Lohengrin Group

Client Newsletter

Volume 4, Issue 6

Inside This Issue:

Feature Story:
The Keynesian Theory – Formula For Recovery Or Economic Disaster?

Did You Know?

Success Story Of The Month

Financial Tip Of The Month

Health Tip Of The Month

Client News And Tidbits

Client Quiz

For More Information

Summer solstice, June 21 Welcome the longest day and the North's midnight sun

Thanks to Daylight Saving Time, more of your waking hours will be in daylight on Sunday, June 21. The sun shines until about 8:30 p.m. on the longest day of the year. June 21 is the day of the summer solstice, the time of the midnight sun in northern climates. Nome, Alaska celebrates its Midnight Sun Festival on the June 20-21 with 22 hours of sun-filled entertainment. Some visitors find it difficult to sleep in the sunshine. During the building of the 800-mile Alaskan Pipeline, workers had to be told to stop working and get some rest, even though the sun was still shining. In some parts of Norway, there is no sunset at all from about April 19 to August 23. Parts of Canada, Greenland, Sweden, Finland and Russia have a similar experience. The word solstice comes from the Latin for "sun stands still." For several days before and after each solstice, the sun appears to stand still in the sky. Its noontime elevation does not seem to change. At the north and south poles, the sun only rises once and sets once each year. During the six months when the sun is visible, it constantly moves around the horizon and reaches its highest point in the sky at the summer solstice. In the six-month polar night, the sun is never visible.

“My policy is to learn from the past, focus on the present, and dream about the future. I'm a firm believer in learning from adversity. Often the worst of times can turn to your advantage. My life is a study of that.”

~ Donald Trump ~

June

The Keynesian Theory – Formula For Recovery Or Economic Disaster?

June We, as taxpayers and citizens, are definitely worried and more than a little leery about how government money is being pumped into banking, the auto industry, cities and states, and business of many kinds.

But stimulus spending is the famed theory of 20th century British economist John Maynard Keynes (1883-1946). Keynes believed that the state should strongly influence the economy and his ideas have been tested many times, with varying results.

Many Keynesians say President Franklin Roosevelt spent enough money to pull America out of the depression. Critics are not so sure.

They say Roosevelt's predecessor President Herbert Hoover was first to follow the Keynes model by raising taxes and increasing government spending. Hoover left a huge deficit but unemployment went up to 17 percent.

Only World War II ended the depression, critics say, mainly by employing men as soldiers.

But Keynesians say World War II was financed by Keynes' ideas. Between 1939 and 1944, the nation's output almost doubled, and unemployment went from more than 17 percent to

about 1 percent. But these products were mainly war materials, not peacetime productivity.

Keynes believed that if the economy cools off, government should heat it up by cutting interest rates and spending lots of government money on infrastructure, education and public health. That's the idea behind the "Economic Recovery and Reinvestment Act."

But Keynes also advocated the government running budget surpluses in good times, something government never manages to do, critics say.

There was a general consensus that Keynes' theories were correct until the 1970s. At that time, despite big spending, unemployment was high, the economy was stalled and inflation raged. Classic Keynesian economics wasn't working and other ideas came to the forefront.

Some people say Americans need to become consumers again. In the American economy, some 70 percent of activity is derived by consumers. But when consumers hunker down and quit spending, economic activity decreases.

The history of America shows it has always had a tendency for action. It has made this country great. People and companies believed in the possibilities of the future and spent their money accordingly.

Today, the mood is the opposite.

Economists warn that if we don't jolt consumers and the economy back to life, we could fall into what economist John Maynard Keynes called the "paradox of thrift." That is, if everyone saves during a slack period, economic activity will decrease even more, making everyone poorer.

If we don't start spending and investing again, we also run the risk of experiencing what was known as Japan's "lost decade of the 1990s."

June There have been signs that investors are putting money back to work again. Retail sales are slowly rising, and housing starts for February were up more than 22 percent. Sales of existing homes increased by about 5 percent. But we have still a long, long way to go.

The rush to hoard cash and pinch pennies is understandable, given that the net worth of many investments has declined dramatically, say experts writing in Newsweek.

But for our $14 trillion economy to recover and thrive, money hoarders need to open their wallets again and become consumers.

No one is recommending big credit card debt, but worthy and affordable purchases or investments should no longer be put on hold.

So, will any of this stimulus and spending the government is forcing upon us work? Will the economy recover? If so, when?
In spite of the critics of the new Administration saying everything Obama’s doing is a disaster, tea parties, etc...the real truth is not one single human knows what’s going to happen. Not the Republican opposition. Not the Democrats who support Obama. Not Obama or his advisors. No one knows. Any claims to the contrary are simply lies.

