Oh yeah. One other thing. The video I posted (see below) shows the new business model:
CwF + GrB = $$$
That is:
(A) Connect with fans + (B) Give them a reason to buy = (C) Reap revenue (and profit)
The video argues that this is one of the more pragmatic business models, and is the wave of the future. That artists, musicians (manufacturers) must now do A (with the market) and B (with consumers) or else they will fail to get C (reap a reward). This should be a wake-up call, an eye-opener.
Assuming that this model DOES work and is applicable to more than just the Music Industry...
Look at it from another, larger scale perspective.
I.E. The international market.
If countries fail to connect with "fans," then they will fail to do business.
I think one of the biggest problems, internationally speaking, is that America has spent decades destroying international "fans" and shredding apart its reason(s) to do business. This isn't just a matter of popularity sliding; it's a matter of millions of people despising -- dare I say, hating -- the US.
It seems that the USA is not very popular (not that it ever really was, except in its own eyes) and that end is stalking them to bite them back. The transfer of wealth in the world reflects an international revolt, and until the USA starts to humble itself and give other nations a "reason to buy," there is [unfortunately] going to be fewer and fewer "sales."
The sobering thought is, that as the wealth IS increasingly transfered, there will continue to be this vortex-effect, and it will have a concussive effect on other nations that are so delicately connected to the US economy. Until the dust settles, as they say, many other nations (like Canada) will be served a similar plate of humble pie.
In this we can see that the old, staunch ways of doing business in the music industry are a thing of the past. And its like the record labels don't see how they are losing fans and NOT giving consumers a reason to buy. Technology and accessibility have changed the market, and it seems only the savvy business-musicians (independent artists) are getting this revelation and embracing the new distribution model, as opposed to trying to protect the old model, and choke out the consumers (fans).
Now this is JUST the music business, but if you consider it being representational of business in general, or as one gate in the symbolic "house of commons," then it demonstrates -- in a time of flux -- that until the old-money establishment changes its agenda, money will still be lost, and the economy will suffer. However, as the adroit upstarts adjust and restore balance, in a changing of the guard fashion, then the economy will have a chance to return.
I think a lot of systems have to change. The entrenchment of thinking must be unearthed.
Old school styles and means just don't hack it anymore.
I'm hearing so much testimony of industry giants (in various sectors) being forced to concede to lesser, newer upstarts who know the times, who recognize that things are getting done differently, and who can circumvent the establishment for direct to market access.
The major news about the ivory tower literary agency in LA, being a case in point: it could not match up to the newer, fresher agency, had had to give ground once numbers proved that old relationships and alliances aren't necessarily a help anymore.
We have a youtube generation amongst us. (See the documentary RiP: A Remix Manifesto for more insight into this generation and how IT bends the rules to get what it wants).
In the first place, where has it gone? Honestly, the manipulative nature of both the political and the elite class need to be investigated in a properly manner. Is American gov. so wasteful of the resources at her disposal?
To answer this question,there is very need to X-ray the administration of Bush for the eight-year period in terms of funds voted to the wars in the trouble-spots of the world,tax policies,social and medicare. Just imagine a man that has been pouring water into basket for good eight years. It really beats my widest imagination. It is not about the economy itself,but,the wastefulness in the American economy.
To me,individual economy should be developed at the expense of the gov. own economic planning. More than 80% of the people in gov. do not know about the emergent of the new invisible world, where fast knowledge is the order of the day. They still believe in doing things with their old educational system coiled with gov. inefficiency. In this economy meltdown, this is the time to plan in terms familiarizing oneself with the latest knowledge that will enhance one's financial independence( getting out of the Rat Race).
I live in an area hard hit by the fall out in a small town called Fairmount, IN (home town of Garfield and James Dean-FYI) and we are close to Marion and Muncie, IN, a couple of towns that at one time seemed to thrive financially because of the manufacturing plants for automotive industries. At least in Marion there are signs of a resurrecting economy with several areas growing with new businesses, all of which seemed to have popped up in the past 2 months, it's pretty amazing and very encouraging.
There are many homes for still for sale, many foreclosures, and from my perspective many investment opportunities for rentals to profit from. I've just started reading the Rich Dad series and read Retire Young, Retire Rich in about 4 days. I am researching the real estate investment procedures and plan on making several purchases of rental properties by the end of the year. I would jump on them now, but I am getting married in 22 days and have been influenced ever so gracefully to not make any drastic changes so soon before my wedding.
Anyway, I see signs of a very profitable time. Businesses are and have popping up here in one of the most recessed areas in the country. -Robert from Indiana
Economy is innocent. The people in the economy, control or being controlled, are not.
If you believe in universal truth, there are ups and downs in life. In other words, we are living in the world of "Yin and Yang". Current recession is simply a matter of balancing when it's not balance.
People's emotion cause imbalance. I hope you and I will learn from this event and always remember it. It will be your an inner weapon to balance as time comes. I felt emotion when March'09 DJIA low and I will keep reminding myself of the feelings. When I write this article, I began to reliaze that it's time to take control my emotion and move on. What's life if there is no "Yin and Yang" in economy?
just going over latest posts. through out I note amongst your US correspondents a strong anti Socialism bent. A society is judged by how it helps those least able to help themselves. that does not mean you count out what we know as capitalism. As I have said in other posts I see the future a mix of old & new with a mix of capitalism providing social benefits.
that is the world movement & hint from many of the corporates they have seen that too. so people should use the lessons you provide to make the world a better place by making a difference.
work within the system. Socialism can co exist with capitalist ideals & both prosper.
My plan is to be able to use capital to under pin services in way you talk about for individuals then with the freedom that provides move onto next concept. each time providing a benefit to society in a manner that pays for itself.
Not sure if that makes sense, but it is now possible by using what you have taught & depression that is coming.
The economy will come back - the real question is what will it come back as. As Robert points out, it won't come back to the way it was before because the underlying foundations are no longer there or dying and Obama's in the house. It's a lot like Obama's campaign slogan for "Change We Can Believe In." Well, you'd better believe most Americans are not going to like the change although we will eventually adapt and most will go with the flow rather than fight for our freedoms.
When I studied Economics in university, I learnt about the developping cycles. I guess that such a cycle is coming to end while a new one is starting up. I would better call that renewal, not crisis or coming back.
Our so called President Obama ,who has more than doubled the gov. in his first 100 days , which took Bush at least eight years to do, is running this country into the ground!! We are moving closer towards Socialisim everyday with Obama and his admin. The Gov. is going to control everything and free enterprise will no longer be, thus our Economy as we know it today will never be the same if any at all. The panic hasn't set in yet and I feel it's going to real soon. I've always been an optimistic, called a polyanna,even gulable at times, and I believe this is the beginning of the end of our economy.
We need to act now in the present so we have a future to plan for! I'm learning how to make the best of the market today with the money I have now. I'm going to have to call it as I see it and plan my escape for me and my family. My prediction is free enterprise is going away and the gov. will have all control. Who in their right mind would want to invest their hard earned money so the gov. can control it and reward the one's who only want hand outs. Our early leaders and founders of this country are rolling in their graves I'm sure!!
We need to protect what we have worked so hard to accomplish. Who knows maybe the majority will plan their escape by starting a new Republic, a new economy some where else on this earth. It's unfortunate that our large corporations feel that they had no other choice but to go to other countries to escape their own gov. taxes. It's almost like history repeating itself all over again!!
Sincere thanks Robert and Kim for allowing me to contribute my thoughts and concerns.
We are now in the information age. Everything is smaller, faster and so far more volitile. Big government and the way the economy was run in the industrial age is now obsolete. Unfortunatly too many people including those running our public services and pensions are still trying to play the new game but with the old rules. We are probably in a dead cat bounce situation at this time. Many people feel everything is fine now and we can start buying stocks etc, make nice profits because they have bought at the bottom.Unfortunatly many of these people are only prepared for their investments to go in one direction, UP. I hope for their sakes they are right. But if we have not hit the bottom like i fear ( not for me )then anymore bad economic news will cause panic ,particuly after all our laeders have tried to convince us they are in control and are our saviors.People will feel betrayed and lied to so when the government say everything is OK the next time will people belive them ?.Probably not.Nobody can say for sure which way the economy will go maybe this is the great recovery, but i doubt it. The point is take the time to learn the rules of the game so you can be prepared for any outcome.
There is a saying that goes something like... "Those who live by a crystal ball eat glass." Whether the economy comes back any time soon does not matter to me.
What I get out of chapter 6 is the question, are you getting prepared for the new economy?" It amazes me, frustrates me, worries me and excites me as to how many people don't have a damn clue of what is going on, starting with my own family and friends.
All they care about is clinging to a job and their obsolete academic education. They are becoming the road kill of the invisible world. When the economy really comes back I for one will be grateful for people like Buckminster Fuller and Robert Kiyosaki who have been willing to share their knowledge (money) with the rest of mankind. But it's up to me to apply it with no guarantees.
I wholeheartedly agree we are headed for more blood in the streets both figuratively and literally. Just this past week in London an enraged man drove his car through a crowd of people attending a celebration involving the royal family. He was recently fired from his job. This is a perfect example of people literally being run over by a new world.
The economy coming back now is fool's gold. Golden rule #3: "A Fool and his gold, work for those who make the rules." Thank you Robert & Kim.
No, this is just a false start.
The huge inflationary seed has not sprouted yet. All the funny money that drives inflation takes a while to show itself. It will come on with a vengence.
It must be said, that like the breaking of a great dam, the American decent into Marxism is happening with breath taking speed, against the back drop of a passive, hapless sheeple, excuse me dear reader, I meant people.
True, the situation has been well prepared on and off for the past century, especially the past twenty years. The initial testing grounds was conducted upon our Holy Russia and a bloody test it was. But we Russians would not just roll over and give up our freedoms and our souls, no matter how much money Wall Street poured into the fists of the Marxists.
Those lessons were taken and used to properly prepare the American populace for the surrender of their freedoms and souls, to the whims of their elites and betters.
First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their "right" to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights. Then they turn around and lecture us about our rights and about our "democracy". Pride blind the foolish.
Then their faith in God was destroyed, until their churches, all tens of thousands of different "branches and denominations" were for the most part little more then Sunday circuses and their televangelists and top protestant mega preachers were more then happy to sell out their souls and flocks to be on the "winning" side of one pseudo Marxist politician or another. Their flocks may complain, but when explained that they would be on the "winning" side, their flocks were ever so quick to reject Christ in hopes for earthly power. Even our Holy Orthodox churches are scandalously liberalized in America.
The final collapse has come with the election of Barack Obama. His speed in the past three months has been truly impressive. His spending and money printing has been a record setting, not just in America's short history but in the world. If this keeps up for more then another year, and there is no sign that it will not, America at best will resemble the Wiemar Republic and at worst Zimbabwe.
These past two weeks have been the most breath taking of all. First came the announcement of a planned redesign of the American Byzantine tax system, by the very thieves who used it to bankroll their thefts, loses and swindles of hundreds of billions of dollars. These make our Russian oligarchs look little more then ordinary street thugs, in comparison. Yes, the Americans have beat our own thieves in the shear volumes. Should we congratulate them?
These men, of course, are not an elected panel but made up of appointees picked from the very financial oligarchs and their henchmen who are now gorging themselves on trillions of American dollars, in one bailout after another. They are also usurping the rights, duties and powers of the American congress (parliament). Again, congress has put up little more then a whimper to their masters.
