Showing posts with label banks. Show all posts
Showing posts with label banks. Show all posts

Tuesday, December 10, 2013

Bank Depositors Please Read This

If you do not wish to read the entire article .. just read the info directly below... and you will understand that the US is way past bankrupt... there were more banks during the 30's depression than there are now.....
JPMorgan Chase - zombie bank
Total Assets: $1,947,794,000,000 (nearly 1.95 trillion dollars)
Total Exposure To Derivatives: $71,289,673,000,000 (more than 71 trillion dollars)
Citibank - zombie bank
Total Assets: $1,319,359,000,000 (a bit more than 1.3 trillion dollars)
Total Exposure To Derivatives: $60,398,289,000,000 (more than 60 trillion dollars)
Bank Of America - zombie bank
Total Assets: $1,429,737,000,000 (a bit more than 1.4 trillion dollars)
Total Exposure To Derivatives: $42,670,269,000,000 (more than 42 trillion dollars)
Goldman Sachs - zombie bank
Total Assets: $113,064,000,000 (just a shade over 113 billion dollars – yes, you read that correctly)
Total Exposure To Derivatives: $43,135,021,000,000 (more than 43 trillion dollars)

Too Big To Fail Banks Are Taking Over As Number Of U.S. Banks Falls To All-Time Record Low

