If you happen to be in the minority in America that is for the bailout that the House contemplates, which they are now trying to sell as a "rescue" plan, then you might find it interesting that national debt clock has run out of digits, according to CNN reporting this morning.

The first screencap above shows the clock which has had to have three digits added since 1989. Three digits. Here are how the 14 digits stack up:

$00, … 000, … 000, … 000, … 000
trillion … billion … million … thousand

So in 1989 when it went up the thought was that 99 billion of debt would be enough space. Then a first digit was added to make it to 999 billion. Oops, not enough. Move to 9 trillion ceiling which they believe would make it until Spring 2009. Not any more.

National debt close to doubles during Bush presidency

When George Bush took over the presidency in 2000, the national debt was at 5.78 trillion dollars:

By the time Bush leaves office the national debt will be close to double, just look where it is now:

No matter what your feelings are on the Iraq war or the bailout/rescuse/whatever the truth is clear: we can’t afford it!

Go straight to sextillion, already

If the national debt sign modders are smart they’ll just skip the 99 trillion ceiling and go straight to sextillion. At the rate this is growing that might last awhile. Doing this would skip quadrillion and quintillion and go straight to something sexy. Americans love sexy things, after all. That’s 21 zereos and would look something like this as a ceiling:

000 (sextillion),000 (quintillion), 000 (quadrillion), 000 (trillion), 000 (billion), 000 (million), 000 (thousand)

Seriously, here’s a better idea: let’s do something about paying down the debt. It’s going to be even more difficult to do this if the bailout/rescue/whatever is approved. The bailout/rescue/whatever that has now grown by another $150 billion and gone from an original draft of 3 pages to 451 pages of fat.

This is so illogical that it would drive the entire Vulcan race into extinction.

Bailout.

One of the most inflammatory words in America at the moment. So inflammatory to some Americans that it has congress knotted trying to figure out how they are going to pass an unpopular bailout plan that their constituents adamantly don’t want to happen. Wall Street is floundering and our economic leaders who told us for the last year that everything was not that bad with the economy are singing a much more serious tune. Pundits are throwing around disaster words like armageddon. Welcome to the last year on Wall Street that has been roller coasterish but ‘armageddon’? Hang tight on that level of hyperbole.

Federal Reserve Chairman Ben Bernanke is now making grim statements like this:

In his most stark assessment since the credit crisis exploded 13 months ago, Bernanke said Congress must move quickly "to address the grave threats to financial stability that we currently face."

Presidential candidates divided on whether or not to have debate this Friday

Senator John McCain is trying the unprecedented move of suspending his campaign and postponing this Friday night’s debate so he and Senator Obama can go back to Washington and try and help come up with a solution for fixing the bailout impasse.

My translation: see what souls can be sold to get the bailout plan to go through.

Obama wants to let the debate show go on. He feels, correctly, like a president will be expected to juggle many balls while running the country and why should the show stop? In McCain’s defense, it could be argued that the country hasn’t faced anything economically like this in some time and if I was in his shoes, I’d want to be knee deep trying to hammer out some viable solution not on the campaign trail.

But let’s return to the title of this post, are economic times as bad as they seem? Is this bailout the only good option as being presented?

The New York Times has an interesting article on how Sweden dealt with their economic problems in 1992:

Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.

President Bush is making a speech tonight at 6pm PST / 9pm EST with what appears to be the intention of selling this bailout plan to the American people. Having the nations most unpopular president in a long time speak trying to convince us how important this bailout would be for the economy is curious, but not sure it will do that much to make people feel any differently. History could find this to be one of the most important speeches George Bush makes over his time in office, maybe the most important speech of the last 20 or more years. Will he screw it up? I’ll update this post after watching the speech with my thoughts.

So I’m against the bailout, you?

Unfortunately I believe there will be one, whether we like it or not. One of my major concerns is what happens next? If the thought that we are in economic ruin if we don’t do this bailout now, what do they say next time when somebody else steps up to the money line with hands out? If the gun is to our head now if we don’t do this, will there be another gun next time? I hope there isn’t a next time like many others, but I’m skeptical. Very skeptical.

The market over the last year has been a series of it goes down, the Feds lower interest rates, it goes back up for a short time. Then there is some negative announcement or pundit prediction of gloom and doom and the market goes down again. Feds step in by making the interest rate lower.

