<< <i>CNBC reporting something strange takeing place with Merrill. Anyone else heard or understand what exactly is going on? jason >>
From their website (CNBC):
"Merrill Lynch said it expects to take a $5.7 billion pretax writedown in the third quarter due to losses on the sale of mortgage assets and plans to raise at least $8.5 billion by selling new common shares.
Merrill said Singapore's Temasek would buy $3.4 billion of the offering. Merrill has already taken billions of dollars in write-downs in past quarters and said it sold key holdings including a 20 percent stake in Bloomberg when it announced second-quarter earnings.
Merrill said Monday it would pay $2.5 billion as required under a previous stock sale to state-run Temasek, along with $2.4 billion in required dividends to preferred shareholders. In previous deals to raise capital, Merrill had agreed that if it sold shares at too low a price in the future, it would reimburse investors.
The No. 3 Wall Street investment bank's shares were down 5 percent in after-hours trading after retreating 12 percent to $24.33 in the main trading session on the New York Stock Exchange.
Merrill also said it agreed to sell collateralized debt obligations with a face value of $30.6 billion for $6.7 billion to an affiliate of private equity fund Lone Star."
<< <i>When all the foreign investors learn of thier great loses
Foreign investors are getting their A$$ handed to them in their own countries. China stocks are down over 50% this year, India down 33%, Brazil down 23%, all of Europe down 20-30%. Russia down over 15% in the last week---I hope you all got my reference to Russia about 2 weeks ago, Japan down 25%, Australia and New Zealand down 29%.
They are happy to be holding US equities that are only down 20%. And they had better hope the dollar does not strengthen.
Remember, the dollar can strengthen even if conditions in the USA suck, just as long as overseas economies suck more. And overseas equity markets are saying things aint so good across the ponds. >>
Exactly. are the Euro contries going to have stronger growth, going forward than the US? Are the emerging market currencies going to have inflation under control? It's quite possible that even with weak growth, The US's relative comparison of inflation metrics and growth could make the dollar strengthen, although the budget deficit is a huge albatross, that will way heavily on the dollar, until it stops expanding.
The FDIC will always cover your bank accounts...always...what backs the FDIC is every single Insurance company that has ever existed in the past present and future!!!! Even if we lose the dollar and go to a new monitary system....they will cover your accounts!
Today in uncertain markets there are many ways you can go: 1) (STOCKMARKET)You can buy into the market and hope that their figures regarding their earnings are worth the value of the stock, but there are no guarantees.
2) (Insurance Policies) which insure you $ for $ plus interest.
3) You can put your money in the bank and hope you get it all back...that is if you put over $100K...best to distribute it between banks with a very small interest rate.
4)You can buy CD's which have had shrinking rates.
5)You can buy Treasury bonds.
You can buy many products, but none will guarantee you $ for $ like an Insurance policy will!
When Japan bombed Pearl Harbor we were in the Great Depression, where did we get the money to enter WWII! Americans were so poor and hurting and going hungry in many places...so you tell me, How did the United States pull the greatest Defeat in History OFF!
But you Live in America ya know! If the dollar continues its downward spiral and you have it in products with no guarantee your money could just disappear...at least with an insurance policy you will have dollars in your hand! Hard Cold Cash...at least it is better to have some than none at all!
I have my Money in an Annuity...with a rider which pays 6% over and above the policy which pays 3%...so that is 9% guranteed...now if the stock market does well, the sky is the limit! So the least I can make on my money is 9%, and it is guaranteed $ for $...and it even has a lock in clause...If for one year the Market gains 15% it locks me in, next year it falls 20%, I still get locked in at the 15%! I like it!
<< <i>The FDIC will always cover your bank accounts...always...what backs the FDIC is every single Insurance company that has ever existed in the past present and future!!!! Even if we lose the dollar and go to a new monitary system....they will cover your accounts! >>
I agree that the FDIC will cover all deposits one way or the other but there's still some danger. In a strongly in- flationary enviroment there is some danger you'd lose substantial portions to inflation while waiting for your check.
Prudence still demands that you try to keep your money safe.
cladking, if it gets so bad that money has no value then there is no safe haven...gold and silver again would be confiscated as they did in 1933...But it would not work as there just is not enough of it today! Now if we closed ourselves off from the world and concentrated on building and feeding our own Country we could overcome much better than other nations...and it could come to this...our only problem is oil, and there are answer for that just around the corner...Another thing if it were to get that bad, people of today could not handle the despair as our Parents and Grandparents did...Mine were farmers one side were Sharecroppers and the other was land owners...they survived by their own hand...today it would not be the same...much worse!
SIV's were paying high interest rates with AAA ratings up until August of 2007. At that point the roof caved in and the Ponzi scheme exploded. Payments in anything today are only as good as the company is solvent. In the case of FDIC, they will quickly go insolvent in trying to keep up with the bank failures. At some point, the taxpayers will own the liabilities of the FDIC (just like they own the losses of Fannie & Freddie) and will have to print oodles of money to keep the payoffs coming.
Cladking makes a good point in that by the time FDIC or SIPC gets around to making good on your money, how much will it have devalued in that time?
If our currency goes the way German Currency did in WWII...and the Jobless are in the millions, I would like to ask you how the taxpayers are going to absorb the debt you speak of when the FDIC fails! There is no way they could because no one has any money...The FDIC will never fail...and I will say it again...The FDIC is backed by every insurance company from the PAST, PRESNT and FUTURE! Your forefathers made it that way! Yes I believe our monetary system was designed to fail, but at the same time it is backed by a fail safe system....It's a means of cleaning house and straightening it up and putting it all back in order. FDIC acts as a broker to broker off insolvent banks.
