Let the good times roll……I just got approved for a student loan for my MBA program and I couldn’t be more excited!  What should I do with the money?  Pay off mortgage?  Pay off the remaining car note?  Buy that new Big Screen TV?   The possibilities are endless!

Student loan money is the best arbitrage money these days as the loans are typically fixed at 6% or so and there isn’t a credit card company in the world that can compete with that since most are arbitrarily raising fees and APR on even their best customers!

I’m only borrowing 15k so it’s nothing to get truly excited about but still, 15k at 6% is a pretty sweet deal as the interest will be (hopefully) tax deductible.   I’ll also add that I’m expecting inflation to sky rocket over the course of this loan(s) over the next few years so the debt will likely be inflated away.

Right now is the perfect time to reposition your cash flows and my balance sheet just got a whole lot better!

According to this post over at Mish Global Economic Analysis, the FDIC went bankrupt on Friday with the latest 3 bank failures.   Technically, the FDIC can tap the Treasury so they money flow will continue but that’s tax payer money not the premiums banks pay into the pool to insure deposits.

We’ve  almost come full circle as I warned people back in September 2006 that we may be facing an SPIC/FDIC Armageddon in the near future and the future is getting closer day by day.   Of course, FDIC chair will have some cover because back in March she issued this warning:

March 4 (Bloomberg) — Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency.

Without these assessments, the deposit insurance fund could become insolvent this year,” Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group

So she’s got herself covered with the warning issued and I can already see the news clip, “I warned the public back in March that this could happen…..people should have taken action….blah…blah…blah…”

Let’s not forget the rumors of a bank holiday coming in September either.   It seems it’s all coming together to form the perfect storm doesn’t it?

So what action should a person take?   I’ll repost this one last time:

When people realize that the money they thought they had in the stock market is gone, when they realize that their credit lines have been cut and when they have no cash on hand left to pay for fuel, groceries or medicine there will be a stampede at your local bank.   The first ones to get there and pull out some or all of their cash will get their money; the lazy, the ignorant, the socialized, the optimists, and the clueless will be left cashless.

You’ve seen this governments response to crisis already and it’s not exactly a positive record: 9/11, Katrina, Bailout.  Don’t expect air drops of food and water anytime soon when you run out of credit and cash.

I’ll repeat what I posted earlier numerous times here, here, and here.

  1. Keep your payroll check in MULTIPLE bank accounts
  2. Keep some amount of emergency funds in your home somewhere safe and sound, don’t assume ATM machines will have cash.
  3. Keep your savings in a SEPARATE account.
  4. Keep well under the 100k limit of FDIC and don’t assume FDIC will bail you out; you’ll learn why later
  5. Forget about money market funds
  6. You should already have a large cash position if investing in the market, if not you’re going to have to ride it out
  7. Keep plenty of food available in your home
  8. Keep you gas tank full at all times when possible
  9. Be vigilant at all times; worry about burglary, robbery and assault at any time from now on until this crisis is over
  10. Have a worse case scenario plan for yourself and your family
  11. If you have large amounts of money buy US Treasuries.
  12. <Added Today> Worry about the “safety” of your safe deposit boxes at the bank and rethink if that’s the best place for your property.

Back in January, I along with a few coworkers, were all laid off.   A few weeks later I got a call from one of those co-workers.  He was BEGGING me to find him some leads to get work.  Evidently, his wife got laid off the following few days after he did so they were BOTH unemployed.    I ended up helping this guy find a job going so far as to give him a glowing recommendation to the potential employer.

He ended up getting the job and through a quirk of consolidation, he ended getting a promotion a couple of months after that and I hadn’t heard from him for a while until some mutual acquaintances informed me that he had gone out and purchased a new Mercedes vehicle.   I don’t know the make or model of the car but I just shrugged my head.   Just a few months ago this guy was begging for work, he got lucky and landed a good position but he’s acting like the economy isn’t in shambles.

This guy has young kids that he still (presumably) needs to put through college and was very nervous about being unemployed so I know he doesn’t have a huge volume of cash lying around to buy cars.  I just don’t get it, this guy had spoken to me about a year ago about how he JUST HAD TO HAVE a luxury car and I advised him to wait until the economy stabilized (this was back in Fall of 2008) before he made any moves like this but he must feel its stabilized enough for him to take the plunge and buy the car.

Oddly enough, my wife knows people at his new company and they’ve been laying off people!  When I asked him about the layoffs he said they were “low level” people that they didn’t need.   Lol!   He may end up becoming “unneeded” soon enough because his new company’s success is predicated largely on that “infrastructure” money that doesn’t seem to be moving anywhere out of Washington D.C.

Well if he loses his job, I’m going to recommend he go work for a Mercedes dealership so he can meet other dolts just like him.

I spend a great deal of time watching Discovery Channel because I love learning and I couldn’t figure out why I was addicted to this channel until a slow realization dawned on me….most of the shows on Discovery are about destruction of the planet earth for profit.

Let’s take a look at some of the themes for their shows:

Cash Cab – A guy drives around in a cab burning fuel asking people questions for a chance to win money.

Deadliest Catch – A group of guys drive around the ocean burning fuel to catch crab for profit.

Dirty Jobs –  A guy goes from filthy place to filthy place to do “dirty jobs” of companies that make profit the dirty way.

Mythbusters – A couple of guys burn fossil fuels, destroy a variety of objects to prove a point.

