I haven't posted anything here in a little while because I've been preoccupied with the Occupy Wall Street protest. Personally, I think it's high time Americans stood up and said, "We've had enough!" and I think it's great that the movement has gone global. Thomas Jefferson said, "I hold it that a little rebellion now and then is a good thing, and as necessary in the political world as storms in the physical.", and, "The spirit of resistance to government is so valuable on certain occasions, that I wish it to be always kept alive. It will often be exercised when wrong, but better so than not to be exercised at all. I like a little rebellion now and then. It is like a storm in the Atmosphere." What's happening now is a good thing.
I wanted to take some time today to offer some ideas on why this rebellion has risen up. I am in no way a spokesperson for any Occupy event/movement, so don't misunderstand, these are just the thoughts of one citizen.
I believe far too many Americans believe that we have a capitalist economy. Far too many Americans believe we have a democracy. Both of these are false and I believe that the misperceptions of these two things have helped politicians to polarize party lines.
The U.S. government was not founded as a democracy. The founding fathers did not trust the average citizen to not be taken in by a silver-tongued devil. Looking at the country and it's media today it could be argued that the founding fathers were ahead of their time. Democracies had been shown to be too chaotic to be sustainable so they set up a republic wherein we the people get to elect representatives to make decisions and run the country on our behalf. What that means for the average citizen is, if you are not satisfied with the way your representatives in government are running things, you need to communicate that to them and if they don't listen you need to elect someone who will. I know this is more work than most Americans want to do, but if you let the government run itself it will act in it's own best interest (as it has).
(The good news is that this is much easier to do today than it has been in the past! I would recommend going to Congress.org and signing up for updates on what your representatives are voting for and against. While you're at it look up some activist sites that concern themselves with things you care about and sign up with them. Many send out petitions and letters on key issues that you can sign and follow. Get your representatives' email addresses and phone numbers and contact them directly. Tell them what you want and ask for explanations if they don't do it. Keep them accountable!)
Capitalism. Look around. This is not what Adam Smith had in mind. Before anyone starts quoting The Wealth of Nations out of context let me just remind everyone that Smith first wrote The Theory of Moral Sentiments -- his own personally favored work -- and The Wealth of Nations was intended to be considered as the next chapter to The Theory of Moral Sentiment, not as a stand-alone piece.
That said, do we really have a capitalist system where one person can build a business and thrive? In some cases, yes. In most cases, though, no and the odds are looking more and more like those on a lottery ticket. Assuming that one does have the resources and talent to build a business and make it successful, navigating through government regulations and personal and business litigation, that business will likely have to compete with one or more huge corporations that are likely deemed "too big to fail" by their board members in Washington D.C. The deck has been stacked and the game is not the same as it was in the late 1700's.
I recently read an argument that if you took someone from the "rich 1%" and took away everything, they would not complain that they couldn't find a job, they would make their own job and create more jobs in the process. I feel this is oversimplified and that if you put this imaginary person into similar circumstances as the average American (i.e. school loans, children, hospital bills, auto repairs, etc.) the story might vary. But let's assume it's absolutely true. Why should we be content with a system that rewards a single talent on the backs of those with other talents? I know some people who are very good at business. I know more people who have had businesses that either failed or never fully supported them. Most of the people I know are very good at things other than owning and operating a business. Why don't we reward the people who teach the next generation or farmers who create our food supply in the same way we reward someone who can find loopholes in the tax code, has a talent for stock speculation, or is willing to neglect their health and family for the almighty dollar? Isn't the person who drives a truck or the person who builds and maintains the road an important part of the distribution system on which many businesses are built?
The fact that our transportation and energy systems have not really changed all that much in the past one hundred years is an indicator of how we have all become complacent. The system is antiquated and it's high time for an update. Our country needs a reboot. Two hundred and some years ago when the U.S. was being established there were those who believed we should be a simple, agrarian society and not be too involved in the world's affairs. Others wanted something that looked more like England's empire. When decisions were made, guess who came to the table?
It's time for us all to show up to the table and make our voices heard.
Showing posts with label banks. Show all posts
Showing posts with label banks. Show all posts
Thursday, October 20, 2011
Tuesday, October 4, 2011
Declaration of the Occupation of New York City
From: http://nycga.cc/2011/09/30/declaration-of-the-occupation-of-new-york-city/
Declaration of the Occupation of New York City
Posted on September 30, 2011 by NYCGA
As we gather together in solidarity to express a feeling of mass injustice, we must not lose sight of what brought us together. We write so that all people who feel wronged by the corporate forces of the world can know that we are your allies.
As one people, united, we acknowledge the reality: that the future of the human race requires the cooperation of its members; that our system must protect our rights, and upon corruption of that system, it is up to the individuals to protect their own rights, and those of their neighbors; that a democratic government derives its just power from the people, but corporations do not seek consent to extract wealth from the people and the Earth; and that no true democracy is attainable when the process is determined by economic power. We come to you at a time when corporations, which place profit over people, self-interest over justice, and oppression over equality, run our governments. We have peaceably assembled here, as is our right, to let these facts be known.
They have taken our houses through an illegal foreclosure process, despite not having the original mortgage.
They have taken bailouts from taxpayers with impunity, and continue to give Executives exorbitant bonuses.
They have perpetuated inequality and discrimination in the workplace based on age, the color of one’s skin, sex, gender identity and sexual orientation.