Somebody somewhere needs to say enough is enough

Letting companies go out of business that make bad business decisions is the way it is supposed to work. I understand the government was partly to blame by forcing lenders to make loans to people who couldn’t afford the terms, but it’s time for everybody to come clean about the dirt on their hands and let the market correct itself.

I realize not doing a bailout will have economic consequences, perhaps even in my own backyard, but I’m more worried how far we have already fallen down the slippery slope by reacting to what the nameless, faceless mob of the market demands and pressures.

If the market is based in great part on speculation, then it’s time the government makes the speculation a little easier. Saying "no" to helping Wall Street banks, giant investment firms, insurance companies and the like doesn’t seem that challenging to me. Sort of like the whole "we don’t negotiate with terrorist" spiel that we see in Hollywood depictions of government.  You made a mess, now go out of business and let some other private business step in and service your customers. I bet some other business can do better.

The whole notion that a company — any company — becomes so large that the government (which in America boils back down to the people) must step in and help that company avoid financial ruin is absurd to most hard working American people. Helping people after hurricane Katrina who lost their homes seems a thousand times more important. And yet if you talk to people who have been to and/or know people who live in New Orleans they say that situation is still a mess. The government needs to stay out of this. I fear the worst the more Government becomes involved in anything financial. And you can go pretty much down the line on that one:

• the war in Iraq. Costing us billions per month. You can get the javascript code to show this war cost in real time. It’s eye opening.
• national debt management. What’s that under Bush’s regime? We continue to make more debt, not manage any significant amount of our existing debt. Do we not care at all for future generations?

No means no

If by standing firm and saying no that means it will be harder to get a car loan or home refinanced, so be it. Sometimes we have to spread the pain around. I can handle being a little more hassled over the next loan we might make in exchange for bankrupting our future. What about you?

Update 8:29pm PST (following President Bush speech): Bush looked tired delivering an all too familiar fear speech tonight. Just roll him out and have him scare everybody on any subject: terrorists, 9/11, weapons of mass destruction or the economy. He said nothing that moved me in any way on this issue. Another opportunity to do something meaningful in his presidency that turned out flat.

On an educational note, if you are trying to wrap your mind around the sequence of events that led to this mess, financial website Kiplinger shares an informative list.

If you thought Twitter was bad with their fail whale messages, at least Twitter doesn’t have a hold on any of your money. This morning I can’t login to my accounts at Zecco or Sharebuilder. Why not? Good ole’ "Technical difficulties."

Meanwhile a friend is also having trouble accessing his broker services (which aren’t the same as mine). I can get into Trowe Price, so not every brokerage with online access is having online issues, but it does make one think: what if there really was some major depression-like event and you wanted to trade your assets, would your web access be unavailable due to technical issues?

It’s time like these that we have to go back to face to face brokerage transactions or using the phone and waiting on hold. I wonder, though, if we’re having problems accessing our trading accounts, are the brokers also having trouble too?

Twitter problems seem minor at the moment. BTW, I don’t want to get in to sell any holdings, nor short any of the 799 financial stocks that have a temporary ban on short sales, I want to BUY. I haven’t sold any of my holdings this week. Check out the DOW over the last year:

-13.63%, down almost 1,800 points. Kraft (KFT) is replacing AIG in the DOW. This has been a wild, wild week on Wall Street.

The price of postage will go up from 41 to 42 cents on May 12, but you can stave off the penny increase for a little longer if you buy Forever Stamps.

Foxbusiness.com:

"The Postal Service developed the Forever Stamp for consumers to ease the transition during price changes," said Postmaster General John Potter. "We encourage Americans to buy Forever Stamps now for 41 cents, because like the name suggests, they are good forever."

When will we see $1 or more to snail mail something? I did a little poking around and learned that the price of a stamp has doubled over the last 27 years (20 cents on November 1, 1981) and quadrupled over the last 33 years (10 cents on September 14, 1975). How much did postage cost some 50 years ago? On August 1, 1958 it cost 4 cents to mail a letter.

News of a postage increase is not good news for snail mail spammers, nor is it for businesses who mail documents and letters as a course of normal business. In our business offline we’ve tried to transition to email for as many correspondences as we can, but ink signatures are still required for many documents. 

