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Archive for the ‘Financial Solutions’ Category

A little off of our standard road…

I would like to share with my readers the first chapter of  a fantastic new Science Fiction novel from my good friend Robin Parrish, author of the Dominion Trilogy.  The book is titled Offworld, and is available in stores now.  Enjoy!

From my review of Parrish’s Fearless:

Parrish quickly proves that he is far from a one-hit wonder….  I can’t imagine anything less than… the style of a blockbuster film. One thing’s for sure – The Dominion Trilogy should have a place on any suspense fans’ bookshelf next to Stephen King and Dean Koontz.


Offworld

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Getting ready for Saturday’s Job & Finance Fair in Cape Coral, 10-2 at Family of God Church: http://www.Familyofgod.us

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Carl Emerson, over at Freedom Analysis, posted an extremely insightful article on the “stimulus” debate that I wanted to share with my readers.  Regardless of your political leanings, this is something you need to consider…

The Kool-Aid is flowing in Washington, D.C.

Sadly, lawmakers are actually batting around the notion of passing what is currently being estimated as an $800 Billion “stimulus” package.

First let me say that if we actually had $800 Billion “in the bank,” as it were, my opinion on this might be different. But the fact of the matter is that we are talking about borrowing this money… on top of all of the money we’ve already borrowed.

And before you write off my opinion as somehow “partisan” or otherwise neatly in support of one “side” or the other in this debate, let me hit you with a bit of common sense:

You can’t borrow your way out of debt.

This is a lesson learned the hard way. I’ve tried it. Let me tell you… it simply doesn’t work.

A National Addiction

We — as a nation — are addicted to debt. And so far we — as a nation — have not felt the sting of it. Sure… many families have learned that excessive borrowing against an asset which varies in value can land you in foreclosure.  That stings.  But as a nation, we’ve not yet faced the painful consequences of all the borrowing that we have done.

This is precisely why we continue to debate this bill as though it were actually a plausible solution.

Once you realize that you have a harmful addiction, you must do any and everything in your power to end the addiction. No matter how painful it may seem (or actually be).

But we — as a nation — have decided that more of our destructive vice is preferable to detox.

The fact is that it used to be a shame to “mortgage the farm.” It meant that you had managed things poorly. It meant that you had not planned well enough for the future. It meant that you weren’t planning well enough for your heirs.

Granted, in an agricultural enterprise, there are years (and sometimes series of years) where drought or other conditions affect the crops and things go badly. But everyone knows this and it’s all the more reason why shrewd farmers plan for it by storing things up.

But our pattern of handing off responsibility every few years and electing leaders — at the national or state level, in all branches of government — who are more concerned about short-term results, their approval ratings and their “legacies” than they are about the real impact of their decisions has made it all too easy to dig ourselves deeper and deeper into this devastating hole.

And whether it’s been done ignorantly or with complicity, we the people have enslaved ourselves through the actions of these leaders.

It’s been done by Republicans and Democrats alike. It’s been done by Independents and others. It’s all too easy to simply borrow more than it is to address the real issues. And as anyone who treated their home equity like an ATM machine during the real estate boom years can tell you, it’s all fine and good until you can’t borrow anymore.

And then the pain of dealing with the real issues is far greater because of the multiplied impact of the debt.

As the ancient proverb says:

The borrower is servant to the lender.

We have enslaved ourselves. And most of us don’t even know it yet. We’ll realize it one day when we wake up with the sting and the scars of the whip extracting its “pound of flesh.” And we’ll have no one to blame but ourselves.

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On September 29, 2008, I had one of my best days ever on this website.  In fact, I had the second highest hit count ever.  The next two days following also had similarly high hit counts.  Why?  Because of an article I wrote back in April of 2007, titled, “Wachovia Looking Forward to Screwing Customers, Shareholders.”  You can utilize the link to read the whole article, but the gist is this, Wachovia purchased a company known as Golden West Financial Corp, which specialized in “creative financing,” vaulting Wachovia to the #2 slot as an owner/servicer of such wonderful mortgages as Option ARMs and Income-Stated loans.  I went on to predict that 2-4 years from then, that Wachovia shareholders and customers would feel a serious pinch.  Well, depending on who you talk to, whether it was inevitable or was accelerated by the media’s need for ‘forced panic,’ my prediction was about 6 to 24 months off.