They have poisoned the food supply through negligence, and undermined the farming system through monopolization.
They have profited off of the torture, confinement, and cruel treatment of countless animals, and actively hide these practices.
They have continuously sought to strip employees of the right to negotiate for better pay and safer working conditions.
They have held students hostage with tens of thousands of dollars of debt on education, which is itself a human right.
They have consistently outsourced labor and used that outsourcing as leverage to cut workers’ healthcare and pay.
They have influenced the courts to achieve the same rights as people, with none of the culpability or responsibility.
They have spent millions of dollars on legal teams that look for ways to get them out of contracts in regards to health insurance.
They have sold our privacy as a commodity.
They have used the military and police force to prevent freedom of the press. They have deliberately declined to recall faulty products endangering lives in pursuit of profit.
They determine economic policy, despite the catastrophic failures their policies have produced and continue to produce.
They have donated large sums of money to politicians, who are responsible for regulating them.
They continue to block alternate forms of energy to keep us dependent on oil.
They continue to block generic forms of medicine that could save people’s lives or provide relief in order to protect investments that have already turned a substantial profit.
They have purposely covered up oil spills, accidents, faulty bookkeeping, and inactive ingredients in pursuit of profit.
They purposefully keep people misinformed and fearful through their control of the media.
They have accepted private contracts to murder prisoners even when presented with serious doubts about their guilt.
They have perpetuated colonialism at home and abroad. They have participated in the torture and murder of innocent civilians overseas.
They continue to create weapons of mass destruction in order to receive government contracts. *
To the people of the world,
We, the New York City General Assembly occupying Wall Street in Liberty Square, urge you to assert your power.
Exercise your right to peaceably assemble; occupy public space; create a process to address the problems we face, and generate solutions accessible to everyone.
To all communities that take action and form groups in the spirit of direct democracy, we offer support, documentation, and all of the resources at our disposal.
Join us and make your voices heard!
*These grievances are not all-inclusive.
Declaration of the Occupation of New York City
Posted on September 30, 2011 by NYCGA
As we gather together in solidarity to express a feeling of mass injustice, we must not lose sight of what brought us together. We write so that all people who feel wronged by the corporate forces of the world can know that we are your allies.
As one people, united, we acknowledge the reality: that the future of the human race requires the cooperation of its members; that our system must protect our rights, and upon corruption of that system, it is up to the individuals to protect their own rights, and those of their neighbors; that a democratic government derives its just power from the people, but corporations do not seek consent to extract wealth from the people and the Earth; and that no true democracy is attainable when the process is determined by economic power. We come to you at a time when corporations, which place profit over people, self-interest over justice, and oppression over equality, run our governments. We have peaceably assembled here, as is our right, to let these facts be known.
They have taken our houses through an illegal foreclosure process, despite not having the original mortgage.
They have taken bailouts from taxpayers with impunity, and continue to give Executives exorbitant bonuses.
They have perpetuated inequality and discrimination in the workplace based on age, the color of one’s skin, sex, gender identity and sexual orientation.
They have poisoned the food supply through negligence, and undermined the farming system through monopolization.
They have profited off of the torture, confinement, and cruel treatment of countless animals, and actively hide these practices.
They have continuously sought to strip employees of the right to negotiate for better pay and safer working conditions.
They have held students hostage with tens of thousands of dollars of debt on education, which is itself a human right.
They have consistently outsourced labor and used that outsourcing as leverage to cut workers’ healthcare and pay.
They have influenced the courts to achieve the same rights as people, with none of the culpability or responsibility.
They have spent millions of dollars on legal teams that look for ways to get them out of contracts in regards to health insurance.
They have sold our privacy as a commodity.
They have used the military and police force to prevent freedom of the press. They have deliberately declined to recall faulty products endangering lives in pursuit of profit.
They determine economic policy, despite the catastrophic failures their policies have produced and continue to produce.
They have donated large sums of money to politicians, who are responsible for regulating them.
They continue to block alternate forms of energy to keep us dependent on oil.
They continue to block generic forms of medicine that could save people’s lives or provide relief in order to protect investments that have already turned a substantial profit.
They have purposely covered up oil spills, accidents, faulty bookkeeping, and inactive ingredients in pursuit of profit.
They purposefully keep people misinformed and fearful through their control of the media.
They have accepted private contracts to murder prisoners even when presented with serious doubts about their guilt.
They have perpetuated colonialism at home and abroad. They have participated in the torture and murder of innocent civilians overseas.
They continue to create weapons of mass destruction in order to receive government contracts. *
To the people of the world,
We, the New York City General Assembly occupying Wall Street in Liberty Square, urge you to assert your power.
Exercise your right to peaceably assemble; occupy public space; create a process to address the problems we face, and generate solutions accessible to everyone.
To all communities that take action and form groups in the spirit of direct democracy, we offer support, documentation, and all of the resources at our disposal.
Join us and make your voices heard!
*These grievances are not all-inclusive.
Monday, June 27, 2011
How Obama Can Fix the Housing Market and the Economy
From HuffingtonPost.com, By John R. Talbott:
Right now there are millions of residential properties that have been foreclosed on and are held by the banks. In addition there are tens of millions more homes that are underwater, that is the mortgage loan balance is greater than the current market value of the home. Such a large overhang of troubled mortgages and properties prevents the housing market from properly clearing and establishing a true floor to home prices. The uncertainty in the housing market as well as this debt overhang are the prime reasons consumers aren't buying, the economy is stalled and unemployment is stuck at a seemingly permanently high level. Companies are sitting on lots of idle cash, but before they invest it or begin to hire again they have to see consumer demand return for their products and services.
