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Thursday, March 23, 2023

It's Your Money, The Way I See It (2009-Part IV)

By Andrew Robbins

CSMS Magazine Staff Writer

If you are an investor, you may skip this article. But, if you are a speculator, read on. If you don’t understand the difference between investor and speculator, stay out of the market.

Before I make a decision to buy or sell equities, I constantly gather information. On a recent ski trip to Michigan’s Upper Peninsula, I observe the following: A group of Chinese engineers are transported by a friend of mine. They want to go to Kmart and Wal-Mart. “Why do you want me to take you to those stores”? My friend asks. Their answer may surprise you. “The items made in China are for export only. We can’t buy those items in our country!” he exclaimed.

Hello America, that’s an important find. Much of the junk produced in China is for export only!

Look at the financial news, the experts claim Americans need to save more, and the rest of the world, especially China’s population, ‘consume’ more. If those actions were implemented, they would help balance America’s trade deficit, which sets to stand at 1.75 trillion dollars if Congress approves president Obama’s 3.5 trillion-dollar new budget proposal.

But if you are the Chinese government, you would want your people to save more and with their savings surplus and our trade imbalance, China will forever continue to finance our debt. If the Chinese stay on that path, China owns America.

A chocolate manufacturer closes its plant and moves to Mexico. Again, just a few thousand American jobs lost. But, when added to the millions of other jobs removed from our country, we find fewer Americans able to afford the goods or services that U.S. employers provide.

Take a look at the auto industry. If management can force those corporations into bankruptcy, they bust the union. The end result, forced by the courts, will be lower wages and benefits for all auto workers and parts suppliers. If that happens, there will be fewer dollars available to purchase goods or services. We may be witnessing a domino effect across America.

There will be no help from Washington. Obama, being the only honest broker living in the White House, is surrounded by a host of individuals who are there only for personal influence, power and greed. The democrats are the ‘socialist’ party and most republicans belong to the monopoly party. There are very few capitalists on either side.

First we were told all America’s financial problems, which include falling home prices, would be solved by stabilizing the banks. Keep in perspective, only a few banks out of 8,000 were in trouble. Now we are told the stimulus package will prevent further decline in home prices.

Think about all the materials and all the people employed in home construction. Next, look at the number of greedy local governments that suck tax dollars from property owners and workers. You begin to witness why there is such fury by governments to stabilize prices.

The fly in the ointment is the global economy. Wages in North America must fall or we are not competitive.

Much of the government’s stimulus package will filter through corporate monopolies—those companies that employ non-union and undocumented workers. Larger profit is the monopoly’s motivator for employing people who accept lower wages. But, as society accepts reduced disposable incomes due to lower wages and additional taxes, the speculator must be cautious when investing.

One banker told me her bank provides savings accounts for undocumented workers. Each month those depositors sweep their bank accounts and transfer all their dollars to their families living outside the U.S. Employing undocumented workers who transfer their wages outside the U.S. does not stimulate the U.S. economy.

I have been a long time customer of First Merchants Bank, Muncie, Indiana. Recently I had a certificate of deposit (CD) mature. First, Merchants offered me a new CD, five year term, at 2%. The renewal rate was three percentage points below the maturing CD.

Had I accepted their terms I lose 60% of my purchasing power for procuring goods or services from U.S. manufactures.

About the same timeframe, Merchants completed the acquisition of another Indiana bank, Lincoln National. Within a few days of acquiring Lincoln, Merchants announced it had “received preliminary approval for $116 million from the U.S. Treasury Department, taxpayer dollars, to participate in the Capital Purchase Program.”

Based on this real example, the new way of snookering Washington’s elected is to acquire first and then borrow from the Treasury. The old way of doing business, under Secretary of the Treasury Paulson, was to first borrow from the taxpayer then acquire your competitor, throw a party, and pay bonuses.

In this example, the bank offered me 2% to tie up my money for five years. Yet, they are willing to ignore their customers and enter into a binding contract with the Federal Government paying 5% for the first five years and 9% for each additional year.

These actions suggest no one in Washington sees the big picture.

Shareholders beware, if the government deems your investment in a corporation that is not living up to the Treasury’s expectations, you may lose your investment. Keep in perspective, by the hour, the rules change.

As I sat watching the banking barrens testify before the Washington’s elected officials, I take pain to know that taxpayers were informed the first $700 billion was actually saved for merger and acquisitions resulting in even larger monopolies. And, we also learned some banks accepted taxpayer money and employed offshore call-centers that assisted and continue to assist in foreclosing on U.S. property owners.

This is the environment speculators invest in. Hourly, new levels of deceit are unveiled. The best one is the Monday press release, “We stand by our investors and will defend our dividend.” By Friday the dividend is reduced and the stock prices have fallen.

Happy hunting speculators!

NoteCSMS Magazine and the author are not in the business of providing financial services or advice. Prior to investing, readers must seek professional assistance.

Andrew Robbins is the author of: It Took My Breath Away; One Man’s Experience May Save Your Life. He may be reached by email at: awrobbins1@earthlink.net

Also see It’s Your Money, The Way I See It (Part VII) 

It’s Your Money, The Way I See It (Part VI) 

t’s Your Money, The Way I See It (Part V)

It’s Your Money, The Way I See It (Part IV)

It’s Your Money, The Way I See It (Part III)

Also see It’s Your Money, The Way I See It (Part II) 

It’s Your Money, The Way I See It 

 Telling us the truth: Bailing out Wall Street or bailing out the country? 

The financial crisis in the US and the mirage of an enlightened global capitalism

Global stock markets stumbled in the aftermath of the Wall Street downslide on Monday

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