By Michael Snyder, on December 3rd, 2013
 
     
Lower East Manhattan - Photo by Eric KilbyThe too big to fail banks have a larger share of the U.S. banking industry than they have ever had before.  So if having banks that were too big to fail was a "problem" back in 2008, what is it today?  As you will read about below, the total number of banks in the United States has fallen to a brand new all-time record low and that means that the health of the too big to fail banks is now more critical to our economy than ever.  In 1985, there were more than 18,000 banks in the United States.  Today, there are only 6,891 left, and that number continues to drop every single year.  That means that more than 10,000 U.S. banks have gone out of existence since 1985.  Meanwhile, the too big to fail banks just keep on getting even bigger.  In fact, the six largest banks in the United States (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley) have collectively gotten 37 percent larger over the past five years.  If even one of those banks collapses, it would be absolutely crippling to the U.S. economy.  If several of them were to collapse at the same time, it could potentially plunge us into an economic depression unlike anything that this nation has ever seen before.
Incredibly, there were actually more banks in existence back during the days of the Great Depression than there is today.  According to the Wall Street Journal, the federal government has been keeping track of the number of banks since 1934 and this year is the very first time that the number has fallen below 7,000...
The number of federally insured institutions nationwide shrank to 6,891 in the third quarter after this summer falling below 7,000 for the first time since federal regulators began keeping track in 1934, according to the Federal Deposit Insurance Corp.
And the number of active bank branches all across America is falling too.  In fact, according to the FDIC the total number of bank branches in the United States fell by 3.2 percent between the end of 2009 and June 30th of this year.
Unfortunately, the closing of bank branches appears to be accelerating.  The number of bank branches in the U.S. declined by 390 during the third quarter of 2013 alone, and it is being projected that the number of bank branches in the U.S. could fall by as much as 40 percent over the next decade.
Can you guess where most of the bank branches are being closed?
If you guessed "poor neighborhoods" you would be correct.
According to Bloomberg, an astounding 93 percent of all bank branch closings since late 2008 have been in neighborhoods where incomes are below the national median household income...
Banks have shut 1,826 branches since late 2008, and 93 percent of closings were in postal codes where the household income is below the national median, according to census and federal banking data compiled by Bloomberg.
It turns out that opening up checking accounts and running ATM machines for poor people just isn't that profitable.  The executives at these big banks are very open about the fact that they "love affluent customers", and there is never a shortage of bank branches in wealthy neighborhoods.  But in many poor neighborhoods it is a very different story...
About 10 million U.S. households lack bank accounts, according to a study released in September by the Federal Deposit Insurance Corp. An additional 24 million are “underbanked,” using check-cashing services and other storefront businesses for financial transactions. The Bronx in New York City is the nation’s second most underbanked large county—behind Hidalgo County in Texas—with 48 percent of households either not having an account or relying on alternative financial providers, according to a report by the Corporation for Enterprise Development, an advocacy organization for lower-​income Americans.
And if you are waiting for a whole bunch of new banks to start up to serve these poor neighborhoods, you can just forget about it.  Because of a whole host of new rules and regulations that have been put on the backs of small banks over the past several years, it has become nearly impossible to start up a new bank in the United States.  In fact, only one new bank has been started in the United States in the last three years.
So the number of banks is going to continue to decline.  1,400 smaller banks have quietly disappeared from the U.S. banking industry over the past five years alone.  We are witnessing a consolidation of the banking industry in America that is absolutely unprecedented.
Just consider the following statistics.  These numbers come from a recent CNN article...
-The assets of the six largest banks in the United States have grown by 37 percent over the past five years.
-The U.S. banking system has 14.4 trillion dollars in total assets.  The six largest banks now account for 67 percent of those assets and all of the other banks account for only 33 percent of those assets.
-Approximately 1,400 smaller banks have disappeared over the past five years.
-JPMorgan Chase is roughly the size of the entire British economy.
-The four largest banks have more than a million employees combined.
-The five largest banks account for 42 percent of all loans in the United States.
-Bank of America accounts for about a third of all business loans all by itself.
-Wells Fargo accounts for about one quarter of all mortgage loans all by itself.
-About 12 percent of all cash in the United States is held in the vaults of JPMorgan Chase.
As you can see, without those banks we do not have a financial system.
Our entire economy is based on debt, and if those banks were to disappear the flow of credit would dry up almost completely.  Without those banks, we would rapidly enter an economic depression unlike anything that the United States has seen before.
It is kind of like a patient that has such an advanced case of cancer that if you try to kill the cancer you will inevitably also kill the patient.  That is essentially what our relationship with these big banks is like at this point.
Unfortunately, since the last financial crisis the too big to fail banks have become even more reckless.  Right now, four of the too big to fail banks each have total exposure to derivatives that is well in excess of 40 TRILLION dollars.
Keep in mind that U.S. GDP for the entire year of 2012 was just 15.7 trillion dollars and the U.S. national debt is just 17 trillion dollars.
So when you are talking about four banks that each have more than 40 trillion dollars of exposure to derivatives you are talking about an amount of money that is almost incomprehensible.
Posted below are the figures for the four banks that I am talking about.  I have written about this in the past, but in this article I have included the very latest updated numbers from the U.S. government.  I think that you will agree that these numbers are absolutely staggering…
JPMorgan Chase
Total Assets: $1,947,794,000,000 (nearly 1.95 trillion dollars)
Total Exposure To Derivatives: $71,289,673,000,000 (more than 71 trillion dollars)
Citibank
Total Assets: $1,319,359,000,000 (a bit more than 1.3 trillion dollars)
Total Exposure To Derivatives: $60,398,289,000,000 (more than 60 trillion dollars)
Bank Of America
Total Assets: $1,429,737,000,000 (a bit more than 1.4 trillion dollars)
Total Exposure To Derivatives: $42,670,269,000,000 (more than 42 trillion dollars)
Goldman Sachs
Total Assets: $113,064,000,000 (just a shade over 113 billion dollars – yes, you read that correctly)
Total Exposure To Derivatives: $43,135,021,000,000 (more than 43 trillion dollars)
Please don't just gloss over those huge numbers.
Let them sink in for a moment.
Goldman Sachs has total assets worth approximately 113 billion dollars (billion with a little "b"), but they have more than 43 TRILLON dollars of total exposure to derivatives.
That means that the total exposure that Goldman Sachs has to derivatives contracts is more than 381 times greater than their total assets.
Most Americans do not understand that Wall Street has been transformed into the largest casino in the history of the world.  The big banks are being incredibly reckless with our money, and if they fail it will bring down the entire economy.
The biggest chunk of these derivatives contracts that Wall Street banks are gambling on is made up of interest rate derivatives.  According to the Bank for International Settlements, the global financial system has a total of 441 TRILLION dollars worth of exposure to interest rate derivatives.
When that Ponzi scheme finally comes crumbling down, there won't be enough money on the entire planet to fix it.
We had our warning back in 2008.
The too big to fail banks were in the headlines every single day and our politicians promised to fix the problem.
But instead of fixing it, the too big to fail banks are now 37 percent larger and our economy is more dependent on them than ever before.
And in their endless greed for even larger paychecks, they have become insanely reckless with all of our money.
Mark my words - there is going to be a derivatives crisis.
When it happens, we are going to see some of these too big to fail banks actually fail.
At that point, there will be absolutely no hope for the U.S. economy.
We willingly allowed the too big to fail banks to become the core of our economic system, and now we are all going to pay the price.

Friday, October 12, 2012

Ethics in Everything and Target Selection in Fighting and War

This one has been brewing in my head for awhile ever since Mountain Guerrilla and then American Mercenary wrote about the topic. (Since they wrote so long ago I couldn't find their specific posts within the amount of time I was willing to put into the matter.) In any case the topic has sat sufficiently and either turned into fine wine or some rotten cabbage dish. Anyway here we go.

A few overarching principles:

1) We have free choice.

2) Actions have consequences.

As Kurt Sutter (the guy behind Sons of Anarchy) said about killing off Opie "Bad thing's don't happen in a vacuum." Sooner or later somehow bad things usually happen to people who do bad things.  Maybe it is about life choices or personality sets or social circles, call it what you want. It isn't always 1 to 1 or right away but things have a way of coming around. 

3) As momma said other peoples bad behavior does not excuse ours.