And Obama needs to do something about the economy if he hopes to win reelection in 2012. The big key electoral battleground states are already shaping up as Florida, Ohio and Pennsylvania, all of which are suffering from weak economies with high unemployment. Cutting taxes or increasing government spending doesn't seem to make much sense in a country drowning in government deficits and debt, especially given that previous tax cuts and government stimuli didn't seem to help much. The Fed has lowered short term interest rates about as low as they can go and no one seems enthused about the Fed pursuing any additional asset purchases financed with newly printed money as QE1 and QE2 seemed to have done little to help the economy but certainly harmed the value of the dollar. It would probably be prudent to look at ways to lower the deficit and get the debt under control, but it is hard to see how those efforts will do much to help stimulate consumer demand in the short run. What is Obama to do?
Before the invention of mortgage securitizations and CDO's in which mortgages are packaged by banks into securities and sold upstream to investors, mortgages were typically held on the books of the bank that issued them. This made it much easier for banks to negotiate changes in the terms of a troubled mortgage because any bank loss generated by forgiving a portion of the principal or interest on the mortgage loan would be offset by the fact that a successful restructuring of the loan would move the loan off the bank's list of non-performing or delinquent loans.
Securitization has broken this link and led banks to be very slow in offering any debt forgiveness on outstanding troubled loans. The reason is quite simple really. With securitization, one mortgage may be held by hundreds of different investors who are difficult to organize and have no real incentive to get the troubled loan off their books quickly, especially if it means recognizing a loss, much less do something solely to stimulate the general economy. There is an easy solution to this dilemma, but it needs the involvement of government to organize the effort as no single party in the securitization food chain has the proper motivation to get the ball rolling.
Right now, homebuyers with good credit and proper down payments can get thirty-year fixed-rate mortgages for around 4.5%. But this rate is not available to people with troubled mortgages or who are sitting on homes that are underwater and wish to remain in their homes. The government should step in and offer a 3% fixed-rate thirty-year mortgage to any person, regardless of credit worthiness or delinquency history, who is refinancing an existing underwater mortgage or any properly qualified person with good credit buying a foreclosed property from a bank. The new mortgage could be guaranteed by the U.S. Treasury and then packaged and sold upstream so the government's debt load is not increased.
Take a simple example. Imagine Joe and Mary bought their house for $400,000 in 2004 with no money down. Assume that the house today is worth $300,000. No bank would be anxious to refinance this $400,000 loan as the home is clearly worth less than the loan balance and the bank does not want to recognize a loss that may threaten its solvency. In addition, Joe and Mary may have financed their home purchase with an ARM so they may have seen their mortgage interest costs explode from an initial teaser rate of 2% or 3% to say 8% or 10% annually and their income just can't cover this level of interest expense.
Assume the Treasury steps in and offers Joe and Mary a refinancing deal in which they pay only a 3% fixed interest cost on a new, no closing costs $400,000 loan. There is now no risk to the homeowner that this rate may increase in the future. Joe and Mary can stop worrying about making their mortgage payments and go back to focusing on their real jobs which would have to help the overall economy. The plan should limit the refinancing to the currently amortized amount of the original loan and avoid any increases to the original principal amount the bank may have added on to cover penalty fees, delinquency charges, missed interest payments, deferred rate increases, etc.
Think of the benefits of such a deal to everyone involved.
Of course, all risk has not been completely eliminated. There is still a risk that Joe and Mary may default on the new loan. This is problematic because the face value of the loan, $400,000, is still greater than the current market value of the home, $300,000. But this risk is minimized because the carrying cost to Joe and Mary has been so reduced and fixed as to make it very desirable for them to want to stay in their home. They aren't going to get this low of rate if they decide to sell the house and move.
You could lower this default risk even further by making the new loan clearly recourse to Joe and Mary's other assets in case of default or by making the new loan an interest only loan. By going the interest only route, the $400,000 repayment becomes a balloon payment due in thirty years further lowering Joe and Mary's carrying costs thus increasing its affordability and reducing the risk of default. Given any reasonable forecast of future inflation, such a repayment amount should be easily covered by the home value at that time in the future. As a matter of fact, in this example, if general inflation averages anything more than 1% a year for the next thirty years the home value catches up to the loan balance.
Qualified homebuyers with good credit who wish to buy foreclosed properties directly from the banks should be offered similar payment terms as this would help clean up the overhang of unsold and foreclosed properties on the market. Also, if Joe and Mary wanted to just get out and sell their home for less than the mortgage balance, the prospective home purchaser could be offered these attractive financing terms so long as he or she met all other credit and down payment requirements. Here, the transactions should occur at the fair market value of the home so the banks would have to recognize some loss, but much less than they otherwise would have without this plan.
This economy is not going to bounce back. We had too big a bubble in too big a sector of our economy to ever bounce back to the high prices, crazy borrowing and wild consumption that existed before the crisis. But if Obama doesn't do something to address the debt problems homeowners and the financial system face, the housing market will lie dormant for years, the economy will crawl along anemically for decades and Obama himself may join the ranks of the unemployed in 2012.
