Perry Glasser

Posts Tagged ‘banks’

CONSPIRACY THEORY

In Business, Economics, Economy, Finance, Political Economy, Politics, Wall Street on February 12, 2016 at 1:09 pm
Janet Yellen

Wizard-in-Chief

Dollar$, always eager to explain the inexplicable world of Finance, that realm in which Wall Street Wizards and Corporate Buccaneers run rampant in their never-ending struggle to own, pervert, master, and control Political Weasels, has developed a theory.

 

Why should Plain Money Talk  be any different from every other blog?

 FACTS

2015 saw:

  • unemployment drop to new lows,
  • minimum wage adjusted up,
  • auto sales rise to recent highs,
  • home sales rise to recent highs with no speculative bubble,
  • the cost of gasoline and heating oil sink to new lows,
  • the United States become an oil exporter.

The Fed is so concerned at all this good news that Janet Yellen has begun to tighte credit, a tactic employed to throttle growth and forestall inflation. Yes, the Wizard-in-Chief, Janet Yellen, is worried things are too good.

Some apologist is sure to point out that the second largest economy in the world, China, is hurting. Dollar$ will give that point of view some quick attention.

CHINA

China’s weakening economy should mean the cost of living in the US will drop, meaning you and I will have more money in our pockets to pay off debt or buy more stuff, everything from furniture to T-shirts at Wal-Mart. The US – China trade balance is heavily weighted toward China—the US imports far more goods from China than China imports from the US. If those good become less expensive, the American consumer benefits. This does NOT harm American business.  Maintaining profit margins at lower prices is easy to do. The cost of commodities the world over is dropping because of the slowdown in Chinese demand. Commodities are the stuff that comes out of the ground from tin to lumber and to gold, the stuff from which everything else is made. Everything should be getting cheaper. Every time Wizards predict that Apple will stop selling iPhones in Shanghai, Apple sells another few million units, but at a lesser price. With inexpensive gasoline, Citizens will be driving  to Disneyworld this year, and they will be able to afford the Mouse’s uptick in prices.

This phenomenon confounds the Wizards., who have learned that bad predictions are clickbait, and clicks drive revenues. No one watches CNN until the shit hits the fan and the shelter under the table grows crowded and cramped.

In the face of positive economic news, the US stock market should be soaring. Instead, the Dow-Jones average has stepped off a cliff in 2016, shedding 2,000 points in 8 weeks, more than a trillion dollars worth of value has been erased from the books.

THE CONSPIRACY

Cui bono?

For the past 30 years,  at every presidential election, commentators complained of the choice between Tweedledee and Tweedledum. But this year, it ain’t so.

weasel candidates in days of yore.

US Presidential Candidates Since 1964

 

This year, on the one hand, we have a wealthy, self-funded foul-mouthed injudicious narcissist celebrity never elected to anything anywhere who is much favored by people who have felt disenfranchised for a generation. On the other hand, we have a New York Jew now from Vermont who has never accepted a dime from Buccaneers or Wizards. An older man, his followers are youth because he demands payback from the banks and companies who were too big to fail and in the past 20 years have sucked the economy dry, indenturing students with education debt. On the third hand, we have a woman who is indebted to the old politics, and on the fourth hand, we have a clown car of interchangeable Republicans who lacking economic issues promise to disallow what your neighbors do in their bedrooms while coyly ignoring that for those promises to be fulfilled they will have to rollback several Supreme Court decisions by what by any account has been a conservative court.

Dollar$ sees the common threat. The two leading candidates are not in thrall to Wizard or Buccaneers. Should either get elected, the summer house in the Hamptons, the private jet, and the 10-room Manhattan  condo are all in jeopardy.

How to dissuade Citizens from voting for either?

Scare the piss out of them. Scare the piss out of them by manipulating stock prices downward. It’s only temporary, and it’s not as tricky as it sounds.

