Financial History Tells a Tale

There's been quite a bit of talk lately at my office, and probably at every cubicle in the nation, about what is to come in the financial realm. Lot's of comparisons to the past, Great Depression of 1929, Panic of 1873 and the like. I'm all for studying the past so as not to suffer past fates in the future, but the key is to actually study all factors in these events and compare them to all factors of the present.

As I mentioned in a previous posting, economics is a bit of an art. It does not work precisely, like mathematics, because economics involves a myriad of factors. In comparing the past to the present, you must consider a myriad of factors in order to come any where close to a good guess at the future.

The Wall Street Journal offered an excellent little piece today by Jason Zweig, which comments on just this subject. Zweig points to that where do you go with your money mindset of todays investor, hurt by most all investments, cautious of most all possibilities. The thought of pulling out your IRA and hiding in your mattress, a real possibility 80 years ago, is not even in the mindset of most investors today. Considering this, how does a run on the banks begin?

Friend and fellow blogger, Dave Harper, puts forth that if it starts somewhere in the world, mass media will have it in everyones face before the day grows long. He has a point, but in this instant of time, there is money waiting from may sectors, both government and private.

Our government has already spent near the proposed bailout amount on wars in Afghanistan and Iraq. What would doubling down on a financial bailout really do to the economy? How much non-existant money can a government spend before their currency becomes nothing more than fancy paper?

All good questions and thoughts, many, many factors to consider, no crystal ball into the future of our economic status as a nation and world.

My suggestion, as an individual investor and citizen, you should keeping reading and studying everything you can. Take it all in, weigh it by validity and don't act on impulses.

What Needs to Be Bailed Out and Why?

Have you ever tried a home remedy? Most of us have from one time to another. We probably figure, what the heck, it's worth a try! Sometimes a home remedy works really well and sometimes you end up going to the doctor and getting a prescription because the home remedy didn't do the trick.

Economics, on the large scale with which we are currently dealing, is much the same as home remedies. There are no set, tried and true, prescriptions to turn around a credit crisis, eliminate mortgage defaults, fend off inflation - recession - defaltion - or stagflation, or kill the cancerously bad practices of paper floaters and major financial concerns. Theory can be applied, but any solution will offer debatable impact until put into practice.

You never really know how the home remedy will work until you try it and find out. But unlike a home remedy, which is usually cheap, a bailout of $700,000,000,000 is more like buying a hospital, or two. Almost seems like we just skipped the visit to the doctor, or maybe that opportunity sailed on by about 5 or 6 years ago and now we are on to the experimental Chemo treatment?

Yesterday I received an circular email, originated from a guy going by the name of T.J. Birkenmeier, offering an elaborate joke concept as an alternative to the Big Bailout. This email suggested that, if the main goal of the Big Bailout was to avoid mortgage defaults and keep the economiy moving, perhaps we would be better served to divide the $700,000,000,000 equally among each and every U.S. Federal tax paying citizen. Most would immediately pay down their mortgage, buy some high ticket manufactured goods, pay down credit cards and other debt, set up college or retirement funds or save some liquid cash for emergencies. Mortgage defaults - fended off a bit, Credit Crisis - oiled up and ready to move again, bad lending practices within the financial community - well, no home remedy cures it all.

One friend said this was an impractical idea. I asked "why?" He said because the government would never do it, agreed, but why does that make it impractical? In the past we have received tax rebates of flat amounts for each tax payer. These were a bit smaller, but in composite were meant to spur economic growth through retail purchases. Did it work? In a small way it had an effect. With $700,000,000,000, it could have a much larger effect. Would financial institutions fail? Perhaps, but they would have a healthy influx of cash if people paid off their debt.

Anyway, it's a thought and a legitimate one at that.

And it's time for everyone to listen to thoughts and maybe get going on some thoughts of their own, because economies are flowing things and this will not be over abruptly. Chris Isidore, a senior writer for CNNMoney.com wrote a great article about the credit crisis and bailout plan this morning which is well worth the time for you to read. One major point he makes, no matter what our lawmakers decide to do, the economy will likely get worse before it improves.

Some probelms cannot be avoided, they are coming and all we can hope for is a lessening of the ripple or gorge they will create. Just like home remedies, the bailout plan might do some good for some people and some factors, but their chance of curing your illness is limited.

Irish Coins of Hillel Kaslove

Hillel Kaslove is a very knowledgeable numismatist in the realm of modern world coinage. He was curator of Modern World Coins at the American Numismatic Society from the late 1960's to the early 1970's. After leaving the ANS, Kaslove moved up to Canada and became curator of the Currency Museum at the Bank of Canada in Ottawa.

In the late 1980's when I began my tenure with Krause Publications, I was blessed in developing a good friendship with Bob Archer, who then worked at Stack's in New York. Bob had a wonderful knowledge of Heaton Mint coins and other British Colonial issues. Whenever I had a question, Bob always made time to help me. He answered my questions and gave me an exceptional education on Heaton Mint proofs over the years.

I remember one time I came to Bob with a question and he recommended that I talk to Hillel Kaslove. It was something about a specific area of British Colonial coinage and Bob said that Hillel would have the answer and sure enough he did. That was the only time I spoke with Kaslove and though I would have liked to expand the working relationship, time never allowed this to happen.

Yesterday, I was looking over the Dix Noonan Webb 2008 Coinex Auction set to cross the block this week and trying to organize my thoughts about the sale in order to bring them to you in some blog postings, when friend and fellow blogger, George Cuhaj pointed out that some of Kaslove's Irish collection was presented in the sale.

What a treat! There are 36 lots of Irish coins from Kaslove including a great run of Gunmoney, some very beautiful high grade pieces from George II and George IV, plus a very rare 1681 small letter Halfpenny of Charles II. Though rather smooth and graded about fine, the small letter 1681 Halfpenny is quite rare, possibly unique and the low estimate on this lot presents a prime opportunity for some lucky collector of Irish copper to snag this coin at a bargain price.

Though the 2003 Spink catalog of Coins of Scotland, Ireland and the Islands offers prices in three grades for the 1681 small letter Halfpenny, I am not aware that any examples exist above the grade of fine. In fact, Coincraft's 1999 edition of the Standard Catalogue of the Coins of Scotland, Ireland, Channel Islands & Isle of Man only values the 1681 small letter in fine at 150 pounds. In our Krause Publications Standard Catalog of World Coins 1601-1700 edition, we have listed the 1681 small letter Halfpenny as unique for several years, with no objection from numismatic quarters. Perhaps this is the only known example? Perhaps collectors have been too isolated to report additional examples?

This auction will provide me a value record to add to the SCWC and NumisMaster and I would hope that the coins surfacing at public auction might drive some meticulous numismatist to offer the SCWC further data on this ellusive date.