murphy2747's Blog

All that money you've lost — where did it go?

By ERIC CARVIN, Associated Press Writer 1 hour, 57 minutes ago

NEW YORK - Trillions in stock market value — gone. Trillions in retirement savings — gone. A huge chunk of the money you paid for your house, the money you're saving for college, the money your boss needs to make payroll — gone, gone, gone.

Whether you're a stock broker or Joe Six-pack, if you have a 401(k), a mutual fund or a college savings plan, tumbling stock markets and sagging home prices mean you've lost a whole lot of the money that was right there on your account statements just a few months ago.

But if you no longer have that money, who does? The fat cats on Wall Street? Some oil baron in Saudi Arabia? The government of China?

Or is it just — gone?

If you're looking to track down your missing money — figure out who has it now, maybe ask to have it back — you might be disappointed to learn that is was never really money in the first place.

Robert Shiller, an economist at Yale, puts it bluntly: The notion that you lose a pile of money whenever the stock market tanks is a "fallacy." He says the price of a stock has never been the same thing as money — it's simply the "best guess" of what the stock is worth.

"It's in people's minds," Shiller explains. "We're just recording a measure of what people think the stock market is worth. What the people who are willing to trade today — who are very, very few people — are actually trading at. So we're just extrapolating that and thinking, well, maybe that's what everyone thinks it's worth."

Shiller uses the example of an appraiser who values a house at $350,000, a week after saying it was worth $400,000.

"In a sense, $50,000 just disappeared when he said that," he said. "But it's all in the mind."

Though something, of course, is disappearing as markets and real estate values tumble. Even if a share of stock you own isn't a wad of bills in your wallet, even if the value of your home isn't something you can redeem at will, surely you can lose potential money — that is, the money that would be yours to spend if you sold your house or emptied out your mutual funds right now.

And if you're a few months away from retirement, or hoping to sell your house and buy a smaller one to help pay for your kid's college tuition, this "potential money" is something you're counting on to get by. For people who need cash and need it now, this is as real as money gets, whether or not it meets the technical definition of the word.

Still, you run into trouble when you think of that potential money as being the same thing as the cash in your purse or your checking account.

"That's a big mistake," says Dale Jorgenson, an economics professor at Harvard.

There's a key distinction here: While the money in your pocket is unlikely to just vanish into thin air, the money you could have had, if only you'd sold your house or drained your stock-heavy mutual funds a year ago, most certainly can.

"You can't enjoy the benefits of your 401(k) if it's disappeared," Jorgenson explains. "If you had it all in financial stocks and they've all gone down by 80 percent — sorry! That is a permanent loss because those folks aren't coming back. We're gonna have a huge shrinkage in the financial sector."

There was a time when nobody had to wonder what happened to the money they used to have. Until paper money was developed in China around the ninth century, money was something solid that had actual value — like a gold coin that was worth whatever that amount of gold was worth, according to Douglas Mudd, curator of the American Numismatic Association's Money Museum in Denver.

Back then, if the money you once had was suddenly gone, there was a simple reason — you spent it, someone stole it, you dropped it in a field somewhere, or maybe a tornado or some other disaster struck wherever you last put it down.

But these days, a lot of things that have monetary value can't be held in your hand.

If you choose, you can pour most of your money into stocks and track their value in real time on a computer screen, confident that you'll get good money for them when you decide to sell. And you won't be alone — staring at millions of computer screens are other investors who share your confidence that the value of their portfolios will hold up.

But that collective confidence, Jorgenson says, is gone. And when confidence is drained out of a financial system, a lot of investors will decide to sell at any price, and a big chunk of that money you thought your investments were worth simply goes away.

If you once thought your investment portfolio was as good as a suitcase full of twenties, you might suddenly suspect that it's not.

In the process, of course, you're losing wealth. But does that mean someone else must be gaining it? Does the world have some fixed amount of wealth that shifts between people, nations and institutions with the ebb and flow of the economy?