4) There are clear lines of right and wrong. Between the clear lines of right and wrong are varying degrees of both.

5) While it is not a get out of everything worthy excuse the circumstances surrounding an event matter.

6) If in doubt, do onto others as you would want them to do to you.

So here we go. I am responsible for myself and the minor children in my care. I cannot control if Bank of America and the global banking oligarchy are destroying our economy or whatever. I have read about folks who think that B of A and the global banking oligarchy destroying our economy justify all manner of financial shenanigans on their part. I personally do not feel this way. If I swipe my credit card for a tank of gas or to buy some cool kit online I am promising to pay them back within the 42 page customer agreement I didn't read. If in a year or two I buy some land or a home I am promising to pay them back.

Things happen in life that can affect our finances. If people have a life changing event like being seriously injured or disabled or a sudden unplanned job change and a hard time replacing the income they can fail on some things. This is sad but happens in life. Bankruptcy exists for a reason. That being said I have a hard time with people borrowing money they know they will not be able to pay back or 'strategic defaults'.

This does bring us back to point 5. Jingle mailing B of A when you can afford the payment is a bit different than getting owner financing from a neighbor, ceasing payment and making them go through a ton of effort to get you out. Sort of like stealing from Mom and Pop's corner store is a bit different than Walmart. It doesn't make these actions right, just that I can see how someone could feel a bit less bad about them.

Fundamentally lethal force should be used judiciously in defense of life, limb, eyesight and essential property.  The words most commonly used in legal circles are ability, opportunity and jeopardy. Ability is about a weapon or disparity of size that means they have the ability to harm me. Opportunity is about proximity; a  guy with a knife can't stab me from 50 yards away but somebody with a gun could shoot me. Jeopardy is that you reasonably believe to be in danger. Randy Coulture or Bass Rutten (both famous professional fighters and all around scary guys) would have a hard time justifying shooting an narmed 200 pound man while 5 ft 100 pound Sally could justify shooting that same 200 pound man.

Property is an interesting sticking point. I won't shoot somebody if they try to steal my TV (but will shoot someone trying to take food that will feed Wifey and Walker during an emergency). That is what insurance is for and to be honest popping off meth heads for stealing my TV just isn't worth the hassle.

In some states people have the legal right to use lethal force in defense of property. Even setting aside ethical considerations it probably just isn't worth the hassle of shooting a meth head trying to steal your TV. If you fix the window and get a TV things can be back to normal in a couple days while shooting Meth Head Bob could very well ruin your life.
Anyway that sums up my opinion on that. Onto the crazy Mad Max, Red Dawn times.

The idea of using lethal force a bit freely is a common theme in survivalist circles. A lot of this blustering is just BS, sometimes 6 pack deep BS. However even factoring that in some seriously warped beliefs still exist.

To paraphrase AM  "the concept of ethically justifying the profession of arms (or killing outside of the most narrow defensive scenario) is dubious at best."

There is how the world should be and how it actually is. People shouldn't fight and counties shouldn't have wars. Also people should date based on personalities and character not shallower things like boobs, butts, biceps and bank accounts. When they disagree adults fight and when countries (or tribes) disagree they go to war. Sometimes they do it for good reasons and other times for bad reasons but most of the time they are in between. If you want a job that is easy to always feel good about become a doctor and volunteer free medical services to disadvantaged children.

There is a definite need to respond with some proportion to events.  Shooting or choke slamming a hungry 10 year old kid who is trying to steal from your garden doesn't make sense. Having a variety of options like basic hand to hand skills, mace, tasers, rubber bullets, etc helps here.

I do not believe that you must wait for somebody to attack you to respond. If you know a fight is coming better to be attacking their camp at 3am than them doing the same to you. That being said this is a hard one to balance. Folks would have to be pretty bad (like the classic roving robbing raping gang) or I would have to be pretty darn confident they were going to hurt me or mine to go this way.

Outside of a direct self defense situation such as in a civil war or guerilla situation things get even more complicated. Somebody can be an active participant in a conflict without pulling triggers. Hitler didn't (to the best of my knowledge) personally kill anybody but he was obviously a participant. In my opinion active participants, leaders and such are fair targets.

Everyone who disagrees with your agenda is not a legitimate target. Also the friends and family of legitimate targets are not automatically legitimate targets. Just because someone else can justify burning down houses with women and children inside doesn't mean that I will stoop to the same levels.

It is worth noting that low level folks who work in support of an organization may not actually believe in it or even in some cases be working voluntarily. A secretary who worked for the county might just be trying to feed her kids or not have a choice of staying on when the Chinese invade. A guy who runs a coffee shop can't very effectively turn away a bunch of young guys with guns. Especially those who are able to trash the shop and hurt his family without reprisals if they want. The question of whether you can justify ethically kill someone is different from whether you should. 

