Cottus Info, Data Broker

Cottusinfo.com, Data Broker

I have been using a site for researching people (www.cottusinfo.com) and a quick search of the company will show a few forum posts by users that don’t appreciate what this site is trying to accomplish. To me, these posts raise a few questions. When you publish information about yourself can you have an expectation of privacy (people claiming information is personal and private)? Is that information copyright protected? If you publish facts about yourself can you tell people they are not allowed to use those facts? Lastly, is this company bringing accountability to people who publish information about themselves?

Is there an expectation of privacy?

In my opinion this question seems silly. If I post information anywhere, for the public to read I automatically accept that information can never be considered private. It is similar to a researcher publishing information about a mountain. Mt. X is so many feet high, has average temperatures of some degree and has snow on top. Lets say the publishing researcher then wants that information to become private, yet the public already started using the published facts in books, comparisons, weather studies, flight charts and more. Can the researcher really have an expectation to privacy with this information? No. Opinion is not good enough though, what really matters is what the courts think of this topic. In a case, Romano v. Steelcase INC., you can read about the case here http://www.nixonpeabody.com/118536.  The Plaintiff had posted information to the “private” area of social networking sites and claimed since this information was not posted for the public then it could not be used in the case. The court ruled against her,

“The court held that plaintiff had no reasonable expectation of privacy in the content she posted to Facebook and MySpace: Thus, when Plaintiff created her Facebook and MySpace accounts, she consented to the fact that her personal information would be shared with others, notwithstanding her privacy settings. Indeed, that is the very nature and purpose of these social networking sites else they would cease to exist. Since Plaintiff knew that her information may become publicly available, she cannot now claim that she had a reasonable expectation of privacy.”

Another story caught my attention on this topic. You can read the story here, http://mashable.com/2012/07/03/twitter-privacy/.  This case is interesting as it is in regards to Tweets made on a popular social networking site Twitter. The judge stated, “There is no proprietary interest in your tweets, which you have now gifted to the world… If you post a Tweet, just like if you scream it out the window, there is no reasonable expectation of privacy.” 

From these cases we can say definitively that there can be no expectation of privacy to information one posts to any public forum, even in the event that information was published to a so called “private” area of a social networking site. If Cottusinfo indeed “scrapes” its data from social networking sites as suggested in forum posts, then that information cannot be considered private.

Is this information copyright protected?

The real question here is if the information on Cottusinfo.com is facts or creative works. We can see in the case of Feist v. Rural that facts are indeed not protected by copyright, you can read about the case here http://en.wikipedia.org/wiki/Feist_v._Rural. I have put some time into trying to convince myself that the information provided on cottusinfo.com is not facts about people, but I have been unable to develop that argument. Facts can change, just like the content in question in the Feist v. Rural case, phone numbers change all the time but that does not make them any less factual. This also leads me to the convention that one has no control over published facts about themselves. Looking back to the Mt. X example or if you scream your name and address to the world like Tony Stark does in Iron Man 3. You cannot have the expectation that such information will not be used. Likewise you have no control to dictate how that information is used. As Judge Matthew Sciarrino said, it is “now gifted to the world.”

Conclusion

From my review of this topic it seems very clear that the “angry” posts on forums about Cottusinfo.com are just that. Emotional responses from individuals that are not getting their way, they have no real argument or basis. Anything collected from social networking sites, as long as it is not creative or proprietary, can be republished. It seems Cottusinfo is bringing some accountability to a sector of the internet that desperately needs it. People must be more diligent with how they choose to publish their life and information. Trying to build a small business by doing things others are not is a very big challenge, and I give Cottusinfo credit for their effort. Not everyone will believe in what they are trying to accomplish or see the value they may bring others, but I believe Cottusinfo is bringing value and I look forward to more products and features from them.

Note about the author,
I am not a lawyer, just a professional that enjoys writing about my experiences and opinions. This post is an opinion piece.