Jorgenson says no — the amount of wealth in the world "simply decreases in a situation like this." And he cautions against assuming that your investment losses mean a gain for someone else — like wealthy stock speculators who try to make money by betting that the market will drop.

"Those folks in general have been losing their shirts at a prodigious rate," he said. "They took a big risk and now they're suffering from the consequences."

"Of course, they had a great life, as long as it lasted."

O.K.......I'm down to this...who else is running for president? I need SOMEONE to vote for!

Who has a list of the ones on the ticket that are NOT endorced by the Democrats  OR the Republicans...to my way of thinking, that is deffinately a point in thier favor!

"
"Grand Larceny" on a Monumental Scale: Does the Bailout Bill Mark the End of America as We Know It?by Richard C Cook

OCTOBER 1, 2008—Tonight the Senate passed the $700 billion Wall Street bailout bill by a vote of 74-25. This follows the rejection of the bill by the House on Monday. In an MSNBC poll, 62 percent of Americans oppose the giveaway, but the lobbyists are doing everything possible to assure the rejection is overturned. According to Bob Borosage, co-director of The Campaign for America’s Future, House leaders "are bringing in the small business lobby and the banking lobby to buy the twelve Republican votes they need."

The Senate took up the bill in order to pressure House members who voted against it to change their positions when it returns to a vote on the House floor on Friday. This procedure may be unconstitutional, because revenue bills must originate in the House, but there is no time or political will for anyone to mount a challenge on constitutional grounds. As another means of inducement—or blackmail—the bill includes the repeal of the wildly unjust alternative minimum tax.

Every reputable economist commenting on the bill opposes it, including NYU’s Nouriel Roubini, who says the plan is "totally flawed." He says the plan is:
"a disgrace: a bailout of reckless bankers, lenders, and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer."My own view is that the plan is worse than that: a crime; grand larceny on a monumental scale.

Here’s why: We know that the debacle started with homeowner defaults on subprime mortgages and that it has now spread to other types of mortgages as foreclosures spread. We know that the unhealthy use of subprime mortgages started during the Clinton administration, as did the bundling and sale of these mortgages into mortgage-backed securities sold in the financial markets.

What has not been reported is that the Bush administration turned these acts of reckless lending into a national program of mortgage fraud. Soon after George W. Bush became president in 2001, meetings at the White House between Federal Reserve Chairman Alan Greenspan and administration officials became more frequent. According to mortgage industry insiders I have interviewed, direction soon began to come down from the banks to mortgage brokers to falsify borrower income information to allow them to qualify for loans that were otherwise out of reach.

The FBI has investigations underway to prosecute some of these cases of mortgage fraud. But they are not reaching above the brokers’ level. The FBI is not gaining access—or at least they have not reported it publicly—to information about collusion at the political level or at the level of the banks which provided the leveraged funding for mortgage money.

But at the time the housing bubble was inflating, no one was watching. Note that when Secretary of the Treasury Henry Paulson testified before the Senate Banking Committee last week, he said he was shocked to learn when assuming office in June 2006 that no federal agency regulated mortgage lending. Rather this was an area left to the states.

What Paulson did not say was that when the states attempted to intervene, they were blocked by the Treasury Department’s Office of the Comptroller of the Currency. In a February 14 article in the Washington Post written before he resigned, New York governor Eliot Spitzer wrote:
"In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules. But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation."Why did the Bush administration do this? The only possible answer is that it had every intention of producing the housing bubble, one that had the effect of not only inflating the cost of homes and real estate but also pumping billions of dollars of borrowed cash into the economy through mortgage and home equity loans.

The bubble enriched huge numbers of executives, managers, and shareholders throughout the financial and real estate industries, and provided jobs to millions of people. The bubble also brought back foreign capital to U.S. markets that had been scared away by the dot.com bust of 2000-2001.

Everyone seemed to benefit, but it was those at the top who skimmed the greatest profits. And for an economy that had already given away millions of its best manufacturing jobs through NAFTA, Most-Favored-Nation trading policies with China, World Trade Organization agreements, etc., the bubble acted as a kind of substitute economic engine.