I don't want to get into target selection too deeply because that is a different post that has been written by other people. Simply put you figure out the goal and the effect which you believe will lead to said goal and then look to achieve it by selecting appropriate targets. I would argue that low level support type employees of the regime who are not actively of your same broad regional/ cultural group are better targeted by recruiting, co opting, bribing or coercion than violence.

Example: Jill is a normal 40ish lady in one of those executive assistant/ admin type jobs. She is a key person in a fairly important office at the district/ county level of the regime. You could easily kill Jill or grab her for a quick interrogation then kill her. You would learn some of what she remembers off the top of her head and disrupt internal processes there for a week or so.

On the other hand if you do some analysis on Jill other opportunities may exist. It may be possible to have somebody (a recruiter or their cut out) approach her at the right place and time. If she is leaning toward the regime or apolitical (Despite what politically active and strong feeling people think a lot of folks don't really care and just want to live their lives.) there may be an easy button to push or threaten to push. Selecting, recruiting and running sources is like target selection a whole other topic and one I am not all that well qualified to write on. My point is that Jill might develop into (willingly or less so) a very valuable source. She could help you fill in who they players are, tell you what is coming down the pipe, push through or falsify paperwork that is convenient for you and lose or misfile stuff that would hurt you.

In fact if the best guerrilla campaign you can come up with is to kill the regime's low level soldiers and support folks it is advisable to do some self education and research instead of acting. It is not that they aren't valid targets just that it isn't a winning plan.

Let's touch on that low level soldier for a second to try and explain the difference between killing some poor bastard and killing that poor bastard for a purpose. Finding a nice place to waiting for the random PLA soldier to walk by and busting a cap in his dome is fine I guess. On the other hand if you were to kill that same PLA soldier today then a couple guys in the market tomorrow and kidnap another off chasing some skirt in a week you might well force the local PLA leadership to restrict movement to larger groups. This will restrict their movement because folks can't go out in onesies and twosies to do whatever. Also it will hurt their morale and force their presence to be more aggressive.

To put it another way let's say Billy Bob and his cousins happen to stop and blow up the ambiguous lone water truck. It is just the first enemy thing that came by. On the other hand Tom's group, in conjunction with other groups also decides to start blowing up (or whatever) water trucks. Their goal is first to hurt the morale of the PLA by killing their showers and forcing them to eat field rations instead of real food. The long game and primary purpose is to make them start guarding the water trucks. This will tie up resources that could be used for active combat and will generally stretch their already thin resources even further.

Make sense?

Precision in lethal targeting is desirable. Obviously you want to kill the folks you mean to kill, not the school bus full of kids in front of them. This runs all the way from training to actually hit what you aim at to choosing when, where and how to engage targets.

There is a trade off between collateral damage and payoff. Collateral damage alienates people from your cause, gives the enemy PR opportunities and generally complicates your life. The amount of collateral damage that is acceptable for an operation varies based on the payoff.  This is really complicated and I don't think there are easy answers. If the equivalent of Hitler, Saddam Hussein, Stalin and Kim Jong Ill are all in the same place at the same time you hit it and use resources and energy to mitigate the collateral damage. On the other hand killing a soldier or minor figure but killing 6 random civilians and injuring 30 with a bomb is a bad trade. While I wouldn't target them specifically if a low level regime employee could get caught in something it wouldn't bother me too much.

The topic of collateral damage in the context of urban operations, people in houses and such is complicated. Proportion is important here as is the tactical urgency of the situation. Leveling an apartment building because somebody took a pop shot from a window is not smart. On the other hand of you are being effectively engaged or taking casualties do what you must. If somebody is stupid enough to shoot at some folks walking by from their house they should expect hate to be brought down on them. Shooting an RPG at a room that has a machine gun which is effectively engaging your element is probably a decent choice. If that RPG collapses the whole place and kills some innocent folks I'm sorry but those are the breaks.

Prudent target selection is very important. Aside from worries about collateral damage we have to consider that resources including time, money and ammunition are finite. This is especially important because Guerrillas are historically vastly out numbered and fairly poorly supplied/ resourced. A guerrilla group cannot trade a dead soldier and a case of rifle ammunition for the same regime blood and ammo. They will run out of men and weapons first which means they will lose, period.

We have to look at payoff. Guerrillas need to find times when they can shoot 200 bullets, kill 2 or 3 PLA soldiers and get away clean with them shooting lots of ammo and dropping a bunch of bombs onto an empty wood line. Also coming back to our previous point (if this is that organized) this needs to be in support of a desired effect.

While it is true that killing every PLA soldier would result in winning that isn't plausible and doesn't pass the historic reality check. Remember, if your group was capable of meeting the enemy openly in large scale combat this would be a conventional war, not a guerrilla war. A more plausible goal is to make the cost in terms of money and blood of pacifying/ holding the area more than the regime is willing to pay and wait until they give up. Or maybe conducting enough violence via attainable goals like wiping out a small outpost to make PR points until you are able to gain enough political backing to win that way or put together an army able to fight openly. All 3 of these options (fight till they leave, win via politics or win via open conflict) have historical presidencies though there is some muddling between the first two.

