>> and it is going to leave our country much like argentina was a few years ago when it was once one of the most prosperous nations on the face of the ersberg of the argentines were like rich texas oil people they swaggered around and than because of fiscal mismanagement of their governments they went into a

financial decline and have not recovered since. the united states is well on the way to doing that. this crisis that we have has resulted in payments of 12 point* $8,000,000,000,000.02 try to salvage the problems that have developed. so in my book "right on the money" i began talking about welfare in general and i quoted something i found very interesting from john d. rockefeller was considered the wealthiest man on earth when he owned standard oil company and all affiliate's. somebody said mr. rockefeller, how much is enough? to which he replied it just a little bit more. [laughter] if you are involved with money it is never enough so i point* that out in this book "right

on the money" we need to give ourselves some perspective a man's life is not consists of the abundance of what he possesses and there is no way that money will satisfy somebody broke it is just more zeros you could add, so why? it does not make you any happier are stronger or live longer or anything except the fact you have another zero on your bank balance. so if you have a couple more is still does not mean anything. all of the rich toys five and 10 and $20 million houses, the latest high-speed $40 million aircraft and the rest of it it still does not satisfy them. we need to understand when we talk about money it does not satisfy. that is for starters.

we also need to understand in terms of finance the average person has got to know how to manage their money. i understand at least 50% of the merck told this court in america is caused by money. -- marital discord fights over money had to spend it, allocated, save it, what do you do with your money? it is a major thing so if we could get the money matter settled among households we could cut the divorce rate down dramatically. the other thing we're facing right now is the baby boom generation is moving into retirement. those who were kids a few years ago are now in their sixties and those who are in their sixties regrettably have

not saved money for their retirement. they have saved on average less than $50,000. that is not even enough to keep you four per one whole year little bone 20 or 30 years of their not ready to retire. so if they do retire they are thrust on to the mercy of the federal government which has a program called social security which is regrettably going bankrupt and will probably be by the year 2019 or so. medicare as we know it will be bankrupt within a few years after that the social security will be bankrupt. so we are relying on the federal government to pick up the tab yet we don't have money in the retirement accounts to take care of us. it will be a terrible shock.

people were using a technique if i can use that term of saving money under what was called a 401(k). or a 403(b) program where they set aside a certain small amount the employer generally speaking matches the small amount and over the years that begins to grow. it became the savings vehicle of all of the baby boomers. and then came the recent recession and they have founded the 401(k) savings vehicles have lost about 50% of the value when the market went down. people were faced with

devastating losses and the fear gripping america was probable. people were not only losing their retirement savings but also beginning to lose their jobs. we have laid off 78 million people in the united states and it is hurting all over the board. so what do we do and how do you regulate our finances so we don't get caught in the paise that may be coming down the road? that is what this book is, "right on the money". first of all, how did we get this way? it is the strangest thing that happened, the government was encouraging home ownership. that was the american way to own a house. to have your piece of the piper ago the thought was real-estate always went up.

if you own a house it would go up three or 4% per year after year so as looked at as an investment so why would invest in a house. people bought houses and then certain of those in congress and not the least of which is barney frank which is head of the house of representatives right now encouraged fannie mae and freddie mac to make loans to poor people so they could have a piece of the pie and have a part of the american dream and own their own home. people began to apply for a loan.

these houses that may be sold for $200,000 are now worth 400,000 and those were 400 are now worth 800. that is a pretty good investment to go up in value. loans were marketed by mortgage companies they had the incentive to place loans. they got paid a commission on the basis of the loans that they put out. so the more loans that they had in the markets the more money they made. they decided they could enhance that prospect to radically if they could securitize those loans. of the mortgage companies began making loans to people

who really should not own house is to begin with then they passed the loans up to wall street where they were bundled together called collateralized debt obligations and once that was done they said these are loans for thousands of thousands of people so they must be good so they gave them a aaa rating which is the same as a government bond and that meant they were good for investment accounts, institutions, school s, municipalities, whenever and whoever invested money. will loans were sliced up into cdo's and the guys on wall street were sold overseas but also all over the world it was not predominantly american

phenomenon but a worldwide thing because we were sending these loans overseas. everything was grand for a time and the investment banking houses began to cover up as many 40 times leverage over their initial capital they had a 40 o /1 leverage that meant they were unloading these loans the cbo on other people. now a sidebar of all of this, people people who were picking up the pieces of paper said we want some assurance that they will not default on us. so they went to the big insurance companies and said k. ride a policy that these loans will not go bad?