[READ THE ORIGINAL ARTICLE HERE]
Right now there are millions of residential properties that have been foreclosed on and are held by the banks. In addition there are tens of millions more homes that are underwater, that is the mortgage loan balance is greater than the current market value of the home. Such a large overhang of troubled mortgages and properties prevents the housing market from properly clearing and establishing a true floor to home prices. The uncertainty in the housing market as well as this debt overhang are the prime reasons consumers aren't buying, the economy is stalled and unemployment is stuck at a seemingly permanently high level. Companies are sitting on lots of idle cash, but before they invest it or begin to hire again they have to see consumer demand return for their products and services.
And Obama needs to do something about the economy if he hopes to win reelection in 2012. The big key electoral battleground states are already shaping up as Florida, Ohio and Pennsylvania, all of which are suffering from weak economies with high unemployment. Cutting taxes or increasing government spending doesn't seem to make much sense in a country drowning in government deficits and debt, especially given that previous tax cuts and government stimuli didn't seem to help much. The Fed has lowered short term interest rates about as low as they can go and no one seems enthused about the Fed pursuing any additional asset purchases financed with newly printed money as QE1 and QE2 seemed to have done little to help the economy but certainly harmed the value of the dollar. It would probably be prudent to look at ways to lower the deficit and get the debt under control, but it is hard to see how those efforts will do much to help stimulate consumer demand in the short run. What is Obama to do?
Before the invention of mortgage securitizations and CDO's in which mortgages are packaged by banks into securities and sold upstream to investors, mortgages were typically held on the books of the bank that issued them. This made it much easier for banks to negotiate changes in the terms of a troubled mortgage because any bank loss generated by forgiving a portion of the principal or interest on the mortgage loan would be offset by the fact that a successful restructuring of the loan would move the loan off the bank's list of non-performing or delinquent loans.
Securitization has broken this link and led banks to be very slow in offering any debt forgiveness on outstanding troubled loans. The reason is quite simple really. With securitization, one mortgage may be held by hundreds of different investors who are difficult to organize and have no real incentive to get the troubled loan off their books quickly, especially if it means recognizing a loss, much less do something solely to stimulate the general economy. There is an easy solution to this dilemma, but it needs the involvement of government to organize the effort as no single party in the securitization food chain has the proper motivation to get the ball rolling.
Right now, homebuyers with good credit and proper down payments can get thirty-year fixed-rate mortgages for around 4.5%. But this rate is not available to people with troubled mortgages or who are sitting on homes that are underwater and wish to remain in their homes. The government should step in and offer a 3% fixed-rate thirty-year mortgage to any person, regardless of credit worthiness or delinquency history, who is refinancing an existing underwater mortgage or any properly qualified person with good credit buying a foreclosed property from a bank. The new mortgage could be guaranteed by the U.S. Treasury and then packaged and sold upstream so the government's debt load is not increased.
Take a simple example. Imagine Joe and Mary bought their house for $400,000 in 2004 with no money down. Assume that the house today is worth $300,000. No bank would be anxious to refinance this $400,000 loan as the home is clearly worth less than the loan balance and the bank does not want to recognize a loss that may threaten its solvency. In addition, Joe and Mary may have financed their home purchase with an ARM so they may have seen their mortgage interest costs explode from an initial teaser rate of 2% or 3% to say 8% or 10% annually and their income just can't cover this level of interest expense.
Assume the Treasury steps in and offers Joe and Mary a refinancing deal in which they pay only a 3% fixed interest cost on a new, no closing costs $400,000 loan. There is now no risk to the homeowner that this rate may increase in the future. Joe and Mary can stop worrying about making their mortgage payments and go back to focusing on their real jobs which would have to help the overall economy. The plan should limit the refinancing to the currently amortized amount of the original loan and avoid any increases to the original principal amount the bank may have added on to cover penalty fees, delinquency charges, missed interest payments, deferred rate increases, etc.
Think of the benefits of such a deal to everyone involved.
- The homeowner is given comfort that his rate will be fixed at a low affordable rate and not be subject to any future increases thus decreasing the likelihood of a possible default in the future.
- The homeowner avoids a default which can damage his or her credit rating and avoids the trauma of possibly having to claim personal bankruptcy.
- The banks and investors who hold the mortgage get out without taking a capital loss so the financial system is not further compromised. Banks, insurance companies and pension funds who hold this mortgage paper can all breathe easier.
- The government has no additional annual cost to carrying these mortgages as the 3% interest they receive on the mortgage more than adequately covers their 3% cost of borrowing. There is no increase in the current government deficit as a result of this plan.
- There is no loan forgiveness for the overaggressive homebuyer. He or she still needs to pay off the full amount of his or her original loan so other homeowners who were more conservative in their borrowing will not feel like this is a unfair giveaway to aggressive homebuyers.
- Entire neighborhoods should improve as a large number of underwater mortgages are refinanced and many foreclosed properties find new owners.
- The economy should improve as debt burdens on consumers ease substantially, the housing price decline moderates and the financial sector is strengthened as it finally deals with its bad loan exposure.
Of course, all risk has not been completely eliminated. There is still a risk that Joe and Mary may default on the new loan. This is problematic because the face value of the loan, $400,000, is still greater than the current market value of the home, $300,000. But this risk is minimized because the carrying cost to Joe and Mary has been so reduced and fixed as to make it very desirable for them to want to stay in their home. They aren't going to get this low of rate if they decide to sell the house and move.
