Let’s just do a write-down!

Write-Down definition: “reduction of the entered
value of an asset”. Then how about a Write-Off
“To charge an asset amount to expense or loss, in order to reduce
the value of that asset and one’s earnings”. Or how about:
Accelerate Depreciation:A depreciation method
which allows faster write-offs than the straight line method.
These methods provide a greater tax shield effect than straight
line depreciation, and so companies with large tax burdens might
like to use accelerated depreciation methods, even if it reduces
the income shown on financial statement. Accelerated depreciation
methods are popular for writing-off equipment that might be
replaced before the end of its useful life since the equipment
might be obsolete (e.g. computers). One example of an accelerated
depreciation method is the Modified Accelerated Cost Recovery
System (MACRS). As you can see, these terms start to get more
complicated when you are talking about Accounting Principles
rather that just the value of the Family Home!

Finally, one more term: double-declining balance depreciation
method :Method of accelerated depreciation, in which
double the straight-line depreciation amount is taken the first
year, and then that same percentage is applied to the
undepreciated amount in subsequent years.

OK…now your eyes are totally glazed over….and you are
wondering why in the heck anyone with half a mug of egg-nog
would want to think about these semi-nautical expressions of
clarity! The reason is simple…we will be hearing a whole
bunch more about these terms in the future. They are part
and parcel of what the world economy is looking at. So
how in the world did all this happen? Was it simply a
world conspiracy? Hey, people don’t even believe in small
conspiracies like alien life or the Kennedy Assassination…
so how are they going to believe in a world Economic, Hedge
Fund, Derivative Conspiracy? Well, it’s all pretty easy..
people are lazy and they don’t pay much attention to many
important things. They would prefer to watch Britany’s 16
year old sister get pregnant…or turn on Jerry Springer…
yes there are far more entertaining things to consider, until
the price of your house falls by 80 percent and you can’t
borrow money to send your kids to college. Until, your
pension becomes worthless and Governments can’t afford to
pay for Public Services. Eventually, that will get your
attention.

OK, before we completely lose our readers…here are just
a few more major issues that you will be hearing about in
some detail in 2008: declining balance method,
Accelerated Cost Recovery System, Modified ACRS, straight
line depreciation, Sum-of-the-Years’-Digits Method
We won’t bother to define any of these terms…if you are
really motivated you can Google them at will. Just make
sure you use “Definition” in your search. Today, Bear-
Stearns the Investment people did a $1.9 Billion dollar
Write-Down for the last Quarter. How much the Write-Down
was for the whole year…you can probably see someplace.
To refresh you memories: Last month Merrill-Lynch Wrote
Down $8.9 Billion dollars..essentially..reducing the value
of all their assets by 25%. They have lots more to go..
so don’t be surprised when they Write-Down a whole bunch
more. President Bush is encouraging these Mega-Investment
World Vehicles….to take the Write-Downs now! Avoiding
the rush later – should be encouraged. For those with homes
in Orange County…we encourage them to follow suit and
call Tax Assessor Webster Guillory and get your re-evaluation
going right away. Why pay taxes that you don’t have to?

But lets get to the essential question: Why is everything
worth 30% of what it was last year? Start with this: “the
artificial rise in Property Values” say by 100% or more.
Try, pandering to Developers and Contractors to keep the
economy going with building, repairs, upgrades and keeping
our illegal immigrants employed. “Build it – and they will
come!” seemed to be the call of the day. Without any
restrictions, without any concern for lack of infrastructure,
without any concern for our lack of water or common sense!
Build high-rise condo’s to the sky! Charge an arm and leg
and make people go begging with auctions and high paced, high
ticket marketing techniques! Hey, who could be against the
“Great Capitalistic Machine”? What, are we against “Progess!”
or what? No, we are against stupidity!

So, how bad is it going to get? “Pretty god-dammed bad!” in
the words of Sonny Corelone…in the original Godfather. Yes
folks….we are soon going to the mattresses here! It isn’t
just happening here in our town….remember how they always
said: “We live in a Global Economy!”….true, so true. Japan,
Europe and even side countries like Venezuela are going to be
affected big time! Remember, as long as its just a so-called
“Paper Loss”…it really doesn’t matter. What matters is when
dividends, interests, sale of property, pension returns, asset
evaluation that affects borrowing, building or selling and
other things like that……need to happen. Yep, that’s when
things get tough! Want to sell your car….good luck! Want
to sell your house or your baseball cards? Not right now!

OK, so what is the corrective behavior folks? Well, its time
to sit this game out…it so reminds us so much of the fall of
the Gold market in 1980! From $848 bucks a ounce to $245…..
in about a year. Our evaluation is – that’s how much our
markets presently have been over valued. The real values of
your property and things? About 30% of “what you think they
are worth!” The good news is: If you can afford to stay in
your present location, with your present transportation and
have enough cash flow to make it every month – You are blessed!
There is no lump of coal in your Christmas Stocking! If things
however don’t quite add up…that way…..we can all pray a
bunch together and hope to make it through; healthy and still
loved by all our families and friends! In fact, Pray for all
the people’s of the world..we are in a Global Economy you see!