Category: Money

In a time when bank executives would rather eat their own children than give one penny of shareholder profit to help consumers and the economy at large, one bank has stepped forward to support legislation that is way overdue. Citibank has agreed to support changes in bankruptcy laws so that primary residences can be protected in bankruptcy court by judges who can write the mortgages into debt repayment plans.

It’s absurd that someone can file for bankruptcy and protect their motorcycle, vacation home or boat but can’t save their primary residence. This has long been a hold out of the mortgage lenders for no other reason than sheer greed. Why should they take a risk? Loans are suppose to be all profit and no risk for them right? And when the gamble doesn’t pay off we’ve seen what happens. They cry to the Fed like whimpering little children who aren’t getting their way. And big daddy Fed is more than happy to quiet them with $700 billion dollars. Thinking about it makes my stomach worse than it already was fighting this Crohns flare up. I will continue to close all my entries about financial institutions with the same ‘ol quote from Dr. Willis Martin of Rocky Mount who said to me “Son, the bank is not your friend”.

“In 1910 Rockefeller and Morgan banking representatives, along with government officials, boarded a luxurious railcar owned by Nelson Aldrich, Senator from Rhode Island, who became quite wealthy representing the interests of the moneyed class. They were journeying from New Jersey to Jekyll Island, Georgia for a secret conference at which “the Federal Reserve was conceived; the birth of a banking cartel to protect its members from competition; the strategy of how to convince Congress and the public that this cartel was an agency of the United States government.”– The Creature from Jekyll Island by G. Edward Griffin

Then they went on to fund the establishment of central banks in Japan and Germany following World War II.  John F. Kennedy was wise to their game and worked diligently to end the Federal Reserve up until the convenient timing of his controversial assassination.   I’m no conspiracy theorist but you’ve got to admit that for all the vague ballistics evidence that pointed to Oswald a motive for his actions have never been made clear.

Everyone fears the Federal Reserve.  Legislators, the judicial system and local and international governments alike bow to their whims without scrutiny into the depths of their intent.  Why do we still have the Fed?  Because they said so.  Why does it take an act of Congress (and almost and act of God) to regulate the actions private banks take with lending terms, creative finances and disclosure of their activities with investor deposits?  Because they said so.

America is a society producing little or nothing trying to trade paper to substantiate our liquidity.  As real estate prices drops the few liquid assets we still have become of less and less value.  The Fed and the markets are trying to reinvent liquidity through investment.  Problem is there’s nothing at home to invest in.  So banks need revenue.  Where are they going to get it?  By gouging their customers, meaning the consumer credit base, as much as possible in the coming years.

You are a slave to maintaining you bank account and credit card balances.  Who among us thinks that consumer credit does not hold sway over daily life?  FICO score anyone?  The banks have come to require your allegiance for everything from renting an apartment to getting a job.  Of course, your FICO score won’t be worth the paper it’s printed on once everyone is down and out, unable to pay.  The so called deadbeats are increasing exponentially.

How do we combat it?  Simple.  Pay off credit cards and cut them up.  This is the same way, the only way, there is to beat drug dealers.  Destroy the demand for the product.  This is the only way out of our recession which will be a established period of deflation by the beginning of 2010.

This morning I went to President Elect Obama’s website change.gov and expressed my opinion on what is necessary to provide affordable health care in America. I’m sure it’s one in two million but hey, I said my piece.

“I am one of the millions of Americans that helped President elect Obama get where he is.  That said, Senator McCain was very right about at least one thing that being the underlying source of health care issues in this country: the cost.

While lack of affordable insurance is foremost on consumers minds it must be determined why health insurance is unaffordable.  Hospital corporations continue to emphasize their increasing operational cost while reporting record earnings to shareholders and owners year after year.  28.1 billion in profits in 2007.  Do we really need to be playing a profit margin game with peoples health and lives?

While I’m all for capitalism I do not see where it is in the best interest of Americans to allow hospitals and health care conglomerates to continue increasing their costs to maintain and increase profit margins.  These cost must be brought under control and only government intervention can do this.

It will take sweeping “change” to achieve this because businesses in the health care industry can no longer be looked at as a “for profit” investment, such as HCA.  Otherwise any price controls would be met by the hospitals through a reduction of resources and services to patients in order to meet profitability.

Businesses in the health care industry can no longer be run under the same business and administrative principals as other corporate entities.  They must take on an operational structure similar to other not-for-profit organizations.  Anything less will continue the cycle of rising costs now estimated at 6-7 times the annual rate of inflation.”

This morning Representative Barney Franks was on NPR advocating a bailout of the auto industry.  While I don’t think this is a good idea Rep. Franks had a real good point. He said…

“Well, [insurance company] AIG, which I don’t think anyone would think was as important to the American economy as the auto industry … got $40 billion just now to make it up over $100 billion. To some extent, let’s not have a white-collar/blue-collar bias in our public policy.”

Barney’s dead on with this observation.  Paulson and his cronies are quick to hand money to their friends in banking who grossly mismanaged their companies but they are quick to refuse money to the auto industry using the justification of mismanagement.   The difference in my opinion and Barney Franks is that he seems to think we should be continuing and extending bailouts.  I say end them all immediately.

No industry, automotive, financial or otherwise deserves preferential protection from the Federal government. Furthermore the invocation of public funds into these industries, with ownership stakes in the companies, is the forerunner to socialism.  Add to it that none of this does anything to restore activity in the micro economy and there is zero chance that this will actually help restore and improve the economic conditions for the majority of Americans.

I just read this bit of information this morning regarding more testimony to be given by Henry Paulson to Congress on Tuesday.

“Paulson, who is overseeing the bailout program for the Bush administration, said he was also working on a proposal that would allow the government to take over a wide range of financial institutions – not just banks – that are in danger of collapse.”

That sort of talk should worry you. If it doesn’t you most likely work for a bank or another failed industry on the verge of collapse eagerly waiting for the government to start providing your paycheck. When Republicans had the nerve to call Obama a Socialist during his campaign it was hipocracy in a most brilliant disguise. Yet Democrats are not without their faults in this mess. Their support of the UAW for a bailout of the auto industry is disgusting.

Let’s recap (yet again…)

1. Banks won’t lend because people can’t pay the money back. Job losses are at an all time high. I suppose Paulson and Bernanke missed that part.
2. Paulson pushes for more tax dollars to the banks so they’ll lend.
3. So banks begin to lend money? Well, no. But if they did no one would want to borrow it.
4. American car manufacturers make cars no one wants. But what if they made wonderful cars? Still, not many can afford to borrow $24k to buy one.
5. American car makers ask for some of the love the banks are getting. After all they’re both losing money right?
6. Paulson does not want to give car makers bailout money because the government isn’t sure GM and Ford won’t die anyway. The wild hypothesis is that people don’t want to borrow money to buy big, gas guzzling, expensive cars right now.
7. Rinse, repeat.

Do you see the cycle here and the common denominator? Do they get it yet? Consumers are tired of mounting debt! And every economic solution put forth by industry and regulators include a recipe for more debt and renewed lending they insist we need. People are in a saving mode right now. Even people with money and credit don’t want to use it.

We have to fall down to get back up. Prolonging the inevitable does not make facts avoidable. People need time to pay for what they’ve got and debt relief. Any industry relying on people to open lines of credit right now is screwed. This includes the lenders. Using credit and going into debt is bad. Allowing the government to take part ownership of these failing industries out of desperation is even worse. The law of the jungle must be allowed to run its course. Some will not come out alive.