Then came Barack Obama's command that GM's (General Motor) president step down from leadership of his company. That is correct, dear reader, in the land of "pure" free markets, the American president now has the power, the self given power, to fire CEOs and we can assume other employees of private companies, at will. Come hither, go dither, the centurion commands his minions.
So it should be no surprise, that the American president has followed this up with a "bold" move of declaring that he and another group of unelected, chosen stooges will now redesign the entire automotive industry and will even be the guarantee of automobile policies. I am sure that if given the chance, they would happily try and redesign it for the whole of the world, too. Prime Minister Putin, less then two months ago, warned Obama and UK's Blair, not to follow the path to Marxism, it only leads to disaster. Apparently, even though we suffered 70 years of this Western sponsored horror show, we know nothing, as foolish, drunken Russians, so let our "wise" Anglo-Saxon fools find out the folly of their own pride.
Again, the American public has taken this with barely a whimper...but a "freeman" whimper.
So, should it be any surprise to discover that the Democratically controlled Congress of America is working on passing a new regulation that would give the American Treasury department the power to set "fair" maximum salaries, evaluate performance and control how private companies give out pay raises and bonuses? Senator Barney Franks, a social pervert basking in his homosexuality (of course, amongst the modern, enlightened American societal norm, as well as that of the general West, homosexuality is not only not a looked down upon life choice, but is often praised as a virtue) and his Marxist enlightenment, has led this effort. He stresses that this only affects companies that receive government monies, but it is retroactive and taken to a logical extreme, this would include any company or industry that has ever received a tax break or incentive.
The Russian owners of American companies and industries should look thoughtfully at this and the option of closing their facilities down and fleeing the land of the Red as fast as possible. In other words, divest while there is still value left.
The proud American will go down into his slavery with out a fight, beating his chest and proclaiming to the world, how free he really is. The world will only snicker.
Stanislav Mishin
The article has been reprinted with the kind permission from the author and originally appears on his blog, Mat Rodina
Not, I really think that never come back the same economy.
Now we need new rules, new markets, new investor and an agility economy, fast to adapt to changes.
So, It has begun the New Economy Era, enjoy the entrepreanur projects, fresh ideas, fresh money for this time with a vicious and old-school economy.
One sample, the biggest companies has crushing-down, need to be more efficient, lighter, and with a new ideas system.
But the entreprenur has a big opportunity to be the business one-person to a new economy with a better choice of services or goods.
So, begin to jump, to growth and reach a new potential-market.
If the root cause of a condition is not changed then it's impossible for a recovery to occur. If one is addicted to Heroin and determines to overcome the addiction, yet still increases use of the drug, how can that logic apply as a solution? The very same conditions exist now in our Economy. We experienced a bubble based on Real Estate, and there is no doubt this was a determined action supported and enacted by the elected officials of the U.S. Government, and was supported by the Super Wealth backing the political system. No matter how we came to this point the masses are being convinced that now is a new paradigm. The Sheep are being led to the butchers block! Rich Dad would no doubt see this as a sham. The numbers simply will not support a recovery, on the contrary, we now heading full speed into a Worldwide inflationary implosion of all paper Fiat currency's. Anything not backed by Gold and or Silver, God's Money in other words, is going to become nearly worthless. Are you ready for this? If not time is not on your side at all!
I just read a report that the Obama admin. is looking into the creation of a "guaranteed retirement account". This account would SEIZE all 401k accounts to create the new government sponsored accounts. To "protect" people's assets....the rate of return would be a measly 3%. Argentina did something like this and their economy tanked afterwards. My guess is that the stock market here in the U.S. would respond the same way...crash - and it would drive capital from the markets. Have you heard about this yet? Can you address this in your writings?
Here's some of what I found... http://online.worldmag.com/tag/guaranteed-retirement-accounts/
People are listening and taking action. What was taken for granted as income, work, and retirement is clearly now the responsibility of every individual. If we take that responsibility, the economy will stabilize and we will all be stronger and smarter. Pay off the credit debt. Put money in savings. Have multiple streams of income. Work together.
I do not think the economy will recover to what it was. Sure, there will be sectors that thrive, but we will not see the consumption that we had. And, the stock market may not recover for decades. Why? The baby boomers are retiring and have past their peak spending years. An aging population will strain younger and smaller generations financially. Americans are in too much debt. I read somewhere that we have as much credit card debt as our country has debt. If that is true, then we are living on borrowed everything and we probably can't pay it back. I hope that we can begin to lead more quality lives that do not revolve around defining ourselves by how much stuff we have. It is exhausting.
The economy is in a state of historic change. As you have often emphasized, the Industrial age model is dying and the information Age is replacing it at lightening speed. The economy will not improve until all the bad debt is cleansed from the system. The present monetary system is going to collapse and something new will emerge in its place. The question is: WHAT will the new system be? Some speculate that the new currencies will have to be gold-backed in order to restore confidence. There is also talk of the USD, Mexican peso, and Canadian dollar being replaced with a regional currency called the Amero. And China is attempting to make the yuan (renimbi) more widely circulated.
I think the stock market way overreacted. This resulted in massive deep selloffs. Many companies should not have gone down that much. So some rise in the market and the economy is warrented. It will take amny years to fully return.
I think we'll see a bear market rally based on the injection of stimulus by various governments competing concurrently with a severely limited credit environment, with the latter eventually winning out as we move to heavy recession/depression in 2010/2011. I believe that Robert's much hyped "march of the babyboomers" will be moderated by them being forced to continue working beyond their planned retirements, after all the "the march" is based on them being able to afford to retire. Never the less, there will be a contractionary effect from baby boomer retirements. I just don't think it will be as rapid as predicted.
One thing I definitely agree with other posters about is that there will be an inflationary period in the mid to long term.
One other concern I have with Roberts writing is a "fallacy of composition" where everyone (or at least most people) are encouraged to be come economically self sufficient. This is excellent in theory and definitely a pathway of the future but in doing this do people really understand the risks they are taking with their financial positions ? I'd suggest that only the VERY well educated and up to date attempt this. Yes the internet is a new medium for commerce, but there will always need to be many more buyers than sellers. What happens when everyone thinks they're a seller ? The market will reject the uninformed and inefficient , as it always has.
I love Robert's writing, can't wait for the next chapters !!
I think the economy has hit about as far down as it will go, but I do not think it will become very strong for a long time. For some countries their economy will grow faster than ours in the United States. I think we are going to see some real slow years in the states.
Since the very beginning, third world countries like ours have been trying to cope with other bigger countries. Now that every economy is bad, i'd say that it has made our coping worse. And it will make more people in debt and poorer.
However, education like these (reading)...trying to understand how the world of business goes, it keeps my awareness on what to prepare and what can i do at the moment...it won't probably have the same effects as companies of Rich Dad, but it will make its way through...
It's an interesting to compare now to the depression, here's an interesting post I found posted November 17th 2008.
It also talks about why it may not be an accurate model... reminded me of the earlier discussion about it being an inflationary depression, or deflationary.
“Those who do not learn from the past are doomed to repeat it”
If someone wants to dispute the viewpoints, that’d be great. I’m not looking to be right, I’m looking to learn. As such I will present potential cases for why the comparison may be valid, and why it may not. My bias certainly could show, so that’s why I want to encourage discussion.
First we are going to start off with the 1929 comparison, simply because there’s no comparison more attention getting then a “pre depression” scenario. And there’s so much fear and forced selling, and a deflationary situation, that we might as well take a look.
This first 2 charts compares the percentage run up before the decline from 1929 and onward, a 31 year time horizon from 1900-1931 and from 1972-2009, which has yet to be completed.
Can you guess which one is which? Clearly in 1971 we came off the gold standard, and the dollar became a currency. This will naturally lead to inflation. Since the indices are priced in money, and not things, the run up from 1972 to 2008 is expected to be larger, and its not necessarily a reason to panic. So while some might say “we’re going to crash even worse”, others will clearly disagree, because everything’s different. An interesting thing to note is the 5 year percentage chart. Not NEARLY the magnitude of the move in the last 5 years as 1925-1929. However, 1996-2000 has roughly the same magnitude of the move. But again, this supports 2000 being closely correlated with 1929.
When looking at some of the charts above, it’s important to note inflation, and for this, it may be better to look at an inflation adjusted dow. The link shows that the longer term gain of value is not significantly worse than 1929. Interestingly, the run up didn’t begin in 1900, and inflation adjusted from 1900 to 1920 actually shows a decline. But around 1921-1929 is when the market really rallied from real relative lows. And it was not until 82 or so until 2000 when the market really rallied. The inflation adjusted rallies from 1921 to 1929 are quite similar in strength to those from 1982-2000. This is just information, that come to think of it, in the comparison, may be more telling that 2000 top is similar to 1929, and now we’ve had one of the post 1929 rally attempts, anywhere from 1929 to 1937, and continued the following patterns. But we’ll get to those comparisons another time. As of now, we’re slightly more focused on how the price run up LOOKS, and the type of psychological effect it may have on our ability to price our own ability to produce. But we still want to recognize that the magnitude of the move due to inflation requires an adjustment.
Below will be another chart. I don’t remember the dates but the time frames are not the same length. Seeing this 1929 chart, was the primary reason for me making the connection from the technical comparison. When I saw the 1929 chart, I knew it would be similar, and it proves to be more so than I thought…. However, consider the time frames is not the same, so if you expect history to repeat and take the exact length of time, to play out, you are using the wrong comparison.
When actually evaluating the same time period, the declines from the top don’t match up. 1929’s decline occured much more quickly.
If you’re curious, this is what matching up the same length of time would look like.
Clearly not the result we are looking for.
We came off of all time highs with a significant decline, and we can see the behavior, and psychology is similar, based on collectively what everyone believes the prices of several stocks on average is worth using a variety of factors.
Finally, lets look at fundamentals:
According to a 2007 google video with Robert Prechter
2007 dow div yield: 2%
Has been 13 years since they have been higher than 1929
Price/Book 4.04
: I found a good article about 1929 fundamentals here.
Some excerpts:
“Barrie Wigmore (1985) researched 1929 financial data for 135 firms. The market price as a percentage of year-end book value was 420% using the high prices and 181% using the low prices. However, the return on equity for the firms (using the year-end book value) was a high 16.5%. The dividend yield was 2.96% using the high stock prices and 5.9% using the low stock prices.”
“To summarize: There was little hint of a severe weakness in the real economy in the months prior to October 1929. There is a great deal of evidence that in 1929 stock prices were not out of line with the real economics of the firms that had issued the stock. Leading economists were betting that common stocks in the fall of 1929 were a good buy. Conventional financial reports of corporations gave cause for optimism relative to the 1929 earnings of corporations. Price-earnings ratios, dividend amounts and changes in dividends, and earnings and changes in earnings all gave cause for stock price optimism.”
“Although it can be argued that the stock market was not overvalued, there is evidence that many feared that it was overvalued — including the Federal Reserve Board and the United States Senate. By 1929, there were many who felt the market price of equity securities had increased too much, and this feeling was reinforced daily by the media and statements by influential government officials.”
“the Federal Reserve Bulletin of February 1929 states that the Federal Reserve would restrain the use of “credit facilities in aid of the growth of speculative credit.”"”