 

Links:

http://www.cottusinfo.com
http://www.cottusinfo.com/contact
http://www.cottusinfo.com/TermsOfUse
http://mashable.com/2012/07/03/twitter-privacy/
http://en.wikipedia.org/wiki/Feist_v._Rural
http://www.nixonpeabody.com/118536

My Experience with a purchase of an HP laptop

Dear HP,

I would like to share my story of buying an HP laptop direct from HP, I intend to share this story so others may consider what happened to me when theyare considering a purchase of a product from HP. I find it odd that companies in this world still seem think there is an endless supply of customers to buy there products and can contiune to function with treating there customers like trash. Well here is my story, it is truthful and factual I hope it helps in your decision on how to adjust your customer service model and so other people who read this when I post is everywhere possible can understand what will happen if they recieve a defective product from HP.


I recently decided to buy a new laptop and began shopping, since my last laptop was a dell (crashed, failed mother board) I decided to try a new company and avoid a company that uses cheap components. I heard that HPs were reliable and nice from some friends who had HP laptops and I decided to give them a try. The purchase of this product was simple and very efficient, much like you would expect it to be when buying a product. I am web savvy and like many who are I prefer to do most of my shopping online as it tends to be cheaper and you can customize the product that you want. After much research, looking through different models and the customer reviews of such models I decided on the Pavilion DV4t.



The DV4T-1300 to be specific, I customized it upgrading the memory, adding BlueRay, WirelessN, WebCam etc... I was satisfied with my model I paid for it from my Paypal account where I shifted the money to from another bank account. After I purchase this product I checked the order status and noticed it would taker 4 business days to build before shipping I thought this was a little long, but I could understand since I wanted a customized build. I was so excited for my new laptop that I went to the FedEx location to pick it up as soon as it arrived. I get home and start it up. Everything looks nice, from the glossy black finish to the stainless steel mouse pad. I start it up and my stomach drops.... An order I placed on May 4Th and received on May 11Th. was defective. The screen on the bottom right corner was damaged, like someone poking it too hard with there finger yet permanently. It is a minor blemish that is only seen when the laptop is on. There is no physical damage to the laptop other wise. Still I don't want to pay a $1000 for a laptop with a blemish! So I call HP to find out how to fix it. I figured they could just send me a new screen and I could replace it and send back the old screen. I am tech talented and capable of doing so.



I call tech line and explain the problem to the first Rep I talk to he transfers me telling me that I need to talk to another group. I get transfered to customer service where I tell my story again and then she proceeds to put on hold to figure out what to do. She comes back and tells me she will exchange it, send me a label to ship it back and they will send a new one doesn't sound to bad. She tells me to hold on while she sets things up. She also tells me that there is a survey I can take to provide feedback to HP on the call and the product and to ask for the survey at the end of the call. She puts me on hold while she sets up the exchange... Now I don't have problems with any foreigners but one problem I found is that she had an Indian accent and it was difficult for me to follow along with what she was saying. She comes back on the line after holding and tells me that its actually a different process. That they will have to credit me the money back to my Pay Pal account and then they can process the purchase of an entirely new unit and deduct it again from my Pay Pal account... Seems excessive but whatever it takes for me to get my new laptop ASAP right? She then proceeded to tell me that they could get a new one out to me ASAP without a wait for a build if I was to settle for a unit that did not have my customizations. She tried convincing me that I did not need a Blue Ray player and that a normal DVD player should suffice. If I customized it to have a BR player then there was a reason and I tell her I want an exact same build as what I originally ordered, she tells me this will take 5-7 business days to build and send sense it was another customized build. At this point I am about 1 hour into this call and getting frustrated, I mean anytime someone has to sit on a phone for an hour so a rep can figure out how to help you "the customer" exchange a defective product that obviously came defective from the manufacturer (no damage to the box, not even a crease) is going to drive you crazy. I try suggesting that to save time on all sides she just send me a new screen and I can replace it myself and send it back. This is obviously not possible because logic seems to escape all major corporations these days. I give in and say OK what ever it takes send me the label and I will send it back. So she starts putting together the build for the new laptop and and then at the end it becomes clear what she is doing, she wants to debit from my Pay pal account another $1000 for a new laptop that they will start to build, then when they receive the defective one they will credit back to my pay pal account what I owe. This can take any where from 7-10 business days to see a refund... This is absurd. Basically HP wants me to Float another $1000 for their defective product and mistake? You have to be kidding me, not that I don't have another $1000 but that is a huge pain in the ass. I have to transfer money around from various institutions to make it available in Pay pal (sense pay pal is not a primary bank of mine) then I have to put up $1000 dollars for there mistake? I would understand if they would not mail the new laptop until the old is received but to not allow an exchange unless I buy a new laptop from them is crazy. So I say no, let me speak to your supervisor, her supervisor Amber comes on the line and tells me that is the process and there is no other way.

