Credit Crunch not hitting the responsible

I just bought a car, and because I didn't have all the cash up front, I did what most people did - financed it. When talking with the salesman, never once did he mention that because I am young it might be tougher to get approved or get a good rate. He simply asked if I have good credit. I told him "not sure what the score is, but I pay all my bills on time." I got approved, no problem with a very good interest rate in about a day. All this nonsense about normal people not being able to get loans seems silly to me.

Oh, it's a 2007 Monte Carlo. This gets me thinking... what happens to my warranty if GM doesn't last the year?

New Blog

I started a new blog called Venga Franco.  This means "come on, Franco" in Spanish.  For those of you who want to read commentary in Spanish, I will try to translate my English posts as well as write some original work in Spanish.    This is mostly for my own benefit and practice, but for those of you who want practice reading badly written Spanish, feel free to peruse.  The link is vengafranco.blogspot.com.

The Dow was up almost 1000 points today.  What an incredible time to be interested in all things economics.  My advice is to buy yourself some gold if it gets into the low 800s or even dips into the 700s range.  We are going to have a serious inflation problem in about 5 years or so.

Dumb Americans are smarter than you think, Washington

I was not going to write about this bailout, but Jim Cramer pissed me off so bad, I just have to rant a little bit here. What did he say? He was a guest commentator on one of CNBC's afternoon shows last week and was asked, "If you had to pitch this plan to the American people, what would you say?" Jim's response was more or less like so, "Listen America, you are not as smart as me or my friends on Wall Street, or my friends in Washington. You don't understand what is going on. We do. Please, just shut up, get out of our way, and let us smart people take care of this problem." My response -"go to hell, Jim Cramer." Why should we let the people who caused this problem come up with a solution? They should be FIRED and replaced with others who DIDN'T cause the problem.

So, this bailout thing went down last week. It was not voted in the first time around because of the typical Washington infighting. It went around the second time once the Senate and House filled it up with pork projects. However, there is another reason the bill did not pass the first time around. Constituents were calling like mad to their representatives demanding a no vote. It must have been a bad day to be a congressional staffer fielding all those angry phone calls.

All of this makes me wonder. Congress said we need to do this. Wall Street and all of the mainstream press said we needed this, but the American public, for the most part was really pissed off and wanted nothing to do with a bailout bill. So, what did Washington, Wall Street and the media do? They resorted to scare tactics, telling us we would lose our jobs and our homes and the the economy would go into a deep recession. This was all reminicent of what we were told before the Iraq war. Did the American people buy it? Not really. We aren't financial wizards, we don't know how to work all the numbers and what exactly this bailout entails. But that doesn't matter because we knew what this was all about. Sure, we don't know the details and we can't prove anything, but everybody knows this is a bailout and not a rescue plan. We all know that Congress and Wall Street is a good ol boys club and it was a way for Congress to funnel money to their campaign donors. This is no secret to anyone, and the American public has a right to be pissed off about this. They are literally taking our money and giving it to a bunch of rich guys. Sure, CNBC pundits will try to explain to us that it is not "technically" a bailout, but we all know the truth. After following this whole saga, I have come to these undeniable facts of life. If you disagree with any of them, or want further detail, please comment and let's talk about them.

1. Barack Obama will not change anything.
2. John McCain will not change anything.
3. Sarah Palin will not change anything.
4. Joe Biden will not change anything, but he has a crush on Sarah Palin.
   
5. There is virtually no difference between Barack Obama and John McCain.
6. Barack Obama and John McCain will do very little of what they promise if elected.
   
7. The Washington elite considers the American public stupid.
8. The public reaction to the bailout shows that regular Americans are not stupid. We just lack access to inside information.
9. There is no place to find an objective media source. Not CNN, not Fox News, not ABC, NBC, MSNBC or anywhere else. You are better served by following your own instincts.
   
10. This bailout bill speeds up our approach to European-style socialism.
11. This financial mess has nothing to do with capitalism. It was the fault of the government and the Federal Reserve system.
12. A recession is not a bad thing and the government can only make it worse.

There you all go, let me know what you think!

New York Photos

Alongside the Wall Street Bull in Bowling Green Park. For good luck, investors must rub the nose, horns and, yes, testicles. In case you doubted me, I did all three.