This is the real first test, banks have failed in the past but not like it will be this time around and you are witnessing History being made!
Hello Enron, So who goes to jail for pumping up these assets? How many billions are the shareholders, employees, etc. losing?
July 29 (Bloomberg) -- Merrill Lynch & Co., the third- biggest U.S. securities firm, will sell $8.5 billion of stock and liquidate $30.6 billion of bonds at a fifth of their face value to shore up credit ratings imperiled by mortgage losses.
In yesterday's statement, Merrill said it agreed to sell $30.6 billion of collateralized debt obligations -- the mortgage- related bonds that have caused most of the firm's losses -- for $6.7 billion.
Listen Guys and Gals, nothing is safe from the Wall Street pyramid guys. State and local governments were already in hock and now it is turning out they loaned their bond money to buy derivatives, Ha Ha HA.
Now that Merrill is setting a mark to market price on this junk at pennies on the dollar the paper pyramids are ready to collapses. I think we will see that Merrill being the first out will make one of the better deals.
“States Follow Federal Probe of Muni Derivatives, XL Filing Says By Michael B. Marois July 29 (Bloomberg) -- States including Florida and Connecticut are conducting a coordinated investigation into bid -rigging of financial products sold to U.S. local governments.
The state probes mirror those under way for more than a year by U.S. prosecutors and the Securities and Exchange Commission looking for evidence of anticompetitive practices and price fixing by banks in the $2.66 trillion municipal bond market. They have focused on contracts to invest bond-sale proceeds, known as guaranteed investment contracts, and derivatives, such as interest-rate swaps tied to bonds.”
A withdrawal from an annuity is covered by the same regulations as a withdrawal from and IRA, and a 10% penalty is due if it is withdrawn early - you better check with your tax advisor, dlimb2.
As for the FDIC never failing - where are you getting your information? Never say never.
goldsaint/roadrunner - the blurb about SemGroup is very intriguing. You know who is in Carlyle Group, one of the owners, don't you? As I recall, the Bush family is included. If that is still the case, it might be interesting to note GW's demeanor when he is talking about the oil markets these days. I wonder if his saudi friends are doing anything to help him out these days......
BYE BYE !!
Reuters SemGroup's $3.2 billion failure shocks backers Friday July 25, 12:04 pm ET By Robert Campbell
NEW YORK (Reuters) - The dramatic collapse of energy trader SemGroup LP shocked the privately held firm's backers who until last week had little idea of the extent of the oil trading losses that sank it, sources said this week.
As late as June a banker at Bank of America (NYSE:BAC - News), one of SemGroup's main lenders, described the fast-growing company as one of his best clients, two sources said this week.
The Tulsa, Oklahoma-based company filed for bankruptcy on Tuesday after suffering $3.2 billion in losses on energy futures and derivatives trades that SemGroup says were designed to protect its physical oil trading business.
Shareholders including private equity giants Ritchie Capital Management, Riverstone Holdings and the Carlyle Group are expected to be wiped out.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>Thing about Annuity's they cost nothing....and they payed me 10% up front...
Good for IRA accounts, you can take out 10% a year if need be without penalty. >>
Well thats all news to me. Every annuity that I ever saw paid the broker 7-8% up front then a .25-.50% annual trailing commission. Then they have surrender charges of about 10-20% if you take your money early.
There is no such thing as free, so if your annuity pays you 15% per year then the insurance company must be making 20%--highly unlikely--or cooking the books--more likely.
If you like annuities then more power to you. I have never recommended them and would only do so for a small segment of the population.
<< <i>Well thats all news to me. Every annuity that I ever saw paid the broker 7-8% up front then a .25-.50% annual trailing commission. Then they have surrender charges of about 10-20% if you take your money early.
There is no such thing as free, so if your annuity pays you 15% per year then the insurance company must be making 20%--highly unlikely--or cooking the books--more likely.
If you like annuities then more power to you. I have never recommended them and would only do so for a small segment of the population. >>
There are annuities that are lower-cost with no sales charges and up to 10% a year can be taken out with no surrender charges. Vanguard offers some of them. The fees are paid by reducing the interest rate paid out, or through using mutual funds with somewhat higher expense ratios.
But I would agree that annuities make sense for only a few people (mostly high income/high net worth people looking for maximum tax deferral and possibly asset protection). And I'd run away from anyone claiming a 15% per year payout to anyone.
"If you like annuities then more power to you. I have never recommended them and would only do so for a small segment of the population."
Cohodk, you must admit that this has been an interesting discussion on insurance. Most folk never have this discussion since it doesn't come up in casual conversation very much so it has been helpful and valuable. I looked at the ing annutiy fixed/indexed w/rider and I'll be darned if I can make any sense out of it so certainly this is a very specialized instrument and you would need professional consultations. But, dlimb is right, the insurance industry is very highly regulated and self policed and probably a very safest industry for investment. I'm still a Roth and PM/cash kind a guy but I have certainly enjoyed this discussion. Thanks, all.
I am still somewhat leery about the insurance companies, since they are invested in the same garbage that is taking other sectors down. However, they may certainly be a relatively 'safer' area at this time.