Only time will tell, and there has not been anywhere near enough time to tell.

Unlike some of the President’s critics, we don’t hope he fails. That’s insane. It doesn’t matter if you, or we, agree or disagree with President Obama’s actions. All we can do are two things:

Plan our finances carefully and diligently.
Change our plans as the economy changes.

That’s it. Arguing philosophy is a meaningless exercise. They’ve done what they’ve done, and we can only hope it all works as quickly as possible.

You do need to sit down, and do a review of YOUR entire financial picture, especially in light of the new Economic Stimulus Plan!

So please give us a call NOW, before too much of the year passes you by! Let’s get your numbers crunched, and squeeze every dollar we can help you put into your pocket!

Remember, we HATE hearing about what you just did with your money. We want to hear, “Here’s what we’re thinking about doing...”, not that you’ve already done it! We look forward to hearing from you soon!

- REMEMBER -
WE WANT YOU TO CONTACT US WITH YOUR "HERE'S WHAT WE'RE THINKING ABOUT DOING" QUESTIONS, NOT YOUR "GUESS WHAT WE JUST DID!" COMMENTS!

Did You Know?

Our monthly feature of tidbits of news and info to make your life easier and your money work harder, so you're healthy all the time!

1.) Biodiesel could become the diesel fuel of the future -

Biodiesel is a vegetable oil-based fuel that can run the diesel engine of a car, bus, truck or boat. It is typically made from canola or soybean oil, but it can also be made from recycled fryer oil. The substance can be merged with diesel fuel or it can run on its own. It's one of the most thoroughly tested fuels on the market. Developers can show that, although it performs in a similar fashion to petroleum, biodiesel is far better for the environment.

Biodiesel is the buzz of college campuses and municipalities. Individual drivers are even purchasing simple equipment that turns waste cooking oil from restaurants into automotive fuel. And you don't have to be a rocket scientist to make the top-quality fuel for 68 to 74 cents per gallon. In the process, used cooking oil is heated to about 135 degrees. Lye and methanol are added. A period of time is allowed for the mixture to settle with a layer of glycerin forming at the bottom. The glycerin layer is then removed, and the fuel is washed with water a few times. After simple tests are used to check purity, it is placed in a storage tank, ready for use in vehicles and other diesel-burning equipment. In just two weeks, one Midwestern city (Kokomo, Indiana) produced enough of the fuel to start using it in its municipal fleet of diesel trucks. A small area for processing the fuel was found in a corner of its sanitation plant. Sanitation technicians used a block of their time for its production. Equipment for making biodiesel fuels from used cooking oil can be found at http://www.biodiesel-kits-online.com and other on-line resource sites.

2.) Baby boomlet predicted to last through 2008 -
The number of American babies born in 2008 has not been compiled, but more babies were born in 2007 than in the baby boom 50 years earlier. Experts predict that when figures for 2008 are complete, they will show that the baby boomlet continued. In 2007, U.S. fertility rates were higher in every racial group and highest among Hispanic women. On average, a U.S. woman has 2.1 babies in her lifetime. That's the magic number needed for a population to replace itself.

3.) 3-D movies proliferate, will come to your TV ... but not for a while -
The 3-D release of Dream Works' Monsters and Aliens in theaters has set off a wave of big-budget 3-D films. DreamWorks' executive, Jeffrey Katzenberg, says it will release every new movie it makes in 3-D. Walt Disney's Pixar feature, UP, was selected as the first such film to open the Cannes Film Festival. And James Cameron, Robert Zemeckis and Steven Spielberg are all working on 3-D movies. The technology today is much better than it was in the 1950s and 1970s when movie-goers were less than enthusiastic about 3-Ds. The studios are longing for a way to present these films to home audiences. Home video sales and rentals accounted for about 68 percent of the worldwide movie market in 2008, according to PricewaterhouseCoopers. The editors of Fortune say the studios have another motive for pushing 3-D movies; they are harder to pirate. In the meantime, TV makers love the idea that they will be able to sell 3-D- ready televisions, according to Fortune, though they haven't yet figured out a way to eliminate the use of those odd-looking LCD glasses.

Katzenberg says theaters haven't done anything new in many years. He likens the 3-D technology to leaps in the industry such as talkies and the introduction of Technicolor. Movie ticket prices for the new films will increase by $2 to $5, but running a theater could become a growth business for the first time in many years. Some theater owners will be hesitant to pay the $75,000 for the digital projectors needed for 3-D films, but Hollywood studios are offering them a financing package.

