Re: Very easy money almost a sure thiing.

lawhonac@xxxxxxxxxx wrote:
On Sep 21, 1:00 am, "Arlo-Payne" <arlo_pa...@xxxxxxxxxxx> wrote:
I rarely give stock advice in fact the last time I gave advice was a few
years ago. That advice concerned Kmart when it was below $2 per share.
Since that time they have gone up greatly and taken over Sears.

Thursday AIG was at $2.05 per share and up to $3.84 on Friday. I have
done a great amount of research concerning AIG and the bailout planned for
the company. At this point I see nothing that can stop it from hitting
$15.00 per share in the next 12 months. After reviewing all the
information I have at hand I feel the stock is headed for a price
somewhere from $30 to $40 per share within the next 12 months.

My advice: Take any and all extra money you can invest without causing
you any harm or concern if it is a 100% loss. For some this might be as
low as $500 for others it may be much much more. At this time I am 100%
sure the return on whatever investment you make in AIG stock will have a
return of at least 400% of your investment. I also have a very strong
feeling it will have a 1000% return with in the next 12 months.

Above all be your own judge and review the data for yourself before
investing. My faith is so strong in what I have seen I am between 20,000
and 25,000 share on Monday as long as the stock is still under $4.00 per
share.

AP

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Arlo, et al:

You guys might be right about AIG and Washington Mutual - at some
point in the future - but you might want to consider a key question
first: What if the $700 BILLION bailout is not enough? What if that
amount only turns out to be half or a third of what is required?
Nobody really knows how much of this toxic financial waste is
scatterred around the world, but once the rescue bill passes Congress
and is signed by President Bush, (and they all wipe the sweat off
their brows thinking "Thank God, it's over!"), we're likely to see the
termites come crawling out of the woodwork. How much do you think
equites are going to be worth when the Government's printing presses
crank into high gear running 24/7? Somebody has to pay that $700
BILLION - and that "somebody" is going to be us.

One thing certain to come out of this huge bailout is an increased
debt burden. An increased debt burden (on this scale) inevitably
means inflation and/or stagflation - a repeat of the mid-to-late
1970's. For those of you too young to remember, the stock market got
clobbered - the Dow dropped down to 574 at its lowest point (from an
admittedly lower starting point than today) - and the price of gold -
another inflation indicator - hit an all-time high in late 1980.
These swings were due, in part, to an "oil shock" following the Arab
oil embargo of late 1973, but the United States was also running large
budget deficits, (i.e. huge debt), in the 1970's. At its worst point,
during the administration of Jimmy Carter, the annualized inflation
rate topped 13 percent and interest rates approached 21 percent.
Ronald Reagan successfully campainged for election in 1980 by creating
what he called a "misery index" - which was the sum of the
unemployment rate and the inflation rate - and asking the American
people if they were better off? The bulk of the American people were
simply fed up with going to the grocery store every week and seeing
that the price of a can of beans had gone up another ten cents from
the previous week. Inflation (and rising prices) was something that
affected everybody. Consequently, Reagan was elected in a landslide.

I'm not a financial expert and I don't pretend to know all the
intricacies of "high finance," but I do know history. If we're about
to throw this much debt on to American taxpayers all in one fell
swoop, then don't be surprised if there is an explosion of inflation.
Interest rates will have to go up. (Do you really think the Chinese
or the Saudi's are going to keep buying our debt at negative rates of
return?) If, (or make that when), inflation starts skyrocketing, look
for the stock market to take it on the chin.

Our political and business leaders have delayed the inevitable for the
better part of twenty years, but as no less a sage than Warren Buffett
has pointed out; at some point you have to pay the piper - and we're
about to start paying - big time.

Alan C. Lawhon
Huntsville, Alabama

Where is all the money going to go? Back in to the Money Market accounts that didn't even know that they had lost it.

The bankers are just not going to have the assets (mortgages) any more. The CDO's won't mean anything anymore, the insurance companies won't issue them anymore.

If nothing else happened there wouldn't be any inflation. It is a giant do over. So where did the money go?

It has already been spent for the most part, it is floating around our economy and has stopped in peoples houses and vacations.

The REAL moral hazard is the one that we haven't dealt with yet. All the people that LIED to get their loans. This is still massively illegal even if the banks LET you do it.

All of the people that yet want to get one over the government with their mortgages.

Those that are going to make a foreclosure decision because even though they could afford their mortgage it makes sense to just start over again.

The real problem is that the government will all of the sudden be the worlds largest mortgage bank, and have to deal with all of these individual mortgagees.

Hell we can't even do taxes right. This will be the single biggest cluster-*** in history.

All of this worry about inflation, taxes, blah blah blah. REALLY REALLY, is not a big deal.

The big deal is the mortgages. Not the banks, not the insurers, and not the money markets. The mortgages.

This could have been worse. WM was an odd bank. They unlike everyone else, KEPT the mortgages. If all banks were like this, we would have seen a massive collapse of the thrift banking system. not 12 banks, THOUSANDS of banks.

But oddly, this whole process, as ugly as it is, is a lot cleaner, because literally, most of the bad mortgages are in just a few locations. Fannie Mae and Freddie Mac, A couple of the Big Investment Banks, Washington Mutual, and through CDO's a big chunk of the risk was kept at AIG.

The banks are not being made whole, they are having the cancer excised. The money market holders are being made whole. But they had no reason to believe that their money was at risk.

Good money to be made in property management and mortgage counseling. Just saying.

Interest rates SHOULD go up. They are too low. This is not "inflation" this is a restriction on money supply. It will lower the value of leveraged property. Like Real Estate, and to some extent, cars and college education.

Inflation increase the value of things on the stock market. The stock market does not take in on the chin because of inflation. It will take it on the chin because of higher interest rates, because money will be more attracted to higher rates at lower risk.

The debt is being "paid for" by a "tax" of lower real estate values. It will spread somewhat because of less wealth based economic activity (that activity that happens just because people are or feel wealthier, rather than real wealth activity having happened, like productivity).

This will constrict the economy and result in lower taxes. Capitalism does not work very well during periods of contraction. This is what all those people are talking about when they say it will take a couple of years to work through this.

But if we don't fail completely, it is quite likely that we can come out the other side just fine. There is nothing really fundamentally different or wrong from where we were say in 2002. Except we have this RE bubble that needs to be deflated. It won't go to zero, we all have to, want to, live someplace.
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