Posts Tagged ‘Economy

12
Sep
10

The Most Dangerous Weapon

Freedom of speech was supposed to protect citizens against an overgrown and biased press. There is a lively debate over just how free our press is right now, and I hold that the free press is easily found, but must be pursued. Unfortunately, the press that is offered without pursuit is beholden to ratings and being able to provide desirable interviews, and is much less free than it should be. The free press has eloped with our government.

The marriage of our popular media and our government has replaced our ability, or, more aptly, our desire for objective thought. For every issue that arises, there are 27 pundits to tell us what to think about it and how to react. The daily news covers portions of stories, leaving us shocked with every detail that a decent pundit can reveal, and, therefore, use to earn trust.

This is almost a useful service in our busy world. Except for one huge detail. Virtue. Our politicized media tells us to be virtuous but fails to define the standard. There is none. Those who tell us how to think, to feel, and to spend, bully us into a belief system of charity and guilt but they refuse to stand up and define the solution. They fail to stand on an absolute, yet they ask us to stake our livelihood on their wavering expertise.

Ayn Rand says that the most dangerous man is one who uses pity as a weapon. Stop. Think. Have truer words been spoken? Think of how we all felt when the stimulus package passed. Think of the way we were told to consider healthcare. Remember the pleas of the sick, the emotion involved in this nation-altering decision.

I challenge the media to define virtue before they ask us to be virtuous. In fact, I’ll supply the definition, then they need only stand by it. Virtue lies in the protection of human rights at any cost. Equal rights belong to the rich and the poor, to every race, creed, and gender. Make no mistake; this is not an endorsement of furthering our welfare state. The problem with Marxist theory is that “from everyone according to his ability, to everyone according to his need” requires mere humans to define ability and to define need. Invariably, the definition of need expands as the definition of ability contracts. It’s a slope of destructive enabling that panders to human whim. If we are to settle on such a standard, will we recognize the men and women worthy of ruling, those who are willing to offer definitions blindly and uphold them with the same impartiality? I highly doubt it. Impartial virtue has been labelled cruel, or unfair. And nobody is willing to wear such a title. Rather, we compromise. We compromise all that is good in the name of virtue and we are left with a welfare state that corrodes such virtue.

Advertisements
20
Jun
09

Redundant Robust Regulation

Because I have nothing to do on a Friday night, I hurried home from work today so I could begin reading Obama’s White Paper “outlining” his financial system overhaul. I made it all the way to page 21. I will finish, but needed to stop and breathe. The buzz is that Obama wrote this all by himself. I have not substantiated that, but if he did, he needs an editor. The first 16 pages are so redundant, I actually had to use the table of contents as a map and still I thought it was a test to prove that nobody reads these documents. There are full paragraphs repeated in the document.

I need to read the rest of it, then I need to read it again, but this should be broken down. I wondered how something so momentous was released with barely a hiccup on Wall Street and now I understand. It is innocuous. Really the first 16 pages simply state and re-state that there will be increased supervision over financial agencies of all sorts. I actually don’t disagree. The financial industry is behaving horribly right now and Obama, or whoever the author is, makes a valid point when he mentions how banks are circumventing regulation.

But there are a couple of troublesome tidbits tucked away in this document. First, it calls for increased supervision of “Tier 1” financial institutions by the Federal Reserve. This is odd. This is not a Federal Reserve responsibility. It is a little known fact that the Federal Reserve is not a government entity. The increased supervision may not be the worst idea ever, but the definition of “Tier 1” is dangerously undefined. It includes any institution that is involved with an institution deemed too big to fail. This can include smaller correspondent banks, third party payment processors, small insurance agencies and investment firms. It expands the reach of the Fed beyond where it was ever intended to be.

Speaking of the Federal Reserve, buried between all the talk about supervision, a real change is casually mentioned. The discount window is to be subject to Congressional approval. I can’t even imagine what that might mean since later in the document, it mentions relaxing emergency lending by the Fed. There are no details on either item in the first 21 pages, so possibly I have misinterpreted, but I find this confusing. It makes me wonder if anyone involved with this truly understands the Fed Funds and discount window process, because this does not seem workable.

