The Cycle of Debt

We're here talking about bailouts and economics and the sinking of the Dow, but there is a part of the equation that's being missed. In the middle of all of this, you hear about banks saving other banks so that they don't crumble.

The federal government takes on some of the burden, but the rest falls on their shoulder. Instead of taking that on their own, they bring their customers into it. Here's an example:

You have a credit card from Bank X, you love it. They give you $10,000 in credit at a great rate that my be variable, but you don't care because it's a great rate and the Fed hasn't touched rates lately. You're having problems with your mortgage, so you use you $10,000 in credit to help buy you some time. In fact, Bank X loves you as a customer because they get a hefty finance charge for all of the products you've been buying, so they raise your limit to $20,000.

Bank X, buys Bank Y and in doing so they write down their bad mortages and get the government to help them if more mortgages go bad than they think they'll be. They got Bank Y for a deal, but they're in the business of making money so they have a great idea.

They are going to raise the interest rate on your credit card, they were making a lot off of you before, but they'll make even more on you now. The extra money they'll get from higher interest rates is nothing compared to the money they'll get from the over the limit charges and late fees they'll get from you. It isn't just you, Bank X is doing this to customers all over the country and they don't lose.

They get to write debt down, or scrap it completely and let credit agencies deal with you or you pay it all and they still make the interest off of you. If you are having a problem with your mortgage, this is most likely the straw that breaks the camels back.

All over America, this is going on and in the end banks profit. The commercials make them all appear that they are your friend and goto source for funding but there's a heavy price to pay.

52 Week Highs - 9/30

ACC - AMERICAN CAMPUS COMM

AGA - DB AGRI DBL SHRT ETN

ANCI - AMERICAN CARESOURCE

The most interesting part here is seeing AGA here. This is the ticker symbol for Deutche Bank Agriculture Double Short ETN. Investors can't short bank stocks, but this shows that people feel that the rise in agriculture stocks like Mosanto will be coming to an end soon.

With the economies of countries all over the world faltering, this may show a new direction in the global trade.

The Bull Case For WRI

WRI is the ticker symbol for Weingarten Realty Investors. They are a commercial REIT that specialize in malls.

If you're looking for a rock solid stock that pays a nice dividend (currently at 6%) - WRI should be on your watch list.

What Happens Tomorrow (10/1)

On the surface, things look like they're better than yesterday. The Dow, Nasdaq and S&P were all up in trading today on talks that the bailout would be sent back to the House for it to be voted on.

Gold prices dropped as a result, and oil prices increased. The big question is what is going to happen tomorrow.

A lot of that rides on companies that will be reporting earnings and how they fair. If companies report bad earnings it will make a bad situation even worst. Also, if talks start to break down then you can expect another decrease.

Things are really fragile right now in the market, but the message that you should take from all of this is that everything will be okay. It will just take time.

Dow Dived 778

The Dow sank on Monday 9/29/08.

You can find a graphic here: http://tvlampsnbulbs.com/2008/09/dow-down-778-and-sinking/

Freddie Mac + Fannie Mae = Screwed Investors

The US government has taken over Freddie and Fannie.

Investors will lose everything they put into it while they try to improve their balance sheet. The move was made to help make the banks (primarily overseas in countries like China) more solvent due to the declining value in the mortgages they back.

Millions of Americans are left hurting. Not only because their investments have turned into nothing, but also people may have these companies in their 401(k)s and not even realize it.

You can read more about it here: http://www.nytimes.com/2008/09/08/business/08fannie.html?ref=worldbusiness

Lehman Brothers To Become House Divided

Lehman Bros needs money, badly. So badly that they're considering splitting their company into two so that they can get money for the "good bank," and use that money to help improve things at the "bad bank."

You can read more about it here: http://www.marketwatch.com/news/story/lehman-mulling-plan-split-two/story.aspx?guid=%7B5C869D6C-FE57-4400-A00A-62AB1E729352%7D&dist=msr_7

Myths & Facts About Loan Modification

There's a lot of information out there, but if you want to know the truth from the full, we've got you covered.

Loanworkout.org looks at the issue more closely, and gives some unbiased information.

Yahoo's Stock: Bottom of the barrel

The market got it's teeth kicked in today. It lost over 300 points, and that's after the dollar rallied to one of it's strongest points over the last few years.

This is actually part of the problem. Why? Well, when the dollar started heading for the bottom, companies decided it would make more sense to expand overseas, buying companies, opening factories, and selling to people in Europe, India, and Asia. When the dollar sucked, everyone agreed that this was a great idea. Now that there's some reversal Q3 earning for a lot of companies are going to be horrible. They won't have the difference in currencies to help them float past analystic expectation.

This leaves a lot of people with a lot of blood on their hands. Looking long-term, this is great. If stocks falls sharply they'll only have that much more room to run up when the dust settles. This is a perfect buy and hold opportunity for those with strong stomachs and some disposable income.