 So in conclusion. I think it is ethical to kill people who are trying to kill you or directly and tangibly supporting them. However unless they are trying to kill you it is prudent to target specific groups in pursuit of your overall objectives. Don't do something just to do it, do it to achieve an effect. 

Anyway this post got really long and rambling. Hopefully it makes you think about some things. Input is welcome.









Wednesday, June 13, 2012

Fed: Recession kicked median household wealth to 1992 level

Here is the article. This is not suprising but still sort of depressing. What they fail to mention is that a buck is worth considerably less today than back in 1992.

I look at who benefited from this, the classic cui bono if you will. It is pretty clear to me. Big bankers and financiers made a killing. Politicians did well on campaign contributions from those folks as well as using the money flowing into their coffers to buy votes. Personally they also made a killing on insider trading their consistently and consistently lucky investment choices. Some normal folks did well, if just for awhile. Nobody was complaining when their homes went up in value 20, 30 or even 40%. Nobody was complaining when the construction industry was booming.

I realized in writing this that I have sort of looked at bankers in the wrong way. I think a bit too locally. The assistant manager of West lake Trust in Peduke, Iowa population 50,000 didn't wreck out economy. That guy gives people loans they come to the bank looking for. Now the big bosses at Citibank, B of A, WAMU, etc all on the other hand had to knew what was really going on. That is why they got rid of these loans like a kid playing hot potato. They made money hand over fist for years. When the game was up they dumped all the junk onto the public in a variety of ways both above and below board. After that we loaned them cheap money which they used to buy up the competion which was slightly worse off or couldn't get easy money friend loans.

Between politicians making laws, setting conditions (keeping interest rates artificially low for years) and supporting their friends in banking and finance a lot of the blame goes to our wonderful elected officials. Banksters knowingly gave bad loans which they repackaged to unrecognizability then sold as rock solid. They bought politicians to do them favors and provide mafia like protection. These two groups royally screwed normal everyday Americans out of tons of money.

I cannot however totaly absolve people of the choices they made or the situations those choices caused. Lots of folks used electronic/ paper gains in their homes to finance vacations, new cars or home improvements and such. Some of them are mad now because they are "underwater" and have to pay back the money they so prudently cashed out during the boom. Lots of normal folks made poor choices thinking that somehow the good times would never end and ended up in a bad spot. Others tried to get in on the game and lost too, by the time normal folks get into the game the smart money is already on it's way out. Normal folks are standing when the music stops in the proverbial game of musical chairs.

Today I may be more disenchanted, with the establishment for lack of a better word, than I have been since the height of this mess in 2008 or so. Not exactly sure what if anything I will do about it.

Wednesday, April 4, 2012

More Foreclosures Coming To Your Neighborhood

This morning started out with a ZONK and then went to a cup of coffee and the news. A nice suprise on the last day of a busy week. So now I am at home drinking some coffee and watching the news. I suppose other than to note that I am having a nice morning none of that really matters. I saw "Americans brace for next foreclosure wave" on yahoo when I went to check my email. (As a reminder my email is theotherryan@yahoo.com.) Needless to say I have some thoughts.

I don't believe for a second that we are done with the sub prime adjustable rate mortgages. From watching the money shows it seems like 3 and 5 years were the common periods before these mortgages adjusted.  I suspect rate adjustments are not a huge issue now as the rates are (some would say artificially) being kept quite low. While I can't say when exactly, some day not too far from now that will change. Since home values are down and folks didn't have any equity to start with they may not be able to adjust into much more desirable fixed rate loans.

The article notes that a lot more of these foreclosures are normal folks with fixed rate mortgages and that unemployment/ underemployment based on the bad economy is to blame. Probably somewhat true. This is sad and is a reminder that folks should be pretty cautious when it comes to how much home they buy. In the 15, 20 or 30 year life of a loan odds are some bad stuff will happen, even in the most boring and well planned life.

We will not have a chance to get beyond this mess until the vast majority of the bad home loans are foreclosed on and those homes are then sold at their current values to people who can actually afford them. This also includes the massive "shadow inventory" of empty homes held by banks. We are not done with this mess.

So what does this mean? For the country it means that we are waiting for the other shoe to drop. For individuals I think that if you are in a place to purchase a reasonable home with a fixed rate mortgage it is probably a pretty decent time. I don't think that timing the exact bottom is a good strategy and right now interest rates are very low. As to investments I would say that folks who can pay CASH are in a place to get some great deals. Just like in past hard times folks who have cash can pick up deals that really pay off down the road. Note that I said PAY CASH. If you haven't figured it out the whole debt based real estate rental get rich scheme is a seriously flawed.

