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June 3rd, 2009

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How much is a trillion dollars??

April 14th, 2009

With all the talk of millions and billions and trillions flying around these days (the recent G20 summit proposed spending a trillion dollars to prop up the ailing world economy), it may be worthwhile for us who don’t deal with so many zero’s on a daily basis to find a way to visualize the numbers.

A million dollars, how much is it really?  Just to get an idea, think of putting a million dollar bills on the ground, side by side.  They would cover almost 2 U.S. football fields, including the end zones.

Now for some real world numbers.  The amount of money that the AIG executives tried to pay themselves in bonuses, after driving the company into the wall, was $165 million (before taxes).  That’s approximately 300 football fields of dollars.

And the amount of money that the AIG bailout is going to cost U.S. taxpayers (according to Joe Nocera, writing in the New York Times of Feb. 28, 2009, and quoting Donn Vickrey, who runs the independent research firm Gradient Analytics) is “at least $100 billion”.  That’s so many football fields (186,920) that it’s impossible for us mortals to visualize.  So let’s think of the island of Manhattan.  If you cover the island from Wall Street to the Bronx in dollar bills, the bailout of just AIG is going to cost us taxpayers  enough dollar bills to cover more than 17 Manhattan islands.  That’s approximately $3,620 for every man, woman, and child in the United States.

And that’s just one company’s bailout money.  What about the billions needed for Citicorp, Freddie Mac and Fannie Mae, or General Motors?

More tips

March 17th, 2009

Coming Soon!

Ponzi Nation — A Land of Believers

February 5th, 2009

My brother and his wife are huge believers in the power of Oregon State University teams: baseball, basketball, football, and any other kind of ball they play out there in Corvallis.  There are a lot of avid Beaver supporters in the Pacific Northwest-so many that they have begun calling themselves Beaver Nation.  As in: there are so many of us OSU supporters that we are not just a local phenomenon, we’re a nation.  A land of believers.

In that vein, I’m naming my first blog on the 21st Century Fusion Economy: “Ponzi Nation-A land of Believers.”  How else could millions of people believe they could invest in houses that cost way more than they could afford?  Don’t worry, they told themselves, someone will come along and pay us way more than what we paid.  It’s happened before, it’ll happen again.  And by the way, don’t worry, the banks and mortgage companies told them, we’ll loan you all the cash you need.

Back in the 1920’s, a swindler named Charles (Carlo) Ponzi figured out that he could make a lot of money by taking people’s money to invest for them, promising them unrealistic returns.  But that didn’t stop people from giving him their hard-earned cash.  Instead of investing it, however, he just paid the new money to earlier investors.  Enthralled that they were getting a much higher return on their money than they would have at a bank or at a reputable financial institution, many invested the money back with Ponzi.  Others told their friends and families about the fantastic returns.  Soon there was a steady flow of money in the Ponzi funds.  The scheme worked fine as long as there was someone down the line, ready to join in and get the same high return as those that went before.

The great housing boom of the early years of the 21st Century worked just like that-a Ponzi scheme that relied on blind belief and devoid of economic logic.  If there was someone coming in the door in a little while to pay you much more than what you paid did it really matter what it was worth?  All you had to do was believe.  By all appearances, the banks and the mortgage companies that provided the loans believed in the scheme as well.  Why else would they provide the money-sometimes up to 100 percent of the purchase price-to home buyers who didn’t have the wherewithal to purchase a house at all just a few years before? Read the rest of this entry »

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Randy Charles Epping uses compelling narratives and insightful analogies to clearly and concisely explain the rapidly changing way business is done in the twenty-first century, without a single chart or graph.


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