and ag said of course, for a nice be and they began to sell collateral debt obligations. and before long they began to sell these things willy-nilly to anybody. and what you could do for example, is in one block a person could say i one to an insurance policy that i will not default on my loan. but what if your neighbor and a nabors neighbor and everybody decided they wanted to get insurance on your house or mortgage? and so the insurance company began to write many, many policies that have no relationship to the actual underlying security and the underlying property? so they flooded the markets with these things until it was

summer in the neighborhood of $50 trillion worth of credit default swaps. that is a lot of money. you have day laborers who had no business buying $500,000 houses to could not possibly afford to make the mortgage payments. they were sold adjustable rate mortgages that are called arms. at very low rates and so they could go and and pay a few hundred dollars per month on their mortgage. these are recent arms as a after three or four years they began to reset and of the true value of what these loans were worth began to come to and the day laborer making maybe four or $500 per month signed -- suddenly had to pay several thousand dollars per month on his mortgage. of course, he could not pay as of the defaulted.

the banks said we will foreclose on the loan and in certain jurisdictions it was necessary for the homeowner to drop off the keys privity said sorry, i cannot make my payments of the drop off the keys and before long whole neighborhoods like the knicks arizona, las vegas, miami, and where there was said jay property boom were flooded with foreclosed properties. these properties were backing of the paper that had been sold by investment banking houses all over the world and held in banks as their own core capital but as people began to look at them they said we do not know what these papers are worth. we're not sure. is it worth 20,000, 50, 100?

it is in default and we cannot assess a value. the banks therefore were unable to get additional capital because they did not have enough money to back up another loan from another bank's and nobody would loan to them and the credit markets seized up so nobody could get a loan. and because businesses could not renew lines of credit and others could not get money to buy houses, start businesses, could not get financing for a startup the whole economy froze up and things began to go into default. there are tremendous loans and companies that had gone out on a limb on the collateral debt obligations and a fancy instruments, they went under.

lehman brothers one of the oldest and venerable banking house is in the world declared bankruptcy. and others became wards of the state. and at aig they were so afraid of the collateral debt obligations because not only were is there $50 trillion of collateral debt obligations but there was also so-called derivatives. a derivative is a bad. you can bet if you want to the fly will crawl up or down a window pane. [laughter] that is a derivative. the fly is the derivative. you can bet that oil prices will go up or go down. cold. sweet. 10. you can write contracts on

anything then you can get complex contracts were you look at the ratio of the basket of currencies to another basket of currencies and you bet on that ratio so it gets increasingly complex that the former head said i did not understand it and nobody else did either. but about one year ago, a $700 trillion in derivatives. is that a quadrillion dollars in derivatives. that is why the powers that be in its treasury are totally spooked about what could happen because if the counterparties begin to refuse to honor their bets then it could unravel low whole financial system of the world and bring down one of the worst crashes we have ever

conceived of. that is hanging over the head of the economy of the united states and the world. the big boys to not like to talk about that but that is the danger but we haven't derivatives in excess of a quadrillion dollars but the notational by you but nevertheless that is a situation we are faced with. that is why we have gone to such heroic efforts we have seen the last couple of days, the head of bank of america has been growth because he says the head of the federal reserve board and head of treasury essentially twisted his arm and said the real by merrill lynch if you wanted to not. you will press the merrill lynch. regardless of how many billions of dollars they owe because if it goes down like lehman brothers the whole house of cards may collapse.

that is the backdrop we're dealing with now the obama administration is throwing trillions of dollars that it but unfortunately the first rescue package was a payoff to democratic constituencies and some of the money that has been spent has been nothing short of ludicrous. they are burdening the taxpayer with a huge tax burden and the amount of taxes that will have to be spent it is horrible to contemplate. how deepen the whole we are going and how much money is being spent. now they say we take on health care which will be trained one and 1.5 trillion dollars to

assume health-care that meant the united states government will crowd out the private insurance company then they will be responsible for all health-care for everybody in the nation and. it will be a hideous mess. so this is the book "right on the money" that is the backdrop with which we have to operate. but people still need to do appropriate planning. the first item that i point* out in this book has to do with something as fairly simple but it is not being practiced by many people. they have to have a budget. a budget is nothing more than figuring what kind of money comes in, what kind of money goes out. when it is the fixed that has to do and will have to be paid