  • Claim good news is bad.
  • Threaten us with defunded pensions, evaporating college savings, and the elimination of savings toward the American Dream, a house.
  • Imply that unless Citizens vote the status quo and allow rapacious policies to continue, grass will grow on Main Street as economic activity collapses.

The stock markets should be soaring, but never forget that 90 percent of all trading is electronic and that computer algorithms engage in a global battle to take advantage of a quarter point’s worth of arbitrage. There is no longer any such thing as investor sentiment. As they now say in Wizard country, My algorithm can beat up your algorithm!

Fear is the most potent means of keeping the harridans out of the White House. Without the creation of synthetic Terror, Weasel Business As Usual will come to a halt.

O the horror!

 

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My Debt, Your Debt, Greek Debt

In Economics, Political Economy, Politics, Wall Street on July 17, 2015 at 6:40 pm

Wearily, Dollar$ emerges from semi-retirement with the vague idea of dispelling some of the more blatantly moronic opinions surrounding the current Greek debt crisis.

There are all manner of weasels infesting the world, not those cute critters, but the kind who live for re-election. As a refresher, Dollar$ asks readers to remind themselves on the sole priority that exists in democratic weaseldom–say anything, no matter how vague or false because relinquishing power is too horrible to think of.

Fat Eddie on the left.

Fat Eddie on the left.

This may be why it takes all of 48 hours for Alexis Tsipras, Greek’s Weasel-in-Chief, to reverse himself on what to do about Greek debt. You let citizens vote, you rouse the rabble, and then you renegotiate with the European Wizards on Wizard terms and screw your citizens.

GRIM TRUTHS
Economics is called the grim science for a reason.

One of the more grim truths of Economics is that when you get a loan, you gotta pay the money back.  Dollar$ learned this lesson from his old buddy, Fat Eddie, who spent many of his days on a park bench in the sun lending money at interest to longshoreman on the Brooklyn docks. Occasionally, for free, he’d share wisdom with callow youth.

I had a hot horse at Aqueduct. I wanted $100. The animal was going to go off at 20-1.

“I can pay you back tonight.”

“No kid. I like you. I appreciate your enthusiasm, and I even agree the horse looks good. But have you considered how you will get me my money and 5 points interest if the horse loses?”

“The horse is a lock.”

“What if he comes up lame? The jockey falls off? Or the horse has a heart attack?  Steps in a gopher hole? It’s a horse, for crissakes.”

“You can have my bicycle as security.”

“What am I gonna do with a freaking bicycle? Get outta here. Do something wholesome. Play blackjack in the park. Roll dice in an alley. Roll a drunk in an alley. Something wholesome. Are the poolrooms closed? Just get outta here.”

So as he slapped the back of my head, I learned my lesson from from Fat Eddie. No one wants to do business with a dead-beat.

It is bad for business.

DEBT
There are two kinds of debt, consumer and capital. Idiots crying for Greece and its screwed population do not know the difference, possibly because they are long-term debtors who have never experienced anything other than being a consumer.

  • Consumer Debt is money borrowed to purchase goods that will be consumed.  Nothing amazing there, right? You consume, bread, gasoline, shoes, and sealing wax. Once it is consumed, it is gone. If you do not have a source of income, you will eventually find paying back consumer debt impossible. Credit card companies will call you at odd hours. Your bills will be handed over to collectors. The road to a happy life requires that you NEVER assume consumer debt you cannot pay back by the end of a month. Credit cards issued by banks charge rates that make would Fat Eddie blush. The only exception is if you are temporarily embarrassed and the kid needs eyeglasses or new shoes. The key is the word temporarily. If your situation is not temporary, you really need either public assistance or a new job. We live in America. If you have to go bankrupt because you cannot pay back, the court will protect you from shylocks and collection agencies. You get a fresh start. No one is happy, and you will not be able to borrow dime #1 for several year, but you can get out of a jam. We no longer populate debtor’s prisons.
  • Capital Debt is money borrowed to make more money. You might hear it called “leverage.” If you are a going concern–a business or have a decent job–CAPITAL DEBT IS A GOOD THING! Why not pay 4 percent on the expectation you will make 8%? Sure, there is risk, but it is the kind of risk even Fat Eddie can respect. Your house mortgage is an asset  that will likely increase in value, Your car enables you to work beyond walking distance from where you live. Your education is a definite asset that will pay off many times what it costs to borrow–provided you do not borrow $150,000 to become a basket-weaver. A bank may be persuaded to loan you  the capital you need to start a business if the bank thinks the business can generate enough profit to sustain you, your employees, and still pay off the interest. If the bank thinks all this is true, the bank will throw money at you.