Also I like coffee and quiet mornings. That is all.

Friday, March 16, 2012

Stuff From The Interwebz

How to live in your car

A very nice minimalist chest rig for an AK. I think they also make a 4 mag model. I will probably pick up one of these when I get around to filling out my whole AK setup.

A gal talks about how to carry a gun and a baby. I definitely have a soft spot in my heart for women who carry handguns that are not a) subcompact/ cracker jack box sized or b) in a diminutive caliber like .32 or .380. She is not a big lady or wearing a "I have a gun vest" or a parka.

Highlight, quote and understatement of the day "if your child can get to the trigger that is bad." My .02 cents on that topic. First put on your gun then grab the kid. Kid doesn't go where the gun is because it wouldn't be comfortable for everybody involved. I carry appendix inside waist band slightly to the right. Kiddo either goes on the left hip if he is just riding or in my chest area if I am doing the comforting screaming baby thing. Since we are talking about kids and guns it is worth rehashing my core belief on this topic. Simply put guns are secured or under the physical control of an adult. In other words lock it up or carry it.

Today I have been intrigued by Iceland's reaction to the whole great recession/ economic collapse thing. 1, 2, 3.

Also I stumbled into a new blog Jerking the Trigger andreceived an email about the Open Garden project.

Hope that stuff gives you something to read and enjoy or at least think about. Have a great weekend.

Monday, January 9, 2012

Angry

The concept of student loan repayment forgiveness as a public program fills me with rage. I have talked about this before so there is no need to rehash it in full. It doesn’t bother me that for a year we put a huge amount (something like 1/3rd) of my wages toward paying off my loan. We decided that instead of making normal payments forever we would knock it out and of course I borrowed it so paying it back is only fair. However that some folks should get a pass because they borrowed a lot will have a hard time and (probably in part due to degrees in underwater basket weaving and gay transgender Eskimo studies) paying it back seems insane to me. We could debate the politics and economics of higher education all day long but if you borrow money you should pay it back. A guy who makes $25k a year and was stupid enough to borrow 40k for a big shiny truck shouldn’t get a pass anymore than someone who goes to an expensive private school and gets a degree which tends to pay poorly. Hint; don’t borrow a ton of money to go to a private school and study communications or education or sociology. If you want to go into those fields I recommend a much more reasonably priced public school.

Also the topic of mortgage write downs came up again somewhere. That might fill me with even more rage. The reason why is simple. I haven’t bought a house yet, dun dun dun, because I couldn’t afford it. Sure I could make the mortgage but I didn’t have any savings, let alone a down payment. Idiots and hopeful fools who made bad choices I was smart enough to avoid should not be rewarded. However if it is any conciliation to me I don’t see this one happening. It is clear to me that the trend is to hook up the banks at the expense of the people, not the other way around.

It pisses me off when we bail out individuals or companies who make stupid choices. Here is an n unavoidable truth, people learn from stupid choices by suffering their consequences. A person who makes stupid choices and feels the consequences stands (assuming he doesn’t blame everybody else) a good chance of learning a thing or two and just maybe making better decisions in the future. If we bail these idiots out they will not learn how to make good choices. Also there is significant risk that we are telling a whole other group of up and coming idiots to go ahead and be idiots as the government has got their stupid back.
Both of these things make we want to start a fire bombing campaign to show my displeasure. I don’t even know who I want to firebomb, I am just really angry.

On the bright side I had a really good talk with Wifey today which as always, helped turn down the burner under the boiling pot that is my rage. She pointed out that we can take a good amount of pride in knowing that we are doing the right thing. Also that in years to come (these programs come and go, woe is a person or a business who is only viable because of a government subsidy or tax deduction) we will be fine and able to take care of ourselves because that is the sort of people we are.

Note, this article is about a month old. I am trying to clean out my writing folder a bit.

Wednesday, November 10, 2010

Houses and Housing

I have been thinking a lot about the nature of this beast. I think sustainability and affordability are sure interesting. Something occured to me recently. We think about housing almost all wrong. The concept of a home as an investment is kind of a misnomer. I think houses (and to a certain degree all realestate) as a physical brick, mortar and wood structure are a good investment. Of course they aren't going to go up 30% a year like they did in the run up to the housing bubble. However assuming you make reasonable choices house values will go up. Also in the meantime they can product income for you. Sort of like a stock that pays dividends you will do OK even when the market is flat. Where I think people go so wrong is that they lump housing in with the brick and mortar structures themselves. Housing is definitely a liability. Housing is a liability because you need, in some form or another, a place to live. To me the concept of purchasing some dirt and a structure isn't about investing it is about a place to lay your head and keep your stuff. Paying off that place is about reducing your liabilities.