The market did not fall just because it was too high — as argued above it is not obvious that it was too high.
The actions of the Federal Reserve, while not always wise, cannot be directly identified with the October stock market crashes in an important way.
The Smoot-Hawley tariff, while looming on the horizon, was not cited by the news sources in 1929 as a factor, and was probably not important to the October 1929 market.
The Hatry Affair in England was not material for the New York Stock Exchange and the timing did not coincide with the October crashes.
Business activity news in October was generally good and there were very few hints of a coming depression.
Short selling and bear raids were not large enough to move the entire market.
Fraud and other illegal or immoral acts were not material, despite the attention they have received.
Thursday, October 3, 1929, the Washington Post with a page 1 headline exclaimed “Stock Prices Crash in Frantic Selling.” the New York Times of October 4 headed a page 1 article with “Year’s Worst Break Hits Stock Market.” The article on the first page of the Times cited three contributing factors:
A large broker loan increase was expected (the article stated that the loans increased, but the increase was not as large as expected).
The statement by Philip Snowden, England’s Chancellor of the Exchequer that described America’s stock market as a “speculative orgy.”
Weakening of margin accounts making it necessary to sell, which further depressed prices.
While the 1928 and 1929 financial press focused extensively and excessively on broker loans and margin account activity, the statement by Snowden is the only unique relevant news event on October 3. The October 4 (p. 20) issue of the Wall Street Journal also reported the remark by Snowden that there was “a perfect orgy of speculation.” Also, on October 4, the New York Times made another editorial reference to Snowden’s American speculation orgy. It added that “Wall Street had come to recognize its truth.” The editorial also quoted Secretary of the Treasury Mellon that investors “acted as if the price of securities would infinitely advance.” The Times editor obviously thought there was excessive speculation, and agreed with Snowden.
There’s some other great stuff in that encyclopedia article, I reccomend you check it out.
Now I will look at this comparison from 2 angles.
First I want to talk about why today could play out in a similar way: Before the crash, you have major amounts of credit at unseen levels. Some argue that we can print money at will, but the counter argument is “what good does it do if the banks won’t lend, and credit is contracting at a faster rate than we can create new credit. ” So if we do have a 1929 scenario, in some ways, things could occur more slowly, as we try to slow the effects down, and we have some tools to do so, that we didn’t before, but it might not be likely for these to change the outcome, just slow things down. Others may say we are expanded globally, and the flow of money is faster, and with better technology and more things happening at once in more areas around the world, that may “speed up” the effects, and the net result may be similar in pattern. While some might argue that this will not happen because things are so much different without the gold standard and federal reserve, we have to recognize that everything has expanded so much that although we do have certain things we can do, the problems have become unmanageable, which may have been the problems of the 1929. So while it’s easy to believe we can inflate our way out of this mess, there’s only so many people that want loans, and only so many people interested in borrowing, and with the increased lending restrictions, and regulation, even with all the creative ways to pump liquidity into the system, it simply may not be enough anyways. And while certain factors our different, human psychology does not really change all that much. We may learn from the past, but emotions still drives our actions and thoughts. If we act in fear of something happening, we may either create that thing because of fear causing irrational behavior, or create something much worse.
Again, I don’t seek to be right, this article is for us to both learn. So now…
why this comparison either isn’t good, or won’t work:
First of all, no gold standard. That means we have more control and can print ourselves out of the problem. Even if no one wants loans, we can always come up with creative ways to get out of the problem by increasing the money supply. We are doing the exact opposite as before. Without the gold standard, it is much easier to do things that will create more credit and more inflation. So whether or not that is a good thing, now we at least have the choice.
Second, in 1929 the opposite action was taken as rates were hiked and the fed attempted to slow down what was thought of as excess speculation and credit, while also returning the real value (gold) to the US.
Another thing you must realize is that the banking crisis didn’t start in 1929, but later on in the early 30s, after the 1929 lows were broken. This could mean things are more serious, or it could mean that we’re simply aware of the problem sooner, and can deal with it sooner. Regardless the timing and effect it will have is different, and will most likely have different results. An interesting thing is that some may say that the 1930’s banking crisis may have been a result of the Fed’s action in the late 1920s. If this is true, we might expect the exact opposite future, where rather than deflation, we will eventually have serious inflation in the next few years.
Bernanke clearly is “a student of the great depression” and wants to make sure it doesn’t happen again. He’s clearly afraid of letting something like that happening, so instead, he’s doing the exact opposite action. With an infinite amount of information available, it’s very easy if you’re used to studying something extensively to notice similarities. In doing so, it is very reasonable to assume that Bernanke will OVER react. While history does repeat, we learn from our mistakes, and 1929 is a mistake that too many people are refusing to make. While it may be too late to undo the factors that lead up to the great run up in prices from the 1970s on, Even if the decline was the same, the future will be completely different, as we will make sure the result will not be the same.
In Summary: If this scenario plays out, there should be a sharp rally at some point in the near future. In 1929 the rally was about 60% from the low. I believe right now it’s better to be positioned for the upside, if you must. I made a great flip as I took profits after noticing the overwhelming bearish sentiment, and making some trades. I believe that if we rally from here short term and it could be the start of a strong rally. I think it’s very likely that we gradually decline in price through massively large swings up and down with big up days and down days, but I believe there’s more upside in getting long here, particularly in OTM calls speculating on a big move. However, I do believe in system trades as well, and I don’t like playing one side too heavily, so I have no problem with you taking Woodshedder’s Big Bamboo trade, and likely will take the trade myself. I’ll take a lower win rate for higher reward potential here on the upside, hedged with a high success high reward system trade.
Starting this week I’m actually mostly neutral, but I will add on a decline and become short term bullish. Unless we break the 11/13 (weekly) lows, I actually think I will be long here, even though the thought of saying I’m bullish kind of “hurts”. This may be a “buy when you are most fearful play.” Which will happen if we retest last weeks lows. Large price swings could very well continue to be dangerously high, and as long as I’m looking short term, I will look to mostly position myself in out of the money Dec08 and Jan 09 calls and puts, rather than stock, to allow me to better manage these big moves without a large amount of capital at risk.
Personally I think it is very difficult to get much of an idea based off of just this one comparison, but I hope that after doing this series and looking at several, it will be much easier to get a more reasonable picture of the future. I think one of the reasons things are so volatile is because both individuals, and people looking at both angles disagree on the future drastically. On one side, you have the deflationary spiral and the belief that it will continue and that the worst is very much yet to come, and that Dow could hit 1000 or lower. On the other side, you have the massive inflation picture that may occur down the road.
I believe this post shows a valid argument on why it’s one of the reasons I am starting to like long gold and commodities and short stocks in the long run. I recognize the possibility that eventually there will be massive inflation in either scenario, even if it could be a long time from now. However, I also believe that during deflation, many stocks will get hurt much worse as stocks have been priced on their FUTURE ability to produce based on the idea that they could borrow to grow. Where it is my opinion that more consideration should have been put on their ability to survive severe downturns through plenty of cash, debt that’s easier to manage, and a solid balance sheet, as well as their ability to produce in financial Armageddon. More emphasis should have been on a dividend, as companies with dividends not only offer reassurance that they are making the earnings they say and not manufacturing them, but should things go wrong, they can cut the dividend and continue to operate at the same capacity and expand and grow, as if nothing ever happened. If other people come to this conclusion, or if problems play out and lending becomes scarce and growth becomes difficult, and credit drys up, and companies are forced to make layoffs, and the layoffs hurt the average income, which hurt housing prices and our ability to consume, which in turn not only hurts businesses, but businesses dependant upon other businesses. The outlook is very grim for businesses and stock, and many will head to zero in a deflationary scenario. Although it will hurt commodities, I don’t believe it will quite have the same impact. Bankruptcies for companies mean that the stock goes to 0 and never returns. In that scenario, the shorts on stocks will beat the shorts in commodities and ags. Also, I believe that Bernanke will fight deflation to the best of his ability. Long term that does signal inflation, but it could take a long time. Where stocks can go to zero, and businesses can no longer have demand, people will still need to eat, and globally, oil will be in demand, even if oil companies fail. Now eventually the same demand that we had may return, but the ability to supply that demand perhaps will not. I’ve been an oil bear, but I want to shift to being a bear on some oil companies now (I recently bought APR 2009 puts on MUR), as well as coal companies (KOL puts) and I eventually will accumulate a long term position on oil (USO) and nat gas (UNG), while also buying solar (TAN) as a hedge to a global diversification out of oil and into alternative energy.
Conclusion: I hope you learned a little something, even if you have no idea what the future will hold. Looking at any one situation independently will show both similarities, and differences to the world we live in today. However, looking at what happened and why in several historcial sitautions, should allow you to have a better understanding of the big picture, and allow you to recognize what’s happening quicker than everyone else, as well as see farther out into the most likely future, which should give you an edge, while those who fail to learn the lessons of history will miss it. History shall repeat,, and those who do not learn from history are doomed to repeat it.
I dont think our economy will ever be as strong again. We are built on a house of cards and it is only a matter of time before that all comes crashing down. Our leaders have sold us out and the american public continues to look at them to solve proplems that they have no desire to solve.I feel bad for all those millions of people trusting the government for their bailout that will never come. As they wait and hope their standard of living is being stolen right out from under them.
Definitely yes...it's already started in China (PMI released on May 1st 2009 up 53,5%, many other important economic indicators are also >50% which means expansion is on the good way). No doubt that US will recover soon too, I'm sure no later than second half 2009, why? because US's government and FED will print as much money as needed to inject into the market in order to boost consumption like crazy. So let's welcome great bull rally shortly.
Besides, I love this quotation from Robert:
"The sky is falling. The sky is falling." Most of us know the story of "Chicken Little," who ran around warning the barnyard of impending doom. We all know people who are that way. But we all have a "Chicken Little" inside each of us. Most people are poor because when it comes to investing, the world is filled with Chicken Littles running around yelling, "The sky is falling. The sky is falling." And Chicken Littles are effective because everyone of us is a little chicken. It often takes great courage to not let rumors and talk of doom and gloom affect your doubts and fears.
No, not in the long run. I agree to the written, that what we are seeing is of short breath. I work in a household appliance manufacturing and we face a considerably worse result with no light down the tunnel. We might not be in the indicative branch, but I seriously doubt other manufacturing areas look better (EU).
Present rise on stock market is probably coming from greed or maybe financial wisdom? Isn’t it taught that you must buy when the market is down? Combined with greed we have an answer.
The world economy is collapsing. I choose not to participate!
I'm only 25 years old. I am blessed to have been exposed to Robert Kiyosaki at 19 years old. I have read his books, played the game, listened to audio, watched him on YouTube, and am now participating in Conspiracy of the Rich. I had not taken any action -- until now. I wish I would have started six years ago; but I can't change yesterday...what I can change is today and tomorrow!
I see things turning around temporarily, but as soon as baby boomers are retiring in force, the business/economy landscapes will be permanently changed - forever. Regrettably, many of them will VOLUNTARILY CHOOSE to be confined to working crap hours at a dead end job with no fulfillment or impact because they had only known economically good times most their life.
I believe my generation (especially middle class offspring) is waking up to the fact, not that jobs suck (though they do), but that we don't want what our parents have. Most of us have seen and had the toys, the glamour, fake status.
