Trust Me, we need Pyramid, & Ponzi schemes: When Blackfolk will know that they have Arrived Financially!!!

I have previously written on my views of practices, policies, & celebrations that I do not agree in full or in part with and I shall continue my diatribe here with Kwanzaa. I have mixed feelings with Kwanzaa because part of me believes that we have pulled away from the family communal atmosphere that once permeated our community. Yet on the other-hand I fully recognize & subscribe to the US being a Constitutional Republic with Capitalistic leanings. Where your are rewarded for your success, if you have the courage to press forward & believe in your dreams.

So with that said on this 4th day of Kwanzaa 2009 - Ujamaa (Corporative Economics) to build & maintain our own stores, shops & other businesses and to profit from them together. This sticks me in the gut. I believe that we should "build & maintain our own stores, shops, & other businesses." That's the Capitalist in me. Yet the next portion "to profit from them together" is the issue point. I fully believe that we as business owners should offer a fair product or service and expect a fair profit in return. Should you expect to share in the profits when I put up the Seed money, Vision, & Sweat equity? That is where the pendulum swings from Capitalism to Socialism. In other-words you have made too much profit so we must take from you & spread it around. It this were a Pyramid or Ponzi scheme you should expect it to eventually trickle down to the lowest level group before colapsing, but as I stated before we live in a Constitutional Republic with Capitalistic leanings & Homie Don't play that...

2009 will go down as a year of eyeopening change in the world of finance & two names have come to the top of the scandle chart Bernie Madoff the jailed architect of a $65 billion Ponzi Scheme & Allen Stanford the alleged architect of a $8 billion Ponzi Scheme. Now it is my thesis that this would never occur in the Black Community, because Bernie Madoff swindled a mostly Jewish investor group in some cases without ever meeting face to face. They almost begged for the opportunity to invest their money with him. Some of the largest names in the entertainment industry (whos names ended in Berg), largest private mostly Jewish universities, hedge funds, & non-profits. These deals came together through country club or golf club marketing where a broker in Florida with the relationship with Madoff would say “Hey Joe, who is handling your investments?” Joe may respond “XYZ firm.” The broker would then ask the gotcha question “If I could get you in the fund managed by the former chairman of the NASDAQ would you be interested?” If by chance Joe said no the next questions is just as critical “You know it has consistently returned above 12%?” (first of all that is unheard of on a consistent basis. & should have sparked an investigation.) But the individuals that were involved mostly answered in the affirmative.

Now it is my Theory that if this same conversation was to occur in the black community it would go Not Slightly, but insanely different. "Yo Donte' where you got your savings?" Donte' answers "In the bank, why you need to know, I don't owe you any money." Oshae answers laughing " Naw, D. Nothing like that, but If I could get you in the fund managed by the former chairman of the NASDAQ would you be interested?" Donte' responds beligerantly "Shae, What in the world are your talking about, you cash your checks at the check cashing place just like me. You don't know anything 'bout no N-A-C-Q. I ain't interested sounds like a pyramid to me."

I often tell the factual story that as a mutual funds broker I held a book a couple million dollars in assets under management and 90% of the total value of my book was held by 3 white women. 10% was held by black folk of all genders. I had to work 10 times harder for that 10% that I had to work for the 90%. The issue was trust. Blackfolk didn’t trust me, where as the white women took me based on my credentials & knowledge.

Every 3-5 years there are a plethora of get-rich-quick schemes that rape the black community of generations of time and wealth that are touted to bring “Passive Income” or whatever the buzzword of the day is to your kitchen table by allowing you to leverage the power of you network. Many times these schemes leave the person an outcast amonst friends & family because every few years they “have found it!”

It is my belief that Blackfolk truly will not know that they have arrived financially until they have a 96 Billion dollar scandle, but that will never happen until we Trust each other.

One Word.... "Duhhhh!!!!"

I the words of that Urban Ghetto Poet Rakim Allah of Eric B. & Rakim Fame “Its been a long time, I shouldn’t have left you without a dope rhyme to step to…” Sorry for the distant time that has passed since the last post. Econ-For-The-African

GM CEO says bankruptcy would cause liquidation

http://finance.yahoo.com/news/GM-CEO-says-bankruptcy-would-apf-14666397.html

I refuse to purchase an American made Automobile. I know with everything going on this is not going to be a popular post. I first got my driver’s license in 1986, I couldn’t wait. I studied hard & my mother took me, and the era of freedom began.