Success Story Of The Month

A Very Ugly Situation...

(Note: The details of these stories have been changed to maintain confidentiality, and some compilations are used to accomplish anonymity.)

Star Dave was the executor of his parents’ wills, and estate. His brother Charlie was never on the greatest terms with his folks, having married a Catholic girl back in the 60’s when “mixed marriages” were still considered a problem for many families.

Dave played on his folks’ disgust with Charlie’s choice of a wife all these years, reinforcing their anger by agreeing with them whenever they complained about Charlie.

And there were lots of complaints. See, their parents were both born in Poland in the late 1930’s. Their mom, Edith, moved with her parents to England just before Hitler invaded Poland in 1939. Their dad, Ed, somehow survived confinement in Sobibor, a truly ghoulish and evil camp, although the rest of his family was killed. After the war, Ed was able to move to the US and live with his cousins who had moved here long before WWII started.

Ed and Edith married in 1954, and had the two boys, Dave first, the Charlie.

The folks worked hard, saved money and were very conservative. They put all their money into savings accounts and CD’s in the bank, and bought a couple rental properties besides their modest home, which was paid off back in 1990.

Ed and Edith were Orthodox Jews, and were very unhappy when Charlie started dating non-Jewish girls, and beside themselves when Charlie announced he was marrying Margaret, the youngest girl from a large Irish Catholic family of nine children.

They couldn’t understand how he could have fallen in love with a non-Jewish girl when their history of almost being wiped off the face of the Earth was still so real and burned into the collective consciousness of their family.

But...love seems to trump many other factors, and Charlie ignored his parents’ protests, marrying Margaret...and then having 4 children with her.

Dave, married a Jewish girl from the old neighborhood, and seemed to relish in confirming Ed and Edith’s ongoing shame with Charlie’s choice of his life. Dave told them they were right, Charlie was thoughtless, selfish and had turned his back on his family, religion and people.

As everyone got older, and the parents became somewhat elderly, they easily decided that Dave was to be their executor and trustee of their living wills and health care directives. Charlie didn’t argue, as he was told by Ed that he would not be the executor or trustee, but that Dave would split their assets equally upon their demise. (Dave protested their wishes of an even split, but Ed and Edith said although Charlie had broken their heart, he was their son, and they had 4 grandchildren to think about.)

Charlie and Margaret raised the four kids, put three of them through college, saved what they could, but neither of them made very much money, both being public employees. In the back of their minds, both of them felt their half of the eventual estate from Charlie’s parents would make up the slack so they could have a decent retirement.

Edith passed away in 1996, but Ed hung on until last year. When Ed died, Charlie and Margaret came in to see us, so we could review their entire financial picture. Charlie estimated what his half of his parent’s estate was worth. We had to make some post bailout, 2009 reductions in the value of the real estate, but his folks had nothing in the stock or bond markets, so that money required no estimated reduction.

We put a plan together for the couple, showing them they could retire comfortably, but since they hadn’t saved much, they certainly wouldn’t be living “high off the hog”.

A couple months later, Charlie and Margaret came in for a follow up appointment, with us expecting to see copies of documents such as bank statements, appraisals of the homes, etc. Margaret’s eyes were very red when they come into our office, and we could tell she’d been crying.

Charlie explained that over the last few weeks, some serious developments had occurred. First off, Dave had disappeared several weeks before, along with his 25 year younger personal assistant. Dave’s wife and kids had no idea where he was. Dave’s assistant’s husband also knew nothing about his wife’s whereabouts.

Charlie talked to a real estate agent he knew, who confirmed that all 3 of the homes were free and clear, but had all been sold recently at firesale prices to one real estate investor. Charlie went to the three banks his parents had their money in, and discovered all the accounts had been closed and cleaned out.

Charlie and Margaret hired a private investigator, and also contacted the police, who said there was no trace of Dave or his girlfriend. No credit card purchases, no airplane tickets, no cell phone calls or texts, no emails, no bank accounts, nothing. The investigator told Charlie his best guess is that Dave and his companion had arranged to change their identity somehow, were traveling outside the US under the aliases, and would be very hard to ever locate.

Wow. When we heard this story, we were obviously so sad and upset. But, as pros, it is our job to help our clients. We had to re-do their plan, showing them what amounts they needed to save and how long they might have to work, even though this would be much longer than either of them thought before Dave’s awful betrayal.