In fairness to the insurance companies, I will mention a whole life policy that I purchased from a well known insurer many years ago. We all know that whole life policies are not the best investments..... however, this one turned out nicely for me. For about the last 10 years the amounts of the dividends paid to me along with the yearly increase in cash value amount to nearly double what I pay as the premium. Plus, they are paying me 5.5 to 6.0 % interest on the accumulated dividends... not sure where I could get a better rate. I only wish I had purchased a larger policy than I did! Of course, in the early years of the policy, it did not pay nearly as well, and given my inexperience with insurance at the time, I quite possibly overpaid for the policy.
We are in some very unusual times. Use due diligence whether you invest in stocks, insurance companies, precious metals, or your local bank. The current financial problems going on right now can affect all of these sectors, and there appears to be no truly safe haven where you can just put your money and expect it to totally safe.
"But I would agree that annuities make sense for only a few people (mostly high income/high net worth people looking for maximum tax deferral and possibly asset protection). And I'd run away from anyone claiming a 15% per year payout to anyone. "
I have to agree with what ziggy29 said.
One thing one should be watching out for, when you see a financial entity paying a higher percentage than most of the others, whether it is a bank, broker, or insurance company. It could very well be a sign that they are needing to bring in more money, and the only way to do that is to pay the higher interest rate. Perhaps their bottom line may not be in the best shape. Be double cautious if it is from a relatively unknown company.
One more thing on the insurance companies. They may be holding their own right now, but remember that they have not been hit with any huge claims payouts since the derivatives problems have hit. They are probably doing ok handling their questionable investments at this time. However, if they get slammed with another Katrina type liability, who knows what their situations will be....
Looks like inflation is really starting to built out in the world. An article from Numismaster.com:
"Economic Woes Reflected Globally flag of vietnam By Patrick A. Heller, Market Update July 28, 2008
If Americans want to understand what could happen in the United States in the future, just look at what is already occurring in Vietnam.
The official inflation rate in Vietnam is now about 25 percent per year. To protect themselves, many Vietnamese citizens are getting rid of the Vietnamese dong currency as fast as they can and replacing it with U.S. dollars and gold.
Gold Fields Mineral Services is one of the world's top consultancies on precious metals. In their latest survey of worldwide gold demand, they report that Vietnam has displaced India (a country with 10 times the population) as the world's largest gold consuming nation in the first quarter of 2008.
Distrust of the dong is so widespread that ads to lease or sell real estate are more frequently being quoted in weights of gold for payment.
In effect, the citizens of Vietnam have unofficially adopted the gold standard for their financial transactions. The Vietnamese government is trying to discourage this trend by prohibiting new imports of gold into the country, but that will not stop smugglers. Vietnam's inflation rate is minuscule compared to that of Zimbabwe, but the Vietnamese have much more experience using gold as a store of value. Many Vietnamese now living in the United States (including just about everyone I have talked to locally) used gold to pay for their escape from their homeland. Those still in Vietnam understand that gold is real money - a currency that cannot be inflated or devalued by their government.
As global economic woes and uncertainties increase in the coming months, I would expect increased usage of gold money in Vietnam and elsewhere - including possibly the United States."
"A withdrawal from an annuity is covered by the same regulations as a withdrawal from and IRA, and a 10% penalty is due if it is withdrawn early - you better check with your tax advisor, dlimb2."
Yes I know this, you treat it just like an IRA...Yes if You withdraw early there is a 10% penalty...these Annuities are for long term...Yes they are for people who have a substantial amount of money and they are a wonderful instrument in which to protect you assets! You are allowed every year to withdraw 10% without penalty!
Right now as things stand, I would not have my moeny anywhere else!!!!!
ttwon, that is an annuity! The difference between mine and that one is that I have someone over seeing mine and taking out the withdrawls I need and doing all the paper work for me. While the one you show, you have to do the work.
If you left your company after age 55, you can take a distribution from the retirement fund without paying the 10% excise tax. Income taxes would still need to be paid.
Dave
Collector of Modern Silver Proofs 1950-1964 -- PCGS Registry as Elite Cameo
<< <i>ttwon, that is an annuity! The difference between mine and that one is that I have someone over seeing mine and taking out the withdrawls I need and doing all the paper work for me. While the one you show, you have to do the work. >>
Any brokerage can set this up for you and you'll recive a monthly/quarterly/yearly check. You just have to decide on the % you want to take and your going to get it for 5 years or 59 1/2 which ever comes first.
If it is through a bank or a brokerage house I would not want it...I want to know who I am dealing with and want them to be sound...today you have to be careful! It is best to know the party who will be doing the insuring and know they are working under the Insurance laws the not the financial banking laws!
No one. It can be in anything stocks, bonds, money market etc. They sell some assests to pay you what amount you want at whatever duration you want. I could convert my Fidelity 401k and they'd do the work if I lost my job and needed to supplement my income due to the new job not paying what I once made. This isn't for everyone since you'd have to only withdraw 4 or 5 % max to at least maintain your principle.
<< <i>Well if no one is insuring it then I would stay far away from it! >>
Well put it in an instrument that is backed by the US government. Your insurance companies aren't backed by the US either and could go belly up with a lot of claims. State Farms is into more than just insuring your house and cars they do loans too as many do so those are paper promises too IMO. Some of these big companies that are having trouble have insurance policies in effect too that could do a number on them. There's just no safe investment right now except diversification IMO.
