Today we’re looking at PT Barnum and his book Humbugs of the World. After all, there’s no one who knows a sham better than a professional sham salesman. “Humbug” as you probably know, is an old world for “bullshit” or “flim-flam” but PT Barnum generously defines humbug as mere…. exaggerations of the truth. And as long as people were getting their money’s worth, humbug here and there isn’t a problem. Whatever you say, PT.

Humbugs came out in 1865, following the huge success of Barnum’s autobiography. Humbugs did pretty well too, and you can probably find really beautiful copies of both books in your local used book store – but it’s public domain and free on Kindle. If you want to see a really beautiful copy, CFI Amherst has a lovely leather copy in their library with gold lettering on the cover and gold on the edge of the pages.

At times, Humbugs reads like PT Barnum is simply defending his own humbuggery by pointing at people who are bigger liars than he is. And hey, the guy has a reputation to keep. But that all fades away when he talks about spiritualists and mediums. Barnum never hired a single one and he has nine chapters full of venom and scorn for the lot of them. If you’re into the history of spiritualists, this is worth picking up just for those chapters alone.

Otherwise, the book gives us a nice overview of the scams and psudoscience of the day, like the “Golden Pigeons of California”, the weird and wonderful moon hoax (the one with the demons having a party on the moon), witch hunts, Monsignore Cristoforo Rischio (a “model for our quack doctors”), blood purification pills, and the list goes on and on. The chapters on financial scams are tailor made for Skeptic money readers, with lottery humbugs, Tuipomania, the largely fictional (but very profitable) New-York and Rangoon Petroleum Company , and page after page of money swindles. The book is mostly anecdotes and feels like a friendly conversation with Barnum. It’s also pretty sarcastic and light-hearted, so it’s very readable, despite the 150+ years of language difference.

There is some serious historical culture shock. He has two chapters devoted to avoiding food and alcohol-related scams; for example, watering down alcohol to “homeopathic” doses. Barnums words, not mine. It took me a minute to remember that these were the days before FDA and basic food regulations. I’ve never felt so grateful for modern food regulations in all my life. I’ll let you read them for yourself, but it’s all very scary. It’s for the germaphobe. The chapters on quack medicines are even scarier with magic sand, rampant placebo use at doctor’s offices, and hashish candy. It’s a wonder anyone was able to survive a doctors visit at all.

Other chapters left me really disliking Barnum. The 1800′s were a bit racist. Ok, they were really racist. And boy-howdy is Barnum right in step with his era. The chapter on the Miscegenation pamphlet is flat-out unpleasant. I get that he had to sell copies of the book to all parts of the US (I’m looking at you, post-civil-war-south) but I took very long breaks from that chapter. It ended up being worth reading for the history of the word “Miscegenation”, but I feel like that information could also be learned from Wikipedia without reading about Barnums disgust with racial mixing. His chapters on religious humbug is where he can really loose me. He’ll start waxing on and on about pagan cultures on distant lands or ancient heathens and my eyes glaze over. On the upside, he does move onto “ordeals”; traditional christian “trials” that would determine your innocence if you survived drowning, poisoning, burning, etc. Apparently these were still practiced during his time.

Overall, it’s a fun read and many of the lesser scams in the book aren’t available to research on the internet. If you’re into history in general or if you feel like you’ve simply run out of new ways to be shocked by scam artists, well,  you’re only gunna find this stuff here and Barnum is awesome. Go check it out.

Humbugs of the World is public domain and is available on Project Gutenberg for free, and currently is free in the Kindle bookstore.

The audio recording is free at the Internet Archive, and was recorded by volunteers at Librivox.org

NOTE:  This post is part of an ongoing education series.  This information is for educational purposes only.  This information does not constitute investment advice.  No rational person would make investment decisions based on a blog post.  Please consult with your financial advisor before taking any action.  If you wish to have specific advice for your situation please contact Polaris Financial Planning.

In April I did a post about a new law that was designed to stop insider trading….

While insider trading is already illegal, there’s some question as to whether current laws that focus on Wall Street apply to Capitol Hill, where lawmakers and staff are encouraged to discuss pending legislation with firms that might be impacted.