What we really want is the time with our families we never had growing up. We graduate college, get thrown into the wash unprepared, and see that we have been deceived and ask. We ask, "Why? Why spend $60k and four years to get a piece of paper and wait tables?" We don't want a corporation telling us when we can wake up, eat, and crap. We see the world through VERY VERY differnt eyes. We naturally see a world of abundance, opportunity, betterment, and prosperity (though Ted Turner would have us see differently). We see that when we network with eachother (eg Facebook) we can build a community that can, will, and has rocked the world, and will continue to do so!
There are a lot of foces against us, a lot of negative to overcome, a lot of mistakes not made by us to solve; but with our minds and God's blessing, down the road I see great things, great inventions, great accomplishments, great successes, great prosperity, opportunity and legacy.
fter i read chapter six, I had to show a rental suite that i am in partners with in a triplex. I showed it to a young girl who was going to university..her father was with her and she would apply for herself and her boyfriend who was also going to school and working part time. I spoke with her father who told me he works in the foresty industry and of course is laid off along with 3500 other members . I asked what he was going to do now and he said he was retraining to drive truck and was just going to wait for the economy to come back.. I could not believe my ears...I felt sad ...I asked the young girl what she was taking in university. Global Studies was her reply. She would eventually end up working for the government in an environmental compacity of some sort. So here was two truths about what i have been reading from my favorite financial guru right before my eyes..after i said goodbye ..i noticed a small house across the street from our triplex for sale. the realitor and his partner were taking picture for the internet that would be up and running by the next day..they let me in ...i took a look and made an offer right there. up until i read chapter 6 in the back of my mind i was waiting too....not anymore..
NO the economy is not coming back. people are continuing their lives going around with blinders on and believing what they see on tv -- the retoric that things will be getting better. By doing so they are denying themselves the opportunity to see the world as it is and prosper from the changes that are happening and will continue to accelerate.
No, the economy (of man) is not coming back. We are entering the time of the Four Horsemen of the Apocalypse. Micheal Boldea describes the four varicolored horses being led out of the stall by angels in October 2006. Rick Joyner describes various future world events in "The Harvest".He notes that India and Pakistan will be the first nations to use nuclear weapons against each other. Jews and Christians will again be killed off as happened previously in Hitler's "dress rehearsal". Only Germany and Sweden will not partake in this massacre. Nita Johnson writes about the future in "Preparing for Winds of Change". She includes a map of which parts of the USA that will be destroyed by various calamities. David Wilkerson describes judgment in "America's last call".Dimitri Dudumann a Romanian Bible smuggler wrote of his many visions and dreams about the USA's demise when she is attacked by 8 nations at once. No dear readers, we have entered the book of Revelation. The Bride will get ready for His return and will witness many miracles. The wise see calamity coming and take refuge.Robert is helping to light our way through the coming darkness.May God protect and help him in his endeavors.
I am pretty sure that the economy has evolved after every depression/recession that we have experienced in the past 80 years. Since 1929, new ideas and technologies have emerged that created a new economy. Unfortunately, many of those technologies are double-edged swords that have not served people well (i.e. credit cards, home-equity loans, Adjustable rate mortgages, etc).
The economy is not going to be the same because of the realities that have been brought to light as a result of the current economic downturn. This will be one of the major events that shapes the history of the current generation. The lessons that the current generation will learn from this are not the same as the lessons learned by previous generations. Those lessons applied will create a new economy within the next 10 - 20 years.
I am sure that the people who worked for the telegraph companies thought that surely things would turn around for them years ago. Probably the same was thought of the coal industry and many other manufacturing sectors whose industry was replaced.
Technology doesn't look back, only people do that. There are many 'famous' quotes from people who chose not to see what was possible. I have heard that Great Depression likened to the winter season. People shutter themselves in, drawing family and friends to them in winter. As the winter passes comes spring, there is new growth, new opportunity. In my province we are already starting to see that spring growth as people are back shopping, new projects and companies are launching. Seasons don't go backward, only forward. People have to focus on moving forward and not what was, its behind them, over and done with.
Like Robert says.. We're entering into the information age and I highly doubt we'll see it turn around. Only being a 20 year old student majoring in business I've already seen a lot that supports thoughts. Ever since I can remember my dad (being a self employed carpenter) has continuously lost business for the past 8 or so years. I also work directly in the auto industry and the same is true there. When I started a little over 2 years ago they were pushing people to work 6-7 days a week. We're now down to a 4 day work week and possibly getting rid of 2nd and 3rd shift. Not to mention we've recently went through three rounds of layoffs, by next week we'll have went through the 4th and it will be the biggest lay off so far. We're currently losing about half a million in sales a month and our customers that are direct suppliers of GM are calling in daily canceling orders. As our CEO put it during our meeting yesterday.."There was a storm a coming, that storm has turned into a level 5 hurricane." When GM shuts down for weeks most likely we will be shutting down as well. I'm only part time there working 2 days a week around my college schedule. I'm not receiving benefits and I'm making half of what the other machinists are making, but I still expect to be jobless here soon. I strongly believe were about to see the worst depression ever and it will be the longest one as well. It is a scary thought but I look at it as I have 20 + years to get ready and be well prepared for the recovery. We have to be optimistic and be ready for what's to come. I became very independent at a young age and I never plan on having the government take care of me. Times are getting worse and sitting around worrying and putting blame on politicians wont change anything. Its up to us as individuals and I can't wait for the opportunities to come. I Owe my future to Robert as reading your books has put me in the right direction. It's never too late to change your ways and get ready for what's to come. Thanks to everyone at RichDad.
I think there will be a little bounce, after all, you can't dump $1 trillion+ into the economy and not have something happen. The problem is that is all that will happen. There is no staying power in the "stimulus package".
Unfortunatly, I think people will see the little bounce as a positive and will get the crazy idea that if they just throw more money at the problem it will fix it. The reality is that it will just make it worse. The middle class will disappear becoming either rich (a very small portion) or poor (the vast majority), and the gap between the rich and poor will become a huge chasm. The poor will continue to blame the rich for their problem, and the rich will try to protect themselves and their families from the government.
Hmmm, what would Richdad say? History repeats itself. If you don't learn from it your bound to repeat it. How many times has this repeated already. It just comes in different forms. You either take advantage of it or it takes advantage of you. I did not like History nor reading until I read Richdad Poordad. Reading the books taught me History lessons I did not learn in school. Will the Economy come back? As Robert said it has gone away. People are still walking around wondering "who stole their cheese". Instead of moving on and looking for other ways to take advantage of it, they are still looking for the same cheese they had before the economy collapsed. You can't solve the current problems with the same thinking that one had when they created it. The Government is doing just that. First they re-elect the same officials who created this mess. Second they are becoming owners of companies. They can't run themselves. They are creating new ways using the same thinking that created this situation. Richdad believed in only hiring Ceo's and board members who owned companies of their own. If you never owned a company yourself how can you be CEO of one. Is the same economy coming back? No. If you look at the current rally in Wall Street, they are playing the same tune. The Rich are taking advantage of the situation on Wall street and bailouts from the government to "cashout" while others are jumping in. The current administration wants to raise taxes for the investors so they can keep spending trillions of dollars. Robert Kiyosaki predicted a crash and depression caused by the "babyboomers" and "social security", which is still to come. Is the economy coming back? If you put just a couple of these ideas together it tells me we are heading for bigger problems soon to come. So open your eyes and see what you can't see. Lord watch over us and protect us. They took prayer and the bible out of school and want you out too. It is time to put "In God We Trust" back in America.
Like Robert said, "the economy has came and left those who are waiting behind." I know so many people who keeps saying, when the economy comes back Im going to do this and that. I just laugh. The economy is gone and unless you want to depend on our government or get a piece of the bailout money, your gone too. This is the best opportunity to become financial free. Take charge of your life.
I think it´s not and I hope it´d never come back to the same absurd and unfair rules of the past, but I´m afraid the Establishment will successfully oppose every possibility of real change of the financial structure, because all the elements of real power share the same wicket interests and even those well meaning people are tied up. The way out is financial education
Not yet, there are still arms that are adjusting and the other quarters of the business cycle need to come out. This will be a loss, in return will most likely drive the Stock market down somemore. Remeber a few months ago the Dow hit 7500 and below that on some other days.
Life is what you make it now. Our compnay www.HowMoneyReallyWorks.com has a newsletter to help people understand money. One should look at money like this What is creating Income and What creating an expenses. If your personal expenses are too high, do you have a budget in place? If not, we have free budget sheets on the site. Everyone should be helping people in this economy, the more people you help, the more comes back to you when you least expect it.
The economy will return to a sustainable level. But most old jobs are lost forever. New jobs in different sectors will be created and pensions may be all going too. States, counties, and cities are all broke and cannot print money like the fed, so what are they going to do? Tax, cut jobs?
Time to stop being a victom and start creating jobs for yourself and others?
Is the economy coming back....Yes...back to depression.....A time when things get tough....and if people don't get tough, they get left behind..... A wise man one said "There's a reason why the Good Lord put your eyes in the front of your head, So, you can look to the future and figure out what you have to do today to get there." Many people today are looking for the glory days they never had, instead of figuring out how to take advantage of this situation. This is why they are going back to depression. "Recession is when my neighbor looses his job. A depression is when I loose my job." Theses people who fail to adapt will loose their jobs and become depressed.
I think the economy is not coming back. As we used to understand the old market (Old System). Now, as the phoenix, the world economy from the ashes will rebuild the way we will make any kind of contract in the future. As Andres Roemer (professor in Law & Economics) said; the country or person that do not innovate or invent new ways of production will extinguished in time.
I DO NOT believe the economy is coming back, my reasons are as follows:
a)Most are hesitant and fearful.
b)Most seem to long for the old era instead of creating a new era.
c)Most are still reliant of big government to fix their issues.
d)Most are not willing to suffer for their freedom.
e)Most are not willing to stick to a disciplined plan.
f)Most still beleive and base their life on an old philosophy.
g)Most are not willing to "do more with less."
h)Few actually oppose statements a - g.
I beleive a strong economy is based on functional relationships and trust, currency is the tool that emodies that relationship.
The government officials don't trust the people and vice versa.
These officials are still using the same 20th century "fearmongering" to herd the unassuming fools into filling their coffers with trash federal notes.
I believe that it will take a cataclysmic financial shift to change this. Why should a fat fox give up a steady diet of juicy chickens?
I'm not an economist or even all that versed in economic theory, but I do know that everyday I still hear about
jobs being cut
businesses filing for bankruptcy
the market fluctuating erratically
and homes still being foreclosed on
IMO no...the economy has not come back....IMO as long as unemployment claims are not DECREASING on a month to month basis then no...we are still in a recession.
Okay... Sorry... One more thing.
Why issue bail-outs and such when NASA is spending approx. US$17 billion per year to study geology on Mars, etc.!?!?
I mean, come on!!
The US is going to majorly revamp its agenda IF it's going to prosper again.
Oh yeah. One other thing. The video I posted (see below) shows the new business model:
CwF + GrB = $$$
That is:
(A) Connect with fans + (B) Give them a reason to buy = (C) Reap revenue (and profit)
The video argues that this is one of the more pragmatic business models, and is the wave of the future. That artists, musicians (manufacturers) must now do A (with the market) and B (with consumers) or else they will fail to get C (reap a reward). This should be a wake-up call, an eye-opener.
