The Debt Ceiling: What is All The Hype About?

It seems that brinksmanship has become a staple of American politics. I don’t think that anyone can say that there is a semblance of stability within our government, on any level. For those of you who don’t know what is going on in American politics right now, Congress is trying to increase the debt ceiling of the United States. What this means is that we are going to run out of money on October 17th and if we don’t raise the debt ceiling. The United States will default on our loans because we are entirely incapable of paying back our debts. Read more of this post

What Does The Future Hold For Online Poker in The United States of America?

Every since the fated day of April 15th, 2011, dubbed as “Black Friday”, there has been much speculation concerning the future of online poker in the United States of America. While many remain skeptical, I remain optimistic of future legalization due to a variety of different factors. The recent incident of Senator John McCain playing poker during a crucial debate over Syria has a little to do with that, but much more than meets the eye has been developing in the background. Will American poker players finally get what they deserve? A fair and regulated poker market for all to play and enjoy without the question of whether or not their bankrolls are “safe” in the online arena? Read more of this post

Is The Proposed Minimum Wage Increase Good or Bad For The American Economy?

During the Presidential State of the Union address, President Obama spoke about raising the minimum wage to $9.00 an hour. Specifically he said “No one who works full-time, should have to live in poverty.” When its put like that, its pretty hard to disagree with, how could anyone disagree with that? Well, those people are called Republicans. When it comes to proposing an increase to the minimum wage, their trepidations aren’t exactly unfounded and wrong. There are legitimate reasons why an increase to the minimum wage, especially in this economy, is a bad idea. Read more of this post

Can The US Dollar Lose All of its Value?

If you are interested in keeping your lifetime savings safe if the dollar collapses, I SUGGEST WATCHING THIS VIDEO.

Some viewers may not agree or may take offense to this video, but the points that Porter Stansberry make are very logical and VERY SCARY.

Our country can see a total collapse if the US dollar loses its roll as the WORLDS RESERVE CURRENCY.

WATCH AND LEARN!

One Currency, Several Problems: Flaws of the Eurozone

When the Euro was created it was known as the largest currency area in the World and had such potential.

Now with the current Euro Crisis threatening multiple European states, there are many questions that need to be answered. I’m not going to get into detail about the entire crisis mainly because I will probably develop carpal tunnel, but I would like to discuss the many flaws of the currency.

My personal question is ” Who the hell designed the structure of this vulnerable currency and who approved of it?!

To make sure we all understand the basics of the Euro, here are two important factors that everyone should understand.

  • The Euro is a single currency within the Eurozone area (HAZARD).
  • The Euro shares a common monetary policy with all of its members (HAZARD).

These two hazards play a huge role in the flaws of the Euro. I would like to begin my rant on the Euro with the problem concerning the interest rate.

1. All Euro zone states must share same interest rates

Within a monetary policy is a common interest rate. This goes for any currency or monetary system, and therefore the Eurozone follows it. Interest rates are used to help balance money supply and growth of a region.

It is the main tool to control the financial situation of a region or Eurozone state. The problem here is that the Eurozone all share the same interest rate levels.

Say the ECB sets an interest rate according to the Eurozone averages, but one or two of the states within the Eurozone are growing much faster or much slower than this average. Obviously, this interest rate level may not be suitable for every member of the Eurozone.

For example, if one region is showing signs of inflation (GERMANY), than the ECB may set higher interest rates. These higher interest rates are going to hurt states that might be in a recession ( GREECE).

2. Language Barriers may keep EU unemployment level up

This is something that Americans take for granted. Say you live in New York with your family. You are working fulltime, but one day you are let go from your job. This is a terrible situation, but in the United States there is so much more opportunity than anywhere else.

You can move to any other state and apply for a variety of jobs. This is made possible because we share the same language, and you are still in the same country.

Unfortunately, this is not the case in the Eurozone. It involves moving to a different country and even learning a new language. There are much more barriers simply because Europe is so diverse.

Being diverse is nice, but not when it comes to fiscal and monetary situations/policies.

3. Regions in a positive financial situation may have to bail others out.

Market discipline is not the only factor that the Euro relies on. The creators of this currency assumed that when one member is in a good financial situation, the rest will benefit from it.

This was so terribly wrong.

Yes, Positivity can spread from region to region, but I guess  no one took the counterpart into consideration.

Basic economics- Deficits=boosted spending = upward pressure on inflation = pressure on interest rates.

When inflation and interest rates are unstable, everyone in the Eurozone is going to feel it. Especially the regions in good financial health because they may be bailing others out.

Now that the Eurozone is in such terrible shape, people are starting to point fingers.

If I were to blame anyone it would be the brilliant architects that masterminded this unstable currency.

Stocks 101: Short Selling For Starters

When I was a high school student, I tried my best to learn the stock market because I decided early that it was going to be my main concentration in college.

One thing that I learned is that the Stock Market has its own language and it is very difficult to understand.

In my Stocks 101 posts I will focus strictly on making the language as easy as possible to help the reader obtain as much information as possible.

If  you are trying to understand short selling, I am pretty sure you already understand the concept of buying a stock. When you buy a stock, you are buying a piece of the company, you own a tiny portion of the company(depending on how many shares you purchase).

Before I define short selling, I feel that it will be easier understood if I define going long on an investment first.

It is very simple.

Don’t be intimidated by all of the terms used in textbooks and crazy definitions that your professors use. Going long on an investment means that the investor believes the stock that they purchased will rise in the future. So when an investors short sells a stock they believe the price will decrease in the future.

This is where it gets a little confusing, just stay with me.

Short selling is the selling of a stock that the seller does not own. When you short sell a stock, your broker basically lends it to you. These shares are sold and credited into your account. Eventually you have to “close the short” .

The New York Stock Exchange

Closing the short simply means buying back the exact number of shares and returning them to your broker. If the price dropped you are in great shape. You buy back the stock at the lower price and you take the profits. BUT, if the stock happened to rise, you have to buy it back at the higher price and you LOSE.

If you are still confused, here is an example:

Say I own 10 shares of marks bakery at $30 per share. You have a gut feeling that the price of Marks Bakery is way over valued and is going to dip in the near future. You borrow the 10 shares from me and sell them at $30 dollars per share, pocketing $300 dollars.

As you so intelligently predicted, the price of Marks Bakery stock dropped to $10 per share. Now you contact your broker and buy 10 shares of Marks Bakery at the new price. This costs you $100. You return the 10 shares to me eventually, but what you did for yourself was make a $200 profit. Simple right?

The concept may seem simple to you now, but there is a lot of time and effort put into short selling. If the stock price went up, You owe me more money than you expected. There is a lot of risk in this game, but where there is risk there is reward.