What is a pyramid scheme?
Answers: Basically one or a few people selling a scheme to more people & recdruiting them to sell to more people. i.e. one person sells the 'idea' to two people and each of those two people sell to two further people each. The shape of the people involved looks like a pyramid. The people at the top make good money from all the people underneath. Illegal in most countries.
An illegal way to "game" your way into huge profits - Amway is a legal version of a pyramid scheme.
http://en.wikipedia.org/wiki/Pyramid_sch...
Don't forget Stream Energy. i.e. Electric & Gas. But it can definitely pay off for the people who work it. It's not so much a "pyramid scheme" as it is a Direct Marketing Plan.
There were lots of people who made $$$ w/ one of the Telecom companies & turned their profits toward success in the energy field. Which now leads us toward Stream Energy.
A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, usually without any product or service being delivered. It has been known to come under many guises.
Pyramid schemes are illegal in many countries, including the United States,[1] Great Britain, France, Canada, Malaysia, Norway, Australia [2], New Zealand. [3], Nepal[4], Sri Lanka [5] and Iran[6]. These types of schemes have existed for at least a century.
What is the cause of this current recession?
Answers: That's a good question. it can be lots of things. Many things have factored in onc which has to do with Outsourcing,thanks to Bush.
MIchael has a good point
you are going to get 10 different answers from 10 different people.
In general, lack of confidence, devalued dollar due to our fiat money system.
lots of reasons. but consumer confidence is key.
There is no short answer as there are a lot of factors that contributed.
Some of the big ones in my open are...
Over inflated Real estate Markets
Easy lending from the banks
Combined these put people into homes that they really couldn't afford due to interest only and neg-am loans
as those payments began to catch up with them
Mortgage lenders over extended themselves
Lon officer did a poor job explaining just what those balloon could amount to
Tripling of gas prices in the last 7 years haven't helped either
Here's the cycle as I see it:
Person A wants to buy a home
Thanks to interest only loans he can afford (however barely) a new home
Now the bank uses that loan and repayment schedule as collaterial to get more money to lend from the gov't
This happens a few times and now the bank has hundreds of people in these loans
Well, since all these people are buying homes, house prices start escalating
Since Person A's home is now worth so much more, Person A takes out a Home Equity Line of Credit
Person A spends this HELOC on luxury items like cars, big screens etc.
Well then gas starts to go up and filling up his Hummer's tank costs $150 3 times a month
Well his monthly expenses jumped up
And he now carries a second loan
And his interest rate creeps up
Now he's spending 6k a month, but only making 4k
Since he's been paying only the interest and used up his HELOC he has on equity left in his home
Just how long can he keep up a negative 2k month habit?
Well he cuts back on spending
but realize that all of the millions of people that did this started spending less on "extras"
People spend less
Businesses make less
Businesses lay people off
People spend even less
Do you start to get the picture?
Overly simplified, but it should give you an idea of some of the causes
One culprit is the housing crisis. As you know, people spend depending on their level of wealth. In America, there are two main generators of wealth such as real estate and the stock market. Real estate is down significantly due to fraud, speculation, greed, etc. primarily related to the subprime debacle. The equity market is down as much as 20% when measured by the Russell 2000 index versus it's recent high. That means the average wealth in America is down significantly when compared to 6 months or even a year ago, respectively.
When the housing market was increasing its value on an ongoing basis, many home owners took out the equity by refinancing (via low interest rate loans like ARMs with teasers) and spent that equity on new cars, vacations, other high ticket items on the hope that rising housing prices will continue. Instead, the housing market has collapsed, there is no equity in many of these homes, the interest rate that was originally made with teaser ARM are now resetting at much high rates.
If the consumers are not spending money, it will result in a recession.
Simple ! The lack of buying power of people for following reasons
1, In reality inflation is high despite official figures.
Look at the cost of Gas,food items like Milk,butter,vegetables,fruits etc
2,Increasing unemployment especially of low wedge earners
i.e immigrants.(Unemployment official figures do not include ilegal employees for construction and agriculture.)
3,pchycological effect on mind of buyers to keep safe or to consrve due to media and stock markets uproar.
4,increasing Deficit gap due to extravagant spending of Govt on Iraq and Afghanistan battles.
5,Offending our trade parteners by our interferin into politics of other countries.Middle east+Russia,Asia,Cuba,Venenzula,African countries,China etc.They are forming their own groups for trading among themselevs putting aside America or european countries.
6,Globalisation has brought out new talents elsewhere competing with America.
NO IMMEDIATE END OF RECESSION IS LIKELY DESPITE GOVT.SINCERE EFFORTS.
The cause is due to decades of bought-off politicians refusing to protect American economic interests. Only Ron Paul is a true and proven fiscal conservative, plus he has voted against the war from day one.
How will the Fed's rate cut affect gap a Roth IRA?
My husband and I are looking to open Roth IRAs for respectively of us individually for 2007. We are 26&34. Is it better to invest in this since or after a rate cut if we are investing in a mutual fund type Roth IRA? Does it brand a difference? Is it good to do it soon if the open market it down because it will produce better earnings? Or does it own no difference wether you buy it because the market will be going up and down over the long-run. Just wondering if it's better to contribute this week or if we can hold stale until we get our levy return to contribute more. We are new to investing, own low-income but want to get the orb rolling for our future. Thanks.Answers: What happen with rate cuts this week, subsequent month or the next make no difference if you;re investing for the long term. Rates will switch over the years. Design your retirement plan for your needs, so it can withstand the ups and downs of the discount. and change it when your circumstances metamorphosis. Not when the economy change. The sooner you start investing, the more you will have at retirement.
Open one ASAP!!
This is something you should hold done when you two were 23.
The Fed rate change will not really affect a ROTH, however, putting money into an investment during an economic slump will allow for a rgeat traffic of wealth creation as it rebound.