The companies we deal with are getting better about allowing digital signature and maybe within the next 5-10 years we will be able to collect signatures digitally as the rule rather than the exception. We used to include a return envelope with postage paid by us, but that cost has risen to well over a $1 for each piece, making it much more cost-effective to include a self addressed stamped envelope.

If history repeats itself, could we see $1 postage stamps by 2035? Sooner? Later?

Merlene wants to know when you plan to retire?

What’s the pot of gold for you? What are you working towards? When do you plan to retire? We work hard. We save. We invest. We worry about our portfolios and our retirement savings. We spend hours with our financial planners and run our spreadsheets and worry will we have enough. But what is enough? What’s your goal?

I’ve written a few times here and told plenty of friends directly that I’d like to retire in my 50s. Being 39 now, that could give me anywhere from 11-20 years.

‘Retirement’ is subjective. Retirement to me doesn’t necessarily mean we sell our businesses and/or stop working completely. I would like to travel more in our retirement years, sure, but I suspect even travel to exotic destinations will lose its luster at some point. Also, if you enjoy your work and are physically and mentally able to complete the duties, why would you ever quit?

Is retirement more applicable to those who aren’t self-employed?

One of my greatest retirement concerns at this points has less to do with money than physical health. I’m healthy now, but who knows what my health will be like in 30 years? I think from 55-65 I’ll still have enough energy to travel. Perhaps more importantly is my wife’s health which has deteriorated somewhat since she was hit by a car back in 2003. She is in a lot of pain in the winter months, even after surgery, so this could cause us to consider moving to a warmer year round climate.

If I wait until 70-75 to retire, I doubt I’ll be as willing to do the worldwide travel I’d like to do someday and I doubt at that age my wife will want to or be able to travel that much. I’m not interested in traveling alone.

My other retirement activity will center heavily around writing. I want to get back into writing fiction and have at least one fiction novel published. This blog helps to keep the saw sharpened, but it’s not enough.

It’s your turn. How would you answer Merlene’s questions? What’s your pot of gold? When do you plan to retire?

When we started an experiment to cancel all our credit cards 232 days ago several people warned that this could negatively impact our FICO credit scores. This seemed like a reasonable concern and now that some time has passed it’s time for a status check.

With the declining interest rates we decided to see if we could get a better interest rate for our existing credit line. Didn’t want to borrow any new money, just went fishing for a better rate. We were able to get almost two full percentage points lower and found out that my credit score has gone up 38 points since the last check before we canceled the plastic demons. Nice!

Before getting too excited, I don’t know if this positive change was because we canceled the credit cards or a normal fluctuation in credit score calculation. I do know, whatever the cause, the direction it’s going is the right one.

An October 2007 article in Kiplinger strongly refutes that there is any benefit to your credit score by closing credit card accounts:

There are two key reasons why closing old credit-card accounts can hurt your credit score: The move affects your credit utilization ratio and your credit history.

Credit utilization ratio is how much of the available credit you are actually using. The lower the better, but less than 10% doesn’t really help you, according to the article. So if you have a credit card with $10,000 credit line spending $1,000 (10%) would be better than spending $8,000 (80%).

Before checking the score I reopened my Bill Me Later account. Why? I’m seeing a number of 12 months no interest deals through Bill Me Later while looking for a computer to replace the one that was stolen and might want to take advantage of that deal. Also, I wanted to see by reopening the established account what impact that would have in the future. Several different sources have pointed out that the age of credit accounts is important. If this is true, while we’re saving 2% by canceling old credit line in favor of a new one with better interest rates, we could be hurting our credit scores.

If I do use Bill Me Later my plan is to keep the money in my money market account, earning interest for me instead of some third party, and before the 12 months is up payoff the total balance so I don’t incur any finance charges. Seems like a good plan, although the downside is we needed to have the account open with them. Bill Me Later isn’t a credit card, so not going to stop the canceled credit card counter on the home page, but this got me thinking about how spending the credit even if I never pay any finance charges might be impacting my credit score.

source: myfico.com

According the pie chart pictured above, simply paying your bills on time, every time, can have a huge impact on your credit score (35% of overall score). What have you done to improve your credit score?

A break from my unannounced blog vacation to share financial analyst Jim Cramer’s comments on the tech sector:

Reluctantly I have to conclude that this is a group that on strength has to be sold. Anything I own that has tech has been killing me for Action Alerts PLUS.