Let me be the first to say this, cause I haven’t noticed anyone else pointing it out yet.  The terrorists won.  Go figure.  Let’s step back a few years to September 11, 2001.  If you’ll recall, almost everyone who predicts such things was claiming that the terrorists who flew the planes into the World Trade Center towers and the Pentagon were doing it, for a large part, in an attempt to destabilize the United States economy.  What they did instead was rally Americans to stand beside each other and re-created the sense of community that many citizens had lost.  In fact, due to Americans coming together, the economy actually rose significantly.  Yes, the stock market fell, predictably, but it recovered a lot faster than such events in the past and things seemed very rosy for the American public and the American dream.

Flash-forward seven years and the economy is doing just what the terrorists hoped it would, crumbling under the weight of Capitalist greed.  You see, regardless of which political side you stand on, it’s hard to deny that there is one thing that got us into this mess – greed.  From the family who wants to buy a home larger than they can afford, to the mortgage broker who gets them that mortgage, knowing they’ll probably end up in the hole, but happy with his commission check, to the banks who approved such loans, looking for larger paydays, to government regulators and so-called watchdogs who turned a blind eye to such practices, to Fannie Mae and Freddie Mac who bought the mortgages, knowing that they probably weren’t good investments, but assuring the investing public, that mortgage-based securities were the safest non-insured investments.

And now, we have an $811-Billion bailout package, approved by Congress and the President.  And no, I didn’t misquote that – pull out your calculator and do the math.  For that matter, who needs the bailout?  JP Morgan Chase had the wherewithal to purchase Washington Mutual, Citi grabbed Wachovia (or did they?) and Bank of America picked up Merrill Lynch and Countrywide.

Personally, I am of the opinion that this nation could use a revisit to the Great Depression reality check.  This bailout is not going to help in the long run, just delay things again a little more.  And if our legislators and Chief of State want to really help, they’d send the American public the money, in the form of individually-coded vouchers that they could only utilize to pay their mortgage or rent.  That way, the banks get bailed out, people get to keep their homes, and the economy has a chance of gently recovering.  Trust me, in the long run, the 11% interest they’ll charge the banks for the bailout cash won’t scratch the surface of the long-term effects of this action.

You may be wondering how even the Republicans can support this bailout.  The answer is easy.  You see, we don’t have a true Capitalist society here in the United States anymore.  We haven’t since – guess when – that’s right, the 1930’s, when our esteemed government tried to fix the last Great Depression.

You remember, when Congress and FDR passed “The New Deal” – various legislations creating Welfare, Medicare, Medicaid, Social Security, the FDIC, extending mortgages past seven year terms, the Agricultural Adjustment Act (which pays farmers NOT to grow crops), and most importantly, the Banking Act of 1933 (the second Glass-Steagall Act), which paved the way for the elimination of the Gold Standard.

For the uninitiated, the Gold Standard states that gold is the standard of value for a country’s currency.  In other words, a hundred dollar bill could be redeemed for $100 worth of gold.  You may recall your grandparents talking about gold certificates or silver certificates – those are currency, which, by definition, still fall under the gold standard.  What is most important about the Gold Standard is that it defined the value of our money by “hard currency.”  Without that definition, our money is barely worth the paper it is printed on – as many folks are now learning.  Nixon sealed the deal back in August of 1971, completely eliminating the gold standard, which has not been used by any country since then.  Instead, we use a Fiat money system, which means that our money is intrinsically useless; it is merely a medium of exchange.

From FDR’s own inaugural speech,

Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

…there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing. Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness of obligations, on faithful protection, on unselfish performance; without them it cannot live.

There must be a strict supervision of all banking and credits and investments. There must be an end to speculation with other people’s money. And there must be provision for an adequate but sound currency…”

So all we have to fear is fear itself?  Did I mention how much it cost the US government to finance the various aspects of Roosevelt’s New Deal?  Somewhere between $10 and $20-Billion, over a nine year period, ending with World War II.  Yes, that’s right, just in 1936 alone, the cost was $9-BILLION!  $9-Billion, in 1936! Taxes went up, up, up, needless to say.  Do I need mention that almost all of the programs FDR initiated that still exist today are already Billions of dollars in arrears?  Now we’ve initiated a single bank bailout program that will INITIALLY cost nearly 80-times the total payout for FDR’s programs over a 10-year period.  Hey, maybe we can get Germany to try and take over the world again.

In all seriousness, have we learned nothing from our grandparent’s generation who lived through this mess back in the 30’s?  Apparently not, since we’re on track to fall once more into the well.  Now, there were some really great things that came out of FDR’s reign in the White House.  For one, labor unions and other workforce reforms were put into place that are still in effect which have had a positive effect on our economy – although I would suggest that many of the labor unions have run their course at this point.