It also resulted in tax revenues that allowed the Bush administration to implement its 2001 and 2003 tax cuts for the rich and provide funding for the Afghanistan and Iraq wars. Of course these tax revenues were not enough, as the national debt soared to over $9 trillion during the Bush years as well.

Economist Dean Baker of the Center for Economic and Policy Research makes the point:
"The near hysterical discussion (count the times ‘Great Depression’ appears in news stories) of the bailout still largely fails to recognize the roots of the economy's current problems in the collapse of the housing bubble. Much of the discussion assumes that the problem is just bad subprime loans and that house prices will bounce back once the credit markets are working properly."The point is critical, because what the Senate and House leaders are telling us, as are President George W. Bush, presidential candidates Barack Obama and John McCain, and Federal Reserve Chairman Ben Bernanke, is that the bailout is to get the American economy moving again. Credit, they say, is the lifeblood of the economy, and without credit no one can make a move.

But credit is the lifeblood of the economy only because people are broke. Purchasing power in the U.S. has collapsed, and it is getting worse as the recession which has now begun worsens.

People can’t get loans, not because the credit markets are stalled, but because they have no savings for down payments and can’t afford to repay what they wish to borrow. If they could repay their loans, plenty of credit would be available. But there is no money—and no savings—within the economy for it to get moving again. The only possible source is more federal borrowing to prime the pump Keynesian-style. That is what the politicians claim the bailout will do. But it won’t.

Then what is happening?

What is happening is that the Bush administration is engineering a massive raid on the Federal treasury to pay off the people within the financial industry who have been operating the housing scam because the politicians told them to do it. This is hush money.

The people in the financial institutions who are getting the money will be passing it on to the big banks that leveraged their criminal lending practices. The giant sucking sound you hear is almost a trillion dollars of future taxpayer earnings going into the vaults of the nations’s biggest banks, such as Citibank, Bank of American, and—the pet bank of the Rockefeller family—J.P. Morgan Chase. Much will also go into the vaults of foreign investors such as the Bank of China.

And these banks have no intention of recycling the money into productive U.S. investments. Despite the political posturing, where much of it will go at the second or third tier is into executive salaries and bonuses. The fat cats are "gittin’ out while the gittin’s good."

What happens next?

Well, it is already happening. In the post-bubble era there will be no more economic engines for the American economy. A long term recession and depression are inevitable, and they are expected by those in the know. In fact, there has been a plan in the works for a very long time to bring down the U.S. economy, and it will be happening over the coming months.

This is why the government is also preparing to implement martial law, or something close to it, in case public unrest breaks out. We will likely also see a clampdown on free speech, the right to protest, and use of the internet. Federal facilities are being prepared all around the country to backstop state prisons and local jails that are already bursting at the seams.

This is the plan, so people need to begin to take whatever measures they can to cut their cost of living, get out of debt, and protect themselves and their families.

Richard C. Cook is a former U.S. federal government analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, NASA, and the U.S. Treasury Department. His articles on economics, politics, and space policy have appeared in numerous websites and print magazines. His book on monetary reform, entitled We Hold These Truths: The Hope of Monetary Reform, will soon be published. He is the author of Challenger Revealed: An Insider’s Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age, called by one reviewer, "the most important spaceflight book of the last twenty years." His website is www.richardccook.com. Comments or requests to be added to his mailing list or to purchase his special report on the 2008 election may be sent to EconomicSanity@gmail.com.

> This is a matter of opinion and opinions are like (well you know) everybody has one.