BTW what's the insurance company putting there money in for a high return? Do you know? If not it maybe they've invested you money in municipal and corporate bonds paying high interest rates. Everything is great all the way until they can't make there payments. That money isn't just sitting in a bank you know so your letting them make your investment decessions.
I had an insurance policy on my car for an extended warranty. Guess what happened? Insurance is good as long as most don't claim.
No insurance companies do not go belly up...Name me one that you know of....Insurance comapanies do insure only 1/10 of a policy 9 other insurance companies insure the remainder....
My father two years prior to his death took out an annuity...he died two years later and The Insurance company payed right off...just had to show his death certificate and fill out papers they sent...and it was payed immediately!
Insurance on your car warranty!!! I do not think I would even say that is a Real Insurance Policy! That is a dealer deal done through the manufacture...and there is no insurance company to back that up except if you want to call Ford Gm or whomever a reliable insurance company!
<< <i>No insurance companies do not go belly up...Name me one that you know of....Insurance comapanies do insure only 1/10 of a policy 9 other insurance companies insure the remainder.... >>
Most analysts believe that the life and health insurance industry, which holds one-third of all corporate bonds and about 30 percent of commercial mortgages
Yes I do know, they are playing the indexes.....not stocks but indexes! If the market fails I will still get my 9%...I have a list of the indexes that they are playing...got it last week.
This is for the state of Michigan: all states read the same:
About Us The Michigan Life & Health Insurance Guaranty Association ("MLHIGA") is a nonprofit association of life and health insurance companies authorized to write life insurance, annuities or health insurance in the state of Michigan. The purpose of this association is to protect Michigan policyholders, within limits, in the unlikely event that a member insurer becomes financially unable to meet its obligations. If this should happen, MLHIGA will assess its other member insurance companies for the money to pay the covered claims of insured persons who live in Michigan and, in some cases, to keep coverage in force. If coverage is provided, it may be subject to limitations or exclusions. This protection is not a substitute for consumers' care in selecting companies that are well managed and financially stable.
The Michigan Life & Health Insurance Guaranty Association Act (a link to the Act can be found in the Additional Info section), Chapter 77 of the Insurance Code of 1956, MCL 500.7701 to 500.7780 details the specific coverage, exclusions and limitations provided to policyholders. The general information provided by the web site does not cover all provisions of the law, nor does it in any way change anyone's rights or obligations under the act or the rights or obligations of MLHIGA. For a definitive statement of the law governing MLHIGA, you must refer to the MLHIGA Act itself. If there is any inconsistency between the web site and any applicable law, then such law will control.
The information provided in this Web site is general in nature and may not address a specific policy or issue. The terms and coverage of insurance products are very diverse and, as a result, it is difficult to make general statements about MLHIGA coverage without reviewing a specific contract. The generalized information provided by this web site should not be relied upon as advice. In addition, please refer to the Michigan Life and Health Insurance Guaranty Association Act, Chapter 77 of the Insurance Code of 1956, MCL 500.7701 to 500.7780, for a more complete explanation of the powers and duties of MLHIGA.
The intent of this web site is to briefly explain how MLHIGA provides protection to Michigan policyholders in the event their life or health insurance company becomes insolvent. If you have any questions that are not answered here, you should contact MLHIGA or consult with your attorney.
On the surface, insurance companies were far from failure during the Depression. Official statements of the companies showed asset values comfortably in excess of policyholder reserves during the entire period. According to these documents, life insurance-companies were in robust condition, even at the nadir of the Depression. At the end of 1932 the total assets of all U.S. life insurance companies were reported to be $20.7 billion, some $1.4 billion in excess of total liabilities, and $2.9 billion in excess of policyholder reserves. Total capital of the insurance companies was reported to be $1.4 billion or 7 percent of total life insurance assets. However, these reports did not present a completely accurate picture of the life insurance companies' condition. In the official statements assets were valued at prices far above what they could be sold for in the marketplace, if the insurance companies had to liquidate them. In particular, investment-grade bends not in default were valued at cost, adjusted by accrued amortization of the discount or premium from par. Other bends were priced at their value as of 30 June 1931 [7, pp. 3-6]. This resulted in a considerable overstatement of the value of insurance companies' bond portfolios. At the Metropolitan Life Insurance Company, the country's largest insurance company with nearly one-fifth of the nation's insurance in force, the market value of the bend portfolio was only 82 percent of its book value [11, p. 287]. This depreciation, if reflected on the official statement, would have practically exhausted Metropolitan's total capital [8, p. 242]. If mortgages had also been valued at what they could be sold for rather than what they had cost, Metropolitan would almost certainly have been insolvent at the end of 1932. So would practically every other life insurance company in the country.
About Us Welcome to the Illinois Life and Health Insurance Guaranty Association (the "Association"). We hope you find this site helpful in providing information regarding the purpose of the Association and how it protects covered policyholders in the event of an insurance company insolvency.
The Association is a statutory entity created in 1980 by the Illinois General Assembly when it enacted the Illinois Life and Health Insurance Guaranty Association Act. A link to Chapter 215, IL. Compiled Statutes Article XXXIII½, Section 5/531.01 et seq. ("the Act") can be found in the Additional Info section. The Association is an unincorporated association of those insurance companies (member insurers) that are licensed to write life insurance policies, health insurance policies, annuity contracts, unallocated annuity contracts and contracts supplemental thereto, in the State of Illinois. It was created to assure the fulfillment of covered policy obligations of member insurers which are determined to be insolvent and ordered liquidated by a court of competent jurisdiction.