· I got my 1^st car in 1986, a 1979 Ford Fairmont. It was given to me by my aunt. It ran 3 weeks and died one block from my mother’s home.

· I got my 2^nd car in 1986, a 1984 Dodge Omni. It was a great car, it took me places I was supposed to be and some places I wasn’t. It lasted till my junior sophomore year in college around 1991 when the transmission/clutch went out

· I got my 3^rd car in 1991, a 1986 Ford Ranger (this is why I hate “some” pickups). My dad purchased it from my uncle, it ran 2 months and died the Friday of Homecoming weekend when the alternator went out. I got that fixed and 8 months later it died again when the Transmission went out.

For those of you keeping score that is 3 cars in 7 years. I walked & bummed rides my senior year so that I could graduate and purchase my own car, new without any restrictions. When I graduated I purchased

· My 1^st car after graduating was a 1993 Honda Civic. I loved that car. I financed it but immediately got on a mission to pay it off in 3 years which I successfully completed in 1996. That car took me up and down the eastern seaboard from Maryland to Miami, and eventually out to Texas. Unlike the others, I finally retired it in October 2001 when it had 208,000 miles.

· My current car is a 2001 Lexus; it currently has 134,000 miles on it.

For those of you keeping score that is 2 cars in 16 years. Anyone want to guess what I attributed the difference to???

The American auto industry is made up of great companies for those of you with Traditionalist spirits. In my opinion their issues are

· Horribly managed Income Statements & Balance Sheets

· Lack of Innovation (The Arrogance of the CEO’s, Broke Folk Need Not Apply)

· Planned Redundancy

Horribly managed Income Statements & Balance Sheets

Common now, you have read my past blog post do I really need to go into the benefits of building a strong balance sheet? Do I?

Lack of Innovation (The Arrogance of the CEO’s, Broke Folk Need Not Apply)

I make no bones that the last American auto that I realistically looked at and said wow that’s different was the Ford Probe, that was back at a time when Ford’s motto was “Quality is job 1.” Unfornately, I never felt that Innovation was job 2, 3, or even 4. I have been to a few auto shows and people tend to walk and drool over the latest “X-something.“

First point that “X” badge denotes “Experimental”

Second point, it rarely if ever makes it to market.

I had to bust-a-gut laughing when the CEO’s of the Detroit auto makers got their hat handed to them when asking for money from the feds. Then they went home and returned 1.5 weeks later driving their latest hybrid electric vehicles. That was in December 2008. The issue that I have is while their dealerships are going out of business, they have to shut down production in late December to February of every year to retool, and the few factories that are staying open aren’t producing hybrid electric anythings. Finally the Volt by Chevy that the CEO’s drove to DC on their second visit is a 2010 at a cost of $30,000 plus (only with government subsidies, without the subsidies it will be above $40,000) that will not hit the dealerships till estimated end of 2010, however in the meantime you can purchase a lovely Hybrid Escalade ESV for 60,000 plus. Somewhere in Detroit there are some real smart MBA’s getting paid to come up with some dumb a$$ ideas.

Planned Redundancy

Planned Redundancy was practiced back in the day where the auto makers calculated that Americans would change autos at predetermined points in time, mostly 5-7 years. That is why it was difficult to get an auto loan beyond 3-4 years Pre 1980’s. Planned Redundancy also manifested itself in the manufacturing of the product, as you would purchase an auto and in 6-12 months the bumper would fall off. (Why do we think what we think?) Have you ever heard anyone say:

· I have to get me something new before this one starts to give me trouble.

· Oh, I just had to do this repair, you know what that means.

People still have the thought that every 5-7years they have to get a new car even though the cars are better built than they use to be.

Back in the 70’s every black family had that one bourgeois family member that purchased a Mercedes, Volvo, or BMW till they got hit with the $1000 oil change. When the first Hondas hit the US Market they were so good that years later you still saw 1977 Accord Hachbacks on the road well into the 1990’s.

In conclusion, The only American Auto I would purchase is a Pickup Truck (but I hate Pickups). The reason is most pickups are built to work truck standards and work trucks have to take a beating over their lifetime and it would not look good in the eyes of businesses if their work trucks continuously broke down. In other words, that is why Dodge is RAM tough, Built Ford Tough, & Chevy Silverado America’s Best Truck (per the commercials).