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Same thing with "education". Every cycle the people beg to help make it more affordable. So the lobby machine writes gifts for themselves like ever more financial aid, easier loans (even for extremely expensive joke degrees) and 529 tax scams, all of which help make the already artificlally expensive product even more expensive because the more they "help" the more expensive it gets and the more help you need because it keeps getting expensive, That's why colleges quickly started burying the money avalanche in as many little holes as they could; opulent new buildings and student centers with cafes and rock climbing walls and architecture and landscaping that rivals where the 0.1% live. Hiring mutipiles of fake make-work admin jobs (often from poorly performing educators and/ or idealogically minded outsiders) than actual teachers. Meanwhile as the speed of information became instant and the cost of delivery of it nearly free, "education" costs went nuts. Both education and real estate are massive bubbles and no politician on either pretend side will ever allow either to be fixed in a sustainable way. They'll just keep pumping til they pop then hope they can bail it out. |
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Reasons to own income producing real estate. 1. Indexed to inflation. With leverage, you actually profit from inflation. 2. The inflationary bias of central banks and the federal government create powerful allies. 3. The government subsidizes the investment through the tax code by allowing depreciation on an appreciating asset. 4. If the entire market goes in the tank, they will try their hardest to bail you out. Ways to make money with real estate and pay less in taxes. 1. Equity capture through value add properties. Preferably via contractor sweat equity vs your own. 2. Cash flow from rent exceeding expenses and debt service. 3. Principle reduction through amortization. 4. Appreciation on the asset, that could be multiplied with smart leverage. 5. Tax savings through depreciation and possibly tax deferred exchanges. Neither education or cost of housing will get solved until lawmakers address the constrained supply. Fees and regulations surround development of new housing ensure that affordable housing won't be built. Embracing technology as a method of distributing education is a great start on that avenue. Adding "free money" just makes it more expensive. |
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Is a 5% weekly swing normal for you option traders? Should I be trying something else to smooth out the swings? |
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Small businesses and rental incoome properties were alwasy two of the best ways for people to work themselves up the ladder. Both of those things are squarely in the crosshairs of the statists now and all trends point to that only getting worse. I agree that its a good idea. But the attacks on it have only just begun, and I wonder how much longer it will be a good deal or a path up the ladder. |
Is "whistleblower" a legit side gig?
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Would the world have sank if Goldman Sachs only made a 200% profit on reselling CDO coverage it got from AIG for $0.0004 per dollar instead of whatever the rate of return is going from $0.0002 to $1? Micheal Lewis (author of the Big Short) figured it out after he wrote his book. Let me try to explain it here. From 2004 to 2007 mostly Wall Street players underwrote several trillion of sub-prime loans. To peddle this garbage off they made it look better by underwriting it with insurance against default. The insurance was priced at about two basis points per dollar. Later, rates were increased to 4 basis points, then as high as seven. Goldman Sachs and other big investment banks positioned themselves as brokers of this "insurance" marking it up 400% to its customers. Insurance is 100%-total-profit, when you sell it, ** IF ** you do not have a loss. Yes, there are administrative expenses and reinsurance costs if you peddle the risk off to someone else (like say some rich prince in the Saudia Arabia (who will never f'n pay you)). If you multiply 450 billion of yearly coverage by $0.0004 that's $180 million for the sixteen or so managers of AIG FP (Financial Products) and $720 million for the Goldman boys. They were doing this on an annual basis and it grew from that $450bn snapshot. In the Big Short people observed this absurdly underpriced insurance and began to place bets on having a loss. The amazing deal was on the retail level, Goldman was pricing this stuff at about 16 basis points, but the loss paid out $1. You can't get that kind of payoff in Vegas. Buying an insurance policy usually requires an "insurable interest." For example, I could not buy insurance on your mother's life because it does not affect me if something were to happen to her; I have no skin in the game. As a matter of public policy, we do not want insurance companies to be gambling houses. However, both political parties have gone along with deregulation in the name of profits. Typically when this kind of thing happens the Insurer (underwriter) declares bankruptcy and offers something like ten cents on the dollar of coverage. Those who had placed their bets would have still received a $0.10 return for every $0.0016 invested, which is huge. Anyone with any sense wonders why not let Goldman Sachs, Deutsche Bank and Goldman handle this like any other bankruptcy with investors taking haircuts, as they damn well should? Maybe we should look at the resumes of those involved in engineering the bail out starting with the chief architect of the thing: Hank Paulson: CEO of Goldman. Wiki notes "Before becoming Treasury Secretary, he was required to liquidate all of his stock holdings in Goldman Sachs, valued at over $600 million in 2006, in order to comply with conflict-of-interest regulations.[17] Because of a tax provision passed under President George H.W. Bush, Paulson was not subject to capital gains tax. This saved him between $36 and $50 million in taxes.[18]" So yeah, there's that. Love Mr. Lewis. He got closer than most writers to figuring this mess out. Further reading https://haraldhau.com/The_Man_Who_Crashed_the_World.pdf |
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https://www.phillipsandcohen.com/whistleblower-rewards/ |
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