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

JULY NEWSLETTER

In this month’s issue:

                Inflation – Short, Medium, and Long Term Outlooks

                Five Secret “Assets” to Build and Preserve Wealth

                Online Banking Security Alert

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Researchers from Carnegie Mellon University have found that is it possible to guess many, if not all of the nine digits of your social security number. Thanks to the Social Security Administration’s efforts to assign social security numbers shortly after birth, anyone born after 1988 has an 8.5% chance that their entire social security number can be guessed correctly. This percentage even increases if you were born in a smaller (population) state.

Here a link:

Mark Lassiter, a spokesman for the Social Security Administration, said that, “For reasons unrelated, the agency has been developing a system to randomly assign SSN’s”. However, in lieu of the inevitable exhaustion of social security and the time it usually takes bureaucrats to do anything, I doubt they were planning on being around long enough to actually implement it, anyway. Kudos to CMU for kicking them in the pants! Add this example to the pile of stories that so clearly illustrate how effective our government is at screwing things up and you’ll see why I am against the Democrats adding another 200,000 bureaucrats.

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With the growing popularity of online banking, now more than ever before, consumers must be prepared against online fraud. If your finances aren't secure, they will be stolen! And that's not even the worst part; when it happens, your bank is going to try and blame you for it.

I always thought that online banking was pretty safe, but identity theft and fraud can happen to anyone. A local businessman, and client of mine, recently fell victim to online fraud. Hackers somehow managed to log into his business and personal banking accounts, then transferred $700,000 to various banks throughout the country. So far, the FBI has not been able to determine how the hackers got his log-in information, but the bank refuses to admit any fault. Although they were able to halt $350,000 worth of transfers - he now has to fight his own bank to get the rest of his money back - which could take years!

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Bernard Madoff, the mastermind of the world's largest Ponzi scheme was given the maximum sentence of 150 years in prison yesterday, albeit a Medium Security Prison. Madoff left a wake of financial destruction behind in the lives of the victims he stole money from. Now the giant task remains to recapture as many of these assets available to repay the victims left behind. So far attorney Irving Picard has only been able to recover 1.2 billion of the estimated losses of 13.2 billion, however, he has already sued to recover more than $10 billion from investors who withdrew sums from their Madoff accounts in recent years, and could try to recover other fictitious profits paid to investors over the past six years.
My only regret for Bernie Madoff is that they did not give him the death penalty. I guess 150 years is good enough to guarantee that he will remain in jail until he dies.

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The following article is an interesting debate on the possibility of more deflation in the short term:

Inflation vs. Deflation

Previously, I also thought that deflation was a real risk; then, the Federal Reserve took care of it when they bailed out the banks. Now, the real risk is an almost guarantee that we are going to have high rates of inflation in the future. Obama's administration is spending more than has ever been spent to boost the economy.

Watch out! Obama's plan and socialist programs aren't doing us any favors. This unbelievable spending will virtually guarantee inflation, and it is not likely to do us any good. Like every other time congress is tempted to stimulate the economy, they kick it into place after the economy is recovering, anyway. As a result, the check will come due, in the form of higher inflation in the long term outlook.

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Some of the hot air bellowing out of this country can be traced back to congress this week, which barely passed new cap and trade policy on Friday (219 votes to 212). The bill is championed by Nancy Pelosi, as an avenue to create new jobs. Other advocates claim it will pave the way for 80% reduction in emissions over the next few decades.

Despite support from key democrats and the White House, critics say the bill has far too many subsidies and loopholes to make any significant impact on the environment. In fact, cap and trade seems to be more beneficial to special interests and utilities companies than any impact to the environment, with profits likely to increase, leaving me to wonder who the bill is really designed to benefit. Massive offsets available to polluters will not eliminate fossil fuels cost savings advantage, and are likely to repeat similar failed attempts to reduce carbon emissions in Spain and Australia.

According to a Washington Post-ABC News poll, less than half of Americans support a cap and trade approach to greenhouse reductions. Compared to surveys last year, fewer want to spend more on greener energy alternatives, and could be a result of the slowing economy and consumers tightening their belts.
Bottom line: cap and trade is just another big tax on the American people. As Warren Buffet said, it is just going to be passed onto the consumers in the form of higher energy costs.

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Here is a great article, by Carol J. Loomis, on the risks of unregulated derivatives:

Derivatives: The risk that still won't go away

I really like this article, and it does a good job objectively describing derivatives. I think that the SEC should be able to hire the best independent derivatives gut out there, to go through and approve any derivatives, before they are allowed to be used. Even if the job seems like its a lot for one person to do, in this case, nothing getting approved would be better.

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Derivatives are the nuclear weapons of the financial world and the problem is that no one is regulating them. Just like nuclear power, good derivatives are great, and bad derivatives are financial Armageddon. People in are wielding these weapons without regard to how it will affect the economy, and that is why we are in this mess. Every time the SEC tries to go after these criminals, they are outgunned ineffective bureaucrats! Adding more of them is not the answer.

What is the answer? The government should hire the best independent firms out there from the private sector, who really understand what is going on, and pay them what they are worth to sort through the crap. Hire the best forensics accounting firms and law firms, to go in an audit these financial institutions. Give them the power to go after the crooks on Wall Street, and really make it hurt! Throw them in jail, take all of their money, and don't forget all the money they give away to friends and family. Take it all back! That is the only way to keep this from happening again.

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Angelo Mozilo, of Countrywide, has been charged by the S.E.C with fraud and insider trading. Countrywide, as you might remember, made risky home loans and then packaged them up together to sell off to investors, even though they claimed otherwise.
Apparently, old Angelo, knew that these risky loans were not a good idea, but he kept us all in the dark, until he could dump his own stock and make 140 million dollars.
You know...trading on insider information is very, very bad, but what he did really hurt a lot of people, and may be a big contributing part of the sub-prime mortgage failure, in this country. I really hope Angelo ends up in jail, where he belongs!

 

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The problem with estate planning attorneys is that there is very little recourse for victims of excess legal fees, or shady practices by unethical lawyers. Why, you ask? Well, you are dead! A good estate planner will work himself out of the process so that, after your death, your assets are handled properly, without any additional legal services. However, this is not always the case. Many attorneys choose to incorporate themselves back into the process, so that they are able to charge you more. The more services they can provide, the more money they make and the less there is to pass on. In addition to costing more in legal fees, these extra services tend to drag the process out, delaying the distribution of your assets to your benefactors.

Although some states have pools to reimburse victims of shady lawyers, it is hard to establish proof that their actions are malicious - after all they are attorneys! Some cases are so blatantly obvious, with attorneys stealing tens of millions of dollars, by charging for excess services, yet no one went to jail, and no one lost as much as their license. They really are the worst of the bad lot!

Fortunately there are a number of better options available. Meeting with a reputable financial planner is always a good idea. For example, you may wonder if your circumstances are better served by a will and trust, or merely a will. Remember, every situation is different. Find a trusted expert, and evaluate your options. This will allow you to make the best possible decisions.

To help get you started, I recommend logging into my website and downloading Bruce's Best: Estate Planning Tips, or you can always call us at 1-866-702-7823. Our experts can help make the process easier on you and your loved ones. After all, none of us are getting out of this alive, so you'd better be prepared!

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