Looking at my own tech portfolio holdings I’m seeing the following results lately:

AAPL (Apple) - down from high of $202 at end of 2007 to $129 today

GOOG (Google) - down from $747 near Halloween 2007 to $506

IACI (ask.com) - down from $30 in October 2007 to $24
VCLK (Valueclick) - down from $28 in October 2007 to $22

YHOO (Yahoo!) - UP from $19 to $31 on possible Microsoft acquisition, but down from $34 in October 2007.

Ironic that Cramer is famous for saying ‘bOOyah!’ and yet many of these tech stocks receive a ghostly boo since Halloween time. Google is among the worst performers since cresting the 666.66 mark. If I was more supernatural inclined, I’d say the big G was cursed, but a lot of the market has been miserable lately.

Despite the performance, I’m holding all my technology stocks for the time being.

What stock sectors to invest in during these troubled times?
I’ve been listening to CNBC on Sirius a lot more lately and reading a ton of information online trying to get educated on good buys and companies and markets to stay away from.

If tech isn’t any good, then what else? The million dollar question. Some gurus are suggesting the financial markets could be one good place to look. I sold NLY (Annaly Capital Management, Inc.) yesterday at a decent profit and am trying to decide what to buy next. I might go back and buy more NLY because this is a company that benefits when the feds cut the rates. If more cuts are on the way as some are speculating, NLY could continue to be a good stock to have.

What about new money to invest?
When the insurance money for my stolen tablet PC was received recently, I stuck it in our money market account which is currently paying 3.97%. Briefly considered adding to my Zecco account and buying some more stocks with it in the interim while deciding what computer to buy as a replacement, but the market is too uncertain for me to invest any new money at this time. Also considered putting in our mutual funds but those accounts are down too.

Where are you investing new money these days? In a holding pattern while the market corrects? Using your savings and money market accounts more?

Yesterday, news that Terry Semel was even further out than he was when he was replaced as CEO by Jerry Yang and today the news that battered Yahoo shareholders have been waiting for: Microsoft wants to buy them. Keep your eye on Yahoo stock price today (disclaimer: I own YHOO stock) as Microsoft has broken out their love ahead of Valentine’s Day.

Microsoft put an offer to the Yahoo Board of Directors to acquire all the outstanding shares of Yahoo! common stock for per share consideration of $31, which rings the deal in at $44.6 billion.

“We have great respect for Yahoo!, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market,” said Steve Ballmer, chief executive officer of Microsoft. “We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners.”

A combined Microsoft-Yahoo would definitely stir the Google Giants because of the sheer amount of web eyeballs between the two properties. There are some in the tech community that said this acquisition would never happen, and it wasn’t until the Yahoo stock price started imploding that a reality for this deal came to fruition.

The deal isn’t done, but Microsoft believes the transaction could be completed by the second half of 2008. I’m excited by the possibilities of seeing my favorite Yahoo properties on places like Xbox Live and the Zune. Imagine Flickr integration on the Xbox Live blade. How about Zune social with delicious bookmarking (artist website tie-in)? And then there’s Microsoft AdCenter, the real belly of the beast that could rain on Google’s parade if only we could put it on our websites. Yahoo already has YPN so maybe AdCenter could shoehorn into that and voila, something that could seriously compete against Adwords/Adsense.

In December 2006 I wrote the one reason Microsoft might acquire Yahoo would be a defensive move to Google. This is even more true in 2008. I’m sure the tech pubs will be dominating TechMeme with this story today. For those who think this is a bad move for Microsoft or Yahoo, keep in mind that Microsoft + Yahoo = better competition against Google. If Google has no serious competition it will get lazy.

I think this is a good move for Microsoft if they don’t squander the assets. Whether they will or not assuming the deal goes through only time will tell. Exciting news heading into a weekend. Can’t wait to read what others have to say. Where did I first hear about this? On Twitter.

While Microsoft is in the buying mood, they should buy Twitter too. They have the engineering firepower to handle Twitter’s scaling woes.

Update 4:41am PST: Microsoft’s official statement. They are having a live webcast at 5:30am PST. Thanks for the head’s up ParisLemon, who also pointed out that YHOO stock price has jumped 60% in pre-market trading already. Google it’s ON.

