Juggling Dynamite

Danielle was a guest today on The Financial Survival Network with Kerry Lutz discussing current trends in the world economy and markets. You can listen to an audio clip of the segment here.

Kerry Lutz wrote a worthwhile historical perspective piece on the World Trade Center this week:

“The World Trade Center’s inception can be traced back to the heady post-World War Two era. The idea was kicked around from the late 1940’s until the early 1960’s; New York’s then Governor Nelson Rockefeller seized upon the idea. When it came to legacies, Rockefeller couldn’t have too many monuments. He needed New Jersey’s consent, since he wanted the flush Port of New York and New Jersey Authority (It owned and managed NY/NJ’s bridges, tunnels, airports and ports) to finance the development. Ever the dealmaker, he dangled the carrot of having the Authority take over the bankrupt Hudson and Manhattan Railroad a/k/a The Tubes (which transported hundreds of thousands of New Jerseyans into New York City daily) before New Jersey’s governor. Governor Miner and then Governor Hughes jumped at the bait and the deal was done. The Port Authority took over the money losing Tubes and it was renamed the PATH (Port Authority Trans-Hudson Rail Line).

There were hundreds of encroaching small businesses that were forcibly evicted from the site. Not a problem for Rockefeller, newly expansive eminent domain doctrine was used to force them out with just compensation. Once the little guys were stripped of their property rights, the game was on…

See the whole article at Why rebuild The World Trade Center?

The stock market has been flailing about like a teenager on cheap wine year to date, but so far the much larger, more sober bond market seems pretty sure about its preferred path: safe-haven inflows to U$ and the highest quality bonds. As shown in this chart of US 10-year Treasury yields, the Q-Eternity sponsored pump and dump in risk assets that began in the fall of 2012 is once more running low on believers in 2014.

Infamous for obscenely high internal management fees and back end loads, Investors Group today announced on its web site a new 1.99 floating rate mortgage available to trusting victims:

The Winnipeg-based financial services firm posted the rate on its website Tuesday, offering a 36-month term at a variable rate 101 basis points below IG’s current prime rate of three per cent.

“It’s probably something we may see more of,” Toronto mortgage broker Marcus Tzaferis said. “They offer it up so they can cross-sell their investment products…They get the opportunity to wrap you up and cross-sell their mutual funds and you’ll probably renew and pay an extra half a per cent for a five-year then,” he said. See: Investors Group unveils 3-year mortgage at 1.99%

This is a common tactic of financial sales firms to turn customers with little capital into customers with more capital by gutting any equity in the family home. Borrowing against one’s home to buy high risk financial products is a bad idea at the best of times, but doing so at 6-year highs in stock markets, in back-end loaded, high fee, no risk management products on a floating rate loan when rates can only go up–that is near certainly a recipe for financial suicide.

If you know anyone who is considering this kind of a sales pitch today, try your level best to alert them. Taking financial advice from the sales force is a well-worn path to pain and suffering. And depending on one’s age and time to recover, the losses can literally be life devastating.