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Tuesday, April 5, 2011

Financial current events- Q & A

Here's where 'Ants & Grasshoppers' tries to address current events and the problems of the world in quick Question & Answer format so readers can get a gist of what's going on and not get bogged down by lengthy paragraphs.  Of course, these subjects A&G either have addressed previously in detail or will in the future.

So let's begin...

Topic:  Wars

Q:  Why are we involved in Libya?

A:  They have oil.

Q: Why are we still involved in Iraq?

A:  See previous answer.

Q: Why are we in Afghanistan?

A: Protect oil pipelines.

Q:  How much is US involvement in Libya costing?

A:  $55 million/day.

Q:  Couldn't that $$ be put to better use?

A:  Sure

Q:  Well, why isn't it?

A:  Government doesn't work for the people.

Topic: Investors & National Debt

Q:  Who does it work for? Banks?  Corporations?

A:  Well yes.. but its #1 priority is the Investor.

Q:  What's so important about Investors?

A:  They buy debts of nations via bonds/treasuries.  Governments have auctions monthly to sell debt so they can function...

Q:  So?

A:  Investors buy up the debt at juicy interest rates.

Q: And that gives governments cash?

A:  Basically. When Investors don't buy debt, nations are in trouble.

Q:  Well, what about the US?

A:  When Investors don't want it, the Fed Reserve buys it.

Q:  We buy our own debt?  Isn't that like the adage of Peter paying Paul?

A: Yep.

Q:  But we print our money don't we?

A:  Yes- it all adds to the National Debt, right now about $15 Trill.

Q: Well aren't we paying it down?

A:  No, if we pay down anything, its the deficit, not the debt.

Q  What's the difference?

A:  Picture a credit card bill- you owe $10k and monthly pymt. is $300.  When you pay that $300, that's only covering minimum payment.

Q:  Right.. so?

A:  If you paid $400, you're cutting down the deficit which lowers your minimum payment and keeps interest under control.  And if you paid $1000 or more, then you're cutting down into the debt.

Topic- Oil & Gasoline

Q:  Why are gas prices going up?

A:  3 Reasons-  1) Investors pushing commodities prices up like in 2008;  2)  Mideast turmoil (though that's more excuse and justification for investors to buy oil, and 3)  Weak US dollar caused by the Fed devaluing it.

Q:  Can you clarify each point a tiny bit?

A:  1)  Commodities are like stocks- they go up and down. More investors pump up the value of a commodity like oil or corn, the more expensive it becomes in everyday marketplace.

     2)  Investors are soulless animals but they like rationalizing their movements- so any rumblings in Mid East is always justification for them to cause price spikes.

     3)  The currency used to sell oil around world is in US dollars.  A strong dollar buys more gas.  A weaker dollar means you need more of it to buy the same amount of gasoline product.

Q:  I understand better but why would the Fed ruin its own currency?

A:  To make our exports more attractive to foreign buyers.  This makes things cost more in the US but Fed doesn't care.  Also, there is a war amongst nations - a competition to see who can devalue their currency the quickest.  Even Cuba is doing it.

Q:  So that's why Japan begged US to help devalue the Yen when it was too strong after the tsunami?

A:  Yes-  the strong yen would have greatly helped the Japanese people but hurt Japanese businesses and investors..  so you know who takes priority, yes...

Q:  Well wouldn't it be a good thing if businesses prosper- means more jobs?

A:  Theoretically.  But wages for those still employed are stagnant while costs to live are rising and personal credit dwindling.  Also those unemployed are being offered jobs at 10-25% pay cuts and decreased benefits to exploit desperation.

Topic: If I was President...

Q:  Can things ever get better?

A:  Of course they can, but you need new leadership

Q:  I don't think Republicans are the solution do you?

A:  No No.. I'm talking a new mindset to governing that doesn't base its policies on Dem or Rep party principles.

Q:  President Obama said today that "everyone needs to share in a (financial) haircut"-  is he right?

A:  NO.  All that $$ went to banks & stock market- nothing to common person.

Q:  Well, lets say you were President- what are some things you'd do?

A:  First, you have to restore confidence in people that the banking system and markets are not rigged and that bad people can't get away with breaking the law.

Q:  Sounds good so far.

A:  As President, I would arrest the CEOs, CFOs, etc of every major bank and financial company who was responsible for the 2008 market crash; held as financial terrorists and be treated as any Al Qaeda operative would. Anyone who tried to sabotage the markets or 'flash crash' it, would be arrested as well.

Q:  Wow- you'd hold these rich, powerful people in cells like terrorists?

A:  That's what they are so they'd be treated accordingly.  What happened on 9/11 was horrible but what these leaders of these corporations did was 100x more destructive, both to Americans and hundreds of millions of people around the world.

Q:  How so?

A:  Everything in the past 30months-- from the economic suffering of Iceland, Greece, Ireland, Britain and other European nations, to the mid east revolts sweeping through over a dozen countries to the combined losses of tens of millions of jobs worldwide, all has its origin point with the 2008 stock market crash.

Q: What about the 'too bigs to fail?

They'd be broken up much like Standard Oil was in 1911 and Bell Telephone was in the 1980s.. For the first time in decades, the American people would see a President tame and control the banks

Q:  What about the jobless situation?

A:  I'd create trickle-up policies where the stimulus money went directly into hands of everyday people and bypass corporations and banks.  Free grants and low interest loans to entrepreneurs wishing to create start up businesses. Free job training.  Matching stipends to small businesses to hire new employees.. for every dollar a small business puts out in salary, the govt matches for 24months, etc... Like with FDR, if private business refuses to hire people are fair living wages, the Government will do so.

Q:  How would you tackle the deficit and debt?

A:   I'd dramatically increase taxes on the top 5% of the nation, especially the very top 1% tier who are billionaires. In Eisenhower's day, the top tax bracket paid 90% in taxes.  Also make sure corps like GE do not get away with paying no taxes.  The Bush tax cuts would disappear obviously.  Also dramatically lower taxes for those making $40k or less since money saved is immediately re-circulated into the economy.

Q:  Any thoughts on Education?

A:  Basically the entire K-12 structure has to be re-modeled in such a way that going to college isn't needed for most basic employment.  What I mean is this-  currently it takes a student completing 4 years of undergrad studies to acquire the same knowledge as someone 40yrs ago acquired simply by graduating High School.

Q:  So you're saying improve education on High School level so that College becomes an option and not mandatory for a career?

A:  Yes-  College is a business. And it costs A lot.  A person could easily complete it in 2 years but they force another 2 years in curriculum electives and courses repeating what was learned in High School. The goal is to siphon more money from students to pay for the lush landscaping.   A degree should be for those seeking specialized skills like medicine, law, etc.. and not a prerequisite to becoming a receptionist or bookkeeper.

Q:  So once again I ask-- Can things get better?

A:  Absolutely.

Q:  How?

A:  It starts with you- are you a leader or a follower?  A saver or a spender?  Do you seek change or are you content?  What matters to you in your life?  What are your priorities?  

Everything positive begins with you.

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