T. Boone Pickens is a wealthy oil man from Oklahoma. (I’ve also heard people refer to him as “T. Bone.”)

The man has so much money, he’s been running national TV commercials touting his plan to reduce America’s dependence on foreign oil.

What would a plan like this mean for the future of South Dakota?

Mr. Pickens is the first to admit that his investments would benefit if his plan were to be implemented.

In a nutshell, Pickens’ Plan consists of combining wind power for electricity generation and natural gas to power our vehicles. Implementing the plan would be expensive, but as Pickens points out, so is our dependence on foreign oil.

Oil dependence is a national security issue, especially since the percentage of oil coming from foreign sources keeps rising.

Pickens also believes that the “cheap and easy oil is gone” and that world oil production has peaked. This is probably at least part of the reason he says this is one problem we can’t “drill our way out of.”

This plan could have huge implications for South Dakota because our state lies right in the middle of the wind corridor running from North Dakota to Texas. An extensive wind power plan could very well be a “boone” to rural economies such as ours.

What do you believe? Is this plan enough? Does it make sense?

The Youtube.com video below is a must-see for all investors.

I would call it entertaining, but I’m far too nervous about the financial sector to say that.

There is some debate about whether J.P. Morgan rescued Bear Stearns this last spring, or if J.P. Morgan was “on the prowl for acquisitions.”

However, before all that went down, many people could see that there was very serious trouble in the financial sector and that the Fed wasn’t taking any action.

Jim Cramer was one of those people.

In this video, Jim complains about Bear Stearns not buying back its own stock in order to confound the shorts and support the stock, but Jim’s main impassioned plea was for the Fed to lower the discount window to help keep these firms afloat.

I’m going to make a prediction: We will see another meltdown from Jim Cramer, and I’m afraid it will be related to the sub-prime crisis and/or the financial sector.

Financial shares appear to be on rebound for now, but I suspect we’re far from a bottom here.

My post on peak oil theory is a work in progress. Please stay tuned!

Comments, anyone?

Quote of the day: “If CNBC is like MTV for old people, when did I get old?” Aaron

On Sunday, July 13^th 2008, Treasury Secretary Henry Paulson announced that the US Treasury and Fed will support Fannie Mae and Freddie Mac by backing their debt “as needed.”

This sounds a bit like a blank check to me. Is this a good idea and how capitalism is supposed to work?

According to the New York Times, the Bush administration considered, but hasn’t yet implemented, a different plan that would “offer an explicit government guarantee on the $5 trillion of debt owned or guaranteed by the companies.” This would be a “far less attractive option…because it would effectively double the size of the public debt.”

This “different plan” may never be implemented, but no matter how Fannie and Freddie’s troubles are handled, my feeling is that these stocks could be headed for zero.

That may be the least of our problems.

My fear is that if we continue to see further housing price declines (which is feeding the financial sector decline), increasing foreclosure rates, more bank failures, declining consumer confidence, higher oil prices, higher inflation and a falling dollar (among other issues), the “perfect storm” that so many people are talking about may intensify significantly.

Then, if the storm does get worse, could our government attempt to prevent panic by going ahead with the plan and backing Fannie and Freddie’s entire $5 trillion debt?

What might be the consequences of such a scenario?

Could we be on the cusp of a severe problem that would dwarf anything we’ve seen so far?

To quote Daniel Plainview from the movie, There Will be Blood, I’d like to “speak plainly.” I wonder if our government has stacked on an amount of debt which might prevent us from responding to an emergency like a total Freddie and Fannie bailout, without causing another depression. (Assuming we’re not heading for one already.)

To explore this issue, I did a little digging. I’m not going to quit because we’re experiencing a confluence of events that’s starting to scare me.

First of all, let’s get some perspective on big numbers, because that’s what we’re dealing with when it comes to federal money.

I’ll quote from the following website which asks,

“What’s the difference between a million, a billion, a trillion?

A million seconds is 12 days.
A billion seconds is 31 years.
A trillion seconds is 31,688 years.

A million minutes ago was – 1 year, 329 days, 10 hours and 40 minutes ago.
A billion minutes ago was just after the time of Christ.