The purpose of the Association is to protect policyholders and their beneficiaries covered by the Act (usually Illinois residents) in the event of the insolvency of a member insurer, by the payment of benefits or continuation of coverage, subject to certain statutory limits. Specifically, when a member insurer is found to be insolvent and is ordered liquidated, the domestic state regulator, acting as liquidator, takes over the insurer under court supervision, marshals (collects or gathers) the assets and pays off the liabilities in a legal proceeding known as "liquidation." The task of servicing the insurance company's policies and providing coverage to Illinois-resident policyholders who are eligible for guaranty association protection becomes the responsibility of the Association. The protection provided by the Association is based on Illinois law and on the language of the insolvent company's policies at the time of insolvency.
We will seek to ensure that the information provided here is in accordance with the most current law in the event that the Illinois legislature amends the Guaranty Association Act or other laws. However, if there should be any inconsistency between the Guaranty Association Act or any other law or regulation and the information on this web site, the relevant law will govern. In light of potential changes in law and the dramatic variations in policy language, the Association cannot make statements regarding coverage of a specific policy unless it is a policy with a company for which the Association has been activated to provide protection. Finally, this Web site is for general information purposes and should not be relied upon as legal advice.
We hope the information provided in this web site proves to be useful. Read the Frequently Asked Questions section for more information. Please feel free to contact us if you have any guaranty association questions.
And Cnitas is right nothing wrong with having some money there at all since it's hard to find anything going up these days but high reward equals to high risk, there's just no free lunches. And bad things happen when you least expect it, look at IndyMac it wasn't even on the watch list.
Comments
<< <i>CNBC reporting something strange takeing place with Merrill. Anyone else heard or understand what exactly is going on? jason >>
From their website (CNBC):
"Merrill Lynch said it expects to take a $5.7 billion pretax writedown in the third quarter due to losses on the sale of mortgage assets and plans to raise at least $8.5 billion by selling new common shares.
Merrill said Singapore's Temasek would buy $3.4 billion of the offering. Merrill has already taken billions of dollars in write-downs in past quarters and said it sold key holdings including a 20 percent stake in Bloomberg when it announced second-quarter earnings.
Merrill said Monday it would pay $2.5 billion as required under a previous stock sale to state-run Temasek, along with $2.4 billion in required dividends to preferred shareholders. In previous deals to raise capital, Merrill had agreed that if it sold shares at too low a price in the future, it would reimburse investors.
The No. 3 Wall Street investment bank's shares were down 5 percent in after-hours trading after retreating 12 percent to $24.33 in the main trading session on the New York Stock Exchange.
Merrill also said it agreed to sell collateralized debt obligations with a face value of $30.6 billion for $6.7 billion to an affiliate of private equity fund Lone Star."
And no end in sight yet.........
<< <i>When all the foreign investors learn of thier great loses
Foreign investors are getting their A$$ handed to them in their own countries. China stocks are down over 50% this year, India down 33%, Brazil down 23%, all of Europe down 20-30%. Russia down over 15% in the last week---I hope you all got my reference to Russia about 2 weeks ago, Japan down 25%, Australia and New Zealand down 29%.
They are happy to be holding US equities that are only down 20%. And they had better hope the dollar does not strengthen.
Remember, the dollar can strengthen even if conditions in the USA suck, just as long as overseas economies suck more. And overseas equity markets are saying things aint so good across the ponds. >>
Exactly. are the Euro contries going to have stronger growth, going forward than the US? Are the emerging market currencies going to have inflation under control? It's quite possible that even with weak growth, The US's relative comparison of inflation metrics and growth could make the dollar strengthen, although the budget deficit is a huge albatross, that will way heavily on the dollar, until it stops expanding.
<< <i>so dlimb - when (as you say) the market does crash - will the FDIC still be backing our money in the banks? >>
Absolutely! Big Ben Bernanke's Magic Money Machine will see to that! (of course, the money may not be WORTH anything.....)
1) (STOCKMARKET)You can buy into the market and hope that their figures regarding their earnings are worth the value of the stock, but there are no guarantees.
2) (Insurance Policies) which insure you $ for $ plus interest.
3) You can put your money in the bank and hope you get it all back...that is if you put over $100K...best to distribute it between banks with a very small interest rate.
4)You can buy CD's which have had shrinking rates.
5)You can buy Treasury bonds.
You can buy many products, but none will guarantee you $ for $ like an Insurance policy will!
When Japan bombed Pearl Harbor we were in the Great Depression, where did we get the money to enter WWII!
Americans were so poor and hurting and going hungry in many places...so you tell me, How did the United States pull the greatest Defeat in History OFF!
But you Live in America ya know! If the dollar continues its downward spiral and you have it in products with no guarantee your money could just disappear...at least with an insurance policy you will have dollars in your hand! Hard Cold Cash...at least it is better to have some than none at all!
<< <i>The FDIC will always cover your bank accounts...always...what backs the FDIC is every single Insurance company that has ever existed in the past present and future!!!! Even if we lose the dollar and go to a new monitary system....they will cover your accounts! >>
I agree that the FDIC will cover all deposits one way or
the other but there's still some danger. In a strongly in-
flationary enviroment there is some danger you'd lose
substantial portions to inflation while waiting for your
check.
Prudence still demands that you try to keep your money
safe.
Annuity's have many great aspects to them, which you will find out.