Of course, I am not overly concerned with the Fed’s new role. I am reading the document because I want to find a real benefit to consumers. Rest easy. The Community Reinvestment Act is going to be protected and possibly expanded under this plan. Last I heard, that very piece of legislation was a great contributor to the current situation. It’s a nice idea, but it is unrealistic. There is a reason that lending standards were as high as they had been.

Another hidden dagger for consumers, the Gramm, Leach Bliley Act is going to be compromised, dissolving the stringent distinction between entities under examination. Right now, Gramm. Leach, Bliley allows banks to offer investment and insurance services, but each offering is very separate. Very simply, if you hold a small investment account with ABC bank, it cannot be considered when processing standard banking requests, such as overdraft payments or charge offs. Perhaps under the new standards, the bank will still not consider a $50,000.00 investment account when decisioning an overdraft. But the Fed, in a regulatory role, may consider you a high risk customer because of an overdrawn checking account regardless of your investment account. Such perceived risk could be detrimental to a financial institution’s rating.

Additional “benefits” to the consumer include fair and balanced disclosures. Bank disclosures are pretty much just factual regurgitation, so this seems like a red-tape-laden token. It also calls for simplified “plain-vanilla” to quote our president, product offerings and disclosure of such offerings.

A quarter of the way in, it’s hard to stand behind this. There is so much regulation, but there are very few specifics regarding the regulatory standards. There are agencies, expanded oversight, and more, but all of this intervention is not qualified. There are no defined goals. Personally, I would like to see a plan that empowers financial institutions and consumers. Too big to fail? Break it up. We have anti-trust laws on the books. CRA as consumer advocacy? Let’s get rid of unfair overdraft practices that essentially trap customers into paying an additional $30-$40 per transaction. Clarified disclosures? Why don’t we strive for financial literacy? The financial world is riddled with pitfalls and is automated to the extent that consumer need not monitor their own finances. This has led to complacency in an area most crucial to our survival. Complacency breeds exploitation.

13
Jun
09

The American Dream up for Resale

I am not a fan of TARP. I am not a fan of the bailouts. I am not a fan of an ineffective but over-priced stimulus package. I am not a fan of a banking system that exploited consumers to the point of exhaustion, then went to the government begging for alms. With a democrat in office and a democratic congress, I would have hoped that government payouts would ultimately have helped the consumers, not simply the behemoth sized banks.

The truth is, the middle class is being squeezed dry. Now that they can’t give anymore, the juicers have gone to the government to DEMAND more. It is unfair on a new level and we Americans should be outraged. We should be afraid. We should make it stop. This is still a representative government that is ultimately responsible to us.

Here is my nutshell version of the financial crisis, complicated by great legislation like the fair housing act: In the 90’s, adjustments were made to reserve requirements, freeing up A LOT of money to lend. In the beginning of the 21st century, right off the bat, our financial sector was attacked. Businesses were dealt a physical blow that they could not overcome and Americans were frightened. To combat a financial meltdown, rates were reduced to historic lows. It was all harmless until greed walked in. With rates so low, it was no longer profitable to lend money – and there was all that new money just waiting to be loaned out… Banks had to find new ways to generate income. Standard fees were increased, but it wasn’t enough.

This is when it became sinister…Banks had to go one step further and find new sources for fee income. This is where the average consumer got involved with the financial crisis. Now banks figured out that the lower middle class may not have a lot of money individually, but as a collective, it was a great cash cow. Even more lucrative was the less savvy lower class. Banks could offer them exactly what they wanted – easy credit, overdraft protection, increased services – all for a fee. Studies were done, numbers were crunched, and the “UNBANKED” demographic became highly sought out. In the eyes of the banking industry, this demographic was practically willing to sign over their government checks for just a little more purchasing power that would soon run out.

And run out it did. When this increased purchasing power ran out, so did the increased fees. And the losses started coming in. The charge-offs, the write-offs, all began to add up and banks were about to experience a day of reckoning for what they had done.

Thank goodness for TARP or those banks would have really suffered!

But what did TARP do for these exploited customers? Credit card rates for risky customers still hover around 30%. The once-manageable rate on the adjustable second mortgage is now out of reach so homeowners can barely make an interest payment. Overdraft policies have not relaxed in the least (actually, that is a little untrue. I JUST read this morning that B of A is tiering based on the size of the overdraft). Overdraft protection that further entrenches consumers by paying offending items and drawing account balances VERY negative has become an industry standard.