A million hours ago was in 1885.
A billion hours ago man had not yet walked on earth.

A million dollars ago was five (5) seconds ago at the U.S. Treasury.
A billion dollars ago was late yesterday afternoon at the U.S. Treasury.

A trillion dollars is so large a number that only politicians
can use the term in conversation… probably because they
seldom think about what they are really saying. I’ve read that
mathematicians do not even use the term trillion!
Here is some perspective on TRILLION:

Trillion = 1,000,000,000,000.
The country has not existed for a trillion seconds.
Western civilization has not been around a trillion seconds.
One trillion seconds ago – 31,688 years – Neanderthals stalked the plains of Europe.”

So one trillion seconds ago, Neanderthals were stalking the plains of Europe. This sounds like a significant number.

According to this Website, our National debt is about $9.5 trillion. The share for each citizen currently comes out to $31,233.96. (It’s updated and increased every few seconds.)

My friend and neighbor Gary Boone lent me a very interesting book called, The Tipping Point: How Little Things Can Make a Big Difference, by Malcolm Gladwell.

The author’s main premise is that small changes can take place in human society over a long period of time without much effect, but often times a critical point is reached where any additional change causes a substantial and dramatic effect on society. The author cited several impressive examples in an attempt to demonstrate this concept.

I believe that US Government debt is already astronomical and that an additional $5 trillion of debt for a possible total bailout of Freddie and Fannie wouldn’t be a “little thing” and could in fact lead to catastrophe.

One possible consequence: Could the US Lose It’s Triple AAA Credit Rating?

Again, this might be the least of our problems.

Fannie and Freddie might be “too big to fail” as we’re constantly hearing politicians say, but what if their debt is too big for a possible total bailout? What if the US government and our economy simply can’t handle another $5 trillion in national debt but the US does it anyway? What if?

Please keep in mind that no one can predict with certainty what will happen with the economy. My position is that action should only be taken with serious consideration of the possible consequences.

See you soon when I’ll be talking about peak oil theory and the very alarming implications for our economy!

Hi! My name is Aaron Grow and I live on a ranch near Hill City, SD.

I’m passionate about stocks and my objective for this blog is to build an interactive forum where you can learn from me and I can learn from you. If you read something you’d like to know more about, or if you have helpful information, please post and I’ll respond to the best of my ability.

I hope to see this grow into an online investment club. (Or support group, depending on how we’re doing!)

The goal of this blog will be to provide the kind of helpful financial information-from a local perspective-that will help us avoid losses and grow our portfolios in this tough market climate.

I have a post-graduate degree in another field, so I’m self-educated in the world of investing.

I watch CNBC (Fast Money and Mad Money are my favorite broadcasts), read the Rapid City Journal, Investor’s Business Daily, Newsweek, Newsmax, BusinessWeek, Forbes, various investment books, and on occasion, USA Today.

I have nothing to sell since I’m not employed by the financial industry in any way.

When I trade, I’ll post a new blog, tell you my reasoning behind the trade and how well the stock or stocks performed. I will provide a complete portfolio update with every blog post.

I have a good chunk of my life savings on the line which I’m actively managing, and I believe that this process is one of the greatest educators around. (For some mysterious reason, losing money or making money helps me pay exquisite attention to what I’m doing!)

My hope is that the Rapid City Journal online community will learn something from my overall success in the market. However, some of the more optimistic readers out there may see my potential little financial train wreck as a great learning experience as well! (Some might even find that entertaining!)

Please join me in navigating this treacherous market, where the Dow just turned in its worst June performance since the Great Depression! Praise the Lord and pass the short ETFs!

Quote of the day: “In the short run, the market is a voting machine, but in the long run it is a weighing machine.” Benjamin Graham, Value Investor

Disclosure: Aaron owns shares of Agnico-Eagle Mines (AEM), American Oriental Bioengineering (AOB), Broadwind Energy (BWEN), IShares Silver Trust (SLV), Market
Vectors Russia ETF Trust (RSX), Merck (MRK), Prudent Global Income Fund (PSAFX) and UltraShort Financials ProShares (SKF)