The Great Depression Online




Great Depression Online Archive Issue:

On the Fritz

Great Depression Online
Long Beach, CA
August 25, 2009

Inside This Issue You Will Discover…

*** Whoa, My Cash is Gone
*** The Hottest Property on the Planet
*** On the Fritz
*** And More

Whoa, My Cash is Gone

Something remarkable and completely unexpected is happening.  For the first time in nearly 30-years, the rich are no longer getting richer.  What’s more, they’re getting poorer.

How could this be?

“The rich have been getting richer for so long that the trend has come to seem almost permanent,” remarked the New York Times last Friday.

“But economists say — and data is beginning to show — that a significant change may in fact be under way.  The rich, as a group, are no longer getting richer.  Over the last two years, they have become poorer.”

~~~~~~Medical Discovery~~~~~~

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~~~~~~~~~~~~~~~~~~~~~~~~~

Just take one John McAfee, for instance.  He’s down to his last $4 million…down, that is, from $100 million just several years ago.

Apparently, McAfee was “caught off guard by the simultaneous crash in real estate and stocks.

‘“I had no clue,’ he said, ‘that there would be this tandem collapse.”’

“One day, he realized, as he said, ‘Whoa, my cash is gone.”’

The Hottest Property on the Planet

Of course, there’s nothing quite like a seemingly bottomless pot of riches that’ll so induce a man to engage in acts of foolishness.  Under the stupor of money’s potent intoxication even the best of men will behave like utter jackasses.

“Folly is the direct pursuit of happiness and beauty,” said George Bernard Shaw.

For the super rich, over the last 30-years, happiness and beauty became expensive pursuits.

“Over the last several years, Mr. McAfee began to put a large chunk of his fortune into real estate, often in remote locations.  He bought the house in New Mexico as a playground for himself and fellow aerotrekkers, people who fly unlicensed, open-cockpit planes.  On a 157-acre spread, he built a general store, a 35-seat movie theater and a cafe, and he bought vintage cars for his visitors to use.

“For a while, Mr. McAfee’s good run, like that of many of the American wealthy, seemed to continue.  In the wake of the dot-com crash, stocks started rising again, while house prices just continued to rise.  Outside’s Go magazine and National Geographic Adventure ran articles on his New Mexico property, leading to him to believe that ‘this was the hottest property on the planet,’ he said.”

Alas, it wasn’t.

On the Fritz

We recount the tale of John McAfee not for comedy…but for instruction.  For here’s a man of seemingly above average intelligence, who was extraordinarily successful in several entrepreneurial endeavors, yet he managed to squander $96 million bucks in a span of about two years.

What can we learn by peering down at his debacle from afar?

That the world of the last quarter century no longer exists.  That stocks and real estate don’t go up forever.  That bubble economies must ultimately be adjusted…one way or another.

Yet those who should understand this most are still without a clue.  Speaking last Friday at the annual Fed conference in Jackson Hole, Wyoming, Federal Reserve Chairman, Ben S. Bernanke, as reported by AP, declared that “economic activity in both the U.S. and around the world appears to be ‘leveling out,’ and ‘the prospects for a return to growth in the near term appear good.’”

Just what type of growth is it that Bernanke’s talking about?  Over 6.7 million jobs have been expunged from the U.S. economy since December 2007.  With the consumer economy severely on the fritz, where will the new jobs come from?

Manufacturing’s been gutted.  Without another bubble finance and retail won’t likely return to their former vigor anytime soon.  Perhaps a green technology revolution will be the next engine of growth.  But for that to happen, the whole economy will need to be retooled and refitted…new skills will need to be acquired.  In other words, it’ll take some time.  And that’s just it…

The high water mark for earnings and incomes in 2007 won’t likely be eclipsed for many years to come.  In the meantime, the return to growth that Bernanke speaks of, won’t feel like growth for most at all; rather it’ll feel a long dreary slog across the Sahara Desert.

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  The time is now.  Those big corporations are going to keep taking from you till you’ve got nothing left to give.  Do you have the courage to fight back?  Your chance to make all your dreams come true has arrived.  Will you go for it?  Will you take action?  Here’s to a better life.

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