Assuming that this model DOES work and is applicable to more than just the Music Industry...
Look at it from another, larger scale perspective.
I.E. The international market.
If countries fail to connect with "fans," then they will fail to do business.
I think one of the biggest problems, internationally speaking, is that America has spent decades destroying international "fans" and shredding apart its reason(s) to do business. This isn't just a matter of popularity sliding; it's a matter of millions of people despising -- dare I say, hating -- the US.
It seems that the USA is not very popular (not that it ever really was, except in its own eyes) and that end is stalking them to bite them back. The transfer of wealth in the world reflects an international revolt, and until the USA starts to humble itself and give other nations a "reason to buy," there is [unfortunately] going to be fewer and fewer "sales."
The sobering thought is, that as the wealth IS increasingly transfered, there will continue to be this vortex-effect, and it will have a concussive effect on other nations that are so delicately connected to the US economy. Until the dust settles, as they say, many other nations (like Canada) will be served a similar plate of humble pie.
Here is a training video (fairly brief) that demonstrates the NEW model in the music business:
http://vimeo.com/4244922
In this we can see that the old, staunch ways of doing business in the music industry are a thing of the past. And its like the record labels don't see how they are losing fans and NOT giving consumers a reason to buy. Technology and accessibility have changed the market, and it seems only the savvy business-musicians (independent artists) are getting this revelation and embracing the new distribution model, as opposed to trying to protect the old model, and choke out the consumers (fans).
Now this is JUST the music business, but if you consider it being representational of business in general, or as one gate in the symbolic "house of commons," then it demonstrates -- in a time of flux -- that until the old-money establishment changes its agenda, money will still be lost, and the economy will suffer. However, as the adroit upstarts adjust and restore balance, in a changing of the guard fashion, then the economy will have a chance to return.
No. Still falling if not moving sideways.
I think a lot of systems have to change. The entrenchment of thinking must be unearthed.
Old school styles and means just don't hack it anymore.
I'm hearing so much testimony of industry giants (in various sectors) being forced to concede to lesser, newer upstarts who know the times, who recognize that things are getting done differently, and who can circumvent the establishment for direct to market access.
The major news about the ivory tower literary agency in LA, being a case in point: it could not match up to the newer, fresher agency, had had to give ground once numbers proved that old relationships and alliances aren't necessarily a help anymore.
We have a youtube generation amongst us. (See the documentary RiP: A Remix Manifesto for more insight into this generation and how IT bends the rules to get what it wants).
Cheers.
In the first place, where has it gone? Honestly, the manipulative nature of both the political and the elite class need to be investigated in a properly manner. Is American gov. so wasteful of the resources at her disposal?
To answer this question,there is very need to X-ray the administration of Bush for the eight-year period in terms of funds voted to the wars in the trouble-spots of the world,tax policies,social and medicare. Just imagine a man that has been pouring water into basket for good eight years. It really beats my widest imagination. It is not about the economy itself,but,the wastefulness in the American economy.
To me,individual economy should be developed at the expense of the gov. own economic planning. More than 80% of the people in gov. do not know about the emergent of the new invisible world, where fast knowledge is the order of the day. They still believe in doing things with their old educational system coiled with gov. inefficiency. In this economy meltdown, this is the time to plan in terms familiarizing oneself with the latest knowledge that will enhance one's financial independence( getting out of the Rat Race).
I live in an area hard hit by the fall out in a small town called Fairmount, IN (home town of Garfield and James Dean-FYI) and we are close to Marion and Muncie, IN, a couple of towns that at one time seemed to thrive financially because of the manufacturing plants for automotive industries. At least in Marion there are signs of a resurrecting economy with several areas growing with new businesses, all of which seemed to have popped up in the past 2 months, it's pretty amazing and very encouraging.
There are many homes for still for sale, many foreclosures, and from my perspective many investment opportunities for rentals to profit from. I've just started reading the Rich Dad series and read Retire Young, Retire Rich in about 4 days. I am researching the real estate investment procedures and plan on making several purchases of rental properties by the end of the year. I would jump on them now, but I am getting married in 22 days and have been influenced ever so gracefully to not make any drastic changes so soon before my wedding.
Anyway, I see signs of a very profitable time. Businesses are and have popping up here in one of the most recessed areas in the country. -Robert from Indiana
Economy is innocent. The people in the economy, control or being controlled, are not.
If you believe in universal truth, there are ups and downs in life. In other words, we are living in the world of "Yin and Yang". Current recession is simply a matter of balancing when it's not balance.
People's emotion cause imbalance. I hope you and I will learn from this event and always remember it. It will be your an inner weapon to balance as time comes. I felt emotion when March'09 DJIA low and I will keep reminding myself of the feelings. When I write this article, I began to reliaze that it's time to take control my emotion and move on. What's life if there is no "Yin and Yang" in economy?
BK
Kia Ora Robert,
just going over latest posts. through out I note amongst your US correspondents a strong anti Socialism bent. A society is judged by how it helps those least able to help themselves. that does not mean you count out what we know as capitalism. As I have said in other posts I see the future a mix of old & new with a mix of capitalism providing social benefits.
that is the world movement & hint from many of the corporates they have seen that too. so people should use the lessons you provide to make the world a better place by making a difference.
work within the system. Socialism can co exist with capitalist ideals & both prosper.
My plan is to be able to use capital to under pin services in way you talk about for individuals then with the freedom that provides move onto next concept. each time providing a benefit to society in a manner that pays for itself.
Not sure if that makes sense, but it is now possible by using what you have taught & depression that is coming.
The economy will come back - the real question is what will it come back as. As Robert points out, it won't come back to the way it was before because the underlying foundations are no longer there or dying and Obama's in the house. It's a lot like Obama's campaign slogan for "Change We Can Believe In." Well, you'd better believe most Americans are not going to like the change although we will eventually adapt and most will go with the flow rather than fight for our freedoms.
When I studied Economics in university, I learnt about the developping cycles. I guess that such a cycle is coming to end while a new one is starting up. I would better call that renewal, not crisis or coming back.
Our so called President Obama ,who has more than doubled the gov. in his first 100 days , which took Bush at least eight years to do, is running this country into the ground!! We are moving closer towards Socialisim everyday with Obama and his admin. The Gov. is going to control everything and free enterprise will no longer be, thus our Economy as we know it today will never be the same if any at all. The panic hasn't set in yet and I feel it's going to real soon. I've always been an optimistic, called a polyanna,even gulable at times, and I believe this is the beginning of the end of our economy.
We need to act now in the present so we have a future to plan for! I'm learning how to make the best of the market today with the money I have now. I'm going to have to call it as I see it and plan my escape for me and my family. My prediction is free enterprise is going away and the gov. will have all control. Who in their right mind would want to invest their hard earned money so the gov. can control it and reward the one's who only want hand outs. Our early leaders and founders of this country are rolling in their graves I'm sure!!
We need to protect what we have worked so hard to accomplish. Who knows maybe the majority will plan their escape by starting a new Republic, a new economy some where else on this earth. It's unfortunate that our large corporations feel that they had no other choice but to go to other countries to escape their own gov. taxes. It's almost like history repeating itself all over again!!
Sincere thanks Robert and Kim for allowing me to contribute my thoughts and concerns.
Your friend in this mutual concern,
* Carman Cook *
My gut feeling is that there are still more skeletons to come out of lots more cupboards.
I am really grateful that the Rich Dad Education programme is ongoing and has opened my eyes to how to make my money work for me.
I try to learn something from everyone, even kids have something important to say, we just have to learn to listen.
We are now in the information age. Everything is smaller, faster and so far more volitile. Big government and the way the economy was run in the industrial age is now obsolete. Unfortunatly too many people including those running our public services and pensions are still trying to play the new game but with the old rules. We are probably in a dead cat bounce situation at this time. Many people feel everything is fine now and we can start buying stocks etc, make nice profits because they have bought at the bottom.Unfortunatly many of these people are only prepared for their investments to go in one direction, UP. I hope for their sakes they are right. But if we have not hit the bottom like i fear ( not for me )then anymore bad economic news will cause panic ,particuly after all our laeders have tried to convince us they are in control and are our saviors.People will feel betrayed and lied to so when the government say everything is OK the next time will people belive them ?.Probably not.Nobody can say for sure which way the economy will go maybe this is the great recovery, but i doubt it. The point is take the time to learn the rules of the game so you can be prepared for any outcome.
There is a saying that goes something like... "Those who live by a crystal ball eat glass." Whether the economy comes back any time soon does not matter to me.
What I get out of chapter 6 is the question, are you getting prepared for the new economy?" It amazes me, frustrates me, worries me and excites me as to how many people don't have a damn clue of what is going on, starting with my own family and friends.
All they care about is clinging to a job and their obsolete academic education. They are becoming the road kill of the invisible world. When the economy really comes back I for one will be grateful for people like Buckminster Fuller and Robert Kiyosaki who have been willing to share their knowledge (money) with the rest of mankind. But it's up to me to apply it with no guarantees.
I wholeheartedly agree we are headed for more blood in the streets both figuratively and literally. Just this past week in London an enraged man drove his car through a crowd of people attending a celebration involving the royal family. He was recently fired from his job. This is a perfect example of people literally being run over by a new world.
The economy coming back now is fool's gold. Golden rule #3: "A Fool and his gold, work for those who make the rules." Thank you Robert & Kim.
No, this is just a false start.
The huge inflationary seed has not sprouted yet. All the funny money that drives inflation takes a while to show itself. It will come on with a vengence.
Source: Pravda.Russian newspaper
It must be said, that like the breaking of a great dam, the American decent into Marxism is happening with breath taking speed, against the back drop of a passive, hapless sheeple, excuse me dear reader, I meant people.
True, the situation has been well prepared on and off for the past century, especially the past twenty years. The initial testing grounds was conducted upon our Holy Russia and a bloody test it was. But we Russians would not just roll over and give up our freedoms and our souls, no matter how much money Wall Street poured into the fists of the Marxists.
Those lessons were taken and used to properly prepare the American populace for the surrender of their freedoms and souls, to the whims of their elites and betters.
First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their "right" to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights. Then they turn around and lecture us about our rights and about our "democracy". Pride blind the foolish.
Then their faith in God was destroyed, until their churches, all tens of thousands of different "branches and denominations" were for the most part little more then Sunday circuses and their televangelists and top protestant mega preachers were more then happy to sell out their souls and flocks to be on the "winning" side of one pseudo Marxist politician or another. Their flocks may complain, but when explained that they would be on the "winning" side, their flocks were ever so quick to reject Christ in hopes for earthly power. Even our Holy Orthodox churches are scandalously liberalized in America.
The final collapse has come with the election of Barack Obama. His speed in the past three months has been truly impressive. His spending and money printing has been a record setting, not just in America's short history but in the world. If this keeps up for more then another year, and there is no sign that it will not, America at best will resemble the Wiemar Republic and at worst Zimbabwe.
These past two weeks have been the most breath taking of all. First came the announcement of a planned redesign of the American Byzantine tax system, by the very thieves who used it to bankroll their thefts, loses and swindles of hundreds of billions of dollars. These make our Russian oligarchs look little more then ordinary street thugs, in comparison. Yes, the Americans have beat our own thieves in the shear volumes. Should we congratulate them?
