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Tuesday, August 25, 2009
Posted by Roberto
2:33 PM 0 comments

THE PONZI ECONOMY

PREPARING FOR THE WORST, BY ROBERT KIYOSAKI

"Is the crisis over?" is a question I am often asked. "Is the economy coming back?"
My reply is, "I don't think so. I would prepare for the worst."

Like most people, I wish for a better future for all of us. Life is better when people are working, happy, and spending money.

The stock market has been going up since March 9, 2009. Talk of "green shoots" fill the air. Yet, in spite of the more positive news, I continue to recommend that people prepare for the worst. The following are some of my reasons:

1. I believe the stock market is being manipulated. I suspect the government, banks, and Wall Street are doing everything they can to keep the market from crashing. Our leaders know that nothing makes the world feel better than a raging bull market.

Do I have any proof that the market is being manipulated? No. I just smell a rat, or a pack of rats. I believe greed, self-interest, arrogance, and fear control the financial markets. I suspect those in charge will do anything to keep us all from panicking... and I don't blame them. A global panic would be ugly and dangerous.

2. In my view, this global crisis has been caused by the Federal Reserve Bank, the U.S. Treasury, Wall Street, and the central banks of the world. They caused the problem, profited excessively in doing so, and now profit by being asked to fix the problem.

Every time I hear a politician mention the word stimulus, my mind flashes back to high school biology class, when I touched battery wires to a dead frog to make it twitch. Today, you and I are the dead frogs. Pretty soon the dead frog will be fried frog.

In the 1980s, our government's hot money stimulus was measured only in the millions of dollars. By the 1990s, the government had to ramp the stimulus voltage into the billions in order to get the frog to twitch. Today the frog has jumper cables with trillions in high-voltage hot money pouring through the lines.

While most us feel better when we have more high-voltage money in our hands, none of us feel good about higher taxes, increasing national debt, and rising inflation for the long term. Another old saying goes, "Sometimes the cure is worse than the disease." I say the government stimulus cure is killing us frogs.

3. Old frogs don't hop. Another reason I am cautious about the future is that the Western world has a growing number of old frogs. Between 1970 and 2000, the economy responded to bailouts and stimulus packages because the baby boomers of the world were entering their greatest earning years -- their purchasing power increased, and demand for homes, cars, refrigerators, computers, and TVs boosted the economy.

The stimulus plans seemed to work. But when a person turns 60, their spending habits change dramatically. They stop consuming and start conserving like a bear preparing for winter. The economy of the Western world is heading into winter. Hot wires and hot money will not get old frogs to hop. Old frogs will simply join the bears and stick that money in the bank as they prepare for the long, hard winter known as old age. The businesses that will do well in a winter economy are drug companies, hospitals, wheelchair manufacturers, and mortuaries.

4. The dying frog economy will lead us to the biggest Ponzi schemes of all: Social Security and Medicare. If we think this subprime financial crisis is big, it's my opinion that this crisis will be dwarfed by the crisis brewing in Social Security and Medicare...Medicare being the biggest crisis of all. As old frogs head for the big lily pad in the sky, they will demand young frogs spend even more in tax dollars just to keep old frogs from croaking.

5. The 401(k)Ponzi scheme. A Ponzi scheme, like the scheme Madoff ran, depends upon young money to pay off old money. In other words, a Ponzi scheme needs tadpoles to finance old frogs. The same is true for the 401(k) and other retirement plans to work. If young money does not come into the stock market, the old money cannot retire. One reason so many people my age are worried, not only about Social Security and Medicare, is because they're concerned about getting their money out of the stock market before the other old frogs decide to drain the swamp.

The facts are that the 401(k) plan has a trigger that requires old frogs to begin withdrawing their money at a certain age. In other words, as baby boomers grow older, more and more will be required, by law, to begin withdrawing their money from the market. You do not have to be a rocket scientist to know that it is hard for a market to keep going up when more and more people are getting out.

The reason the 401(k) has this law related to mandatory withdrawals is because the Federal government wants to collect the taxes that they deferred when the worker's money went into the plan. In other words, the taxman wants their pound of flesh. Since they allowed the worker to invest without paying taxes, the government wants their tax dollars when the employee retires. That is why the laws require older workers to sell their shares and pay their pound of flesh.

Demographics show that we are entering a battle between young and old. I call it the "Age War." The young want to hang onto their money to grow their families, businesses, and wealth. The old want the tax and investment dollars of the young to sustain their old age.

This war is not coming...it is upon us now. This is one of many reasons why I remain cautious and say, "The worst is yet to come."

Sources:
Preparing for the Worst, by Robert Kiyosaki
Robert Kiyosaki on Wikipedia
Rich Dad

Links:
Money Pirates
Stock Shock: The Movie
Labels: economy recession

Monday, August 17, 2009
Posted by Roberto
3:41 PM 1 comments

WIKITUDE WORLD BROWSER

WIKITUDE World Browser presents the user with data about their surroundings, nearby landmarks, and other points of interest by overlaying information on the real-time camera view of a smartphone.

Geo-Tag the World:
Wikitude.me, is the Augmented Reality (AR) platform which allows you to browse the world and helps you discover information about places and points of interest around you.

WIKITUDE World Browser

This is what we had to wear in order to have augmented reality back in 2001 (in the picture my friend Tom Brooks):

And this is how SixthSense, enhances the real world with digital information at MIT today:

A simple, wearable device enhances the real world with digital information
SixthSense Video
Labels: augmented reality, smartphone, wikitude

Monday, August 03, 2009
Posted by Roberto
6:07 PM 0 comments

STOCK MARKETS RALLY, TOO FAR, TOO FAST?

U.S. MARKETS

PREMISE:
March 18, 2009: The Committee decided today to increase the size of the Federal Reserve's balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months.

STATUS:
If the market would trade on fundamentals, maybe the march lows would have been lower, and maybe we would end-up retesting those lows, but in a money printing world (Asset prices tend to rise when the government prints money), we kind of throw some of the historical evaluation tools out of the window and we witness everyone being bullish in the U.S. after a 40 percent rise in the S&P.

CHINA

PREMISE:
July 8, 2009: In China the focus of the stimulus was to stimulate lending. China's new lending more than doubled in June from a month earlier, increasing concerns for bad loans and asset bubbles. New lending was 1.53 trillion yuan ($224 billion), the central bank said on its Web site today, bringing total lending this year to 7.4 trillion yuan ($1080 billion).

STATUS:
The Shanghai Composite is up 87 percent this year!
The government is countering an export collapse by flooding the economy with money to fuel domestic demand. Rapid credit growth poses a risk to the nation's lenders and a concentration of credit in some industries and businesses may damage the stability of the financial system, the banking regulator said yesterday.

"Excess liquidity is fueling speculation and that means asset bubbles and wasteful investment," said Isaac Meng, a senior economist at BNP Paribas SA in Beijing.

Fear the Dark Side of China's Lending Surge
RMB 1.5 trillion in new Chinese lending, can we turn this thing off?

DANGER:
If China starts falling, the U.S. market can follow...

Posted by Roberto
4:19 PM 0 comments

GLOBAL INNOVATION IS OUR ONLY HOPE

July 2009 | NASA Ames Research Center
Interviews at the Singularity University

Larry Smarr, director of the California Institute for Telecommunications and Information Technology, interviewed by David Orban at the Singularity University.