GREECE

Since 2001, Greece has borrowed money for capital investment, a step required for admission to the European Union and all the expected blessings of a single European currency.

Alas–Greek weasels confused Capital and Consumer debt. Instead of making its citizens more productive, a stratagem that would allow the debt to be paid off, duly elected weasels enforced a low retirement age. Since collecting taxes is nowhere popular, Greek weasel leadership looked the other way as tax evasion became a way of life for the people of Greece. The repeated bailouts were a vain hope by Europe that Greece would understand it was not a teenager with Daddy’s credit card, but a going concern responsible to its citizens and the international community.

Like Fat Eddie, the lenders want their money back. What is German going to do with a frigging bicycle? There are no assets waiting to be confiscated. This is a sovereign nation, for crissakes. No one is showing up to repo the Parthenon.

The knuckleheads who blame the banks for having seduced Greece into loans it cannot pay want to remember Fat Eddie. No one wants to lend money to a deadbeat. It’s bad for business.

What Greece needs is a weasel overhaul, not debt forgiveness.

WEALTH INEQUALITY

In Business, Economics, Economy, EDUCATION, Finance, Political Economy, Politics, TAXES on March 8, 2014 at 12:40 pm

bossy sisterWhenever my big sister played Monopoly, if the game was going against her she would toss the playing board in the air. My hotels and houses would scatter across the living room carpet as she shouted, “Salugi!” (a New York-ism pronounced “suh-LOO-gee”)and lunged across the table to confiscate most of my deeds, especially Boardwalk and Park Place.

When I was able to read the rules of the game, I learned there was no allowance for tossing the game in the air or confiscating my property. My sister was cheating! But since I was 8 and she was 14, she was able to meet my accusation by beating me up.

The History of Wealth Redistribution

My sister was a revolutionary.

To be sure, Dollar$ reminds readers that rebels object to rules, but revolutionaries rewrite them. Rebellions are common; revolutions are rare.

The folks who threw the board in the air in the past have cried, “Justice!” not “Salugi!” They had names like Washington, Lenin, Mao, and Castro.

Note that political persuasion—Left or Right—has nothing to do with revolutionary status. Mao and Washington might have discussed military tactics, but Dollar$ suggests they would have come to no agreement about economic systems or the function of government.

The Function of Governmentpreamble-20532-20120118-55

It’s less complicated than Monopoly.

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.

Washington (the dude on the $1) believed that the function of government was primarily to protect the rights of the individual, rights that most often needed protection from government itself. If no military personnel have been billeted in your living room, thank Washington.

Washington may have noted that to promote the general welfare required some redistribution of wealth to insure equal opportunity and to insure domestic tranquility, but that does not guarantee equality of status among citizens.

Washington’s pal was the first Secretary of the Treasury, Hamilton (the dude on the $20). Hamilton understood that wealth concentration in institution like banks were a social good, provided the bank used that concentration of wealth to fund the visions of a greater society, lending money to visionaries and giving stability to the economic infrastructure by protecting wealth from being squandered by a ruling class on personal indulgences. Hamilton, an orphan at 11 and the illegitimate son a British West Indies plantation owner, would likely not endorse a notion that the function of government was to protect the rights of the filthy rich to become obscenely rich.