These men, of course, are not an elected panel but made up of appointees picked from the very financial oligarchs and their henchmen who are now gorging themselves on trillions of American dollars, in one bailout after another. They are also usurping the rights, duties and powers of the American congress (parliament). Again, congress has put up little more then a whimper to their masters.
Then came Barack Obama's command that GM's (General Motor) president step down from leadership of his company. That is correct, dear reader, in the land of "pure" free markets, the American president now has the power, the self given power, to fire CEOs and we can assume other employees of private companies, at will. Come hither, go dither, the centurion commands his minions.
So it should be no surprise, that the American president has followed this up with a "bold" move of declaring that he and another group of unelected, chosen stooges will now redesign the entire automotive industry and will even be the guarantee of automobile policies. I am sure that if given the chance, they would happily try and redesign it for the whole of the world, too. Prime Minister Putin, less then two months ago, warned Obama and UK's Blair, not to follow the path to Marxism, it only leads to disaster. Apparently, even though we suffered 70 years of this Western sponsored horror show, we know nothing, as foolish, drunken Russians, so let our "wise" Anglo-Saxon fools find out the folly of their own pride.
Again, the American public has taken this with barely a whimper...but a "freeman" whimper.
So, should it be any surprise to discover that the Democratically controlled Congress of America is working on passing a new regulation that would give the American Treasury department the power to set "fair" maximum salaries, evaluate performance and control how private companies give out pay raises and bonuses? Senator Barney Franks, a social pervert basking in his homosexuality (of course, amongst the modern, enlightened American societal norm, as well as that of the general West, homosexuality is not only not a looked down upon life choice, but is often praised as a virtue) and his Marxist enlightenment, has led this effort. He stresses that this only affects companies that receive government monies, but it is retroactive and taken to a logical extreme, this would include any company or industry that has ever received a tax break or incentive.
The Russian owners of American companies and industries should look thoughtfully at this and the option of closing their facilities down and fleeing the land of the Red as fast as possible. In other words, divest while there is still value left.
The proud American will go down into his slavery with out a fight, beating his chest and proclaiming to the world, how free he really is. The world will only snicker.
Stanislav Mishin
The article has been reprinted with the kind permission from the author and originally appears on his blog, Mat Rodina
“Economy is how to spend money without enjoying it.” - unknown
You can credit me for that one Robert (wink, wink).
For Financial Freedom,
Noel
http://billionairebillbartmann.blogspot.com
Not, I really think that never come back the same economy.
Now we need new rules, new markets, new investor and an agility economy, fast to adapt to changes.
So, It has begun the New Economy Era, enjoy the entrepreanur projects, fresh ideas, fresh money for this time with a vicious and old-school economy.
One sample, the biggest companies has crushing-down, need to be more efficient, lighter, and with a new ideas system.
But the entreprenur has a big opportunity to be the business one-person to a new economy with a better choice of services or goods.
So, begin to jump, to growth and reach a new potential-market.
If the root cause of a condition is not changed then it's impossible for a recovery to occur. If one is addicted to Heroin and determines to overcome the addiction, yet still increases use of the drug, how can that logic apply as a solution? The very same conditions exist now in our Economy. We experienced a bubble based on Real Estate, and there is no doubt this was a determined action supported and enacted by the elected officials of the U.S. Government, and was supported by the Super Wealth backing the political system. No matter how we came to this point the masses are being convinced that now is a new paradigm. The Sheep are being led to the butchers block! Rich Dad would no doubt see this as a sham. The numbers simply will not support a recovery, on the contrary, we now heading full speed into a Worldwide inflationary implosion of all paper Fiat currency's. Anything not backed by Gold and or Silver, God's Money in other words, is going to become nearly worthless. Are you ready for this? If not time is not on your side at all!
Robert,
I just read a report that the Obama admin. is looking into the creation of a "guaranteed retirement account". This account would SEIZE all 401k accounts to create the new government sponsored accounts. To "protect" people's assets....the rate of return would be a measly 3%. Argentina did something like this and their economy tanked afterwards. My guess is that the stock market here in the U.S. would respond the same way...crash - and it would drive capital from the markets. Have you heard about this yet? Can you address this in your writings?
Here's some of what I found...
http://online.worldmag.com/tag/guaranteed-retirement-accounts/
People are listening and taking action. What was taken for granted as income, work, and retirement is clearly now the responsibility of every individual. If we take that responsibility, the economy will stabilize and we will all be stronger and smarter. Pay off the credit debt. Put money in savings. Have multiple streams of income. Work together.
I do not think the economy will recover to what it was. Sure, there will be sectors that thrive, but we will not see the consumption that we had. And, the stock market may not recover for decades. Why? The baby boomers are retiring and have past their peak spending years. An aging population will strain younger and smaller generations financially. Americans are in too much debt. I read somewhere that we have as much credit card debt as our country has debt. If that is true, then we are living on borrowed everything and we probably can't pay it back. I hope that we can begin to lead more quality lives that do not revolve around defining ourselves by how much stuff we have. It is exhausting.
The economy is in a state of historic change. As you have often emphasized, the Industrial age model is dying and the information Age is replacing it at lightening speed. The economy will not improve until all the bad debt is cleansed from the system. The present monetary system is going to collapse and something new will emerge in its place. The question is: WHAT will the new system be? Some speculate that the new currencies will have to be gold-backed in order to restore confidence. There is also talk of the USD, Mexican peso, and Canadian dollar being replaced with a regional currency called the Amero. And China is attempting to make the yuan (renimbi) more widely circulated.
I think the stock market way overreacted. This resulted in massive deep selloffs. Many companies should not have gone down that much. So some rise in the market and the economy is warrented. It will take amny years to fully return.
I think we'll see a bear market rally based on the injection of stimulus by various governments competing concurrently with a severely limited credit environment, with the latter eventually winning out as we move to heavy recession/depression in 2010/2011. I believe that Robert's much hyped "march of the babyboomers" will be moderated by them being forced to continue working beyond their planned retirements, after all the "the march" is based on them being able to afford to retire. Never the less, there will be a contractionary effect from baby boomer retirements. I just don't think it will be as rapid as predicted.
One thing I definitely agree with other posters about is that there will be an inflationary period in the mid to long term.
One other concern I have with Roberts writing is a "fallacy of composition" where everyone (or at least most people) are encouraged to be come economically self sufficient. This is excellent in theory and definitely a pathway of the future but in doing this do people really understand the risks they are taking with their financial positions ? I'd suggest that only the VERY well educated and up to date attempt this. Yes the internet is a new medium for commerce, but there will always need to be many more buyers than sellers. What happens when everyone thinks they're a seller ? The market will reject the uninformed and inefficient , as it always has.
I love Robert's writing, can't wait for the next chapters !!
I think the economy has hit about as far down as it will go, but I do not think it will become very strong for a long time. For some countries their economy will grow faster than ours in the United States. I think we are going to see some real slow years in the states.
Since the very beginning, third world countries like ours have been trying to cope with other bigger countries. Now that every economy is bad, i'd say that it has made our coping worse. And it will make more people in debt and poorer.
However, education like these (reading)...trying to understand how the world of business goes, it keeps my awareness on what to prepare and what can i do at the moment...it won't probably have the same effects as companies of Rich Dad, but it will make its way through...
It's an interesting to compare now to the depression, here's an interesting post I found posted November 17th 2008.
It also talks about why it may not be an accurate model... reminded me of the earlier discussion about it being an inflationary depression, or deflationary.
The post can be found here
http://www.ibankcoin.com/peanut_gallery/index.php/2008/11/17/historical-...
“Those who do not learn from the past are doomed to repeat it”
If someone wants to dispute the viewpoints, that’d be great. I’m not looking to be right, I’m looking to learn. As such I will present potential cases for why the comparison may be valid, and why it may not. My bias certainly could show, so that’s why I want to encourage discussion.
First we are going to start off with the 1929 comparison, simply because there’s no comparison more attention getting then a “pre depression” scenario. And there’s so much fear and forced selling, and a deflationary situation, that we might as well take a look.
This first 2 charts compares the percentage run up before the decline from 1929 and onward, a 31 year time horizon from 1900-1931 and from 1972-2009, which has yet to be completed.
Can you guess which one is which? Clearly in 1971 we came off the gold standard, and the dollar became a currency. This will naturally lead to inflation. Since the indices are priced in money, and not things, the run up from 1972 to 2008 is expected to be larger, and its not necessarily a reason to panic. So while some might say “we’re going to crash even worse”, others will clearly disagree, because everything’s different. An interesting thing to note is the 5 year percentage chart. Not NEARLY the magnitude of the move in the last 5 years as 1925-1929. However, 1996-2000 has roughly the same magnitude of the move. But again, this supports 2000 being closely correlated with 1929.
When looking at some of the charts above, it’s important to note inflation, and for this, it may be better to look at an inflation adjusted dow. The link shows that the longer term gain of value is not significantly worse than 1929. Interestingly, the run up didn’t begin in 1900, and inflation adjusted from 1900 to 1920 actually shows a decline. But around 1921-1929 is when the market really rallied from real relative lows. And it was not until 82 or so until 2000 when the market really rallied. The inflation adjusted rallies from 1921 to 1929 are quite similar in strength to those from 1982-2000. This is just information, that come to think of it, in the comparison, may be more telling that 2000 top is similar to 1929, and now we’ve had one of the post 1929 rally attempts, anywhere from 1929 to 1937, and continued the following patterns. But we’ll get to those comparisons another time. As of now, we’re slightly more focused on how the price run up LOOKS, and the type of psychological effect it may have on our ability to price our own ability to produce. But we still want to recognize that the magnitude of the move due to inflation requires an adjustment.
Below will be another chart. I don’t remember the dates but the time frames are not the same length. Seeing this 1929 chart, was the primary reason for me making the connection from the technical comparison. When I saw the 1929 chart, I knew it would be similar, and it proves to be more so than I thought…. However, consider the time frames is not the same, so if you expect history to repeat and take the exact length of time, to play out, you are using the wrong comparison.
When actually evaluating the same time period, the declines from the top don’t match up. 1929’s decline occured much more quickly.
If you’re curious, this is what matching up the same length of time would look like.
Clearly not the result we are looking for.
We came off of all time highs with a significant decline, and we can see the behavior, and psychology is similar, based on collectively what everyone believes the prices of several stocks on average is worth using a variety of factors.
Finally, lets look at fundamentals:
According to a 2007 google video with Robert Prechter
2007 dow div yield: 2%
Has been 13 years since they have been higher than 1929
Price/Book 4.04
: I found a good article about 1929 fundamentals here.
Some excerpts:
“Barrie Wigmore (1985) researched 1929 financial data for 135 firms. The market price as a percentage of year-end book value was 420% using the high prices and 181% using the low prices. However, the return on equity for the firms (using the year-end book value) was a high 16.5%. The dividend yield was 2.96% using the high stock prices and 5.9% using the low stock prices.”
“To summarize: There was little hint of a severe weakness in the real economy in the months prior to October 1929. There is a great deal of evidence that in 1929 stock prices were not out of line with the real economics of the firms that had issued the stock. Leading economists were betting that common stocks in the fall of 1929 were a good buy. Conventional financial reports of corporations gave cause for optimism relative to the 1929 earnings of corporations. Price-earnings ratios, dividend amounts and changes in dividends, and earnings and changes in earnings all gave cause for stock price optimism.”
