Friday, May 13, 2011

20 Cents A Gallon

Great poster from gas station owner.
(Pre 1964 coins were real silver)

Page Problems And Milestones

Google's blogger was down all day yesterday and today and is still in the process of correcting itself.  (My post from Thursday has still not been returned to the site)

Fortunately, there was no massive news in the market.  I felt like someone who had lost their cell phone with no form of communication.

I will be adding a twitter feed soon to prepare for something like this happening in the future.

In other exciting news, this site crossed over 30,000 views today and viewership continues to rise at a rapid rate. (13,500 views in 2011)  Thank you to everyone who continues to visit.  I hope you have enjoyed reading as much as I have enjoyed writing.

 I will do my absolute best to continue to help you navigate through the coming storm.

The Tuna

Wednesday, May 11, 2011

What Is A Ponzi Scheme?

I refer to the term "Ponzi Scheme" often and referenced it most recently yesterday in Who Pays For The EU Bail Out? 

I assume that most understand the concept of a Ponzi scheme due to the recent popularity of Bernie Madoff, but for those that do not the following graphic is a helpful visual representation of the structure.

Investors who invest early (and cash out) are safe, but those that enter last end up losing everything.

If you can understand this simple process then you can move on to the understanding of how money is created under our current financial system. This is also known as Modern Money Mechanics, a handbook created by the Federal Reserve.

When an American understands both the Ponzi graph above and the video below simultaneously, it is the equivalent of waking up from the Matrix that our current financial system is structured within.

Sovereign Debt Crisis Enters Year 2

Today marks the one year anniversary for the announcement of Greece's first bail out, which officially kicked off the second phase of our global financial crisis.  The first phase was the bursting of the 30 year credit bubble in the fall of 2008.  These toxic debts were then moved to the balance sheets of governments around the world.

With the second phase of the global financial crisis entering its second year it is always nice to check in with Greece, the place where it all began.  (The crisis over the past 12 months has spread to Portugal and Ireland, and will soon move throughout Europe and make its way to Japan, the UK, and the United States.

If you woke up in Greece this morning and went out for an afternoon walk, the following is what is taking place around you.  A first hand visual of what occurs when a government's credit card bounces. Coming soon to the USA.

Tuesday, May 10, 2011

Who Pays For EU Bail Out?

Well done graphic below from the Economist, which shows who contributes to the European bail out program and how much they add to the pot. One side is composed of funds from the largest European countries, and the other is from the IMF (International Monetary Fund) which receives its funds from a group of countries around the world.

Most people in America do not realize that $50 billion (and counting) of the IMF bail out money for these European countries comes from the American tax payer.

The second circle above shows the total size of the current bail out fund and what has been used thus far for Greece, Ireland, and Portugal.  Estimates show that the coming bail out needed for Spain will wipe out all remaining funds under the current structure.

The entire program is a large ponzi scheme as new debt is used to pay off the old.  It is a way to push back the day of reckoning, and that day is moving closer by the hour.

Housing Market Continues Downward

Corelogic reported this morning that home prices have fallen again by 1.5% month over month.  Prices are down 7.5% year over year and down 34.8% from the peak. reported yesterday that home prices fell 3% in the first quarter of 2011, fell 8.2% year over year, and have now fallen for 57 straight months as seen in the red below.

The Federal Reserve reported homeowner equity in 2006 (meaning the cash homeowners would put in their pocket after selling their home and paying off their mortgage) at $12.8 trillion.  Their most recent report showed homeowner equity at $6.3 trillion.

This means homeowners have lost $6.5 trillion just by owning their home over the last 5 years.  Estimates show that this $6.5 trillion represents half of the middle class's total net assets.

The story will get far more tragic from here.  The pent up supply of shadow inventory is staggering, mortgage rates are already at all time record lows, the government currently purchases 97% of all new mortgages, and the unemployment and income numbers continue to get worse month over month.

The next leg down of the housing market will wipe away any chance most Americans had toward retirement.

Monday, May 9, 2011

Greece Downgraded Again

Greece's rating was cut again this morning by both S&P and Moody's and estimates are showing the likely return of principle for investors on these bonds at between 25% to 50%.  This means if you own $1,000 in Greek government bonds they may send you a check in the mail for only $250 and some sort of apology.

The following video from Future Money Trends provides an audio and visual to some of the topics I have been discussing over the past month.

It is important to remember that the United States financially is equivalent to Greece, however, we own a AAA rating from S&P and a printing press which has pushed back the day of reckoning.