The Situation Today

Some of Dollar$’s best friends sink into fuzzy thinking when talk comes around to how wealth is created and distributed in the United States. They lose sleep fearful that someone, somehow, somewhere, is leveraging assets to optimize profit.  They simple-mindedly believe that economics is a zero-sum game and cannot imagine economic growth. If an organization makes a dollar, someone must be a dollar poorer.

No. That simply is untrue. If it were so, you and I would enjoy the same standard of living as Washington and Hamilton. But the fact is that economies grow.  At issue is how they grow, not whether they should grow at all, though there are indeed some who think that a good idea, too.

The deluded friends of Dollar$ from time to time propose bold programs to redistribute wealth, programs they understand as pursuing Justice.

There two reasons those cannot and should not work.

1. Nowhere in the US Constitution will one find the word corporation. True, we reserve the right to free assembly, but that does not elevate any assembly of citizens devoted to profit a guaranteed right to speak lies in its advertising or compensate its directors and executive officers so rapaciously that shareholders who hope to partake of the boons of the system see their profit participation reduced by rapacious Buccaneers.

Oliver-Wendell-Jr-Holmes-9342405-1-402
Not Sherlock; not Mycroft, just Oliver

2. Oliver Wendell Holmes, Jr. noted Taxes are the price we pay for a civilized society. The idea is carved in stone on the IRS building in DC., but let’s note that corporations do not pay taxes, they collect them.  If you think they not, you are submitting to a distraction, a buy-in to the fallacy above.

Dollar$ hastens to explain that citizens are consumers. Tax us, and we bleed money. Bleeding, we consume or save less, neither of which are good things, though it does not follow consumers should not be taxed. Civilization is messy, but must be purchased. But to a corporation, taxes are a cost of doing business, like labor, supplies, and logistics.

Raise corporate tax rates, and corporations will only raise their prices.

Guess who pays the difference?

Today’s  Lesson

Remember, friends, we cannot pursue social justice by confiscating wealth. We can, however:

  • Limit executive compensation by law to some multiple of the lowest worker in an organization;
  • Create progressive income tax brackets that limit the shift of American wealth to the rich from the poor;
  • Lower repatriation taxes so that companies that keep their money off-shore are encouraged to bring it home where they can invest in more factories and create jobs here–better to collect 15 percent of something than 30 percent of nothing;
  • Demand that higher education is a matter of national security, and so to insure the blessings of liberty are  free to all;
  • To insure the blessings of liberty on ourselves and our posterity, give tax breaks to organizations that train employees instead of demanding that future employees borrow so much money to gain perceived needed skills that students have a choice of poverty of a life of indentured servitude;
  • Regulate publically traded corporations by disallowing aggregation of profits as cash without paying shareholder dividends, a means to share in that profit. Can we stop the nonsense that hoarding cash is good corporate financial strategy when all it does is spike share prices that are subsequently used to calculate executive performance compensation? (Are you listening Apple Computer?)
  • Return to personal income tax rates that  reflect the needs of our society. Under Eisenhower, we built the interstate highway system and taxed marginal income as much as 92 percent.

We don’t have to throw the game board in the air to start over again: all we need to do is play by the rules.

BITCOIN DENOUEMENT

In Business, Economics, Economy, EDUCATION, Finance, Old Farts Financial Network, Personal Finance on February 28, 2014 at 2:43 pm
Mt Gox Depositors

Mt Gox Depositors

Mt Gox sought bankruptcy protection in Japan today. The Bitcoin exchange is no more.

Dollar$ wonders if Japan can supply sufficient protection from a mob of angry depositors carrying torches and pitchforks led by CEO Mark Karpeles’ mother. A half billion worth of the non-currency has vanished.

Poof!

 

20-Something Thinking

Dollar$ admits to little sympathy to the casual 20-Something investor who figured the Old Farts Financial Network needed some shaking up.  After all, everyone knows that sex traffickers, pornographers, drug dealers, and arms merchants in dire need of a traceless currency would never steal. They have financial rights, too! Bitcoin was a product that was needed!

