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If you needed $2 Million right now to maintain your lifestyle, keep your home, and
continue to work or run your business, would you be broke?

I want to make a very strong point about how you may want to view the near future for
your business and your personal financial safety but let me set the stage first:

The big companies which need billions of dollars in cash infusions from the Fed are
broke! They are already broke and gone. We are only trying to keep their neon signs
lit up so that the general public will not feel so bad about coughing up the money to
pay for it all. There is an ebb and flow to the whole process. Part of the ebb and flow
is, at some point, to try to convince the general public that things are okay, things will
be fine, the future is bright. Why do they do this? And by “they” I mean the CEOs,
Politicians, and the Fed. They do this because in order for the whole process to work,
in their view of ideal, the corporations must have “leveragable” valuations. The
companies must be able to borrow more money in order to fund their futures, pay
taxes, employees, and suppliers. They must pay their bills and invest in research and
development projects. To do this they need to have share prices above $6 per share,
and ideally above $10. There are a variety of ways to achieve the higher price point
but the cheapest and easiest is to convince the public that the future is bright enough
to warrant a higher price now, so they want you to buy. The funny thing is that this is
not legal. It is against the law to manipulate the share price by giving out false
information of a material form. They really need to expand the intent of the law to
include giving out material truths but in a wrongful positive spin. A good example is the
CEO of Bank of America telling us that buying Merrill Lynch and taking a $15 Billion
loss was a good thing. We all know a loss of that magnitude does no good and I don’t
care how long you mark time until the value comes back up again, it is still a loss.

Here is the major point: After all of that is said and done and we all realize that the cost
of this debacle is in our own pockets rather than on the heads of the idiots who caused
it, it still does not work to go through this financial bailout, nationalization of banks, and
increased socialism in government, if there are far fewer consumers. Why? Because
the cash flow isn't there, it was false value to begin with. Go read the Bank of
America's CEO's comments and realize all his numbers are based on the hot air of the
years prior to this downturn.

Do we really believe that the mortgage market will go back to making toxic style loans?
Do we really believe that people will go back to excessive spending in the near term?
Do we really believe that 5-10 million people will right back to work in a year? The
answers are obvious and if you are not planning to be earning 30% less than you were
(or worse), owning property that is 30-50% less, or for your investment portfolio to be
stagnant or down for the next 7-10 years, then you are not paying attention to what
really makes the economy work (it has never, ever been the Government).

Smarter Business
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"The best way
to stop your
business from
growing is to
ignore what you
have to do to
keep it growing!"

Mike Arnold, Owner
Business Wealth
Consultant
mike@ecspex.com

Cognitive Economics