A shot of Grand Central Station. Commuters from Jersey and Connecticut, and the outer New York Suburbs arrive here every morning. I got my tennis racket strung at a shop here. Hint - click on the linked text "Grand Central Station" above for a really cool social project.



















Me in front of the New York Stock Exchange. Spooky to think that over a trillion dollars changes hands here every business day.


Here I am in front of Times Square.

Big Day in Tech News

Carl Icahn is launching a proxy battle in an effort to oust the Yahoo board and re-negotiate Microsoft's bid for Yahoo. My take? I say the Yahoo board is shaking in their boots right now. This is a clear opportunity for Microsoft to low ball Yahoo and offer 29-30 per share. Microsoft eventually upped the offer to $33 per share before withdrawing it leaving Yahoo shareholders very irritated. Maybe the Yahoo board will cave and accept a lower offer to avoid battling one of the most legendary financiers.

CBS announced a purchase of CNET networks sending CNET's shares up 40+%. It's a bummer I didn't buy a few months ago since I've had the "hunch" that CNET was going to be bought out for a long time. I guess investors should worry about the future and use the past only as a learning experience. CNET owns a number of tech media internet outlets.

Jim Rogers

A good friend and a self described "socially irresponsible speculator and robber baron" mentioned I check out Jim Rogers. I asked him where I should put my money these days to which he replied "short all the investment banks and short the dollar." That's a dreary play, but I looked up Jim Rogers on YouTube, and he seems to echo with a little more clarity what Ron Paul always spoke about. He gives the same advice that my friend gave. Jim believes that the Bernanke and the Fed are setting up the United States for serious inflation and expresses serious moral disagreement with using the Fed as a means to bail out investment banks. Let me remind you that our Secretary of the Treasury Henry Paulson is the former CEO of Goldman Sachs, the most successful investment bank in recent years. I wonder if any of this is related..... It's all pretty interesting to me.

In the past, "Mr. Rogers" hit big on Wall Street, then retired at 37, bought an incredible looking Mercedes, and literally drove around the entire globe visiting foreign countries to grasp the culture and investment opportunities. He put it all in a book called "Adventure Capitalist." I found it on Amazon for pennies, so I snatched it up. If it's good, I'll let you know.

Anyway, I posted a couple of his TV appearances below. You can see more clips by searching for Jim Rogers on YouTube. I especially like where he talks about these bailouts enabling investment bankers to buy maseratis while we get screwed with the subsequent inflation.

Goldman shines.

Looks like Goldman took Wall Street to the bank today. They reported a huge drop in profit, but it wasn't nearly as bad as the analysts expected. In other words, they beat analyst expectations... by a lot. Their stock is up 13% today. Financiers casual and professional are all keeping a keen eye out for the market to bottom. It looks like this may be the first sign.

There's nothing quite like starting a blog and pretending to be an expert on the financial markets. I have a hunch that I'm right about this one.

First Investment Post

Tomorrow is a big day for investment banks. Yes, Bear Stearns bit the dust today, but their troubles were seen looming for some time. Tomorrow, investment bank, Goldman Sachs, reports its 1st quarter earnings. Goldman is considered the strongest investment bank by Forbes because of its very low exposure to the subprime lending market. It's stock is down nearly 30% so far this year, so despite avoiding the bulk of this mess, the stock plunge leaves me scratching my head. They've written down a billion here and there but not to the scale other banks have. My best guess is that it is a result of a general distrust of the banking sector. Goldman was just roped in with everyone else. I've been looking for news about this earnings report all day with little luck - it almost seems like nobody cares. What Goldman reports tomorrow is a huge indicator of the strength of the banking sector. How good the best of any industry does speaks volumes about the health of the industry as a whole. Let's just hope their results impress.

Speaking of financial topics, this Fed issue is going to bite normal people in places that don't see the sun much. The issue of cutting rates is seemingly complicated. Cutting rates, or "providing liquidity" is code for "flooding the markets with new money." When the Fed cuts rates, it literally causes inflation by increasing the total supply of money. While the effects are complicated and, in my opinion, immeasurable, one has to admit that this can't be good for the dollar. Simple economics tells us that increased supply lowers the price. I'm pretty sure the Fed knows that it sinks its knife deeper into the dollar every time it drastically cuts rates. This is good for the banks for sure because of the non-neutrality of money. It's everyone else that gets screwed. Maybe that article is a little long, just trust me on this one.