The OFFN plainly did not understand how the internet is a network of stalwart enlightened libertarians.

The 20-Somethings also believed that profits of 1,000 percent in a year was the justified return to them for their courage, foresight, minor hygiene problems, and a steady diet of cold pizza and Red Bull while sitting in front of a computer screen.

Really, kids, you have to get out more.

They know for sure that to get wealthy in America today is a plausible idea and a hell of a marketing department.  Anyone knows that!  Just ask the good people  at WorldCom, Pets.com, Enron, Furniture.com, or any other get-rich- quick scheme the OFFN lived through in the past few decades. 

Could Boomers have all the good stuff because they worked for it? Why know anything when you can invent a brave, new world and hope to be the last fool out the door before the collapse.

Looks like it is too late, now.  bitcoin

 

WHAT WE TALK ABOUT WHEN WE TALK ABOUT BITCOIN

In Business, Economics, Economy, EDUCATION, Finance, Wall Street on February 26, 2014 at 6:53 pm

dollar20sign1Dollar$ is unable to resist the didactic opportunity of this ongoing story, but is not sorry to hit the many points over and over again.

Citizens can recover from flu; financial ignorance will cripple a lifetime.

Dollar$ expressed doubt about the entire enterprise shortly before Mt.Gox went dark, but finds the idea that sex traffickers, arms merchants, dope dealers, and other folks who need untraceable transactions are losing money to hackers and thieves not terribly disturbing

As for speculators caught in the downdraft, what did you expect for an asset that went from $12 $1,000+?  You did not have to be born in 1600 to know it was Black Tulip Time in Cyberspace again.

Some fools never learn.

You know a news story has legs when major news outlets are paying attention, but Dollar$ notes for the record that by the time The New York Times, ABC-News, or the Wall Street Journal catch the scent of a story, it is already too late for a Citizen. That aroma they detect is the aroma of burnt arse. You’d be far better off monitoring blogs—and so we humbly offer Dollar$.

The Great Casino

Banks LOVE transactions, which means any time money changes hands, as long as they are involved. That means credit cards and checks, and for most of us that means 90 percent of what we spend.

With small fees, they will eventually will own the universe. If there are parallel worlds, they will own them, too.

Think not?

Round up some friends and invite them to play poker at that neat green felt table in your garage. I won’t tell the cops if you don’t.

Supply poker chips, artichoke dip, chill the beer, but DO NOT PLAY CARDS. (Gamble??? Have I taught you NOTHING?? Are you an idiot???)

Instead of playing in your friendly game, after every hand, no matter how large or small the pot, extract a mere 2% before the winner rakes in 98%.

After enough hands, at 2% per hand, you will have every dime in the room. You will also have the keys to the cars parked in the driveway, several deeds to houses, and most of what had been future college tuition for the children of your players.

Look. Yours is a a friendly game. Your players are losing really slowly.

By comparison, Roulette at a Las Vegas casino rakes more than 5 percent. 220px-Roulette_-_detailThe amount dropped depends only on how many times the wheel spins. In your garage, the amount a player wins or loses in a night depends how fast new hands of poker can be dealt. Sure, a player or two will win many hands, and they may even quit winners some nights, but as long as the wheel is in motion and the cards are fluttering across the table, the house will eventually take it all.

The rake for Visa and MasterCard, depending on the merchant, is  between 2.5 percent and 3 percent. Walmart pays less—lots of volume. Mom and Pops Pottery Place pays more. The reason you can get discounted gas for cash  is that currency keep a transaction out of the hands of the bank.

And now you know why the financial regulators are sitting on their hands as the BitCoin Bubble floats away.

It ain’t their action.

Dollar$ Wizard Award #3

In Business, Finance, Politics on September 28, 2008 at 10:58 am

Dollar$ salutes yet another Wizard, Edward L. Yingling, president and CEO of American Bankers Association!

Dollar$ No Bull Definition: ABA = the bank lobby.