That is when I decide to tell them to forget the new product, I will no longer support HP products and she can just send me an Overnight shipping label so I can get it back to HP ASAP for my full refund. She says OK, ill email it to you and have a nice day. I told her that I would like the opportunity to complete the survey that was offered in the beginning of the call and Amber tells me that is fine and to hold. I hold for a minute or so to only be disconnected.

There customer service is the worst I have experienced, I had a defective dell product once and they sent me the new item and a shipping label to send the old one back once the new one was received. I am completely confused on HP and I officially do not support any of their products due to the way I was treated. If one thing this economic crisis should do is show companies that customer are more important, obviously HP doesn't think so.

Cash Management

Cash management refers to how you manage your cash or other liquid assets; liquid assets are assets that are immediately accessible. Are there risks to poorly managing your cash? How does one properly manage their cash investments? The first thing we should look at is the risks associated with cash investments.

Cash investing can carry more risks then most understand, 1^st is inflationary risk. Inflationary risk is the risk that your money today will be worth less tomorrow with real value. Did you ever hear your grandfather tell you how when he was a child it cost $.05 for a loaf of bread? But today it costs on average $1.59? This is inflation! What you could buy with your money in 1940, bread being $.08 a loaf at the time, now cost 80% more! The historical average inflation in the US is around 3%, while the average cash position returned historically a 3.8% this means that over time if you maintain a cash portfolio your inflation adjusted return would be .8% annually. This truly is terrible for any money that has a long term goal, so make sure that your long term investments are well diversified with a mix of stocks, bonds, and cash.

Another risk with cash investments is the ease at which it can be spent. Since these funds are extremely accessible; being accessible means that it is easy to spend, and when it is easy to spend it can be easy to over spend. Did you know that banks hope you overspend? Most banks will incorporate an overdraft protection on your account. This means that if you accidentally spend more then you have in your account they don't mind covering it on the short term, but they smack you with an average fee of $27 per overdraft. An FDIC study recently released (http://www.fdic.gov/bank/analytical/overdraft/) shows that on average the APR of overdraft loans is 3,520%!! This brought in $37 Billion in revenue for the banking system in 2008!! Some banks will even reorder your transactions from largest to smallest to maximize these returns from there members. For example, lets say you have $100 in your checking account, and you, in this order spend out of your checking account with your debit card; $10, $10, $20 and $80. The $80 put you over your spending limit and if you have a good bank that values its customers this would cost you, $27 on average. If you're using a bank that reorders the day's transactions from largest to smallest, these same transactions would show up on your statement as $80, $20, $10, and $10. This means that your first 2 transactions would hit your spending limit and you would see an overdraft fee of $27 on each of the following 2 more transactions!! Yikes, keeping track of how you spend, when you spend it should eliminate this fee altogether if not teach you about your banks accounting methods. In general if you have a short term cash position, the more liquid the investment, the lower the rate; the less liquid the investment, the higher the rate.