But back to the United States economic policies – since FDR’s New Deal, American capitalism has actually been a form of Socialized Capitalism.  Adam Smith would be rolling in his grave.  Again, this was not necessarily a bad thing, as it did help American workers get back on their feet and curtailed industrialist greed, at least temporarily.  In fact, John Maynard Keynes predicted that if the reforms were carried on to their logical conclusion, that we would be working shorter hours and earning more money in just a few decades.

Unfortunately, his theories did not fully anticipate the government’s attempts to siphon-off man hours to help fight the 1950’s Cold War with Russia.  Or the continued movement of women into the workforce that began in 1950 and rose significantly through the 70’s and 80’s.  Not to mention the fact that there is some evidence to suggest that longer working hours leads to sustained inflation, which leads to longer working hours, which leads to – well, you see my point.

So now that we have Socialized Capitalism, where we routinely bail out individuals – to a point where we need some sweeping reforms of the welfare and unemployment programs – so why not bail out corporate America when it gets greedy and overreaching?

This isn’t new news.  Larry Burkett predicted this back in 1991, in his classic, but now out of print book, The Coming Economic Earthquake.  The book includes a chapter that gives a fictionalized account of how things might play out in 1999, if Larry was right.  What’s scary is how very un-fictional much of his story sounds now.  Economic Journalists Neil Howe and Phillip Longman pointed out back in 1992 that government spending for entitlements was out of control and if not curtailed would eventually result in disaster.  Meanwhile Pastor Gary Keesee may have wished his latest book, Fixing the Money Thing, wherein he explains a number of the concept his Forward Financial Group have used to help people out of debt, had come out a few weeks later (or maybe a few months earlier).  In the early chapters, he lays the groundwork of what is happening in the country and also has vision of the future, which turns out to be a little more conservative, but still a horribly scary picture of what our next few months may look like.

And in the end, the terrorists have won.  No matter how this eventually plays out, they’ve proven that Americans are greedy, capitalist fiends.  What’s more, we’ve also managed to prove that our grand system of capitalism is a fraudulent, failed beast – after all, if it really worked, we’d let these banks flounder and recover on their own.  And neither candidate is willing to say which of their programs they may have to eliminate to help pay for this bailout.  My guess is, regardless of who gets elected, we aren’t going to see another personalized economic stimulus package, but rather, higher taxes across the board, for everything from income to foreign goods (tariffs) to telecommunications to tobacco and alcohol and sales – anything to help “stimulate” the economy by saving some bank CEOs’ butts.  The same banks that now charge fees for everything from using the ATM, to cashing a check, to talking to a teller or processing a payment over the phone or Internet.

The worst part is, the American people, as far as I can tell, are largely against the bailout, but the politicians, by and large, ignored literally thousands of calls to the switchboard – not by some artificial grassroots organizations, but from hundreds of actual citizens, taking an interest in the government, trying to let our elected officials know how they thought the bailout should be handled.  They were, unfortunately ignored.  Now, while I’m not usually one to jump on the bandwagon – I usually lean towards the idea that there may have been information that elected officials were privy to that the public is not – I think in this case, Congress and the President should have listened to the people.  And just in case you wondered, here are links to which people voted for and against the bailout – in the House and the Senate.  You might want to take that into account when you head to the polls later this year.

I wish I had more answers to offer, but I don’t, other than to offer a couple of words of wisdom from God’s Word, spoken to the Israelites, “What other nation is so great as to have their gods near them the way the LORD our God is near us whenever we pray to him?  …Only be careful, and watch yourselves closely so that you do not forget the things your eyes have seen or let them slip from your heart as long as you live. Teach them to your children and to their children after them.  Remember the day… if from there you seek the LORD your God, you will find him if you look for him with all your heart and with all your soul.  When you are in distress and all these things have happened to you, then in later days you will return to the LORD your God and obey him.  For the LORD your God is a merciful God; he will not abandon or destroy you or forget the covenant with your forefathers, which he confirmed to them by oath.” (Deuteronomy 4: 7, 9, 29-31)

And, “if my people, who are called by my name, will humble themselves and pray and seek my face and turn from their wicked ways, then will I hear from heaven and will forgive their sin and will heal their land.  Now my eyes will be open and my ears attentive to the prayers offered in this place.” (2 Chronicles 7:14-15)

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