Category: Authors

POOR RICHARD’S REPORT
Chapter 17
Big Banks Are Really Bad
One item that needs particular attention is that computers can work wonders only depending on who is programing and running them.
Banking has the same problem. Who is running the bank? It is not the computer running the bank.
When Bill Gates made Microsoft Windows for every computer worldwide that turned on the greed machine, wannabees wanted to make as much as he did or least become a billionaire. Today these wannabees are thinking short term instead of long term. Bill Gates had a goal. Improve the world of computing.
Timothy 6:10 states it very clearly in a single sentence for us humans. “For the love of money is the root of all kinds of evils.”(English Standard Version) It does not say “money is the root of all evil.” It is how one makes money – not how much- that counts.
Individuals who had huge egos and no morals abound in history. Men who waged war with
no regard for life like Genghis Kahn and Napoleon were mass murderers in reality. That is why Harry Truman, President of the United States after WWII, insisted on the Nuremberg Trials of Nazi Party Members to make sure that 100 years from now they did not become folk heroes. Money was not their primary focus in life.
Truman, Churchill, Eisenhower, Reagan, Mustafa Kemal Ataturk were world leaders who had goals to do well for the people during crucial times in the twentieth century to name a few. Money was not their primary goal.
J P Morgan was the most powerful banker. He set the standards and companies he backed are still powerful and remain leaders in their respective industries.
Sadly, his bank, one of the most powerful and most fined, has him spinning in his grave. They call him “pin wheel JP” in bankers heaven.
When banks become too large managers tend to inflate their figures to their superiors, just like communist countries. Then a “rogue” trader makes a mistake and the cover up begins, ending in apparent suicides maybe?
JP Morgan manipulates almost every market they are in. They are fined billions. This allows them to take part of the fine as a tax deduction. If they had to go to a real court, the Judge and Jury would probably break the bank up into five different businesses, or better yet merge their divisions with smaller banks.
They have been behind the manipulation of gold and silver markets since 2008 when they bought Bear Stearns. The monies from the Quantitative Easing (QE’s) done by the misguided Federal Reserve, has been hoarded by most banks because the velocity of Money as measured by the Federal Reserve is down – not up. With all that money supposedly being pumped into the economy, the velocity of money should be soaring. I believe, and I could be wrong, but JP Morgan Chase has been using these funds for shorting silver and gold contracts and then buying the low price metals in the Exchange Traded Funds and taking delivery to the metals. This is in direct violation of commodity rules of fair trading. They then deliver these precious metals to commodity brokers to whom they owe stock. They have actually sold high and bought low by breaking existing laws or operating in the very grey areas. JP Morgan is operating immorally and dishonestly for a world leading industry.
The US Government and the Federal Reserve have been frantically trying to get the economy moving and to fight deflation. All they have to do is stop the manipulation in Silver and watch the metal fly to the moon. Silver is used in practically everything beside coins.
The precious metals will stay down or go lower with minor blips up, until JP Morgan Chase is called before a Congressional Investigating Committee for Criminal Activities.
Moral: Governments and Central Bankers should tighten controls on their bankers or else the Bankers end up running the Government.

Libor
London Inter-Bank Offered Rate
Major banks and their traders have been rigging the overnight interest rates for years. This is what we have to pay for various services.
Each country has its own investigation and as the fines roll in and the cover ups are exposed it will get worse for the international banking industry. The public is supposed to be able to trust their bankers.
Where is all those billion dollars in fines actually going?
This is just the beginning for the international banks worldwide.