Another risk of cash management is default risk; default risk is the risk that the institution accepting your money, promising to give it back at a rate stated, fails. When a banking institution fails this brings the risk of default as you are relying on this banking institutions ability to pay you back. In general banks, credit unions and brokerage firms are insured by a government sponsored company, to protect you from this type of default, but there are limits to this coverage and not all institutions are members of these guarantee companies. It is important to learn what these limits are at the time of investing, as they can change, and make sure your cash is properly diversified amongst different institutions, in general try to keep less then $100k in cash, per institution.

After looking at some of the major risks associated with cash management, it becomes clear that discipline and organization can save you a lot of money. Learning simple tasks such as balancing your checkbook or using a money management software like, Microsoft Money or Intuit QuickBooks to do it for you will not only save you a lot of your time in managing your cash, but will help keep you organized in knowing what you do spend to help you in avoiding these outrageous fees. When looking at banking institutions you should make sure to review there overdraft policies, this could save you the extra $27 when you accidentally do go over. Try establishing a checking account that is linked to a saving account that way you can cover your own overdrafts without paying the extra fees to the bank if the bank has to cover it for you. When looking to invest your cash, always remember that the higher the rate, the higher the risk and the only truly guaranteed investment currently is considered US treasury investments; try comparing your banks current rate to the national average on bankrate.com. If your bank offers rates below the average it may be more conservative with your money, if wildly over the national average one would question what that bank is investing in to achieve these wild returns. Checking the financial stability of your financial institution can help you in avoiding a default headache (bauerfinancial.com rates banks on an easy 5 star setting).

If you don't know how to balance your checkbook, here is a site I found that gives the basic steps. http://www.ehow.com/how_2299584_balance-checkbook.html

Resources used for this Article.

http://blog.thinkcashfinancial.com/2008/12/fdic-study-highlights-true-cost-bank-overdraft-programs/

http://www.fdic.gov/bank/analytical/overdraft/

https://personal.vanguard.com/us/VanguardViewsArticlePublic?ArticleJSP=/freshness/News_and_Views/news_ALL_longterm_12262007_ALL.jsp

http://en.wikipedia.org/wiki/Inflation

Americas Debt-Will we learn?

American Debt. So here we are with Obama in office, looking to pass a stimulus bill for $825 Billion, and as much as I think a stimulus is necessary for the economy to turn around, I just don't feel this type of stimulus is the way to "right the ship". I feel that debt in this country is what leads to this down cycle, and that printing more money and creating more debt is supporting that, which flawed us to begin with! I feel that the volatility we have seen over the past ten years in our markets is due to over-inflation of product (US GDP) with the 2 systematic failures that we witnessed from 99-09 being the prime examples, i.e. the dot-com (“.com”) bubble and the "credit" crises of 2008. These crashes were created by over-inflation of product. The dot-com crash was caused by a few things: super-liquidity creating the illusion of the growth of wealth.

Low interest rates and the liquidity in the financial markets made it easy for "would be .com companies" to "Borrow" money in order to finance ventures that ultimately failed. Most people had good ideas and intentions but lacked important characteristics to be successful entrepreneurs.

see http://en.wikipedia.org/wiki/Dot-com_bubble

This is a great article written in 1987 on the subject of debt and economics… Why didn’t we learn here? http://www.time.com/time/magazine/article/0,9171,146120,00.html

Of course, when you have no product or an over-inflated product, the inevitable happens; things collapse eventually. That’s all that debt does... it over-inflates wealth, wealth undeserved. Let’s say you go to a store to buy a $3000 TV but you have no money; so, you sign your name on a line promising on your name to pay it back over-time. Yet, after the 30 days with the TV you lose your job and are unable to continue payments... but you don’t want to give the TV back. So you ignore the calls from the collector and tell yourself it’s going to be OK! Well it’s not going to be OK, you’re about to smash your credit, making it hard for you in the future to do anything that requires a financial loan, because the trust you have built up on your name has been crushed. Hopefully nobody does loan to you again until you rebuild that trust, yet you walk into your local WAMU Bank, and your banker tells you, "You could own a nice house; we'll approve you." You buy a giant house that you can barely afford, and you miss one payment by accident and the bank instantly hikes your rate as a penalty. Then, you can’t keep up with the payments at all, so you start balancing your mortgage and living bills on your credits cards to keep up... This only lasts for so long, then Foreclosure! Here we are in 2009 after the "Mortgage Bubble" popped in 2007, and we witnessed a decline in our economy that was steeper than the great depression from 1929-1939. All because inflation of wealth, wealth that is not there!! Yet, we didn’t learn our lessons; here we are again borrowing money in order to try to rescue this economy from a 20's esq- depression. Come on!! How many times are we going to bang our heads against the wall before we stop!