You could lower this default risk even further by making the new loan clearly recourse to Joe and Mary's other assets in case of default or by making the new loan an interest only loan. By going the interest only route, the $400,000 repayment becomes a balloon payment due in thirty years further lowering Joe and Mary's carrying costs thus increasing its affordability and reducing the risk of default. Given any reasonable forecast of future inflation, such a repayment amount should be easily covered by the home value at that time in the future. As a matter of fact, in this example, if general inflation averages anything more than 1% a year for the next thirty years the home value catches up to the loan balance.
Qualified homebuyers with good credit who wish to buy foreclosed properties directly from the banks should be offered similar payment terms as this would help clean up the overhang of unsold and foreclosed properties on the market. Also, if Joe and Mary wanted to just get out and sell their home for less than the mortgage balance, the prospective home purchaser could be offered these attractive financing terms so long as he or she met all other credit and down payment requirements. Here, the transactions should occur at the fair market value of the home so the banks would have to recognize some loss, but much less than they otherwise would have without this plan.
This economy is not going to bounce back. We had too big a bubble in too big a sector of our economy to ever bounce back to the high prices, crazy borrowing and wild consumption that existed before the crisis. But if Obama doesn't do something to address the debt problems homeowners and the financial system face, the housing market will lie dormant for years, the economy will crawl along anemically for decades and Obama himself may join the ranks of the unemployed in 2012.
[READ THE ORIGINAL ARTICLE HERE]
Sunday, April 17, 2011
I Hate Credit Cards: Part III
The other day I received a statement in the mail from the second-to-the-last credit card to have been paid off. Despite the card having been paid off, the statement showed the current balance as $11.32.
WTF!?!? Okay, okay, after my last experience with this I pretty much knew what was going on. Credit cards, it turns out, calculate interest daily, but do not add that interest to the balance until the end of each billing cycle. So, even if you get your balance online (which one might think would be a real-time balance), and pay it online on the day, you are not actually paying the total due. Why would they keep this information from you?
Why do you think?
Unfortunately for me, we paid this one off before getting the statement from the second-to-the-last card, so I was not yet aware of this evil device when we paid this last card off. I decided to make a phone call.
After the typical phone-key menu designed to make a person hang up in frustration I finally reached a human being. I explained the dates and balance paid and reasons for believing that I did not actually owe them another $11.32. The call center professional then began reading their script about how purchases are added...
I stopped him. "We haven't used this card in over a year. There were no new purchases."
He said, "If you would let me continue..." and proceeded to explain how balances are carried over.
I knew exactly what was going on -- they took nine days worth of interest and fees and applied it against the balance before it was paid off. I was arguing that if I took the balance from their website it should be real-time and there should be no balance.
At this point the call was dropped.
I hate cell phones.
I called back. Understand, I knew how it worked and that I was playing their game and they make the rules. The last card I dealt with dropped these charges because, let's face it, it's petty money grubbing. So I get a new call center professional on the line who reads me the exact same script. I have the same argument until I get tired of being told that I am the one who does not understand by a person who clearly can not work off-script. I keep explaining that, if I paid the balance off during the last billing cycle, how do I know that they aren't going to send me a bill next month for the interest and fees on $11.32?
"What do I have to do to pay this thing off and never have to deal with you people again?!"
I was transferred to an executive who tried very hard to save me from ruining my credit by closing such a important account. This person was able to immediately waive the interest charges "as a courtesy" before I had a chance to ask. I explained my frustration in paying off the card and then receiving a bill that the card still carried a balance and complained about their practice.
I was then offered to have all charges waived except for a $.09 fee which was handled by a different office and given the phone number for that office. As I was about to agree to these terms, keep the account open, and call the next office about the last $.09 (which I would have paid regardless of principal), I was told that the others fees were not able to be waived. So I'm back at interest waived, but I still owe all of the fees.
I said, "How can I pay this off, close the account, and never have to deal with [bank name here] again?"
After another volley of how bad the bank would feel for me to lose this grand gold star on my credit report I assured them that I would be just fine to never speak with them again.
I paid $5.09 and felt simultaneously free and like I was taken for a chump.
The balance has shifted too far to Hamilton. If we're really going to make important decisions based on the people and events of 200+ years ago, we need to understand all of the founders. Personally, I'll take Adams and Jefferson.
WTF!?!? Okay, okay, after my last experience with this I pretty much knew what was going on. Credit cards, it turns out, calculate interest daily, but do not add that interest to the balance until the end of each billing cycle. So, even if you get your balance online (which one might think would be a real-time balance), and pay it online on the day, you are not actually paying the total due. Why would they keep this information from you?
Why do you think?
Unfortunately for me, we paid this one off before getting the statement from the second-to-the-last card, so I was not yet aware of this evil device when we paid this last card off. I decided to make a phone call.
After the typical phone-key menu designed to make a person hang up in frustration I finally reached a human being. I explained the dates and balance paid and reasons for believing that I did not actually owe them another $11.32. The call center professional then began reading their script about how purchases are added...
I stopped him. "We haven't used this card in over a year. There were no new purchases."
He said, "If you would let me continue..." and proceeded to explain how balances are carried over.
I knew exactly what was going on -- they took nine days worth of interest and fees and applied it against the balance before it was paid off. I was arguing that if I took the balance from their website it should be real-time and there should be no balance.
At this point the call was dropped.
I hate cell phones.
