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Wednesday, July 21, 2010

Myth: Capitalism is a Perfect System

As incredible as it may seem, there are prominent political, intellectual, and business leaders who believe that unfettered capitalism, a "free" market, can do no harm. For example Alan Greenspan, the principal architect of our recession, believed financial regulation stifles innovation. Thus his support of GW's deregulatory spree.
But as Stanford economist Joe Stiglitz points out in his latest book, "FreeFall", the only innovations the banksters and Wall Street came up with were how to avoid accounting and tax regulations. Had they really had any interest in innovation they would have figured out how to eliminate the risks of home ownership rather than compounding them.
Our capitalist system is imperfect and fails frequently and spectacularly. This happens, as Stiglitz points out,when private rewards become disconnected from public benefit. There will probably always be the type of "business" person who chortles at raking in profits while providing absolutely nothing of material value in return. This is known as sociopathy. It is a mental illness. This is why we need a strong, equitably enforced regulatory structure to keep such people from entering the market and to take them out if they somehow manage to get in. I dream of the day when everyone has to follow the rules, from the President on down to your local plumber.  Not that plumbers are at the bottom of any strata, it just sounded good.  Ok, how about down to the local kid mowing your lawn.

Thursday, July 1, 2010

What if . . . .? This CD-killer is no myth.

Having never quite grown up, doomed, I suppose, to being a perpetual dreamer, I'm a great one for "what ifs". This is one of my favorites, what I call "The CD Killer".

In terms of safe money, what if:
1. You could earn double the rate your current CD is paying.
2. Defer taxes on the interest indefinitely.
3. Have penalty-free access to your funds
4. Triple your money if you ever needed long term care. Yes you're reading that right, triple.
5. Do all this regardless of your current health.
6. Protect your principal and earnings from creditors as well as from FAFSA reporting.

If that sounds the least bit intriguing to you, please contact me for more details.