Charlie and Margaret eventually resigned themselves to this different plan for their retirement years, and have done very well in not being bitter about what Dave did to them. We will keep working with them, updating and monitoring their plan as time passes.

We wish this story had a happy ending, but we just talked to Charlie the other day, and he told us that Dave’s girlfriend finally surfaced, returning home to beg her husband’s forgiveness. She told everyone that one morning she woke up in the hotel room, and Dave, their car, and money were gone. She came back home, just showed up at the house one day, hoping to reconcile her marriage.

Wow, what a mess. We hope everyone can get past all this.

While your situation might not be the same as Charlie’s and Margaret’s, you shouldn't take that to mean your planning needs aren't just as critical! PLANNING BEFORE TAKING ACTIONS IS THE MOST FUNDAMENTAL, AND IMPORTANT ELEMENT OF FINANCIAL SUCCESS!! So make sure you take heed, and call us BEFORE making any moves! We're here to help you plan, and make sure you have the best shot at financial security! Especially during these tough economic times!

Financial Tip Of The Month

The New Gold Rush...

June Americans are buying so many gold coins the U.S. Mint can hardly keep up with the orders. From September 2008 through January 2009, the mint sold three times as many American Gold Eagle coins as it did last year in the same months.

Gold has tripled in value since 1999, but its long-term track record as an investment has been inconsistent and at times a money loser, say the editors of Smart Money magazine.

America's gold dealers report that there was a similar upswing in buying when investors were worried about the effect of the turn of the century, the Y2K scare. The demand and prices soon fell for a time when the world didn't plunge into chaos.

Some dips in gold prices are difficult to explain, such as the day in October 2008 when the price fell to $682 an ounce. It was $1,003 in March 2008.

Professional money managers are partly responsible for the present gold rush, but individuals buying more coins are causing more of a backlog. The U.S. Mint has sold so many gold coins that it keeps running out of gold blanks, which is the material for striking an eagle, buffalo or other image on the blank to turn it into a coin. For the first time since the Y2K buying binge, the mint has been forced to ration the sales of certain types of gold coins, including the American Eagle.

Traditionally, gold has been an investment that may hold value, especially during a period of inflation. But, with times as crazy as they are now, gold may be a very risky bet to take.

The BEST answer is to sit down with us, review your ENTIRE financial situation and together, we can decide what the wisest path for your savings should be.

Please keep in mind that this tip is designed to be of help for you, but is not to be relied upon as advice. It is merely a reminder that there are many choices you have available to you, and that planning is the only way to find the right answers for your situation! As with any financial issues, make sure you get the right information before making a decision! If you have any questions, we'll be glad to help you!

Health Tip Of The Month...

As Deadly As A Tornado - Lightning Can Do Shocking Things!

These tips are not for everybody and should not be taken as specific recommendations. Before you take any action regarding yours or anyone's health, we strongly suggest you consult a qualified physician!

June An additional 300 people report being injured seriously by lightning, but many more injuries are undocumented and could involve many more. Lightning can injure people even when they are not directly struck, such as when it strikes a tree and creates a sideflash injuring those who are standing nearby.
According to the National Weather Service, being struck directly or indirectly causes injuries to the nervous system and the brain. Some of the results:

* Memory loss, personality shifts or depression.
* Fatigue and sleep disorders.
* Burns, hearing problems, light sensitivity, dizziness and headache.
Protect yourself by staying out of its path. Lightning can strike as far as 10 miles away from the area where it is raining. When you hear thunder, you are within striking distance for lightning. Seek safe shelter immediately. Get to a sturdy building or an enclosed car. Inside a home or building, stay off corded phones, computers and any equipment that puts you in direct contact with electricity. Stay away from indoor and outdoor pools, tubs, showers and other plumbing that could conduct electricity. The effect of conducted current from a lightning flash may range from tingling shock to a massive current diverted from a poorly grounded electric power pole through the wiring system. When you are inside, wait 30 minutes after the last clap of thunder before going outdoors. This could seem like a long time, but lightning can strike even after the rain turns to a drizzle.













Client Quiz!
This Month's Quiz	Answers To Last Month's Quiz
Q. If you’re in the process of getting a divorce as of 12/31, you can file your taxes as “single” if you no longer live together and divorce papers have been filed with the court. True False	Q. Which First Lady gave a tour of the White House for a TV program, earning an Emmy Award? Nancy Reagan Laura Bush Jackie Kennedy Bess Truman A. Jackie Kennedy


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