I called back. Understand, I knew how it worked and that I was playing their game and they make the rules. The last card I dealt with dropped these charges because, let's face it, it's petty money grubbing. So I get a new call center professional on the line who reads me the exact same script. I have the same argument until I get tired of being told that I am the one who does not understand by a person who clearly can not work off-script. I keep explaining that, if I paid the balance off during the last billing cycle, how do I know that they aren't going to send me a bill next month for the interest and fees on $11.32?
"What do I have to do to pay this thing off and never have to deal with you people again?!"
I was transferred to an executive who tried very hard to save me from ruining my credit by closing such a important account. This person was able to immediately waive the interest charges "as a courtesy" before I had a chance to ask. I explained my frustration in paying off the card and then receiving a bill that the card still carried a balance and complained about their practice.
I was then offered to have all charges waived except for a $.09 fee which was handled by a different office and given the phone number for that office. As I was about to agree to these terms, keep the account open, and call the next office about the last $.09 (which I would have paid regardless of principal), I was told that the others fees were not able to be waived. So I'm back at interest waived, but I still owe all of the fees.
I said, "How can I pay this off, close the account, and never have to deal with [bank name here] again?"
After another volley of how bad the bank would feel for me to lose this grand gold star on my credit report I assured them that I would be just fine to never speak with them again.
I paid $5.09 and felt simultaneously free and like I was taken for a chump.
The balance has shifted too far to Hamilton. If we're really going to make important decisions based on the people and events of 200+ years ago, we need to understand all of the founders. Personally, I'll take Adams and Jefferson.
Wednesday, March 30, 2011
I REALLY Hate Credit Cards
I posted a couple weeks ago that the wife and I had paid off our final credit card!
Tonight we were basking in the afterglow of a credit-card-free, productive weekend when my wife looks up from her email and says, "[banking institution]sent me an email saying our statement is ready."
I was immediately angry. "What does the statement say?", I asked.
"Let me look... $6.03. It says we owe $6.03."
I said something not suitable for family radio. To backtrack, this was not even the last card we paid off. This is the same card I wrote about in "I Hate Credit Cards". We checked with the bank before sending in the last payment to make sure we were paying every last cent owed. On the day the final payment went through, my wife called (it was her card) and asked specific questions to verify the balance was indeed zero and the account was indeed closed. She was assured the balance was indeed zero and the account was indeed closed.
Fuming, I asked her for the phone number, account number, and date of the final payment. After the usual keypad gymnastics with the phone I finally got a person on the line. After verifying my identity I explained that we paid the card off on "X" date, we called to verify and were told the balance was zero and the account was closed, and asked how we owe $6.03?
The customer service person on the other end started by saying, "I am taking care of that now. It will take 3-5 days to process, but after that the balance will be zero. Let me explain the charge...".
I was then told that this particular bank calculates interest daily, but only from billing date to billing date. Since two weeks had passed from the last billing date to the date of the last payment, the $6.03 was interest on the balance during that time, and just so I understand, this is how the billing cycle and interest works, but if I call the interest can be waived. I was apologized to that this was not made clear during our last phone call and reassured that the charge was dropped.
I asked one last time, "So, it will take 3-5 days, but then the balance will be zero and the account will be closed?" After being reassured (again) this was indeed true, I said thank you and goodnight.
To sum up, the account was paid in full, we verified that with the bank, they charged us interest anyway, and when we called them on it they dropped it with no question or argument. The sinister part is that they plainly told me, even if you pay your card in full the day your bill arrives (or when you view it online in "real time"), there will be undisclosed interest still owed on the account.
This reeks to me of a scam. Worst case scenario, the bank gets an angry phone call and drops the charge. Probably what usually happens is people will pay one or two occurrences before the angry phone call and the bank makes $6.03 off a few thousand people. Best case scenario is the people who believe the account is closed and let months of interest and late fees build up and, with any luck, can't dig themselves back out of debt this time.
This is the kind of thing We The People need to stand up against. A truly "free market" would never allow a company that treats it's customers and neighbors this way to get "too big to fail". I am so fed up with banks and credit cards and CEOs and executives that live like lords by taking advantage of the have-nots.
It doesn't help that I saw this earlier today.
It's time for a revolt.
Tonight we were basking in the afterglow of a credit-card-free, productive weekend when my wife looks up from her email and says, "[banking institution]sent me an email saying our statement is ready."
I was immediately angry. "What does the statement say?", I asked.
"Let me look... $6.03. It says we owe $6.03."
I said something not suitable for family radio. To backtrack, this was not even the last card we paid off. This is the same card I wrote about in "I Hate Credit Cards". We checked with the bank before sending in the last payment to make sure we were paying every last cent owed. On the day the final payment went through, my wife called (it was her card) and asked specific questions to verify the balance was indeed zero and the account was indeed closed. She was assured the balance was indeed zero and the account was indeed closed.
Fuming, I asked her for the phone number, account number, and date of the final payment. After the usual keypad gymnastics with the phone I finally got a person on the line. After verifying my identity I explained that we paid the card off on "X" date, we called to verify and were told the balance was zero and the account was closed, and asked how we owe $6.03?
The customer service person on the other end started by saying, "I am taking care of that now. It will take 3-5 days to process, but after that the balance will be zero. Let me explain the charge...".
I was then told that this particular bank calculates interest daily, but only from billing date to billing date. Since two weeks had passed from the last billing date to the date of the last payment, the $6.03 was interest on the balance during that time, and just so I understand, this is how the billing cycle and interest works, but if I call the interest can be waived. I was apologized to that this was not made clear during our last phone call and reassured that the charge was dropped.
