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Chapter Three November 15, 2005: “With respect to their safety, derivatives, for the most part, are traded among very sophisticated institutions and individuals who have considerable incentive to understand them and to use them properly. The Federal Reserve’s responsibility is to make sure that the institutions it regulates have good systems and good procedures for ensuring that their derivative portfolios are well-managed and do not create risk in their institutions.” March 28, 2007: “At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.” January 10, 2008: “The Federal Reserve is not currently forecasting a recession.” March 16, 2009: “We’ll see the recession coming to an end probably this year.” Mr. Bernanke is a graduate of MIT, a professor at Stanford and Princeton, and may be a brilliant economist. Yet it seems he does not live in the same world as you and I live in. In 2002, Rich Dad’s Prophecy was published, predicting that the biggest stock-market crash in history was coming. You do not have to go to MIT, Stanford, or Princeton to see the future. I wrote in the introduction of Prophecy: “[Y]ou may have up to the year 2010 to become prepared.” As expected, Rich Dad’s Prophecy was trashed by leading financial publications such as the Wall Street Journal and Smart Money magazine. In 2007, the real estate market began to wobble as subprime borrowers could not make their mortgage payments. A global banking crisis followed, eventually bringing down the United States and Europe with it. After the United States crashed, the European PIIGS—Portugal, Ireland, Italy, Greece, and Spain—collapsed under mountains of debt. If not for Germany, Europe and the euro might have gone down. The debt crisis was solved by creating more debt. The 94

Profile for Jamiel Cotman

Unfair advantage ebook  

by Rich Dad, Robert Kiyosaki

Unfair advantage ebook  

by Rich Dad, Robert Kiyosaki

Profile for jfcotman
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