The crowning achievement of it all is Yahoo. Their situation really epitomizes the struggles taking place in Corporate America. On one hand, you have a company that wants to grow, stay strong and make their investors and employees rich. On the other hand, you have a few people that were disillusioned that they could do better on their own instead of taking $40 billion dollars from a stranger.

Las Vegas Hotel Deals

Vegas is run by the homes and dreams of those looking to get rich. When they don't have enough money to get to "Sin City" they need a push to help get them in the door. Las Vegas hotels are stepping in by offering drop down cheap rates, whether on or off of the Vegas strip.

You can read more about it at Walletpop.

Oil Falls To $107

A strong dollar, plus slowing global demand is bring oil prices back to reasonable levels. We still have a long way to go before gas prices get under $3.00, but this is a great move. You have to wonder what the impact will be on overseas markets if this trend continues.

For years, overseas investing has been a place where the money was able to grow faster than here in the US. Could this signal a reversal?

Source: Blogging Stocks

Cheap Cruise (Exp. Sept 7)

The word cheap is not usually something you want to throw around lightly. That's why it delighted me to discover that you can take a 4 day cruise around the Caribbean for $159 per person (based on double occupancy).

It is hurrican season, so the timing may not be the best, but if you're looking for a true last minute getaway, this is exactly what you've been looking for.

You can find more details and book it here.

Dodge Foreclosure

Despite what a lot of the newspapers are saying foreclosure isn't a death sentence for your home or your credit.

USAToday has an article that discusses how people were able to escape foreclosure and either remain in their home or get away from it without having to continue paying for it.

One of the alternatives is to call your lender directly and find out what they can do for you. They'd rather you pay your mortgage under some modified manner, than to have you walk away and discontinue paying completely.

Another alternative to help you dodge foreclosure is a 401(k) loan. If you've been contributing to a 401(k), you are able to take a hardship withdrawal or you can take a loan for 50% of what's in your account. You do have to pay it back but since it's your own money, you're paying yourself back. There is a fee associated, but it's an option to consider if your financial situation becomes severe.

How to Invest During a Recession

While it's important to consider the future, we looked into the past to give you the inside scoop on the best way to invest during economic downturns like we're experiencing now, and with the threat of a recession.

Your playbook should consist of:

-Money Market accounts
-CDs
-Bond funds
-Exchange Traded Funds

These are instruments that will grow your money safely because they are relatively low risk. When the market ends up being down 10% or individual stocks are down 70%+, being able to earn 4% on your money is fantastic.

You can read more on the SmartMoney website.

Starbucks To Offer More Discounts

Starbucks got away with high prices for average coffee for years. With McDonalds and Dunkin Donuts offering their own variation of premium coffee and doing so with lower prices, Starbucks has finally, smelled the coffee.

They are planning to not raise prices but also roll out promotions to help generate more foot traffic.

Source: Walletpop

Don't Fall For Websites Selling Free

Freetriplescore.com makes it seem like all you have to do is sign up and you'll be able to get free scores from TransUnion, Experian, and Equifax. The unfortunate truth is that they will just try to bilk you for $30/month.

Don't fall for it people, it's a scam.

How To Claim Your TransUnion Settlement

If you've had a credit card, charge account, or loan (ever in life) - a recent class action settlement may put some money in your pocket, or at least get you free credit monitoring.

Source: Listclassaction.com

Introducing ChargeSmart

You have a rewards credit card that will pay you 3-5% of what you spend every month in cash. You have bills like credit cards, auto loan(s) and mortgage(s). If only there were a way of being able to get cash for paying your bills with your credit card.

This is where ChargeSmart comes into play.

ChargeSmart enables individuals with Internet access and a major credit card to
make payments to companies in five different industries. Customers submit
payments directly to ChargeSmart and indicate the amount they wish to pay and
the recipient. The ChargeSmart system accepts, processes and remits payments
electronically, ensuring every step from the customer to the payee is accounted
for and traceable. The company's easy-to-use interface enables customers to gain
reward points or miles from his or her card issuer. [Source]

This isn't free though. They charge a fee to do the transaction and also take a commission.

London Luxury Real Estate Down To Record Lows

New York real estate has only been rivaled by the skyrocketing prices across the pond in England. Now a report is coming out that after the years of high flying that things are coming closer to normal with prices on luxury real estate in England down to the lowest point in 5 years.

The reason: feelings of economic instability

Go figure.

Source: Luxist

Oil Prices Drop As Gustav Lowered To Cat. 2

Hurricane Gustav caused a rift on the market when prices for crude oil rose in anticipation of the damage it would cause. Bloomberg reports that these prices have receded now that it has been downgraded to a category 2.

You can read more about Gustav and Tropical Storm Hanna here.