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I've been following this story since I read this article last week. Moody's hired a private law firm to review the claims made by Mr. Kolchinksy. Mr. Kolchinksy said Moody's has continuing conflicts of interest and inflated ratings. You can read more here.

Here is a link to my previous post.

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I just read a disturbing article in the Wall Street Journal - LINK. An ex-Moody's employee says the firm continues to issue inflated ratings on complex debt securities. How much of this are we going to continue to take? I don't want to go through another financial meltdown. I've given my opinion on these types of complex securities and to sum it up in short, they are bad. They are financial weapons of mass destruction! Not only should they be banned, you have a supposedly impartial firm accused of telling you that they are great, when they know them to be less. What is it going to take for our government to finally wake up?

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Sometimes it would be nice to mix things up a bit, but I am not going to hesitate nominating Barak Obama over and over again if he is going to continue to make dumb decisions. What's has he done this time? The last thing you want to do is get into trade war when your economy is in a recession, but that is exactly what he is doing with the tariffs on tires from China.  

See article here:

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We have posted a new edition of our Monthly Newsletter - Bulletproof Your Financial Future

SEPTEMBER NEWSLETTER

In this month's issue:
Roth IRA Conversion Saves You Money - Part 2
Investing: Cash is Not King... But Where Do We Go From Here
Local Business Spotlight

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Twelve years ago I started making predictions as an experiment on my radio show. The plan was to have some fun making educated guesses about the markets and then have a good laugh about them a year later. Instead, a funny thing happened: they all came true. Here is a link for my predictions online.

So far I am 29/31, with two predictions pending. I predicted the 2008 real estate bubble, and got my clients out of REITs before the crash, but the credit freeze had a negative effect on the rest of the market, that I didn't see coming. In the end, we faired far better than the markets and our investments have rebounded nicely over the past few months.

Sometimes I get lucky, like the Pension Protection Act prediction I made in October 2006. I ended up predicting that more regulation would lead businesses to avoid pension plans, because I missed the part about how it was suppose make it easier for small businesses. Although I was happy to get it right, I never forget that it could have just as easily gone the other way. Had I known that, I would have predicted there would be more time tentative programs in the future and I would have been wrong. Sometimes it's just plain better to be lucky.

At the basis of having successful investments is hard work. I spend a tremendous amount of time doing research to prepare for each of my radio shows, and my staff of financial advisors assists me in that project. Between the elbow grease and the research and experience behind my predictions, it is hard to be wrong.

In addition, what makes it hard to be wrong is that we make long term predictions. We buy good things and keep them forever. If you do that, it makes it difficult to be wrong if you've done the hard work to begin with. And one other thing, I've found the harder I work, the luckier I get. Some of my predictions, you may notice, I was right to the very day of the best time to buy. That's luck but I'm always glad to have luck because it never hurts. This combination of hard work by a sophisticated group of analysts and just plain old good luck has served us well.

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With so many problems plaguing the SEC, I have been looking for ways to we can find solutions.

I've mentioned before that one way might be to create a securities division in the Justice Department, designed to criminally prosecute the bad guys of Wall Street. We'd do away with the incompetence of the SEC and hire the best private securities law firms to do the job right. 

Another idea I heard recently, was to put the SEC under the direction of the Treasury Department.  I am not sure how that would make it better, but I am interested in what you think. What should be done to make sure this financial crisis never happens again?

 

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We have posted a new edition of our Monthly Newsletter - Bulletproof Your Financial Future

AUGUST NEWSLETTER

In this month's issue:
Roth IRA Conversion Saves You Money - Part 1
IRAs - Frequently Asked Questions

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Why is the Justice Department so incredibly inept at prosecuting securities fraud? The reason is they don't have anyone devoted to prosecuting these cases. In fact, there is not a single attorney in the entire Justice Department that is trained in the area of securities. Should a case come up, that they might want to prosecute, they'd probably have to look up the word securities in the dictionary to see what it means.

This is a completely untenable situation. It is imperative for the Justice Department to have its own division devoted exclusively to securities, set up with the best attorneys they can get their hands on. We know that the big firms are going to try and hire the best of the best to defend them so, it is time to even the playing field.

How are they going to do that? I believe that the best way to do that, again like what I said regarding the SEC, is to go out to the private sector, hire the best people as outside consultants to work on given cases. In an even fight, and with the right people on their side, I am confident that the Justice Department would have a pretty good chance at getting the job done.

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Can you spare some change?
Deciding to convert a traditional IRA to a Roth IRA just got easier thanks to the Democrats. Obama, like a kid in a candy store, is spending like crazy and driving up the deficit. Cut through the sugar coated rhetoric and, once the economy starts to recover, you'll find one hefty bill left for taxpayers!

It's time to pay the piper.
So, what are you going to do? Did somebody say, "Impeach Obama?" Hmm... I like where you are going with that, but that could take years and right now you're better off with a Roth IRA. Think about it: with higher taxes looming in our future and the market nearing bottom, the time is ripe to give the government their share. After all, I'd rather pay 25-35% now than 60% later. The government has been your partner ever since you started saving, waiting to cash in on his portion of your retirement. Now is your chance to buy him out for cheap; plus, you won't have to worry about him coming for his cut later.

Go long!
A Roth Conversion especially makes sense now if your investments are down, and you expect them to go back up as the market recovers. Convert to a Roth IRA now, and pay the taxes on the depreciated value of your portfolio, then you can sit back and watch your investments grow tax free.

Everyone deserves a second chance.
Are you still worried that converting to a Roth IRA might not be a good idea? Well go ahead and swing anyway, because if you change your mind next year- you get a mulligan, baby! Roth IRA conversions are reversible. If you can't decide between converting now, in case they raise taxes, and waiting until 2010 so you can spread out the taxes over 2011 and 2012. Do it now and you can reverse it later if they don't raise taxes next year.

Double take.
In fact, you can reverse a Roth conversion and then reconvert it back to a Roth IRA again. If you already converted back when your portfolio was worth more, reverse it and then reconvert it back so that you are not stuck paying taxes on the balance before it went down. There are so many benefits, I can't think of a reason not to do it. A Roth IRA conversion truly is a beautiful thing!

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Why is the SEC wasting so much time on formalities? After Madoff plead guilty in March, for running a massive Ponzi scheme, we all knew that he was going to jail. In fact, he was placed into custody after his confession so, what took the SEC 3 months to ban him from trading for life? Plus, who cares if he has a securities license anyway? I am pretty sure he wasn't going to use his one phone call to place a trade - no that he actually used his license for trading, anyway. He was stealing money, not investing it. He is certainly not going to be doing it now, with a 150 year sentence and solitary confinement. So why were they spending their time on pushing meaningless paperwork. What a waste!

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