Beating Broke

Personal Finance from the Broke Perspective

Just What is the Treasury Trying to Pull?

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With apologies to Wil for republishing in entirety.

REQUEST FOR URGENT CONFIDENTIAL BUSINESS RELATIONSHIP
From: Minister of the Treasury Paulson
Subject: REQUEST FOR URGENT CONFIDENTIAL BUSINESS RELATIONSHIP

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

Doesn’t it really put things into perspective when you look at it from another view? What if this was how they had proposed the massive bailout?

Dow Drops 504 – Now What?

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The Dow dropped by nearly 504 points (503.99) yesterday.  Now what?  Don’t panic.  As the bells start ringing to open the markets again today, they will likely slip even further.  Don’t panic.  There’s a silver lining to this.

I’m an optimist.  The glass is always half-full.  The silver lining here is actually a benefit of Dollar-Cost Averaging.  If you don’t know what that is, you’ll pick up a little bit in this post, but it’s a good time to subscribe to this site as we’ll be discussing DCA a little bit further later this month.

As everyone knows, if you want to make money in the stock market, you have to buy low and sell high.  A lot of money can be made if only you can do that.  Most of us don’t have the crystal ball to do it perfectly though.  Let me help you out.  Buy now.

When you see a headline like the one above, it’s a pretty safe bet that it won’t get much lower.  And if it does?  Dollar-Cost Average to the rescue.  And in the long run, the market will come back up, and you won’t even need another dot-com bubble to make yourself a safe full of money.

So what if the Dow drops more than it has in 7 years?  Buying at a low like this can only help your Dollar-Cost Averaged prices.  And if it gets lower?  Buy more.  Pretty simple really.

The people in charge here at Beating Broke are not financial professionals.  Please don’t take our advice for gospel.  If you are going to follow the advice here, please consult a financial professional first.  And, just for the record, nothing is a sure thing in investments.  So if you lose all your money, don’t come crying to us.  And don’t sue us either.

Feds Take Over Freddie and Fannie

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Mortgage giants Freddie Mac and Fannie Mae will be placed into a conservator-ship by the Feds.

The plan, which was delivered by Treasury Secretary Henry Paulson and James Lockhart, director of the Office of Federal Housing Enterprise, places the twin mortgage buyers into “conservatorship” to be overseen by the Federal Housing Finance Agency. Under conservatorship, the government would temporarily run Fannie and Freddie until they are on stronger footing.

“We examined all options available, and determined that this comprehensive and complementary set of actions best meets our three objectives of market stability, mortgage availability and taxpayer protection,” Paulson said.

Both Executives have been demoted and replaced.

Yet another in a long line of Fed takeovers.  And, unfortunately, another blow to an already weak economy.  Freddie and Fannie aren’t going under, but a takeover certainly shows their weakness and what could have been an impending failure.

I still don’t think that there is anything to worry about and we’re not headed into another great depression or anything.  What we all need to realize is that in the last 5-10 years, there were a lot of really stupid loans being made (and taken) on homes.  It created the housing bubble, and that bubble is still bursting.  In the end, there will be a huge number of foreclosures and a serious cutback on new home building.  But the thing to realize is that there are plenty of people that have the money to buy those foreclosures and resell them.  Eventually, the market will come back around, we just have to get past the aftershocks of the bubble burst.