It’s been fascinating, at times dismaying, watching what’s happening in in the financial markets since Summer 2007. The subprime lending meltdown which has spurred the Feds to lower the interest rates several times, and possibly once more again tomorrow making two rate changes in the last week alone.

Meanwhile, there’s a government sponsored stimulus package in the works that passed 385-35 in the House today and is on it’s way to the Senate.

Under the House plan, most workers would receive $600 from the government, $1,200 for couples, plus $300 per child. Eligibility for the full check would be capped at $75,000 in adjusted gross income for individuals, $150,000 for couples. Workers with at least $3,000 in earned income last year but too little earnings to pay income taxes would receive $300, along with $300 per child.

These checks could be in the mail as soon as May this year. Of the 35 no votes, 10 were Democrats and 25 Republicans.

Speaking of the subprime mess, it got messier today as the FBI announced it is investigating 14 companies for accounting fraud relating to subprime loans:

[Neil Power, chief of the FBI’s Economic Crimes Unit] indicated that some people knew about the subprime crisis well ahead of time.

Ouch.

The Zecco UI and account screens continue to be unclear. I didn’t see anywhere in the trade section where these $4.50 trade commissions are being applied which prompted this post. In the account activity area it shows “principal amount” and then the “net amount” shows $4.50 less, so this must be where we are supposed to see the commission fees reflected (?). If you know of a better place to track the commissions than this, please reply in the comments.

How to locate the commission fees in Zecco
STEP 1. inside the Trading area choose “Account Records” along the left column.
STEP 2. choose “all activity” beneath the section.
STEP 3. select the “From Date” and “To Date” and click on “go” button in the account table cell.
STEP 4. you should see something like the snipped screenshot pictured above.

Why not just have a commission column that shows the amount charged for each buy/sell? Maybe Zecco will add that going forward. That would make more sense.

Recognizing a stock loss
As you can also see above, I just took my first stock loss trade at Zecco by selling Zarlink (ZL) which I bought 60 shares back on July 20 at $1.69 and sold today at a dismal $0.64/share. To add insult to injury, I paid my first $4.50 commission for the trade bringing the grand total of the loss to $66.90. Like buying a video game that is played once and shelved. Like filling up somebody else’s tank of gas.

I lost money.

Why did I take this loss instead of waiting for it (hopefully) to bounce back? I’d waited nearly six months already for ZL to do something besides go down and there is a looming threat of them being delisted. I’d rather suck up the loss and move onto something else. I turned right around and bought 6 shares of Shortel (SHOR) paying a second Zecco $4.50 commission. I already own SHOR shares through Sharebuilder (and paid $15.95 commission there, ouch!), so this adds to my holdings, only at a different online broker.

The impact of commissions in 2008 versus 2007
We’ve known the Zecco free ride on trades for those with balances under $2,500 was going to end in 2008 so this doesn’t come as a surprise.

I added a “fees” section to our stock competition Google Finance shared spreadsheet to reflect these $4.50 commissions per trade throughout the year. Even with the ZL loss and $9 in commissions, overall my stock competition portfolio is still +2.96%. I sold seven stocks in 2007 at a profit (GMO, BQI, ATAR, RSTO, MCZ, SIRI and SAPE) and 0 stocks at a loss, but I could (and time will tell if I should) have taken the ZL loss in 2007.

Of those stocks sold, 2 of 7 are currently showing higher than the amount sold: GMO which is at $11.50 and was sold at $8.05 and BQI which is at $4.19 and was sold at $3.67. On a percentage basis (5 of 7 = 71.4%), I’m happy to have sold when I did. This is a real world example of the uncertainty in the market that everybody is trying to time; buy low, sell high.

The last six months on the market have been rocky, so I’m not disappointed with the performance. If $4.50 commissions would have to have been paid on all of the 2007 trades, I’d be looking at an overall portfolio loss, so this will continue adding an additional wrinkle in 2008.

I covered some of this in my 2007 stock competition recap post, but at the time hadn’t done the following:

1. paid any commissions to Zecco
2. taken any losses on trades

Now I can clear both those off the table. Let’s hope #2 doesn’t happen very often in 2008. As I’m about to publish this, SHOR has lost 27 cents from what I paid for it already (dropping from $6.17 to $5.90). Argh, isn’t the stock market fun?