Knowledge is the enemy of fear
Good for IRA accounts, you can take out 10% a year if need be without penalty.
Cladking makes a good point in that by the time FDIC or SIPC gets around to making good on your money, how much will it have devalued in that time?
roadrunner
banks.
This is the real first test, banks have failed in the past but not like it will be this time around and you are witnessing History being made!
So who goes to jail for pumping up these assets?
How many billions are the shareholders, employees, etc. losing?
July 29 (Bloomberg) -- Merrill Lynch & Co., the third- biggest U.S. securities firm, will sell $8.5 billion of stock and liquidate $30.6 billion of bonds at a fifth of their face value to shore up credit ratings imperiled by mortgage losses.
In yesterday's statement, Merrill said it agreed to sell $30.6 billion of collateralized debt obligations -- the mortgage- related bonds that have caused most of the firm's losses -- for $6.7 billion.
State and local governments were already in hock and now it is turning out they loaned their bond money to buy derivatives, Ha Ha HA.
Now that Merrill is setting a mark to market price on this junk at pennies on the dollar
the paper pyramids are ready to collapses. I think we will see that Merrill being the first out will make one of the better deals.
“States Follow Federal Probe of Muni Derivatives, XL Filing Says
By Michael B. Marois
July 29 (Bloomberg) -- States including Florida and Connecticut are conducting a coordinated investigation into bid -rigging of financial products sold to U.S. local governments.
The state probes mirror those under way for more than a year by U.S. prosecutors and the Securities and Exchange Commission looking for evidence of anticompetitive practices and price fixing by banks in the $2.66 trillion municipal bond market. They have focused on contracts to invest bond-sale proceeds, known as guaranteed investment contracts, and derivatives, such as interest-rate swaps tied to bonds.”
As for the FDIC never failing - where are you getting your information? Never say never.
goldsaint/roadrunner - the blurb about SemGroup is very intriguing. You know who is in Carlyle Group, one of the owners, don't you? As I recall, the Bush family is included. If that is still the case, it might be interesting to note GW's demeanor when he is talking about the oil markets these days. I wonder if his saudi friends are doing anything to help him out these days......
BYE BYE !!
Reuters
SemGroup's $3.2 billion failure shocks backers
Friday July 25, 12:04 pm ET
By Robert Campbell
NEW YORK (Reuters) - The dramatic collapse of energy trader SemGroup LP shocked the privately held firm's backers who until last week had little idea of the extent of the oil trading losses that sank it, sources said this week.
As late as June a banker at Bank of America (NYSE:BAC - News), one of SemGroup's main lenders, described the fast-growing company as one of his best clients, two sources said this week.
The Tulsa, Oklahoma-based company filed for bankruptcy on Tuesday after suffering $3.2 billion in losses on energy futures and derivatives trades that SemGroup says were designed to protect its physical oil trading business.
Shareholders including private equity giants Ritchie Capital Management, Riverstone Holdings and the Carlyle Group are expected to be wiped out.
I knew it would happen.
<< <i>Thing about Annuity's they cost nothing....and they payed me 10% up front...
Good for IRA accounts, you can take out 10% a year if need be without penalty. >>
Well thats all news to me. Every annuity that I ever saw paid the broker 7-8% up front then a .25-.50% annual trailing commission. Then they have surrender charges of about 10-20% if you take your money early.
There is no such thing as free, so if your annuity pays you 15% per year then the insurance company must be making 20%--highly unlikely--or cooking the books--more likely.
If you like annuities then more power to you. I have never recommended them and would only do so for a small segment of the population.
Knowledge is the enemy of fear
<< <i>Well thats all news to me. Every annuity that I ever saw paid the broker 7-8% up front then a .25-.50% annual trailing commission. Then they have surrender charges of about 10-20% if you take your money early.
There is no such thing as free, so if your annuity pays you 15% per year then the insurance company must be making 20%--highly unlikely--or cooking the books--more likely.
If you like annuities then more power to you. I have never recommended them and would only do so for a small segment of the population. >>
There are annuities that are lower-cost with no sales charges and up to 10% a year can be taken out with no surrender charges. Vanguard offers some of them. The fees are paid by reducing the interest rate paid out, or through using mutual funds with somewhat higher expense ratios.
But I would agree that annuities make sense for only a few people (mostly high income/high net worth people looking for maximum tax deferral and possibly asset protection). And I'd run away from anyone claiming a 15% per year payout to anyone.
Cohodk, you must admit that this has been an interesting discussion on insurance. Most folk never have this discussion since it doesn't come up in casual conversation very much so it has been helpful and valuable. I looked at the ing annutiy fixed/indexed w/rider and I'll be darned if I can make any sense out of it so certainly this is a very specialized instrument and you would need professional consultations. But, dlimb is right, the insurance industry is very highly regulated and self policed and probably a very safest industry for investment. I'm still a Roth and PM/cash kind a guy but I have certainly enjoyed this discussion. Thanks, all.
In fairness to the insurance companies, I will mention a whole life policy that I purchased from a well known insurer many years ago. We all know that whole life policies are not the best investments..... however, this one turned out nicely for me. For about the last 10 years the amounts of the dividends paid to me along with the yearly increase in cash value amount to nearly double what I pay as the premium. Plus, they are paying me 5.5 to 6.0 % interest on the accumulated dividends... not sure where I could get a better rate. I only wish I had purchased a larger policy than I did! Of course, in the early years of the policy, it did not pay nearly as well, and given my inexperience with insurance at the time, I quite possibly overpaid for the policy.