Pitchmen – A couple of guys sell the best crap from China at a reasonable price for China

Other shows I watch have similar themes on various channels (e.g. History or Discovery):

Ice Road Truckers – Burn fossil fuels to deliver stuff that extracts more fossil fuels…rinse and repeat.

Ax Men – Slash down trees for profit!

Swamp Tree Loggers – Slash down trees for profit using heavy equipment burning fossil fuels!

Life After People – The show for those who want to know what happens when we deplete the planet of all resources!

Oh man, I gotta cut back on watching this channel.

Call your Senators and ask them to Support the Demint Amendment!


If  you’ve been wondering where the PPT has been all this time, they’re alive and well.   Watch the video.


A few people have commented that they are seeing ads on my blog but I don’t run ads so I’m curious how/why this is happening.   A reader e-mailed me the following screen shot from his computer.


Clearly there is some strange ad which appears to be some sort of flash overlay.  I’m wondering if my site has been hacked.  Any ideas?

Wow, it’s hard to phathom that three years ago I started this blog.   Remember 2006?  The Dow was above 11k and headed higher towards the sky.   People were talking about the never ending boom in housing but some of us saw what was coming…

Looking back since 2006, I’ve worked for 3 different companies only to find myself currently unemployed.  I’ve traveled to at least 5 continents and over a dozen countries since that time for both business and pleasure.    My kids have grown quite a bit and in a few short years our kids will be asking for vehicles and then off to college.    I still can’t phathom where all the time went when I look back on it.

I’ve considered shutting down this blog numerous times simply because of the time constraints of work, family, and other committments but I’ve endured and the latter part of the year may be brutal (more on this later) but I’ll endeavor to keep going.

I’ve been unemployed now for three months and my life has changed for the better.  I get much deeper sleep now and feel so much more relaxed than I’ve ever had in my life.  This is the first time I’ve been off for such an extended period of time without carrying a blackberry, without having to worry about fiscal budgets, deadlines, projects, international travel, etc.

I’ve been gardening every day and picked up a rich tan but that’s not the only thing.  I’ve noticed the birds singing, the roses and flowers bloomimg, the vegetables sprouting and so much more.   I’ve noticed the movements of the sun change from January thru today (April). I’ve noticed the curious things my kids do when they get home from school and I’ve played with them outside almost every day spring started.

I’ve started to read books that interest me instead of professional books and journals required for my career.  I’ve cleared the clutter in some rooms to simplify my life but still have a long way to go.   I’ve started to adjust to life the way it should be which means that I must be getting close to it all slipping through my fingers.    I’ve begun to get a few calls from recruiters and have some interviews scheduled for May so the end of my wonderful new life must be near.

To be honest, I was hoping to be unemployed through the summer as I’ve got grand plans:  take my kids to the beach a few days in the week, go fishing a few other days, explore the countryside and maybe go camping a few days to see what nature is all about.

I believe everything happens for a reason and the last three months “off” have shown me the way life should be.

If you’ve ever watched Star Trek or most science fiction shows you’ll inevitably encounter “teleportation” devices that can “beam” or transfer one object from one point to some other point, usually a distant point tens or hundreds of miles away.   I usually do thought experiments and ponder what would happen if such a device existed today and how it would impact the economy.

For starters, if such a device existed, I would imagine that the following industries would almost immediately collapse:

Shipping – No need for oil tankers, cargo ships, or other bulk carriers since goods can be “teleported” from point A to point B with no problem.

Airlines – No need to “fly” anywhere if you can “beam” there instantly.

Air Shipping – No need to “fly” goods anywhere if you can “beam” them there instantly.  If teleportation devices could be installed on every home then UPS, Fedex and others would disappear too.

Hotels – If you could “beam” back and forth from your favorite vacation spot, why would you need a hotel?   The entire industry wouldn’t collapse but a large portion of hotels would eventually succumb.

Car Rental – Once again, if you could “beam” to your destination, why bother with a rental car?

Auto Industry – If you could beam from home to your place of employment, the grocery store or your favorite vacation spot would you ever need a car?

Now that air travel, shippers, autos and other industries have disappeared you can look at what other industries are no longer needed.  If planes, trains and automobiles are no longer needed then oil is no longer needed in the quantities that are currently being consumed so a significant portion of the oil & gas industry would collapse.

You can take this thought experiment in any direction and I did with a friend over a long discussion about other technology advancements that could further destroy the economy.   If a cure for the common cold is discovered then there isn’t a need for NyQuil, Sudafed, and hundreds of other cold remedies.  The marketing, sales, production, distribution and other personnel associated with the cold remedy would be made obsolete.

My friend argued that we would always have new jobs and new innovations to keep people working but my argument is simple: there is an initial burst of jobs created initially but then the jobs go away and people don’t have the time or money to constantly retrain onto something else.   In our teleportation thought experiment, initially many new jobs would be created with the creation of teleportation units, installation and eventually maintenance of units but what do you do when you reach saturation?   Worst yet, what if you could simply teleport a teleportation device then you would saturate the entire planet within a year then all the installation jobs are gone.    The only jobs left would be repair and maintenance similar to AC repair and in the process, millions of jobs have disappeared!

Ultimately, this begs the question, with the population continuing to grow exponentially and technological advancement growing exponentially, what will members of a society do in the future, particularly at a time when wage deflation is spreading throughout the world?

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