Ill tell you what is going to happen, they will pass this stimulus bill, maybe a few more, and one of two things will happen. The economy will not correct and our industrialized world will fall into a 10+ year depression. 20-40% unemployment rate, with the majority of people going to their local town halls for food... Sleeping in local schools and buildings set up as shelters to help the entire newly poor survive to survive. This will continue until the government shrinks, becomes smaller and manages its budget properly. Over time as we balance our budget and deficit, things will right themselves and our economy will crawl out of the gutter and back to prominence... This will take decades. The sooner we learn to build on our nation’s strongest natural resource, (INTELLIGENCE-needs better EDUCATION!!) the faster we will return to prominence. There is a reason that financial analysts feel that the Chinese economy is going to overtake the US economy; most feel that will happen by 2020 and some even thought it would happen after the 2008 economic crash, most unlikely. Obama is trying to give hope to people with his charisma; the problem is you can’t give hope to people, you need to inspire it within people, so people achieve greatness on their own … What is hope when not earned? The other thing that could happen is that we do see job losses to job creations balance out a bit, housing prices stop their decline and the debt we put our nation into declines, and we shrug it off! “It’s OK! We’ll pay it off eventually” we say to ourselves. With more tax revenue, possibly, we manage debt slightly better. What happens if this new growth is built on false wealth once again though? So the market turns around in response to the stimulus and we once again get comfortable in our habits as Americans. We don’t learn our lessons and once again we will have to deal with another market crash, maybe a few more; they will happen with more frequency, until the eventual depression happens and we respond responsibly.

So what do we need to learn? What do we do? How do we fix things? We start with basics! We educate, we teach people to be more responsible with their money, learn the risks of credit, when is it ok to use credit and not ok to use it. We teach people how to save and not chase the fancy cars, or nice luxuries. The truth is that only the top % can afford luxury, and we should keep it to the top 10%. Is this unfair? No. You don’t earn it; don’t buy it on false hope. These are the things we need to teach our kids. Yes, this means a slower growing economy at first as we adjust from the pop and crash cycle that we are used to. It will take longer to build up our market economy again, but at the end we would have a more consistent and ultimately more stable economy that is grounded in reality, not fantasy. In another direction, there is no escaping that the government needs to shrink. Spending $3trillion a year needs to be cut by 50%, with the focus of the money that is spent on government directed towards the development of our best natural resource, education! The money that was being spent by our government ultimately gets into the hands of our people and thus the cycle of prosperity begins again but without the deceits of debt! This is our solution whether we like it or not…Now, or later it will happen, because we will learn, because society is progressive.

I’m going to do my part and try to help. I am going to make a push for educating our kids in high school on how to be financially responsible. How to manage cash and balance a check book, how to manage credit and learn about the risks of poor credit management. I am going to try to teach our kids to spend within their means!! I want to inspire a generation of kids to seek to achieve what they want rather than skip on to false hope. I am starting a non-profit that will seek to do this, so that schools will create a specific class that will address what is missing and maybe inspire a stronger focus on education..

Why did the Feds Lower the Fed Rate to Record Lows?