We are in some very unusual times. Use due diligence whether you invest in stocks, insurance companies, precious metals, or your local bank. The current financial problems going on right now can affect all of these sectors, and there appears to be no truly safe haven where you can just put your money and expect it to totally safe.
I have to agree with what ziggy29 said.
One thing one should be watching out for, when you see a financial entity paying a higher percentage than most of the others, whether it is a bank, broker, or insurance company. It could very well be a sign that they are needing to bring in more money, and the only way to do that is to pay the higher interest rate. Perhaps their bottom line may not be in the best shape. Be double cautious if it is from a relatively unknown company.
One more thing on the insurance companies. They may be holding their own right now, but remember that they have not been hit with any huge claims payouts since the derivatives problems have hit. They are probably doing ok handling their questionable investments at this time. However, if they get slammed with another Katrina type liability, who knows what their situations will be....
"Economic Woes Reflected Globally
flag of vietnam By Patrick A. Heller, Market Update
July 28, 2008
If Americans want to understand what could happen in the United States in the future, just look at what is already occurring in Vietnam.
The official inflation rate in Vietnam is now about 25 percent per year. To protect themselves, many Vietnamese citizens are getting rid of the Vietnamese dong currency as fast as they can and replacing it with U.S. dollars and gold.
Gold Fields Mineral Services is one of the world's top consultancies on precious metals. In their latest survey of worldwide gold demand, they report that Vietnam has displaced India (a country with 10 times the population) as the world's largest gold consuming nation in the first quarter of 2008.
Distrust of the dong is so widespread that ads to lease or sell real estate are more frequently being quoted in weights of gold for payment.
In effect, the citizens of Vietnam have unofficially adopted the gold standard for their financial transactions. The Vietnamese government is trying to discourage this trend by prohibiting new imports of gold into the country, but that will not stop smugglers. Vietnam's inflation rate is minuscule compared to that of Zimbabwe, but the Vietnamese have much more experience using gold as a store of value. Many Vietnamese now living in the United States (including just about everyone I have talked to locally) used gold to pay for their escape from their homeland. Those still in Vietnam understand that gold is real money - a currency that cannot be inflated or devalued by their government.
As global economic woes and uncertainties increase in the coming months, I would expect increased usage of gold money in Vietnam and elsewhere - including possibly the United States."
Yes I know this, you treat it just like an IRA...Yes if You withdraw early there is a 10% penalty...these Annuities are for long term...Yes they are for people who have a substantial amount of money and they are a wonderful instrument in which to protect you assets! You are allowed every year to withdraw 10% without penalty!
Right now as things stand, I would not have my moeny anywhere else!!!!!
Rules Regarding Substantially Equal Periodic Payment (SEPP )
Dave
Link to 1950 - 1964 Proof Registry Set
1938 - 1964 Proof Jeffersons w/ Varieties
<< <i>ttwon, that is an annuity! The difference between mine and that one is that I have someone over seeing mine and taking out the withdrawls I need and doing all the paper work for me. While the one you show, you have to do the work. >>
Any brokerage can set this up for you and you'll recive a monthly/quarterly/yearly check. You just have to decide on the % you want to take and your going to get it for 5 years or 59 1/2 which ever comes first.
If it is through a bank or a brokerage house I would not want it...I want to know who I am dealing with and want them to be sound...today you have to be careful! It is best to know the party who will be doing the insuring and know they are working under the Insurance laws the not the financial banking laws!
OJ put his money into an annuity so the civil lawsuit couldn't touch it.
<< <i>Well if no one is insuring it then I would stay far away from it! >>
Well put it in an instrument that is backed by the US government. Your insurance companies aren't backed by the US either and could go belly up with a lot of claims. State Farms is into more than just insuring your house and cars they do loans too as many do so those are paper promises too IMO. Some of these big companies that are having trouble have insurance policies in effect too that could do a number on them. There's just no safe investment right now except diversification IMO.
BTW what's the insurance company putting there money in for a high return? Do you know? If not it maybe they've invested you money in municipal and corporate bonds paying high interest rates. Everything is great all the way until they can't make there payments. That money isn't just sitting in a bank you know so your letting them make your investment decessions.
I had an insurance policy on my car for an extended warranty. Guess what happened? Insurance is good as long as most don't claim.
<< <i>No insurance companies do not go belly up...Name me one that you know of....Insurance comapanies do insure only 1/10 of a policy 9 other insurance companies insure the remainder.... >>
Policyholder Runs, Life Insurance Company Failures, and Insurance Solvency Regulation
Most analysts believe that the life and health insurance industry, which holds one-third of all corporate bonds and about 30 percent of commercial mortgages
Knowledge is the enemy of fear
About Us
The Michigan Life & Health Insurance Guaranty Association ("MLHIGA") is a nonprofit association of life and health insurance companies authorized to write life insurance, annuities or health insurance in the state of Michigan. The purpose of this association is to protect Michigan policyholders, within limits, in the unlikely event that a member insurer becomes financially unable to meet its obligations. If this should happen, MLHIGA will assess its other member insurance companies for the money to pay the covered claims of insured persons who live in Michigan and, in some cases, to keep coverage in force. If coverage is provided, it may be subject to limitations or exclusions. This protection is not a substitute for consumers' care in selecting companies that are well managed and financially stable.
