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How solid is your investment? Part 1 Wall Street. Blue chip investment houses with long and grand pedigrees. Sound investment advice from the experts.
All of this turns out to be a house of cards.
* Lehman Brothers –160 years old. Wouldn’t you trust them? Surely they know a thing or two? Made it through the Great Depression and all the ups and downs of the 20th century?
They filed for bankruptcy protection on September the 15th this year.
* Merrill Lynch – who hasn’t heard of them? Massive worldwide firm, respected, admired, copied, quoted, solid as a rock? Rescued by being sold to Bank of America the day before.
“How long will Wall Street’s turmoil continue? No one really knows – and that’s the scary part.” That’s how an article headed “There’s no end in sight ...” in the Business Times began last weekend. It goes on to say that the panic has its foundations in the loss of $350 billion due to the sub-prime fiasco. (The US sub-prime fiasco, in a nutshell, being lending money to people who can’t repay it, making your money out of the deal, then passing the debt on quickly to someone else before it all falls apart, which it must inevitably do).
Apparently there’s another $250 billion more in losses “spreading” into the prime housing market. The prime housing market being the solid core of America, surely? So it seems that a supposedly healthy investment area (housing belonging to people who can afford it) is being dragged down too.
Headlines ask “How could we have let it happen?” because memories of the dotcom bubble are still so fresh.
But they’re asking the wrong question. Because there’s an assumption that it was a mistake.
But for the people who initiated it and benefited in the early days, it was very profitable. The trick was to pass the deal on to someone less aware (like ordinary people’s pensions funds and mutual funds) quickly enough that you didn’t get burned.
So it was perhaps a deliberate strategy. By people who have lost any sense of ethics or responsibility. What it really amounts to is siphoning money away from the unwary. The unwary being the uninformed.
So here is the question you would like to ask yourself – How solid is my investment?
Learn How To Invest Money is an excellent resource to find out more about the Formula For Riches and why debt keep us poor.
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