Why has our fed dropped the fed rate to a record low at zero to .25%?
There are a couple reasons for this, its an effort to help stimulate the economy and ease liquidity in the credit markets, but it is also to guard against deflation. What about the concern of inflation after cutting the rates so low? Do we want inflation? Yes, I feel there is a real threat of a deflationary spiral that needs to be hedged and thus the feds are making moves to start buying back treasuries putting more money in the market and the latest rate cut is to counter act this devastating effect..In this article(http://www.bloomberg.com/apps/news?pid=20601087&sid=aLj4INeKlU3M&refer=home)
it shows that there was an immediate response from the rate cut that was most likely predicted and hoped for by our feds, essentially hoping that the drop in the dollar will create inflation by making it more expensive to get foreign products. This also works in trying to keep business in the US, countries will look to buy our products becuase they are cheaper, and citizens will look to buying more US products aswell since it will come at a lower cost.


Here is the most recent CPI as of 12/17/2008













Notice the abnormal drop in consumer products over the past 4 months, much steeper then anything we have seen for the last 10 years according to this chart.

CPIhttp://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=CUUR0000SA0&output_view=pct_1mth


So what is a Deflationary Spiral? See below pulled from wikipedia.com
http://en.wikipedia.org/wiki/Deflation

Deflationary Spiral
A deflationary spiral is a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price. Since reductions in general price level are called deflation, a deflationary spiral is when reductions in price lead to a vicious circle, where a problem exacerbates its own cause. The Great Depression was regarded as a deflationary spiral.
A deflationary spiral is the modern macroeconomic version of the general glut controversy of the 19Th century.

Counteracting deflation Until the 1930s, it was commonly believed by economists that deflation would cure itself. As prices decreased, demand would naturally increase and the economic system would correct itself without outside intervention.
This view was challenged in the 1930s during the Great Depression. Keynesian theory argued that the economic system was not self correcting with respect to deflation and that governments and central banks had to take active measures to boost demand through tax cuts or increases in government spending. Reserve requirements from the central bank were high and the central bank could then have effectively increased money supply by simply reducing the reserve requirements and through "open" market operations (e.g., buying treasury bonds for cash) to offset the reduction of money supply in the private sectors due to the collapse of credit (credit is a form of money).
With the rise of monetarist ideas, the focus in fighting deflation was put on expanding demand by lowering interest rates (i.e., reducing the "cost" of money). This view has received a setback in light of the failure of accommodating policies in both Japan and the US to spur demand after stock market shocks in the early 1990s and in 2000 - 2002, respectively. Economists now worry about the (inflationary) impact of monetary policies on asset prices. Sustained low real rates can be the direct cause of higher asset prices and excessive debt accumulation. Therefore lowering rates may prove only a temporary palliative, leading to the aggravation of an eventual future debt deflation crisis.

Obviously... If we get past the deflationary spiral scare... because of all the money that is going into the market the next fear is of an inflation or hyperinflation stage, which is what happened to post World War 2 Germany... Folks where bringing wheel barrels to stores full of money to buy bread.

Hopefully our economy can recover before this happens. I guess the feds are addressing the issues as they come. I prefer being a fiscal conservative, small government and little involvement. Indeed a cut was needed, but cutting the rate as low as it did is concerning. With this extremely large government that has bend spend happy over the past 8 years (very Democratic like), this could doom the US into a lengthy and difficult depression, that is possible if this economy does not get under control. Lowering taxes and shrinking government spending is most likely going to be necessary in order to cope.

I think Obama is smart and sees this as he has already said he has frozen any of his plans to raise taxes in the next 2 years. I like this approach, taxes are already low for most, lets keep it that way and try leaving as much money in the economy as we can for now. Then within the next two years if there is an inflation scare they have the ability to raise taxes slightly and raise rates in order to take money out of the system and thus re-balance our economy. Again this is only going to work if the government learns to control spending and shrink!!!