“Although it can be argued that the stock market was not overvalued, there is evidence that many feared that it was overvalued — including the Federal Reserve Board and the United States Senate. By 1929, there were many who felt the market price of equity securities had increased too much, and this feeling was reinforced daily by the media and statements by influential government officials.”
“the Federal Reserve Bulletin of February 1929 states that the Federal Reserve would restrain the use of “credit facilities in aid of the growth of speculative credit.”"”
The market did not fall just because it was too high — as argued above it is not obvious that it was too high.
The actions of the Federal Reserve, while not always wise, cannot be directly identified with the October stock market crashes in an important way.
The Smoot-Hawley tariff, while looming on the horizon, was not cited by the news sources in 1929 as a factor, and was probably not important to the October 1929 market.
The Hatry Affair in England was not material for the New York Stock Exchange and the timing did not coincide with the October crashes.
Business activity news in October was generally good and there were very few hints of a coming depression.
Short selling and bear raids were not large enough to move the entire market.
Fraud and other illegal or immoral acts were not material, despite the attention they have received.
Thursday, October 3, 1929, the Washington Post with a page 1 headline exclaimed “Stock Prices Crash in Frantic Selling.” the New York Times of October 4 headed a page 1 article with “Year’s Worst Break Hits Stock Market.” The article on the first page of the Times cited three contributing factors:
A large broker loan increase was expected (the article stated that the loans increased, but the increase was not as large as expected).
The statement by Philip Snowden, England’s Chancellor of the Exchequer that described America’s stock market as a “speculative orgy.”
Weakening of margin accounts making it necessary to sell, which further depressed prices.
While the 1928 and 1929 financial press focused extensively and excessively on broker loans and margin account activity, the statement by Snowden is the only unique relevant news event on October 3. The October 4 (p. 20) issue of the Wall Street Journal also reported the remark by Snowden that there was “a perfect orgy of speculation.” Also, on October 4, the New York Times made another editorial reference to Snowden’s American speculation orgy. It added that “Wall Street had come to recognize its truth.” The editorial also quoted Secretary of the Treasury Mellon that investors “acted as if the price of securities would infinitely advance.” The Times editor obviously thought there was excessive speculation, and agreed with Snowden.
There’s some other great stuff in that encyclopedia article, I reccomend you check it out.
Now I will look at this comparison from 2 angles.
First I want to talk about why today could play out in a similar way: Before the crash, you have major amounts of credit at unseen levels. Some argue that we can print money at will, but the counter argument is “what good does it do if the banks won’t lend, and credit is contracting at a faster rate than we can create new credit. ” So if we do have a 1929 scenario, in some ways, things could occur more slowly, as we try to slow the effects down, and we have some tools to do so, that we didn’t before, but it might not be likely for these to change the outcome, just slow things down. Others may say we are expanded globally, and the flow of money is faster, and with better technology and more things happening at once in more areas around the world, that may “speed up” the effects, and the net result may be similar in pattern. While some might argue that this will not happen because things are so much different without the gold standard and federal reserve, we have to recognize that everything has expanded so much that although we do have certain things we can do, the problems have become unmanageable, which may have been the problems of the 1929. So while it’s easy to believe we can inflate our way out of this mess, there’s only so many people that want loans, and only so many people interested in borrowing, and with the increased lending restrictions, and regulation, even with all the creative ways to pump liquidity into the system, it simply may not be enough anyways. And while certain factors our different, human psychology does not really change all that much. We may learn from the past, but emotions still drives our actions and thoughts. If we act in fear of something happening, we may either create that thing because of fear causing irrational behavior, or create something much worse.
Again, I don’t seek to be right, this article is for us to both learn. So now…
why this comparison either isn’t good, or won’t work:
First of all, no gold standard. That means we have more control and can print ourselves out of the problem. Even if no one wants loans, we can always come up with creative ways to get out of the problem by increasing the money supply. We are doing the exact opposite as before. Without the gold standard, it is much easier to do things that will create more credit and more inflation. So whether or not that is a good thing, now we at least have the choice.
Second, in 1929 the opposite action was taken as rates were hiked and the fed attempted to slow down what was thought of as excess speculation and credit, while also returning the real value (gold) to the US.
Another thing you must realize is that the banking crisis didn’t start in 1929, but later on in the early 30s, after the 1929 lows were broken. This could mean things are more serious, or it could mean that we’re simply aware of the problem sooner, and can deal with it sooner. Regardless the timing and effect it will have is different, and will most likely have different results. An interesting thing is that some may say that the 1930’s banking crisis may have been a result of the Fed’s action in the late 1920s. If this is true, we might expect the exact opposite future, where rather than deflation, we will eventually have serious inflation in the next few years.
Bernanke clearly is “a student of the great depression” and wants to make sure it doesn’t happen again. He’s clearly afraid of letting something like that happening, so instead, he’s doing the exact opposite action. With an infinite amount of information available, it’s very easy if you’re used to studying something extensively to notice similarities. In doing so, it is very reasonable to assume that Bernanke will OVER react. While history does repeat, we learn from our mistakes, and 1929 is a mistake that too many people are refusing to make. While it may be too late to undo the factors that lead up to the great run up in prices from the 1970s on, Even if the decline was the same, the future will be completely different, as we will make sure the result will not be the same.
In Summary: If this scenario plays out, there should be a sharp rally at some point in the near future. In 1929 the rally was about 60% from the low. I believe right now it’s better to be positioned for the upside, if you must. I made a great flip as I took profits after noticing the overwhelming bearish sentiment, and making some trades. I believe that if we rally from here short term and it could be the start of a strong rally. I think it’s very likely that we gradually decline in price through massively large swings up and down with big up days and down days, but I believe there’s more upside in getting long here, particularly in OTM calls speculating on a big move. However, I do believe in system trades as well, and I don’t like playing one side too heavily, so I have no problem with you taking Woodshedder’s Big Bamboo trade, and likely will take the trade myself. I’ll take a lower win rate for higher reward potential here on the upside, hedged with a high success high reward system trade.
Starting this week I’m actually mostly neutral, but I will add on a decline and become short term bullish. Unless we break the 11/13 (weekly) lows, I actually think I will be long here, even though the thought of saying I’m bullish kind of “hurts”. This may be a “buy when you are most fearful play.” Which will happen if we retest last weeks lows. Large price swings could very well continue to be dangerously high, and as long as I’m looking short term, I will look to mostly position myself in out of the money Dec08 and Jan 09 calls and puts, rather than stock, to allow me to better manage these big moves without a large amount of capital at risk.
Personally I think it is very difficult to get much of an idea based off of just this one comparison, but I hope that after doing this series and looking at several, it will be much easier to get a more reasonable picture of the future. I think one of the reasons things are so volatile is because both individuals, and people looking at both angles disagree on the future drastically. On one side, you have the deflationary spiral and the belief that it will continue and that the worst is very much yet to come, and that Dow could hit 1000 or lower. On the other side, you have the massive inflation picture that may occur down the road.
I believe this post shows a valid argument on why it’s one of the reasons I am starting to like long gold and commodities and short stocks in the long run. I recognize the possibility that eventually there will be massive inflation in either scenario, even if it could be a long time from now. However, I also believe that during deflation, many stocks will get hurt much worse as stocks have been priced on their FUTURE ability to produce based on the idea that they could borrow to grow. Where it is my opinion that more consideration should have been put on their ability to survive severe downturns through plenty of cash, debt that’s easier to manage, and a solid balance sheet, as well as their ability to produce in financial Armageddon. More emphasis should have been on a dividend, as companies with dividends not only offer reassurance that they are making the earnings they say and not manufacturing them, but should things go wrong, they can cut the dividend and continue to operate at the same capacity and expand and grow, as if nothing ever happened. If other people come to this conclusion, or if problems play out and lending becomes scarce and growth becomes difficult, and credit drys up, and companies are forced to make layoffs, and the layoffs hurt the average income, which hurt housing prices and our ability to consume, which in turn not only hurts businesses, but businesses dependant upon other businesses. The outlook is very grim for businesses and stock, and many will head to zero in a deflationary scenario. Although it will hurt commodities, I don’t believe it will quite have the same impact. Bankruptcies for companies mean that the stock goes to 0 and never returns. In that scenario, the shorts on stocks will beat the shorts in commodities and ags. Also, I believe that Bernanke will fight deflation to the best of his ability. Long term that does signal inflation, but it could take a long time. Where stocks can go to zero, and businesses can no longer have demand, people will still need to eat, and globally, oil will be in demand, even if oil companies fail. Now eventually the same demand that we had may return, but the ability to supply that demand perhaps will not. I’ve been an oil bear, but I want to shift to being a bear on some oil companies now (I recently bought APR 2009 puts on MUR), as well as coal companies (KOL puts) and I eventually will accumulate a long term position on oil (USO) and nat gas (UNG), while also buying solar (TAN) as a hedge to a global diversification out of oil and into alternative energy.
Conclusion: I hope you learned a little something, even if you have no idea what the future will hold. Looking at any one situation independently will show both similarities, and differences to the world we live in today. However, looking at what happened and why in several historcial sitautions, should allow you to have a better understanding of the big picture, and allow you to recognize what’s happening quicker than everyone else, as well as see farther out into the most likely future, which should give you an edge, while those who fail to learn the lessons of history will miss it. History shall repeat,, and those who do not learn from history are doomed to repeat it.
I dont think our economy will ever be as strong again. We are built on a house of cards and it is only a matter of time before that all comes crashing down. Our leaders have sold us out and the american public continues to look at them to solve proplems that they have no desire to solve.I feel bad for all those millions of people trusting the government for their bailout that will never come. As they wait and hope their standard of living is being stolen right out from under them.
Definitely yes...it's already started in China (PMI released on May 1st 2009 up 53,5%, many other important economic indicators are also >50% which means expansion is on the good way). No doubt that US will recover soon too, I'm sure no later than second half 2009, why? because US's government and FED will print as much money as needed to inject into the market in order to boost consumption like crazy. So let's welcome great bull rally shortly.
Besides, I love this quotation from Robert:
"The sky is falling. The sky is falling." Most of us know the story of "Chicken Little," who ran around warning the barnyard of impending doom. We all know people who are that way. But we all have a "Chicken Little" inside each of us. Most people are poor because when it comes to investing, the world is filled with Chicken Littles running around yelling, "The sky is falling. The sky is falling." And Chicken Littles are effective because everyone of us is a little chicken. It often takes great courage to not let rumors and talk of doom and gloom affect your doubts and fears.
“Cynics criticize, and winners analyze"
Just like you said "bear market rally", i think stock market will plummet deeper as GM and others file for bankruptcy.
The economy will come back but it will involve foreign help from countries like China.
After reading your book, i really don't see positive advantages U.S. has in this globally competing world.
No, not in the long run. I agree to the written, that what we are seeing is of short breath. I work in a household appliance manufacturing and we face a considerably worse result with no light down the tunnel. We might not be in the indicative branch, but I seriously doubt other manufacturing areas look better (EU).
Present rise on stock market is probably coming from greed or maybe financial wisdom? Isn’t it taught that you must buy when the market is down? Combined with greed we have an answer.
I'm only 25 years old. I am blessed to have been exposed to Robert Kiyosaki at 19 years old. I have read his books, played the game, listened to audio, watched him on YouTube, and am now participating in Conspiracy of the Rich. I had not taken any action -- until now. I wish I would have started six years ago; but I can't change yesterday...what I can change is today and tomorrow!
