Monday , 24 November 2014
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Beware: The end of the world (as we know it) is near

Beware: The end of the world (as we know it) is near

I recently watched a TV show about the Great Depression.

I tend to watch these things and my TV companion says I am wasting my time. Perhaps she is right. The show starts out showing America in our heydays of the Roaring Twenties when everyone seemed to have all they needed or wanted and then some.

Then they discovered the stock market. At first only the wealthy could buy stock in a company. They actually owned part of a firm so that if the firm did well they could sell their stock to some- one else for even more than they paid for it. This worked out great until someone came up with the idea of selling stock to the general public like you and me.

Of course we didn’t know anything about the companies that we were buying into, but who cared? It was a way to make easy money and all the rich guys were doing it. How could you go wrong? Even the banks and brokers were so confident that the stock value would continue to go up that they would allow us to buy with only 10 percent down, called margin. If this sounds like the current day housing debacle, it’s because it is.

Naturally the “rich guys” got together and figured when to buy and sell so that they got even richer. By the time the rest of us figured out what was happening a lot of money was lost. Those that bought on margin could barely come up with their 10 percent. The rest is history.

“Brother can you spare a dime?”

So now comes this genius guy named Zuckerburg who is worth over $18 billion. Gosh, I don’t earn that much in an entire year. Of course his company, worth over $100 billion, has gone public which means that you too can buy some stock in Facebook and get very rich very quick.

Are you buying yet? I’m not! I have been using Facebook since it’s inception, both business and personal, and I have yet to send them a dime. Have you? I didn’t think so. So what makes them worth so much money? The same thing that made $100,000 homes worth $500,000.

People at one time were willing to pay that much for them even if they couldn’t really afford them. Next year they might be worth twice that so what is there to lose? For a while everyone seemed to be “buying and flipping” real estate. A banker once suggested that I use the equity in my home to buy another and then flip that to buy another and another, etc.

I’m glad I didn’t listen to him. You get my point? Our whole (and the European) economy is based on really nothing. People are being paid huge amounts of money working at jobs that don’t rally require that much skill or physical ability, but somehow we are told that is what they should earn. Company CEOs earn millions of dollars every year. What would be wrong with just a few hundred thousand? I think I could get by on that. How much do you think those guys like James Dimon at J. P. Morgan make? How about $1,300,000 plus? Again, more than I earn as vice mayor. They only lost two billion dollars by mistake.

Anybody know what over-the-counter synthetic derivatives or credit default swaps are? Neither do I, but that is what these folks are gambling  with your money.

My theory is that for things to balance out, there has to be a Quid Pro (that for which) or we have to pay the piper someday. People are driving automobiles that they could not normally afford. Why? When you go to buy a car they never ask how much you want to spend, but rather how much can you pay on a monthly lease. Sure, go ahead and drive a fancy car that you can’t afford. You will never own it anyway. Something seems wrong with that formula.

I love (well like) watching athletes perform and they should be well paid for what they do, even up to $20 per hour but these gegundo salaries are ridiculous.

So how long do you think we can go on living like this? Kids graduating college now owe on huge college loans and not too many companies are standing in line to hire them.

A lot of people think that the President can fix all this. I doubt it. I don’t think even I could do it. What probably needs to happen is a complete reset of the economy as suggested in a book by economist Richard Florida in his book, The Great Reset.

My advice: Do as I am doing and stock up on cat food. They say it tastes just like tuna.

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One comment

  1. Sounds good, well Obama got to where he was by doing public service for a couple years; running for senate and a few years later running for President. I would like to be involved with public members as well, maybe or hopefully along side. There are many things that we could do to help out citizens, but socialism/communism isn't they way; is has never worked in history and never will. Obama says, "Our constitution is flawed"; that is what Nero said before the collapse of Rome. Why don't we do something about it other than just standing around as we are? Perhaps it isn't time, but don't you think it might be too late if we don't react first?