Affordability is so important and is something we seem as a culture to have lost. The smart money folks say things like a payment not more than one third of your income. I have also heard your high total amount shouldn't be more than 3 times your total annual income. Our blog friend's advice to ignore the loan people and get what you know YOU CAN AFFORD is sound. Personally I think being pessimistic is the key. Don't think about the good months where you get some overtime or the great months where you get a big bonus but the bad months when you have a few down days and some unexpected expenses. Assuming you take the life of a loan to pay it off you are looking at between 15 and 30 years. While your income may grow and or inflation will make the true value of the monthloy cost lower a lot of bad things can and will happen in that amount of time.

Our Grandparents typically bought a home and stayed in it. Sometimes they got a really small starter home and upgraded after a kid or three to a place with more bedrooms. However the difference is that THEY STAYED THERE. Also though a house might have 4 or 5 bedrooms it wasn't typically a gazillion square feet. A house payment which might have been a little tight when the kids are young and the parents are in their early 30's (they got married younger) was comfortable 10 years later after Dad went from working on the line to being a supervisor or bring a teacher to a principle or whatever. Their payments got more comfortable because their incomes grew and there was some inflation. Conversely today people upgrade their house every time they get a raise and take out home equity loans to boot.

I think the way to look at housing and homes both as an investment and a place to live needs to be adjusted. The housing boom is over and while prices may rise they aren't going to be the idiot proof investment they have been for a decade or so. Think more about securing your families ability to well, not be homeless, than making a profit.

Write a post on your site/blog/forum elsewhere online about how you use ammo cans. Here is a shell you can use if you want.

" Lucky Gunner partnered with TSLRF to put together a contest. The goal is to come up with the most creative way to use ammo cans. I use ammo cans to _____________________. The prize is a half case of free ammo! See the full details here."

If you paste that shell into your blog or website or favorite forum then add in what you use ammo cans for and you will be good it go. You do not need to use the above shell. I just wrote the shell out to make it as easy as possible for you to enter. For a qualifying post you just need to be sure you link to ammo cans and TSLRF in your post!

b. Copy the link to your post and add it to the comments section on this post. You can also email a link to your entry to me. This enters you into the contest.

c. The contest will run until 14 November. After the contest has closed, I'll do another post w/all the qualifying entries. Our readers will get to vote on which post was the best (either entertaining or most informative) via a survey. Folks who enter can tell their readers/ friends and family about the survey and they can vote in favor of your entry - so be sure and spread the word!

d. Based on the poll results, the winner gets their choice of 500 rounds of ammo from Lucky Gunner. See full details here.

Saturday, July 24, 2010

The economy is so bad that:

I got a pre-declined credit card in the mail.

I ordered a burger at McDonald's and the kid behind the counter asked,  "Can you afford fries with that?"

CEO's are now playing miniature golf.

If the bank returns your check marked  "Insufficient Funds," you call them and ask if they meant you or them.

Hot Wheels and Matchbox stocks are trading higher than GM.

McDonald's is selling the 1/4 ouncer.

Parents in  Beverly Hills fired their nannies and learned their children's names.

A truckload of Americans was caught sneaking into  Mexico  .

Dick Cheney took his stockbroker hunting.

Motel Six won't leave the light on anymore.

The Mafia is laying off judges.

Exxon-Mobil laid off 25 Congressmen.
 
Congress says they are looking into this Bernard Madoff scandal. Oh Great!!   The guy who made $50 Billion disappear is being investigated by the people who made $1.5 Trillion disappear!

And, finally...
 
I was so depressed last night thinking about the economy, wars, jobs, my savings, Social Security, retirement funds, etc.,  I called the Suicide Lifeline. I got a call center in  Pakistan , and when I told them I was suicidal, they got all excited, and asked if I could drive a truck.

Saturday, July 10, 2010

quote of the day

"Your country needs you Logan"-Striker
"I am Canadian"- Logan

I enjoy those easy going beer loving folks up north.  If they had better gun laws I would seriously consider moving up there. Yeah they have socialized medical care but we are headed that way at a dead sprint anyway. To their credit the Canadians managed to avoid the whole sovereign debt issue because their banks stayed out of the derivative and bail out madness.

Thursday, July 8, 2010

Interesting News

Financial Mistakes Young Families Make.


Why Canada's Housing Market Didn't Crash is an interesting article. However it does rather simplistically focus on banks and the selling of secularized mortgage products. It does not mention that banks were legally forced to loan to people who were not desirable borrowers.

Friday, June 25, 2010

Borrowers Exit Troubled Mortgage Program

Here is a snippet "As more people leave the program, a new wave of foreclosures could occur. If that happens, it could weaken the housing market and hold back the broader economic recovery.
Even after their loans are modified, many borrowers are simply stuck with too much debt -- from car loans to home equity loans to credit cards.