I see things turning around temporarily, but as soon as baby boomers are retiring in force, the business/economy landscapes will be permanently changed - forever. Regrettably, many of them will VOLUNTARILY CHOOSE to be confined to working crap hours at a dead end job with no fulfillment or impact because they had only known economically good times most their life.
I believe my generation (especially middle class offspring) is waking up to the fact, not that jobs suck (though they do), but that we don't want what our parents have. Most of us have seen and had the toys, the glamour, fake status.
What we really want is the time with our families we never had growing up. We graduate college, get thrown into the wash unprepared, and see that we have been deceived and ask. We ask, "Why? Why spend $60k and four years to get a piece of paper and wait tables?" We don't want a corporation telling us when we can wake up, eat, and crap. We see the world through VERY VERY differnt eyes. We naturally see a world of abundance, opportunity, betterment, and prosperity (though Ted Turner would have us see differently). We see that when we network with eachother (eg Facebook) we can build a community that can, will, and has rocked the world, and will continue to do so!
There are a lot of foces against us, a lot of negative to overcome, a lot of mistakes not made by us to solve; but with our minds and God's blessing, down the road I see great things, great inventions, great accomplishments, great successes, great prosperity, opportunity and legacy.
fter i read chapter six, I had to show a rental suite that i am in partners with in a triplex. I showed it to a young girl who was going to university..her father was with her and she would apply for herself and her boyfriend who was also going to school and working part time. I spoke with her father who told me he works in the foresty industry and of course is laid off along with 3500 other members . I asked what he was going to do now and he said he was retraining to drive truck and was just going to wait for the economy to come back.. I could not believe my ears...I felt sad ...I asked the young girl what she was taking in university. Global Studies was her reply. She would eventually end up working for the government in an environmental compacity of some sort. So here was two truths about what i have been reading from my favorite financial guru right before my eyes..after i said goodbye ..i noticed a small house across the street from our triplex for sale. the realitor and his partner were taking picture for the internet that would be up and running by the next day..they let me in ...i took a look and made an offer right there. up until i read chapter 6 in the back of my mind i was waiting too....not anymore..
NO the economy is not coming back. people are continuing their lives going around with blinders on and believing what they see on tv -- the retoric that things will be getting better. By doing so they are denying themselves the opportunity to see the world as it is and prosper from the changes that are happening and will continue to accelerate.
No, the economy (of man) is not coming back. We are entering the time of the Four Horsemen of the Apocalypse. Micheal Boldea describes the four varicolored horses being led out of the stall by angels in October 2006. Rick Joyner describes various future world events in "The Harvest".He notes that India and Pakistan will be the first nations to use nuclear weapons against each other. Jews and Christians will again be killed off as happened previously in Hitler's "dress rehearsal". Only Germany and Sweden will not partake in this massacre. Nita Johnson writes about the future in "Preparing for Winds of Change". She includes a map of which parts of the USA that will be destroyed by various calamities. David Wilkerson describes judgment in "America's last call".Dimitri Dudumann a Romanian Bible smuggler wrote of his many visions and dreams about the USA's demise when she is attacked by 8 nations at once. No dear readers, we have entered the book of Revelation. The Bride will get ready for His return and will witness many miracles. The wise see calamity coming and take refuge.Robert is helping to light our way through the coming darkness.May God protect and help him in his endeavors.
I am pretty sure that the economy has evolved after every depression/recession that we have experienced in the past 80 years. Since 1929, new ideas and technologies have emerged that created a new economy. Unfortunately, many of those technologies are double-edged swords that have not served people well (i.e. credit cards, home-equity loans, Adjustable rate mortgages, etc).
The economy is not going to be the same because of the realities that have been brought to light as a result of the current economic downturn. This will be one of the major events that shapes the history of the current generation. The lessons that the current generation will learn from this are not the same as the lessons learned by previous generations. Those lessons applied will create a new economy within the next 10 - 20 years.
I am sure that the people who worked for the telegraph companies thought that surely things would turn around for them years ago. Probably the same was thought of the coal industry and many other manufacturing sectors whose industry was replaced.
Technology doesn't look back, only people do that. There are many 'famous' quotes from people who chose not to see what was possible. I have heard that Great Depression likened to the winter season. People shutter themselves in, drawing family and friends to them in winter. As the winter passes comes spring, there is new growth, new opportunity. In my province we are already starting to see that spring growth as people are back shopping, new projects and companies are launching. Seasons don't go backward, only forward. People have to focus on moving forward and not what was, its behind them, over and done with.
Like Robert says.. We're entering into the information age and I highly doubt we'll see it turn around. Only being a 20 year old student majoring in business I've already seen a lot that supports thoughts. Ever since I can remember my dad (being a self employed carpenter) has continuously lost business for the past 8 or so years. I also work directly in the auto industry and the same is true there. When I started a little over 2 years ago they were pushing people to work 6-7 days a week. We're now down to a 4 day work week and possibly getting rid of 2nd and 3rd shift. Not to mention we've recently went through three rounds of layoffs, by next week we'll have went through the 4th and it will be the biggest lay off so far. We're currently losing about half a million in sales a month and our customers that are direct suppliers of GM are calling in daily canceling orders. As our CEO put it during our meeting yesterday.."There was a storm a coming, that storm has turned into a level 5 hurricane." When GM shuts down for weeks most likely we will be shutting down as well. I'm only part time there working 2 days a week around my college schedule. I'm not receiving benefits and I'm making half of what the other machinists are making, but I still expect to be jobless here soon. I strongly believe were about to see the worst depression ever and it will be the longest one as well. It is a scary thought but I look at it as I have 20 + years to get ready and be well prepared for the recovery. We have to be optimistic and be ready for what's to come. I became very independent at a young age and I never plan on having the government take care of me. Times are getting worse and sitting around worrying and putting blame on politicians wont change anything. Its up to us as individuals and I can't wait for the opportunities to come. I Owe my future to Robert as reading your books has put me in the right direction. It's never too late to change your ways and get ready for what's to come. Thanks to everyone at RichDad.
I think there will be a little bounce, after all, you can't dump $1 trillion+ into the economy and not have something happen. The problem is that is all that will happen. There is no staying power in the "stimulus package".
Unfortunatly, I think people will see the little bounce as a positive and will get the crazy idea that if they just throw more money at the problem it will fix it. The reality is that it will just make it worse. The middle class will disappear becoming either rich (a very small portion) or poor (the vast majority), and the gap between the rich and poor will become a huge chasm. The poor will continue to blame the rich for their problem, and the rich will try to protect themselves and their families from the government.
Hmmm, what would Richdad say? History repeats itself. If you don't learn from it your bound to repeat it. How many times has this repeated already. It just comes in different forms. You either take advantage of it or it takes advantage of you. I did not like History nor reading until I read Richdad Poordad. Reading the books taught me History lessons I did not learn in school. Will the Economy come back? As Robert said it has gone away. People are still walking around wondering "who stole their cheese". Instead of moving on and looking for other ways to take advantage of it, they are still looking for the same cheese they had before the economy collapsed. You can't solve the current problems with the same thinking that one had when they created it. The Government is doing just that. First they re-elect the same officials who created this mess. Second they are becoming owners of companies. They can't run themselves. They are creating new ways using the same thinking that created this situation. Richdad believed in only hiring Ceo's and board members who owned companies of their own. If you never owned a company yourself how can you be CEO of one. Is the same economy coming back? No. If you look at the current rally in Wall Street, they are playing the same tune. The Rich are taking advantage of the situation on Wall street and bailouts from the government to "cashout" while others are jumping in. The current administration wants to raise taxes for the investors so they can keep spending trillions of dollars. Robert Kiyosaki predicted a crash and depression caused by the "babyboomers" and "social security", which is still to come. Is the economy coming back? If you put just a couple of these ideas together it tells me we are heading for bigger problems soon to come. So open your eyes and see what you can't see. Lord watch over us and protect us. They took prayer and the bible out of school and want you out too. It is time to put "In God We Trust" back in America.
Like Robert said, "the economy has came and left those who are waiting behind." I know so many people who keeps saying, when the economy comes back Im going to do this and that. I just laugh. The economy is gone and unless you want to depend on our government or get a piece of the bailout money, your gone too. This is the best opportunity to become financial free. Take charge of your life.
I think it´s not and I hope it´d never come back to the same absurd and unfair rules of the past, but I´m afraid the Establishment will successfully oppose every possibility of real change of the financial structure, because all the elements of real power share the same wicket interests and even those well meaning people are tied up. The way out is financial education
Not yet, there are still arms that are adjusting and the other quarters of the business cycle need to come out. This will be a loss, in return will most likely drive the Stock market down somemore. Remeber a few months ago the Dow hit 7500 and below that on some other days.
Life is what you make it now. Our compnay www.HowMoneyReallyWorks.com has a newsletter to help people understand money. One should look at money like this What is creating Income and What creating an expenses. If your personal expenses are too high, do you have a budget in place? If not, we have free budget sheets on the site. Everyone should be helping people in this economy, the more people you help, the more comes back to you when you least expect it.
The economy will return to a sustainable level. But most old jobs are lost forever. New jobs in different sectors will be created and pensions may be all going too. States, counties, and cities are all broke and cannot print money like the fed, so what are they going to do? Tax, cut jobs?
Time to stop being a victom and start creating jobs for yourself and others?
Is the economy coming back....Yes...back to depression.....A time when things get tough....and if people don't get tough, they get left behind..... A wise man one said "There's a reason why the Good Lord put your eyes in the front of your head, So, you can look to the future and figure out what you have to do today to get there." Many people today are looking for the glory days they never had, instead of figuring out how to take advantage of this situation. This is why they are going back to depression. "Recession is when my neighbor looses his job. A depression is when I loose my job." Theses people who fail to adapt will loose their jobs and become depressed.
I think the economy is not coming back. As we used to understand the old market (Old System). Now, as the phoenix, the world economy from the ashes will rebuild the way we will make any kind of contract in the future. As Andres Roemer (professor in Law & Economics) said; the country or person that do not innovate or invent new ways of production will extinguished in time.
Robert,
I DO NOT believe the economy is coming back, my reasons are as follows:
a)Most are hesitant and fearful.
b)Most seem to long for the old era instead of creating a new era.
c)Most are still reliant of big government to fix their issues.
d)Most are not willing to suffer for their freedom.
e)Most are not willing to stick to a disciplined plan.
f)Most still beleive and base their life on an old philosophy.
g)Most are not willing to "do more with less."
h)Few actually oppose statements a - g.
I beleive a strong economy is based on functional relationships and trust, currency is the tool that emodies that relationship.
The government officials don't trust the people and vice versa.
These officials are still using the same 20th century "fearmongering" to herd the unassuming fools into filling their coffers with trash federal notes.
I believe that it will take a cataclysmic financial shift to change this. Why should a fat fox give up a steady diet of juicy chickens?
I'm not an economist or even all that versed in economic theory, but I do know that everyday I still hear about
jobs being cut
businesses filing for bankruptcy
the market fluctuating erratically
and homes still being foreclosed on
IMO no...the economy has not come back....IMO as long as unemployment claims are not DECREASING on a month to month basis then no...we are still in a recession.