Isn't this strange, we had eight years with a "so called" republican (conservative) president, that spent money and acted more like a democrat. Now we have a democrat admin coming into office and in order to help this economy recover he has to act more like a conservative! Looking at his actions speak to this, all his actions in the transition period are showing a different Obama then the campaign Obama. He has backed off most of his "Change Policies" and has been going through all the books in the government looking at budgit, getting ready to shrink government, sweetness! Score for the fiscal conservatives! I did not vote for Obama, not because I did not think he would be the better president, as I feel he will be. I was concerned of having a democratic president and a democratic congress. This feels wrong to me, as the founding fathers themselves wrote a document that was heavy on "checks and balances". I was also concerned with his tax policies in this economic times and his possible spending habbits being a democrat. I guess time will only tell how good of a president he will be...
I didn't vote for McCain either, I couldn't bring myself to vote for him, his VP pick was aweful and his policies resembled too closely to the Bush admin policies, I voted for Ron Paul.


What is Hyper Inflation?
http://en.wikipedia.org/wiki/Hyperinflation

In economics, hyperinflation is inflation that is "out of control", a condition in which prices increase rapidly as a currency loses its value. Formal definitions vary from a cumulative inflation rate over three years approaching 100% to "inflation exceeding 50% a month." In informal usage the term is often applied to much lower rates. As a rule of thumb, normal inflation is reported per year, but hyperinflation is often reported for much shorter intervals, often per month.

The definition used by most economists is "an inflationary cycle without any tendency toward equilibrium." A vicious circle is created in which more and more inflation is created with each iteration of the cycle. Although there is a great deal of debate about the root causes of hyperinflation, it becomes visible when there is an unchecked increase in the money supply (or drastic debasement of coinage) usually accompanied by a widespread unwillingness to hold the money for more than the time needed to trade it for something tangible to avoid further loss. Hyperinflation is often associated with wars (or their aftermath), economic depressions, and political or social upheavals.

Another Government bailout for the Victims of the Madoff Ponzi scheme

Rumors of another Government Bailout?! What are we.. the USSA.. United Socialist Sates of America!

http://wcbstv.com/business/madoff.ponzi.scheme.2.888036.html

Let’s start by going over what a Ponzi scheme is then look at what is happening currently with Bernard Madoff’s scheme. A Ponzi scheme is simple in principle but can become very complex, as in the case with Madoff. Essentially an investment firm offers potential clients above average rates of returns (usually dumb investors, as educated investors should be diligent in the analysis of their returns), takes the new investors assets and will use it to pay towards the returns on the earlier investors and so on. These types of scheme are obviously going to fall apart at some point since there is no true business here or product. Its a scheme that will make one an incredible amount of money, that is until it collapses.

Recently the famed investor, Bernard Madoff got caught running one of these types of Ponzi Schemes. In which it is estimated that it could reach total losses of about $50 Billion!! That is a staggering amount of money that is now lost. There were a large number of investors impacted of coarse mostly top1% investors, including large banks, charities, pension funds, institutional funds, corporate funds and big wig CEOs. My biggest questions here is what are these firms doing chasing abnormal returns? Most banks are borrowing our tax dollars right now in order to stay operational, and yet there are banks using the liquidity they do have in this type of investment firm? Seeking abnormally higher returns? Bernard must be one hell of salesman, I can see the charities and personal investors falling into this, but the hedge fund managers and institutional investors? The corporate, the banks and pension funds? They didn’t have questions? His scheme must have been going on for at while, and no one notices something out of whack? the scheme relies on the buy and sell of unregistered securities, so what was our SEC doing? Busting the Dallas Mavericks owner for insider trading worth about 800K? Or were they busy worrying about Martha Stewarts insider trading practices? Ooops.... they missed this jack ass robbing hopes and dreams? (Charities)
(http://www.huffingtonpost.com/2008/11/17/mark-cuban-insider-tradin_n_144320.html)
(http://www.sec.gov/news/press/2003-69.htm)

"U.S. District Judge Louis L. Stanton ordered that clients of Madoff's private investment business seek relief under a federal statute created to rescue cheated investors. Stanton also ordered that business be liquidated under the jurisdiction of a bankruptcy court and named attorney Irvin H. Picard as trustee to oversee that process. Stanton signed the order after the Securities Investor Protection Corporation asked that steps be taken to protect investors in the scheme, which has ensnared several major banks and prominent figures as victims and could result in as much as $50 billion in losses."
"Congress created the SIPC in 1970 to protect investors when a brokerage firm fails and cash and securities are missing from accounts. Funds can be used to satisfy the remaining claims of each customer up to a maximum of $500,000. The figure includes a maximum of up to $100,000 on claims for cash."