> A lot of Americans have become so insulated from reality that they imagine that America can suffer defeat without any inconvenience to themselves.
>
> Pause a moment, reflect back.
>
> These events are actual events from history..
>
> They really happened!!!
>
> Do20you remember?
>
> 1. 1968 Bobby Kennedy was shot and killed by a Muslim male extremist.
>
> 2. In 1972 at the Munich Olympics, athletes were kidnapped and massacred by Muslim male extremists.
>
> 3. In 1979, the US embassy in Iran was taken over by Muslim male extremists.
>
> 4. During the 1980's a number of Americans were kidnapped in Lebanon by Muslim male extremists.
>
> 5. In 1983, the US Marine barracks in Beirut was blown up by Muslim male extremists.
>
> 6. In 1985 the cruise ship Achille Lauro was hijacked and a 70 year old American passenger was murdered and thrown overboard in his wheelchair by Muslim male extremists.
>
> 7. In 1985 TWA flight 847 was hijacked at Athens , and a US Navy diver trying to rescue passengers was murdered by Muslim male extremists.
>
> 8. In 1988 , Pan Am Flight 103 was bombed by Muslim male extremists.
>
> 9. In 1993 the ; World Trade Center was bombed the first time by Muslim male extremists.
>
> 10. In 1998, the US embassies in Kenya and Tanzania were bombed by Muslim male extremists.
>
> 11. On 9/11/01, four airliners were hijacked; two were used as missiles to take down the World Trade Centers and of the remaining two, one crashed into the US Pentagon and the other was diverted and crashed by the passengers. Thousands of people were killed by Muslim male extremists.
>
> 12. In 2002 the United States fought a war in Afghanistan against Muslim male extremists.
>
> 13.. In 2002 reporter Daniel Pearl was kidnapped and murdered by-- you guessed it-- Muslim male extremists.
>
> No, I really don't see a pattern here to justify profiling, do you? So, to ensure we Americans never offend anyone, particularly fanatics intent on killing us, airport security screeners will no longer be allowed to profile certain people... Absolutely No Profiling!
>
> They must conduct random searches of 80-year-old women, little kids, airline pilots with proper identification, secret agents who are members of the President's security detail, 85-year old Congressmen with metal hips, and Medal of Honor winner and former Governor Joe Foss, but leave Muslim Males alone lest they be guilty of profiling.
>
> According to The Book of Revelations:
>
> The Anti-Christ will be a man, in his 40s, of MUSLIM descent, who will deceive the nations with persuasive language, and have a MASSIVE Christ-like appeal....the prophecy says that people will flock to him and he will promise false hope and world peace, and when he is in power, he will destroy everything.
>
> And Now:
> For the award winning Act of Stupidity Of all times the People of America want to elect, to the most Powerful position on the face of the Planet -- The Presidency of the United states of America .. A Male of Muslim descent who is the most extremely liberal Senator in Congress for what 143 days? (in other words an extremist) and in his 40s.
>
> Have the American People completely lost their Minds, or just their Power of Reason ???
>
> I'm sorry but I refuse to take a chance on the 'unknown' candidate Obama...
>

If  you could  have  one  POLITICAL  wish,  what  would  it  be?

 I know what I would wish for. I would wish that we could completely do away with the Repbulican and Democratic parties and have a government that was doing what  was best for the people, not for the PARTY!

Why is all of this going unnoticed by the media?  They send 1000 reporters to Alaska to dig up something on Sarah Palin and they have this politically incorrect crap right in front of their eyes!

      

From Dreams of My Father:'I ceased to advertise my mother's race at the age of 12 or 13, when I began to suspect that by doing so I was ingratiating myself to whites.'

 From Dreams of My Father : 'I found a solace in nursing a pervasive sense of grievance and animosity against my mother's race.'

 From Dreams of My Father:'There was something about him that made me wary, a little too sure of himself, maybe. And white.'

 From Dreams of My Father: 'It remained necessary to prove which side you were on, to show your loyalty to the black masses, to strike out and name names.'

 From Dreams of My Father:'I never emulate white men and brown men whose fates didn't speak to my own. It was into my father's image, the black man, son of Africa , that I'd packed all the attributes I sought in myself , the attributes of Martin and Malcolm, DuBois and Mandela.'

  

From Audacity of Hope:'I will stand with the Muslims should the political winds shift in an ugly direction.