I asked one last time, "So, it will take 3-5 days, but then the balance will be zero and the account will be closed?" After being reassured (again) this was indeed true, I said thank you and goodnight.
To sum up, the account was paid in full, we verified that with the bank, they charged us interest anyway, and when we called them on it they dropped it with no question or argument. The sinister part is that they plainly told me, even if you pay your card in full the day your bill arrives (or when you view it online in "real time"), there will be undisclosed interest still owed on the account.
This reeks to me of a scam. Worst case scenario, the bank gets an angry phone call and drops the charge. Probably what usually happens is people will pay one or two occurrences before the angry phone call and the bank makes $6.03 off a few thousand people. Best case scenario is the people who believe the account is closed and let months of interest and late fees build up and, with any luck, can't dig themselves back out of debt this time.
This is the kind of thing We The People need to stand up against. A truly "free market" would never allow a company that treats it's customers and neighbors this way to get "too big to fail". I am so fed up with banks and credit cards and CEOs and executives that live like lords by taking advantage of the have-nots.
It doesn't help that I saw this earlier today.
It's time for a revolt.
Wednesday, March 9, 2011
Rethinking Resolutions
Less than two months after I posted my resolutions for the year, I am beginning to wonder if I aimed too low. As I said, we are primarily focused on getting out of debt. I have talked a little about our experience on this journey here and there. Let me first bring you up to speed.
We are starting with our credit card debt, focusing on the highest interest rate cards first. While we have made very good progress on this front, there have been setbacks. First was Washington State informing me that, as an independent contractor, I have been delinquent in filing for a business license and paying taxes on such a business (mentioned in This Time Of Year). I reconciled this as quickly as I was able and found that the taxes owed did not amount to anything we couldn't handle. Sometimes it works out in our favor that we don't make a lot of money. Still, it was a setback.
Our second setback has been Federal taxes. I have been going back and making sure we are including everything and in doing so have been able to bring what to owe to a reasonable amount, but it looks like we will still owe money. That's another setback.
The third, and most irritating setback came in the form of a credit card debt of which we were unaware. In a nut, a couple years back my wife was in the process of getting her business licenses transferred to Washington State (I swear, this state has a serious racket with it's licensing!), we were in a pinch and agreed to put about $200 in fees on a credit card. By our own mistake, we used a card (Card A) that we had already paid off, intending to use a different card (Card B) from the same institution. Unfortunately, neither my wife nor I can recall receiving a statement on Card A. We naturally assumed our payments on Card B were going toward the debt. That is, until we recently received a collection notice on Card A, which had now run up to almost $700 on interest and fees. It took a couple weeks and many phone calls to both the bank and the collection agent explaining our position and flat out refusing to pay $700 on a $200 debt for which we were never billed before we were able to finally settle the account for about $350. A very frustrating setback and one more reason to hate credit cards.
All that said, we are making better progress on paying down our debt than I expected. I am making it my goal to be completely out of debt before the end of the year. I really think we can do it if we stay focused.
I have done almost nothing with the writing project I mentioned in my resolutions. I have been waiting for information from someone on which to base my decision on which project to pursue, but I haven't pushed the issue because I've been depressed and otherwise occupied. I intend to remedy that.
I also did not want to get specific because some things are kind of up in the air right now. I realize now that I don't need to understand how it might happen, I just need to put it out there. That said, I intend to have a productive garden this year and to put some wild game into my freezer this year. I intend to have a location for the family farm by this time next year. I will learn more about eating healthy and sustainably as we make greater strides this year toward being self-sufficient and sustainable.
My family will be happy and healthy.
We are starting with our credit card debt, focusing on the highest interest rate cards first. While we have made very good progress on this front, there have been setbacks. First was Washington State informing me that, as an independent contractor, I have been delinquent in filing for a business license and paying taxes on such a business (mentioned in This Time Of Year). I reconciled this as quickly as I was able and found that the taxes owed did not amount to anything we couldn't handle. Sometimes it works out in our favor that we don't make a lot of money. Still, it was a setback.
Our second setback has been Federal taxes. I have been going back and making sure we are including everything and in doing so have been able to bring what to owe to a reasonable amount, but it looks like we will still owe money. That's another setback.
The third, and most irritating setback came in the form of a credit card debt of which we were unaware. In a nut, a couple years back my wife was in the process of getting her business licenses transferred to Washington State (I swear, this state has a serious racket with it's licensing!), we were in a pinch and agreed to put about $200 in fees on a credit card. By our own mistake, we used a card (Card A) that we had already paid off, intending to use a different card (Card B) from the same institution. Unfortunately, neither my wife nor I can recall receiving a statement on Card A. We naturally assumed our payments on Card B were going toward the debt. That is, until we recently received a collection notice on Card A, which had now run up to almost $700 on interest and fees. It took a couple weeks and many phone calls to both the bank and the collection agent explaining our position and flat out refusing to pay $700 on a $200 debt for which we were never billed before we were able to finally settle the account for about $350. A very frustrating setback and one more reason to hate credit cards.
All that said, we are making better progress on paying down our debt than I expected. I am making it my goal to be completely out of debt before the end of the year. I really think we can do it if we stay focused.