So now there are rumors that the government will do a full Bailout… I’m torn about this.. its another example of the upper echelon of our society are going to get out of their unfavorable situation and not take any ownership. These investors took extra risk with their investments, looking to make fast cash now! Then when the pyramid falls apart its ok to loose a couple billion dollars because you’ll get bailed out… I’m sure a lot of folks made a lot of money on this while it was working including some of the investors themselves... I agree of with allowing the SIPC coverage, of up to 500k per investor but going above this amount per investor is letting them off easy on being irresponsible. I don’t know the whole situation, I’m sure Bernard was very convincing, but were these investors diligent? I don’t think so.

So what are we left with? These companies went after abnormal returns and offerings, taking on extra risk with their investments, probably received an incredible return while things were good. And when the scheme collapses... Again a scheme that relies on gullible investors, we the tax payers are going to bail these guys out!! This is maddening. I want to take incredible risk personally, I’m going to quit my job, start my own company spend all my assets, poorly manage this company and when it fails I’m going to hold out my hands to uncle Sam to pay me back, and make things whole! Right

US Auto industry bailout

Well, I don't like whats happening in our economy today, I think our leader (Bush) is making poor decisions that are going to cause problems in the future, and hinder the growth phase of our economy, when it returns.

The auto industry bailout is a poor idea that should never have been considered by our leaders in the US. The auto companies are in terrible shape because of 1 reason POOR MANAGEMENT. Unfortunately the market (due to this poor economy) is shrinking, this is what happens in recessions, and with a shrinking market you need to shrink your business, this is how the economy works and this is how business management works. If you are having issues shrinking your business to a level that can function in the current economical crises, well then you file chapter 11 in order to restructure your business that will survive in this crises. This is what business is about! You plan for these down cycles and when it is worse then expected, you contract your business to a level that can function.

The worst thing you can do is shoulder the auto industry with America's tax payers money, this is an awful plan. People may lose there jobs, plants may have to close down, union contracts most likely will need to be resolved or restructured. In the end the Risk of a default at a later date, on the tab of the working American citizen is unacceptable, I applaud our senators who let the original bailout bill fall apart. Now hopefully, our spend happy president is smart and leaves the original financial bailout package alone to be used in the manner that is most important... Getting liquidity and cash into the system, to the corporations (banks, financials) that is what it was intended to to do.

Think about things, if you give GM $15 billion to continue their operations currently (which obviously is not working), GM has a running cost of about $2billion dollars(http://www.npr.org/templates/story/story.php?storyId=96844977) a month. With demand for cars globally expected to fall through 2009 and possibly 2010. That means even with a taxpayer bailout of the company they will need more!! So the eventuality is a restructuring of the company. This short term bailout is a shot in the dark, with the unions, and the companies executives supporting hoping for a miracle turnaround, which is unlikely.

I am an American citizen, with a background in investments, and this is a bad investment I don't want our country to make. When you are relying on a miracle to make your investment turn out positive in the short term with no long term benefit apparent your out of your mind. I would rather see the money go to a program for the folks that ARE going to lose there jobs, funding education, secondary schools, unemployment and other programs. This as well does not have a short term return, but it has a more promising long term effect overall.

Here is a great article on why the original bailout failed in the Senate... Thank you senator Coburn (R-TENN) http://www.cnsnews.com/public/content/article.aspx?RsrcID=40775

“As far as the failure of last night, it solely lies on UAW,” Coburn told CNSNews.com. “All we asked was, ‘Just give us a date at which you will have competitive wage rates. We will put it in and that’s what you will have to meet.’ They would not move. They would not renegotiate their contract with GM as far as wage rates.”