The Michigan Life & Health Insurance Guaranty Association Act (a link to the Act can be found in the Additional Info section), Chapter 77 of the Insurance Code of 1956, MCL 500.7701 to 500.7780 details the specific coverage, exclusions and limitations provided to policyholders. The general information provided by the web site does not cover all provisions of the law, nor does it in any way change anyone's rights or obligations under the act or the rights or obligations of MLHIGA. For a definitive statement of the law governing MLHIGA, you must refer to the MLHIGA Act itself. If there is any inconsistency between the web site and any applicable law, then such law will control.
The information provided in this Web site is general in nature and may not address a specific policy or issue. The terms and coverage of insurance products are very diverse and, as a result, it is difficult to make general statements about MLHIGA coverage without reviewing a specific contract. The generalized information provided by this web site should not be relied upon as advice. In addition, please refer to the Michigan Life and Health Insurance Guaranty Association Act, Chapter 77 of the Insurance Code of 1956, MCL 500.7701 to 500.7780, for a more complete explanation of the powers and duties of MLHIGA.
The intent of this web site is to briefly explain how MLHIGA provides protection to Michigan policyholders in the event their life or health insurance company becomes insolvent. If you have any questions that are not answered here, you should contact MLHIGA or consult with your attorney.
On the surface, insurance companies were far from failure during
the Depression. Official statements of the companies showed asset values
comfortably in excess of policyholder reserves during the entire period.
According to these documents, life insurance-companies were in robust
condition, even at the nadir of the Depression. At the end of 1932 the
total assets of all U.S. life insurance companies were reported to be $20.7
billion, some $1.4 billion in excess of total liabilities, and $2.9 billion in
excess of policyholder reserves. Total capital of the insurance companies
was reported to be $1.4 billion or 7 percent of total life insurance assets.
However, these reports did not present a completely accurate picture
of the life insurance companies' condition. In the official statements
assets were valued at prices far above what they could be sold for in the
marketplace, if the insurance companies had to liquidate them. In
particular, investment-grade bends not in default were valued at cost,
adjusted by accrued amortization of the discount or premium from par.
Other bends were priced at their value as of 30 June 1931 [7, pp. 3-6].
This resulted in a considerable overstatement of the value of insurance
companies' bond portfolios. At the Metropolitan Life Insurance Company,
the country's largest insurance company with nearly one-fifth of the
nation's insurance in force, the market value of the bend portfolio was
only 82 percent of its book value [11, p. 287]. This depreciation, if
reflected on the official statement, would have practically exhausted
Metropolitan's total capital [8, p. 242]. If mortgages had also been valued
at what they could be sold for rather than what they had cost,
Metropolitan would almost certainly have been insolvent at the end of
1932. So would practically every other life insurance company in the
country.
About Us
Welcome to the Illinois Life and Health Insurance Guaranty Association (the "Association"). We hope you find this site helpful in providing information regarding the purpose of the Association and how it protects covered policyholders in the event of an insurance company insolvency.
The Association is a statutory entity created in 1980 by the Illinois General Assembly when it enacted the Illinois Life and Health Insurance Guaranty Association Act. A link to Chapter 215, IL. Compiled Statutes Article XXXIII½, Section 5/531.01 et seq. ("the Act") can be found in the Additional Info section. The Association is an unincorporated association of those insurance companies (member insurers) that are licensed to write life insurance policies, health insurance policies, annuity contracts, unallocated annuity contracts and contracts supplemental thereto, in the State of Illinois. It was created to assure the fulfillment of covered policy obligations of member insurers which are determined to be insolvent and ordered liquidated by a court of competent jurisdiction.
The purpose of the Association is to protect policyholders and their beneficiaries covered by the Act (usually Illinois residents) in the event of the insolvency of a member insurer, by the payment of benefits or continuation of coverage, subject to certain statutory limits. Specifically, when a member insurer is found to be insolvent and is ordered liquidated, the domestic state regulator, acting as liquidator, takes over the insurer under court supervision, marshals (collects or gathers) the assets and pays off the liabilities in a legal proceeding known as "liquidation." The task of servicing the insurance company's policies and providing coverage to Illinois-resident policyholders who are eligible for guaranty association protection becomes the responsibility of the Association. The protection provided by the Association is based on Illinois law and on the language of the insolvent company's policies at the time of insolvency.
We will seek to ensure that the information provided here is in accordance with the most current law in the event that the Illinois legislature amends the Guaranty Association Act or other laws. However, if there should be any inconsistency between the Guaranty Association Act or any other law or regulation and the information on this web site, the relevant law will govern. In light of potential changes in law and the dramatic variations in policy language, the Association cannot make statements regarding coverage of a specific policy unless it is a policy with a company for which the Association has been activated to provide protection. Finally, this Web site is for general information purposes and should not be relied upon as legal advice.
We hope the information provided in this web site proves to be useful. Read the Frequently Asked Questions section for more information. Please feel free to contact us if you have any guaranty association questions.
Others are not disagreeing with you, only saying that blind faith in any 1 sector is foolhardy...even insurance.
Can we steer this back to gold/silver/economy rather than a personal investment discussion?
Random Collector
www.marksmedals.com
AIG problems help send Wall Street tumbling
And Cnitas is right nothing wrong with having some money there at all since it's hard to find anything going up these days but high reward equals to high risk, there's just no free lunches. And bad things happen when you least expect it, look at IndyMac it wasn't even on the watch list.