to buy as much oil stocks and BRK/b i could afford.

[recoprianto]

Ollie,

You said it perfectly...who wants to watch prices every day. Pick good companies, buy them, and spend your time enjoying life doing things like kiting.