And the ultimate, cruelest irony? These very squeezed consumers are paying for TARP. They are feeding their captors whose only lifestyle adjustments involve laying middle-class people off.

OMG – THIS IS WRONG!!! We were pacified by passage of the most ineffective banking reform bill of all time when really we should be rioting in the streets. I am a capitalist through and through and I love to see successful business. But greed and corruption will defile any capitalist system and that is what we are living right now. We are at risk – grave risk – of losing our way of life to this. It is imperative that we stand up for what is right. Write to congress. Tell your friends. Tell your neighbors. And for goodness sake, be vigilant. This happened as people slept, offering their financial independence as a sacrifice to an American banking system that promised an American dream that was not theirs to give. All the banking system has to offer us Americans is begged, borrowed, or stolen.

16
Feb
09

Bliss in a Ponytail

Has the cliche “ignorance is bliss” caused us as a culture to discount the intelligence of many a bubbly cheerleader?  Not just pom pom-toting-ponytailed high-school cheerleaders, but the ones we meet as adults, too.  The ones who remind us to keep moving forward when we can seem to move our feet on our own.  Personally, I have been very guilty of it.  Anytime I see a ponytail bounce by, trailing a cheerful “hello,” I assume that ponytail is attatched to a sweet but empty head.  I have always held to the conventional wisdom that those who know the most are going to finish first and best.  We need to know what is happening if we are to be protected against it or to benefit from it.  I refuse to fault myself; this makes perfect sense. 

HOWEVER, I have recently found myself nearly unable to cope.  I didn’t even notice how bad it had become (make not mistake, my children had) until I turned off talk radio and chose instead some vapid music to sing with until my throat bled.  It was great.  I had no idea until I was nursing my very sore and scarred throat that I had been unhappy.  Lately the world has become nearly unbearable.  I have steeped myself in statistics.  The size of the stimulus package.  The dollar amounts actually going toward infrastructure.  The dollar amounts that may not result in economic gain.  Previous GDP’s and the stimuli pressed through at those times.  The resultant tax burdens.  Child pornography.  Human trafficking.  Teen drug abuse.  The last time I had an oil change.  The unemployment rate…You get the very large picture.  I determined that I would unplug for a while.  No more talk radio in the car and no more internet research and NO evening news.  No newspapers, except the Target ad on Sunday. 

First, I began my experiment with a certain amount of fear.  I felt so isolated and I felt that I would be ill-equipped to protect myself and my family in the event that – I don’t know – there was a literal fan and the world became covered in, well, you know…Then I had an epiphany.  Thank GOD.  I realized that yes, it is ridiculous to live a life of complete ignorance.  But just as ridiculous is to climb under the covers over what amounts to little more than a lack of control.  I can learn all I want about every issue facing us as Americans, but this does not change the fact that I have no control over these issues.  Right now, I am not part of a majority.  I can write my congressmen and petition all I want, but I am unlikely to change the outcome. 

Now, I would never condone squandering one’s life in complete ignorance Paris Hilton style.  BUT, to determine one’s moral compass and live in such accordance, permits a life of ignorance.  My daughter argued with me the case of Oedipus (not Paris Hilton), making the case that a life of ignorant bliss would surely lead to complete destruction.  Oedipus seemingly had no moral compass.  He was living an ignorant and self-destructive life of incest, addiction, and all the other trappings. 

However, to determine a standard of living and adhere to this would fully allow one to exist in complete ignorant bliss.  For instance, were I to save 20% of my income, avoid debt, and donate 10% to the less fortunate, I would easily avoid increased taxes and now that the economy has turned, I would be unconcerned.  I would have savings to rely on and no debt to worry me.  This isn’t just a financial matter.  To live as outlined above, I would have to avoid envy and covetous behavior.  That is probably the very root of many financial ills. 

If I had lived a life based on a strong moral code, the concerns of our nation would not be mine.  As our situation worsens, I could use my strength to truly combat suffering.  I would not be beholden to debt, or even a job.  Is it possible that keeping my mind centered on the events happening each day in this culture is where true ignorance was born?  It seems that my extensive knowledge of these many problems has done more damage to me and my psyche than complete ignorance would.  Perhaps, had I ignored that which I could not control and instead worked just on myself, I would not be overwhelmed at this moment.  I would then be a worthy adversary. 