Of course they apply.  Even if they did not it would be immoral and unethical to use this information for personal prophet.  All elected officials should put their funds in a blind trust or at least index funds.

I was stunned that they even had to vote on a law to make something illegal that is already illegal.  There are strong and well established laws on insider trading.  Some people just thought that they did not apply to lawmakers.  So, they passed a law to take away some special privilege that allowed them to do something that is illegal for everyone else.  Now I see this news…

[a] 14-page memo notifies House members and aides covered by the law that their spouses and children aren’t covered.

Are you f-in kidding me.  So a member of the house can have special knowledge give it to their spouse or kids and they can go make a fortune.  This is why people don’t trust politicians.  If they (or their family, or friends, or anyone they give information to…) use this inside information to make trading decisions – they should go to jail!

Sen. Kirsten Gillibrand, D-New York, also criticized the House decision not to include congressional spouses and children.

“I think it’s wrong, and I think it’s unfortunate because the reality is the whole point of this legislation is we should play by the exact same rules as every other American citizen, and when all of America looks at Washington, they know it’s broken.”

“We’re trying to restore just a small measure of confidence through this kind of transparency and accountability,” Gillibrand said.

Well, you failed.  Now get back in there and fix it.

Post by Phil Ferguson

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NOTE:  This post is part of an ongoing education series.  This information is for educational purposes only.  This information does not constitute investment advice.  No rational person would make investment decisions based on a blog post.  Please consult with your financial advisor before taking any action.  If you wish to have specific advice for your situation please contact Polaris Financial Planning.

via CNN.

Foreclosure filings in April fell for the third straight month to the lowest level since July 2007.

Total foreclosure activity for April, including default notices, scheduled auctions and bank repossessions, was down 5% from March, according to RealtyTrac.

They are still high but the trend is in the right direction.  (Note the numbers in the chart below are units not dollars as marked)

While the total is down, some states are still having serious problems.  The best improvement seem to be in states that were the hardest hit.

In Arizona and Nevada, for example, bank repossessions were down roughly 70%. In California, they were more than 50% lower.

With a little luck this is a sign that home prices will stop falling and provide greater confidence with consumers.  More people are buying houses and fixing them up.

Post by Phil Ferguson

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NOTE:  This post is part of an ongoing education series.  This information is for educational purposes only.  This information does not constitute investment advice.  No rational person would make investment decisions based on a blog post.  Please consult with your financial advisor before taking any action.  If you wish to have specific advice for your situation please contact Polaris Financial Planning.

Via CNN Money.

 NEW YORK (CNNMoney) — President Barack Obama said Monday that a $2 billion trading loss suffered by JPMorgan Chase is “why Wall Street reform is so important.”

It is not just important – it is critical.  You have heard the phrase before..these banks are too big to fail.  Sadly this is true.  However, that phrase is too long.  It should be, “These banks are too big.”  The solution is to break them up.

“…six financial institutions, the largest six, that have assets that are the equivalent of 60 percent of the GDP of the United States of America…” – Bernie Sanders

Here are the top 6….(numbers in BILLIONS)

JPMorgan               $2,265

Bank of America   $2,136

Citigroup                $1,873

Wells Fargo            $1,313

Goldman Sachs        $923

Metlife                         $799

These 6 banks own $9,313 BILLION in assets and US GDP is $15,462 BILLION (that is around 60%) .  JPMorgan alone has 15% of the total and they just lost $2 billion – $2,000,000,000!  This is a huge amount of money and it is from a division of the company that is supposed to hedge against risk.  This is the part of the bank that should balance out anything risky that the bank may do.

Banks need to be safe and stable and they need to loan out money to companies so they can grow.  However, a large part of their business is now gambling on risky activities.  The banks need to be just banks and they need to be smaller.  We as a country have done things like this before.  In the early 80′s AT&T was split into several companies and in 1911 Standard oil was divided.

It is time to do it again.

Here is a clip of Elizabeth Warren and she explains it better than me.  She is the former Special Advisor to the Secretary of the Treasury for the Consumer Financial Protection Bureau.  She is currently a  candidate in the 2012 United States Senate election in Massachusetts and could be one of the most important voices in our government.  She will have my vote if she runs for president in 2016.