"The majority of these modifications aren't going to be successful," said Wayne Yamano, vice president of John Burns Real Estate Consulting, a research firm in Irvine, Calif. "Even after the permanent modification, you're still looking at a very high debt burden.""

 Now for some thoughts. I see this sort of program as putting a band aid on a gun show wound. A nice idea but really not a solution. I see two groups of people who could possibly benefit from this. The first are people who could fundamentally afford their mortgage but just had a job loss or income change for awhile that left them behind. However my uninformed opinion is that these sort of people have usually been able to work something out anyway. The second group are people who can afford the principal but upcoming or recent change from the "teaser rate" to the adjustable rate will be too much for them. It seems like these days it is often in the banks best interest (versus repossessing the home and sitting on it or selling it at a steep loss) to figure out how to get these people into a fixed rate loan they can afford.

However for most of the people who are in trouble with their mortgages I just can't see a way for them to be able to make it without "adjusting the terms" significantly. In other words unless the bank is willing to say "We know you borrowed 300k but lets call it 210" they aren't going to be able to make the payments. Not surprisingly banks kind of want people to actually honor the deal they made.

Without getting into the reasons why they did it or making value judgments or playing the blame game (sort of like when you come to a party with a half gallon of great booze there is at least a shot for everybody) many people bought homes, or borrowed against their "equity" to such a point, they simply could not afford. I recall a story on NPR of a woman in NYC who bought an apartment for something like 300k. Her payment was going to be almost 2k a month and she took home $2,400 a month. There is simply no way she could possibly afford that. Even at zero percent that is almost her entire paycheck.

Also so many people have such a high debt load that what would be an affordable mortgage isn't. Maybe they did not let their housing costs get over about  1/4-1/3rd of their take home which I believe is the rule of thumb. However they also have 2 large car payments and huge visa bill and 3 store cards and a personal loan so their total amount of debt is just way too high.

I don't think we are going to return to a semi normal housing market until a lot of people are out of houses they simply can not afford. The faster we get these people out the faster we will see the actual bottom of the market. People who are sitting on money or are getting into a place where they can afford to buy a home will be able to find some deals be they on an investment rental, a vacation place or a primary residence. There will be some pain but the market will correct itself and get to an honest place.

I find there are two types of people when it comes to pulling off band aids. There are the kind who want it to hurt a little bit gradually with time to relax in between small pulls and the kind who want to just rip it off and be really uncomfortable for a second or two then have it over with. Personally I am in the get it over with and rip the band aid off camp.

Sunday, May 9, 2010

Sunday Ramblings

People seem to hate bankers. As Commander Zero noted they do stop hating them when they need to buy a car or a house or whatever. After they get "their car" or "their house" then the banker goes back to being greedy scum for wanting their money back AND A PROFIT! The nerve they have.

I don't really have anything against bankers. No banker has ever cornered me in a dark alley and forced me to take a loan at terms I do not like. I have a student loan which I got because it seemed to be in my best interest. Seeing as my earning power went up significantly it seems like that was a fairly good choice.

I am not a fan of the whole capitalism on the way up socialism on the way down pattern of late. I blame our government and by default us for that more than bankers. It drives me just as nuts when people try to do the same thing. They are happy as can be when the value of their home goes up 30% and talk about how they made such good choices. Then the minute things go the other way they demand that the government do something to stabilize housing prices.

My observations of people is that everybody tries to get as much as they can. From "disability insurance" for a person who has earned little to nothing to "earned income credit" to "mortgage interest deductions" all the way up to pet tax loopholes for big businesses and bank bail outs everybody goes for as much as they can. I can't really blame individuals too much. If there was a 10K refundable tax credit for some niche group I fell into darn sure I would take it!  We deserve every dime we can grab but that other guy is a greedy SOB for trying to do the same.

I tried again to buy a beer brewing kit from Amazon but I can't find anyone who will ship one to us. There is a place that sells beer brewing stuff not too far from here so I will make the trip in the next few weeks. That town also has a pretty nice Chinese restaurant so the trip would be pretty decent anyway. Apparently my last book order didn't go through so I re ordered it.

Also today we ordered a second computer which I am pretty psyched about. Really knocking off all of our significant economic goals inside of a week or so (in April!) makes me pretty happy.  No more real big financial goals, just stashing a few more euro's and some spare parts and mags. Now we can focus on whipping that darn student loan. After that we can save for a modest home with a wood stove and ideally a basement on a big lot.

I am psyched to get another computer. I will have my own puter so when out and about I'll be able to watch DVD's and save up scheduled posts more conveniently. Also while I don't play video games at home they are a good time killer for when I am away.

As a final thought Jericho looks real nice on the new TV.

Wednesday, April 21, 2010

quote of the day

"People are quick to hold the banks’ feet to the fire while largely giving a free pass to the morons who bought houses they couldn’t afford."
-Commander Zero
Related Posts Plugin for WordPress, Blogger...

Popular Posts