regardless and then there is the discretionary which is money that can be optional. every family need the budget if we have a fixed cost one is a mortgage payment, what is the tax is? if we have certain other things that are a definite cost that is the fixed income than the balance is discretionary. then rican write down here is what we would like to do and here is where families can make a huge amount of mistakes because they feel like i feel flushed today so let's go out and the $100 dinner they cannot pay their grocery bill. but here again we have been this book "right on the money" ways that families can cut there spending, i get the

thing back and nine so that they can live more comfortably. but if they get and $40,000 per year and spend 45,000 per year they will be in debtors helper when they do they go to the credit cards and run up credit card balances which are now 18% and if a person misses a couple of payments they ratcheted up 27 or 28% interest and the person cannot ever get out. the one thing that nobody should do is take the minimum monthly payment. on a three or $4,000 loan you could spend 20 or 38 years paying off the balance because they haven't rigged that you cannot get out. this is the kind of thing that we warn people about in this book. the other thing that i recommend is you only have to credit cards that means

plastic surgery on the rest of them. [laughter] one that you used primarily for the various expenses the other is a standby in case of an emergency. maybe you have to buy one thing per year to keep it active. nothing else besides that. the other thing that is so important is that every family have a minimum cash balance, may be five or six months of expenses so they just do not completely be at the mercy of the event that takes them over a period of time. they can have a feeling of security in terms of their money. these are a couple of simple things. i have many things you can find interesting i have one

chapter how to start a business i'm a great believer and entrepreneurship. people if that all should enjoy our free enterprise system and get into business. it is not all that hard by indicated them later -- though the year with a great education could make a great entrepreneur if they can add, subtract, divide that is all they need to know. here's what i get coming here is what i will spend, expenses, and if there is a balance and then i have a profit. that is business. i know we like to make it tougher we have master's and doctorate but that is what it amounts to essentially. i also point* out "right on the money" something about families. more and more women are in the workplace more and more women are getting paid very nice salaries and more and more

women are being paid more than their spouses that sets up a conflict because the spouse wants to tell the wife how to spend the money and the woman does not want to do with that way. it is my money and i will spend it the way i want to. the couple has to make the decision what will they do with the money? it needs to be very dispassionate and yet here is what i recommend. it is all in this book "right on the money". i think the couple should determine what are their expenses? and which expenses will be the obligation of the wife, which expenses are the obligation of the husband? and that means rent or mortgage payment and the

husband says that his mind, i will take that come but the car payment the husband says i will take that then expenses for groceries come a children's clothes and the wife says i will take that. i will run household expenses. then what about insurance? somebody has to play for health insurance and the rest of it. they can work it out very rational but i do think if my wife brings home money she should have her own bank account and her own brokerage account so she can make investment decisions with her money and the same thing with the husband. and hopefully they can get together and agree what to do especially in relation to charitable contributions because i think those should be put down as a fixed expenses the most important

saying. monday is to have got on your side. i recommend to keys to financial prosperity. one is to give. the bible says give it and it will be given 92 and i think every couple should have money set aside for charitable giving. the tide is the amount in the old testament, new testament it should be foundation not accidentally if there is something leftover but one of the fixed expenses somebody has their contributions to charity should come at the top of the list. the second thing that i think is important is to understand the principle of the lot of use. lord rothschild called it the eighth wonder of the world and einstein said it is one of the

laws of physics that is as powerful as any that he knew of and that is money global supply according to the interest-rate being charged. i like the rule of 72. if you take the amount of compound interest your investments will garner and divided into 72 you will learn how many years it take to to have your money doubled. if it doubles four years then goes aides then another 12 ended doubles every period of time that it goes through. when a person gets to a certain age before long they will have much more work many they realize is possible that is the way to become a millionaire not to hit the lottery or a jackpot or to

take radical moves in the stock market. in addition to all of these things their needs to be an investment portfolio and where they put their money or how is it allocated, i go into some detail in this book. what the appropriate balance of somebody's money and the other thing, one to determine, so much goes to bonds, equities, foreign, large cap, a small cap, all of those other things involved in eight investment portfolio, if e class exceeds the other dramatically then the important thing is to sell off a part and reinvest to get back to the balance. that is called balancing the

portfolio. people need to understand how to balance their money. i am talking about fixed income, how it works, how coupons work, the various investment vehicles and what happens in the stock market? where it is and where it is going and that is all here. in addition we need to understand about mutual funds things like insurance policies, what is smart insurance what is not, what is foolish word good insurance broker i think whole life is stupid. but yet there are many people that make a good living selling it. the important thing in my opinion is to get term insurance on the at