Whoever thought that the cheerleaders are the true heroes?

01
Feb
09

The Stimulus in the Corner

A man I look up to a great deal gave me some advice.  It was the best advice I have ever gotten.  I felt backed into a corner with no way out, so I was complaining and he said, “Why would let someone back you into a corner?  If you live right, you’ll never be in the corner.”  At first, I thought he just didn’t understand that I didn’t have a way out.  Then I realized that I had absolutely gotten myself into the situation and I had no choice but to find a way out, by changing my attitude in a drastic way.  The funny thing is, I don’t even remember the situation I was in.  I just remember this advice and the many choices I have made because of it. 

Our nation is backed into a corner.  Collectively, we were irresponsible and we landed ourselves up against a wall with now way out.  We achieved some financial success, but saw no reason for gratitude.  Instead, we borrowed more to satisfy our every whim.  Then, we failed to hold our leaders to any standard.  In our apathy, we stopped expecting honesty and objectivity from our media.  Now, we have a mess and we need to change our attitude.  Actually, we need to change our entire lives.  Everything needs to be different. 

We’ve been offered a solution in the form of an economic stimulus.  Now the question is whether to take it or leave it.  It is so appealing.  We could accept this solution at little or no cost – right now.  Eight hundred and nineteen billion dollars is so much money.  Properly spent, it could solve all of our problems, to be sure.  What then, would it leave our children with?  The interest alone on this $819,000,000,000.00 is more than we have spent on the war in Afghanistan.  The size of the spending package is equal to the national budget in 1984 and it is two thirds of our current budget, that’s for all government spending.  All of it.  In the ’90’s, a $19 billion dollar stimulus package was on the table and Bill Clinton, not known for fiscal responsibility, said it was too aggressive.  That was less than a quarter of the size of this package just a little over 10 years ago.  This money means $5000.00 for every household in America.  Right now, to fund the bill, every household would have to cough up $5,000.00.  When the nation is paying it back in 20 years, our children will bear the burden of $819 billion plus all that interest.  The tax burdenwill be crushing.  What this means is that this package will create another bubble, tantamount to the housing bubble or the tech bubble, that is destined to burst.  The question is, what will become of the next generation when this colossal bubble bursts?  If we pass this stimulus package, we are keeping ourselves backed into this corner. 

So what if we don’t?  I would love to say that this is a media-induced frenzy, and there is some evidenct to that point.  It is not hard to believe that if the economic situation is dire enough, we will do anything to solve it long before we take the time to truly consider our options.  And let’s be informed.  In the ’80’s, a time that keeps popping up in the media, unemployment hovered around 7 per cent and peaked briefly around 10.  It was believed then that if unemployment sunk below 6 per cent, inflation would run out of control.  Six to seven per cent unemployment was the goal then and that’s exactly where we are now.  We are moving higher, but is that the result of media-induced hysteria?  Everybody I know is employed right now, but nobody will spend.  When spending stops, commerce stops.  When commerce stops, production stops.  When production stops, jobs are lost. 

Also, the housing numbers for December are in.  New mortgages rose by 6.5% in December.  January is proving to be one of the busiest months many in the mortgage industry remember.  Those official numbers will be in within the next few weeks.  Interestingly, this optimistic news did not get a lot of press.  I, for one, am so hungry for positive economic data that I leapt on the news.  I waited for it to be touted near and far, but then, it fell flat.  In fact, to recall the exact figure I had to find the Australian version of the Wall Street Journal. 

Another thing we cannot deny – corporations are still making money.  American business is still profitable.  It may not be as profitable as shareholders and board members would like, but profits are there.  In the ’80’s, a lot of business was not profitable, not at all.  Then, the general population seemed to have enough common sense to understand that some years are better than others.  This was not a profitable business cycle.  This is not where we are right now. 

I have to wonder if our situation merits $819,000,000,000.00?  I really, truly want to believe that it does not.  But I don’t want to be wrong.