On September 23, Yingling released a statement expressing “disappointment” at the passing of H.R. 5244, the House of Representatives bill some call “The Creditcard Holders’ Bill of Rights.” The fools who represent us passed this evil little bill with a vote of 312-112, roughly 3 to 1. What can our reps be smoking?

Imagine! Elected officials have the mad idea that 45 days notice ought to be required for a credit card issuer to change interest rates! Our elected officials think 25 days notice on your credit card bills ought to be ordinary! They think the phrase “fixed rate” ought to mean…well, “fixed.” How will banks make money??

With his eye on the ball and the unrestricted right to screw the consumer, Yingling says, ““Sometimes things that appear attractive on the surface often come with too high a price tag. Increasing prices for consumers, reducing low-cost credit alternatives for small businesses, and causing more ripples in the securitization market make little sense.”

Ah, if only Wizard Yingling’s foresight was available to us when his organization’s members embraced uncreditworthy mortgages! If only Wizard Yingling’s insight about banks begging for $700 billion taxpayers dollars to haul their chestnuts out of the wreckage of the American economy!

Bank business; bank profit. Bank losses, taxpayer bill. 

So….Stand! Salute!

For distributing a strong dose of hypocrisy-laced Kool-Aid he’d never drink, for self-impotance brought to new levels, for fautous stupidity, for rapaciousness, greed, and disdain for the public,

The Dollar$ Wizard Award goes to Edward Yingling!

Dollar$ readers who wish to share their opinion of Mr Yingling’s enlightened stance should not hesitate to contact Yingling’s PR serfs.

ABA Media Contact: Peter Garuccio
(202) 663-5452
E-mail: pgarucci@aba.com

Let’s not be shy now… tell ’em how we REALLY feel!

Money Markets – the little footnote

In Business, Economics, Finance, Personal Finance, Politics, Wall Street on September 22, 2008 at 8:40 am

Money market mutual funds take lots of small deposits from you and me and buy big honkin’s notes and bonds for us, getting us a higher rate of return than we can get at the bank.  It’s a nice idea–provided the Wizards who are making those investments for us buy stable, conservative, reasonable paper.

And they have, usually. But with extraordinary financial times, comes extraordinary risks (as well as extraordinary opportunities)–and when Wall Street announced last week that all money market funds were guaranteed, the Wizards sort of fibbed, put their hands behind their backs, and crossed their fingers.

They whispered the part about how all deposits are insured, provided they were made before September 19. Putting money in a money market mutual fund after that date is to accept additional risk.

The Wizards make money by accepting assets (our dough) for their management. Little streams of capital become torrents of billions. They invest billions at 7%, give us 5.5 %, and send their kids to Ivy League colleges with vacations in Barbados, all funded by the the difference between take-in and paid-out.  One and a half percent of a several billion dollars is not pennies. The more they manage, they more they make.  And over in the mortgage market, they take the billions and lend it to real estate buyers.

That’s the theory, anyway.

Leave the mortgage market for another day: money market managers compete for our dough by bragging about their fund’s return. 

Uh-oh–that gives these Wizards incentive to expose our money to higher risks. Reward follows risk, right? The more of our money they manage, the more they make.

No one is out putting money market capital on a horse in the fifth race, but up until a year ago the mortgage market looked like a sure thing.  After all, the vast bulk of mortgages were conforming to FHA standards, and the Fed had quasi-government agencies guaranteeing the notes, Fannie Mae and Freddie Mac.

What could go wrong?

Suddenly, money market fund managers are talking about maybe if things get really really bad, just knocking down the par value of each share from $1.00 to something a teeny bit less, let’s say $.98.

But things may be getting really, really bad. That example would be a 2% loss–but only for new money under managment after September 19.

What should you do?  Well, your corner bank offers $100,000 worth of insurance on savings.  If you’ve got that kind of new cash, accept the lower interest for the higher security and don’t let the Wizards deceive you.

Oh, and if you have MORE than $100k, open multiple accounts at different banks.

Watch those dollar$.