POOR RICHARDS REPORT
Chapter 16
THE REAL MEANING OF THE 2014 ELECTIONS
Our forefathers who wisely founded the United States of America had the farsightedness to glimpse into the future and see when their leader would come under fire. They wisely set up checks and balances. The President would be elected every four years and the House of Representatives every two. Also only one third of the senate would stand for election every two years along with the House.
The final check would be the Supreme Court of the United States which would decide if the laws passed were constitutional. The Congress and the President would decide who would sit on the court. Their term was for life.
What is amazing about the document is that it was formed by citizens from all walks of life. There was no gridlock.
Gridlock is when the house passes a bill and the senate ignores their bill, or votes it down. In England the Prime Minister can call for a new election. It is interesting that their Prime Minister has to answer questions in their Parliament meetings.
Every member of Congress has a committee or is on one. Each committee is made up of 14 members. Ideally seven from each party, with the Speaker of the House deciding to break a tie vote. So when the house is lopsided to one party the majority has time to do other things and can skip meetings.
I was once fortunate enough to be with Congressman McEwen from upstate NY when he was one of few republicans that won in the Goldwater political debauchery in 1965. He was one of three republican members on the committees and had to meet every day at a hearing while democrat members met once every 7 days.
In his office his secretary had urgent messages pinned in his chair. In order for him to sit down he had to pull the pin out and read the message and give her an answer.
So the minority party members are the ones who have their work cut out for them.
Now, all the illegal manipulation going on in the market place has been able to have a free hand because of the gridlock. Basically, the senate refusing to hold hearings has stonewalled many reforms that the house wanted. The house knew they would get nowhere if they passed a bill.
Now consider our Social Security System.
Millions of retired citizens depend upon their Social Security check. The lady who interviewed me asked
“What happen to you in 1974?”
“That was the year of my divorce. How do you know all about that? ” I asked.
She then spun the computer around triumphantly with a big grin. It had all my earnings from day one. She then told me when I would get my first check and the amount.
When I started to think about it, I was amazed how well the government worked. Imagine what would happen if Tuesday’s pay did not come until Friday? Riots? What would happen if the welfare checks came late? I have heard that Walmart is crowded at 12 AM on the first day of each month as millions line up to use their welfare tickets for food.
My point is that these systems work for the everyday folk like us.
So this gridlock has made millionaires and billionaires who have taken advantage of the system. This system which has operated without reform. There were the last money makers from the railroads until the government took over. There were thousands of trusts set up with Boston Banks (When Boston was the financial center) that could only invest in railroad growth stocks. Many of these investors were known as “Robber Barons”.
Wall Street must now reform itself or the Congress will. One of the worst crimes for a broker or brokerage firm or trader to do is called “front running”. That is when they know a large order is coming and they buy or sell ahead of it. That is what High Frequency Trades (HFT’s) do. Except they front run everything for a profit.
This is just one little item that the congress must address in order to satisfy the public demand for better government.
So, come March I expect to see many inquires start in both houses about illegal positions in commodities, as well as reforms in the Dodd Frank Act and Obama care.
It takes a 2/3 vote in the senate to override the President’s veto, so only the most controversial parts will be examined. That way they will be able to attract moderate democrats into the fold.
The United States, I believe,
is heading for the “middle of the road” politically. In the beginning it will be a rocky road for everyone.
Just remember LBJ hit the social security funds in his guns and butter program, but the paychecks were still coming on time. Time is running out because the checking accounts are becoming empty.

POOR RICHARDS REPORT
Chapter 14
A REAL HONEST TO GOODNESS PANIC
It might start at 2:30 in the afternoon EST and just dribble down to about 126 point drop in the S&P 500 Index which will require a 15 minute trading halt. That is when the circuit breakers take over. It is exactly 3:20pm when the market resumes and immediately starts it’s slide. By this time traders are trying to unload their holdings in stocks, and by 3:25PM the market is down over 20% . The market then shuts down for the day. It would be a historic day in finance when the Circuit breakers were finally used.
Market gurus would frantically search for a reason… and then a clerk in a back office would make an unofficial announcement. Their computer had had a double order by mistake and it kick started their computer high frequency trading programs. So the first 126 point drop was computer driven. Then individual and margin orders kicked in other computer driven programs.
This is dangerous. Computer driven programs are taking over the markets instead of individual investors so that the owners can make billions while we quake in our boots.
No one can really tell you when the selling will start or the exact top of the individual markets, but when it starts, the slide will be a doozy, because all the safeguards have been tossed in the recycle bin by our representatives who received payola from delighted lobbyists.
The Dodd–Frank Wall Street Reform and Consumer Protection Act was signed into federal law by President Barack Obama on July 21, 2010 at the Ronald Reagan Building in Washington, DC. Passed as a response to the Great Recession, it brought the most significant changes to financial regulation in the United States. With this reform, the protection of the individual investor was severed for the protection of the “banks”.
The “continuing education courses” that qualified financial analysts must take contain true false questions. When they are answered wrong the test can be retaken immediately. That is proof of how confusing the D-F ACT is. 800 pages long with 3000 pages of footnotes trying the clarified rulings.
This Act should be trashed completely and the reforms that I will express in the next chapter should be implemented post haste.
When the next day dawns we will find out the other markets all over the world have also sold off as everyone wants cash.
In the United States stocks open with the symbol BW –OW. This means bid wanted and offer wanted. Name your price. Finally offerings are made and transactions ensue at various levels depending upon the company and the dividend. A week later most securities are selling around their book value* or less and several hedge fund managers may have died mysteriously. Unemployment rises to the teens and soup lines appear all over town. Police stop arresting because the jails are full and they release most as harmless vagrants. Several companies announce that their debt will be in default due to “market conditions”. Trading hours are shortening to 10am – 3pm for the weekday. Pension plans falter and deflation rears its ugly head. Calmness overcomes most of the country as people line up for credit or are off to sell household items or treasures for food and clothes. We start a barter system as efforts are made to recall our elected officials.
Soon people become more realistic and self-reliant. Neighbors start helping each other and protecting mutual interests. Greed disappears; as a show of wealth brings social disapproval. Armies start marching against each other, but stop because of no pay no food. The planet earth is in chaos.

All the above can happen unless we institute the reforms mentioned.
We must reform the “banks” and the entire industry before it is too late.

*Book value: if the company sold everything for cash that is what one