The Reality of the Widget Salesman

Are you getting your opinions about the stock market from unbiased reousrces? Do the Wall Street cheerleaders really believe their opinions or are they just hoping eveyrthing works out?

As I sit here watching CNBC (financial television), I just stay amazed at the run away bullishness of this market. Should it be a real surprise? Just ask all of these money managers who talk about the markets on CNBC. They see nothing but clear sailing the rest of the year. Just keep in mind about the opinions of money managers.

The majority of these money managers can only purchase stocks. A bear market would be the worst case scenario. Thus, it will always be a bull market regardless of what the tape says. Besides, why would they shoot themselves in the foot and offer anything negative?

For example, let’s take the story of the widget salesman. The only thing that he can sell is widgets. Besides the money that he makes selling widgets, he also makes plenty of money as long as his clients hold onto those widgets. Well, let’s say that something happens to the widget market. Widgets lose some of their popularity. People don’t want them as much.

As a result, he will go announce that this weakness is temporary. After all, he doesn’t want to lose any current customers. Second, he will talk about what a bargain widgets are so that he can still sell them.

The take away from that story is that the salesperson can only sell stocks. The salesperson depends on widgets always being a good deal because that is his only income source.

The same applies to money managers or financial advisors who depend on stocks. Remember the opinion that you here in the media might just be desparate hope rather than a solid opinion.

Congress Proposing Legislation to Once Again Protect the Credit Industry

Let's take a look at this nonsense. First, the mortgage industry is allowed to make big bucks writing these sub-prime loans for the past 3 or 4 years. Anyone with common sense would recognize that a problem is going to be created by allowing a mortgage to be written for 100% of the home value, no money down, and no documentation nor income verification. It is a very risky loan that posses potential problems for the consumer.

Now we pay the price for the greed that has been displayed by the mortgage business. Of course, this type of borrowing has been great for the economy on the short-term. As a result, why would Congress ever step in and tighten the lending standards?

Now, Senator Schumer wants to bail out these sub-prime loan holders with hundreds of millions of dollars. So, what is he really doing? Is he proposing something to protect the American Dream or is he proposing something to protect the mortgage industry?

Think about it for a minute. This legislation will keep subprime lenders solvent by helping these mortgage holders pay their monthly mortgage payments.

How about another idea to consider. Force the sub-prime lenders to go in and reconstruct these loans for the borrower at reasonable fixed interest rates. In addition, force them to do it for free. If needed, Congress could subsize the costs of this process. How about the sub-prime lenders coming in and paying the price for their greed? As taxpayers we should not take on the burden of bailing out these home buyers. Thes subprime lenders should pay the price.

Another example of Congress watching out for big business when they should have been regulating big business a long time ago.

RENT-A-CREDIT SCORE

So, you need a higher credit score to qualify for a mortgage loan?

An internet company will increase your credit score by making you an authorized user on another person’s credit card. By being an authorized user on a person’s card with excellent credit, all of the good credit information will be transferred to your credit file.

As a result, your poor credit score will get an increase due to borrowing the credit history of someone with good credit.

There is also big dollars in it for the people who are willing to allow this company to use their credit cards by adding add authorized users. They get a hefty fee for each added authorized user.

Although the Federal Trade Commission is looking into, they have not filed any legal claims against the company. However, the Nevada Mortgage Lending Division states that anyone associated with this scheme “will be subject to administrative action and potential criminal penalties.”

Adam Wheeler who runs this unethical scheme states his business is “legal” but he conceded that “some people might say it’s unethical.” He also said he does not “condone fraud against mortgage institutions.” If clients are going to lie to lenders, he says, “that is not good.”

Well, Mr. Wheeler it is probably not good if you help those people lie to those lenders either. That is a story from the “I just can’t make this stuff up department.”