So every time I am confident that the media has hyped us to the edge of sanity, I remember the reason we are here.  Hedge funds.  A credit market gone wild.  In the last decade, the United States has lost ground as a producing country.  We offer services, intellectual property, and money.  Even in the beginning, when I was young and clueless, I looked at our credit markets and wondered where the money was coming from.  How, I wondered, did Household credit have enough reserves all of a sudden to loan billions of dollars to high risk customers?  It seemed that every company was doing this and I knew a very small bit about reserves and risk factors and it simply didn’t make sense.  I was 27 when I noticed this, and I was certainly no economist.  SO, how did Alan Greenspan miss it?  How did the OCC miss it?  How did we end up here where are lending institutions have a trillion dollar shortfall in reserves?  That is the crux of the problem, one trillion dollars, or one and a half, but whose counting?  When I remember that huge number, I have to wonder, do we need $819,000,000,000.00?  Possibly.  Should we take it?  Will it make a difference?  Will it make it worse?

It will make it worse.  It may save us now, in the short term, but we should be very concerned about what we are leaving to our children.  If we could find it within ourselves to change our way of life and to change our attitudes, we could keep our children out of the corner.

27
Jan
09

Waiting for September 12th

My friend hasn’t slept through the night in about two months.  My husband’s ulcer has flared up.  My coworker is completely despondent.  I cannot seem to hold food down.  Nobody is willing to put a guarantee on what may happen tomorrow.  First I thought it was just me.  I usually live in the worst-case scenario.  But it is not just me.  Not at all. 

The bumper stickers are calling us to be our 9/12 self.  The idea is that we live as the best American we can, like we did on that day when we all resolved to live a life of purpose.  That’s exactly how we should be living.  I would guess that if we all lived in that mind set, we would not be in the position we are today.

But here we are.  Entitlement, greed, and quick fixes have brought us to the brink of economic disaster.  It’s so much more than that.  Everything we take for granted – our national security, our safety, innovation, the environmental debate, even the abortion controversy – will lie forgotten if our economy fails.  So we replace our dreams and the hopes we have for our children with Tums and Tylenol PM.  What we did not notice, because it crept in behind the distraction of the holidays, is that we cannot be our 9/12 selves because we are re-living 9/11 in slow motion.  It is as though Good Morning America has been doing a frame-by-frame since the first plane came into sight.  Slowly, with time to contemplate and fear, we are watching our world change forever.  And, once again, we are not in control.  It is being done to us and we are but spectators, anticipating impact, just waiting for the frames to speed up.  On 9/11, it happened fast.  I remember looking around at every intersection on my way to work.  Everyone was stunned; at one light, all six lanes of traffic sat through a green.  Then at work all of us speculated, some cried.  Many checked on loved ones.  Nobody worked.  We all held our breath and listened for news instead.  Then we went home to our families, held them close, thanked God, and planned for a better tomorrow.  That’s when America united. 

I learned the true meaning of Joy on the evening of September 11th.  There were flags everywhere.  Donations were flying in before anyone even knew where to send them and the media had nothing disparaging to say.  In fact, many talking heads were teary.  Joy is not synonymous with happiness.  Joy is the assurance that trials are temporary.  The pain may linger, but with it comes the sweetly honed pleasure of the memories left from the good times and the hope for tomorrow. 

Hope.  Hope is a strong word.  It is what gives Americans their strength.  There is no nation on earth that offers the promise this country does.  Even now that we are bruised, we can still rest in a hope we take for granted.  But right now, right at this moment, we are watching that plane.  We are wondering if we get to hold onto our hope.  What we need to do, to move on and become our 9/12 selves, is re-evaluate hope.  In this time, we cannot count put our hope into anything that we cannot control.  It has to be personal and we have to be strong enough to hold on.

We may be holding on for September 12th, but it is actually here.  We may feel downtrodden and fearful and just barely American.  But we need to remember something.  This weekend, people will be married.  Right now, a baby is crying for the very first time.  There is a teenage girl talking to her best friend about her first kiss.  A boy in second grade is tugging the hair of the girl in front of him.  Next month, we may not be able to buy a Chevrolet and we may even cancel trips to Disney World this summer, but life still carries on.  No matter the nation we leave to our children, the human spirit is the true gift we leave behind.  If we can show them joy in the midst of adversity, they will grow into joyous lives.  Fear and dread are far outweighed by our capacity to love.  Where love lives, so does hope.  Where hope lives, so does greatness.




What’s here

SuzyJ’s Tweets

Error: Twitter did not respond. Please wait a few minutes and refresh this page.

Advertisements