I have done almost nothing with the writing project I mentioned in my resolutions. I have been waiting for information from someone on which to base my decision on which project to pursue, but I haven't pushed the issue because I've been depressed and otherwise occupied. I intend to remedy that.
I also did not want to get specific because some things are kind of up in the air right now. I realize now that I don't need to understand how it might happen, I just need to put it out there. That said, I intend to have a productive garden this year and to put some wild game into my freezer this year. I intend to have a location for the family farm by this time next year. I will learn more about eating healthy and sustainably as we make greater strides this year toward being self-sufficient and sustainable.
My family will be happy and healthy.
Tuesday, March 8, 2011
Humping The American Dream: Afterglow
The middle class has been gradually dissolving as poverty rises in America. While the "new economy" depends on job innovation, blue collar jobs that were the backbone of the American economy for decades are disappearing. If our new jobs rely on coming up with ways to do more with less (technical innovation and efficiency) while the "everyman" jobs (manufacturing and production) move offshore, don't more Americans fall into poverty? It used to be respectable for an American worker to work a factory job, support their family, maybe even work their way up the ladder a rung or two before taking a modest retirement. A college education could get one in a little higher up that ladder and earn a person a solid career with security, a better lifestyle, and a nicer retirement. Today the bottom seems to have fallen out and turned into a canyon between the rich and the poor.
There is a given that the economy must grow. This is a poor plan in my own personal opinion because, even in the most optimistic or prosperous of times it never seems to find an equitable balance of wealth, control, and power and it has always been unsustainable in the long term. Regardless, we have set up a system that requires the economy to continually grow.
Since WWII we have refined this concept of industrialization so that (almost) every American can have a home and a good job to support a family. Post WWII America saw the rise of the middle-class, abundance, and affluence. Franklin Roosevelt understood Jefferson's ideal that the world belongs to the living and was willing to change the terms of government based on current realities and not the realities of 1788. Still, his second bill of rights was never adopted. After WWII, FDR's second bill of rights seemed unnecessary, but we set out on a course of unintended consequences.
It seems to me that after the prosperity of the 1950's we lost something that had been part of the American zeitgeist until then. Perhaps it was a result of Roosevelt's willingness to try anything to drag us out of The Great Depression? Maybe we got really comfortable with the middle-class lifestyle of the '50's, maybe we were just really relieved to be done with the Second World War in only 31 years? Maybe the Second World War just moved us into a new era where the Second Amendment was no longer a viable insurance policy for the average family? Certainly television was already starting to turn us into consumer-zombies. Whatever it was, the second half of the 20th Century saw a change in the United States and new breed of American. Gradually we became entitled, complacent, and resentful of anyone who pointed it out.
In the sixties, we wrote off those who had an idea that things should be different. In the seventies, we had a President who told us, "I do not promise you that this struggle for freedom will be easy. I do not promise a quick way out of our Nation's problems, when the truth is that the only way out is an all-out effort. What I do promise you is that I will lead our fight, and I will enforce fairness in our struggle, and I will ensure honesty. And above all, I will act." We promptly voted him out of office. We elected new people who opened the gates to hump all that was left of the American Dream in the eighties. The nineties had it's ebbs and flows with both sides focused on the economy. It almost seems serendipitous that terrorists from the Middle East attacked the U.S. in 2001, setting the course for Military-Industrial growth, potential control of the hundred-year-old lifeblood of industry, and the final, senile thrusts of The American Gang-Dream.
At the beginning of the second decade of the 21st Century, we have surrendered our rights to government, our government and wealth to the heads of Corporation, and our children to almost certain poverty. American Imperialism has run it's course. Health (#37 according to the World Health Organization), education (18th among the 36 industrialized nations), infant mortality (the CIA cites 51 countries with lower infant mortality rates) -- the United States has fallen behind on all counts. Even if the U.S. is still the wealthiest country, it is only a very small handful of Americans who hold that wealth in 2011.
We have only two real options at this point:
1. Rise up against the Corporatist State of America
2. Prepare for The Transition
Brace yourself, citizen.
There is a given that the economy must grow. This is a poor plan in my own personal opinion because, even in the most optimistic or prosperous of times it never seems to find an equitable balance of wealth, control, and power and it has always been unsustainable in the long term. Regardless, we have set up a system that requires the economy to continually grow.
Since WWII we have refined this concept of industrialization so that (almost) every American can have a home and a good job to support a family. Post WWII America saw the rise of the middle-class, abundance, and affluence. Franklin Roosevelt understood Jefferson's ideal that the world belongs to the living and was willing to change the terms of government based on current realities and not the realities of 1788. Still, his second bill of rights was never adopted. After WWII, FDR's second bill of rights seemed unnecessary, but we set out on a course of unintended consequences.
It seems to me that after the prosperity of the 1950's we lost something that had been part of the American zeitgeist until then. Perhaps it was a result of Roosevelt's willingness to try anything to drag us out of The Great Depression? Maybe we got really comfortable with the middle-class lifestyle of the '50's, maybe we were just really relieved to be done with the Second World War in only 31 years? Maybe the Second World War just moved us into a new era where the Second Amendment was no longer a viable insurance policy for the average family? Certainly television was already starting to turn us into consumer-zombies. Whatever it was, the second half of the 20th Century saw a change in the United States and new breed of American. Gradually we became entitled, complacent, and resentful of anyone who pointed it out.
In the sixties, we wrote off those who had an idea that things should be different. In the seventies, we had a President who told us, "I do not promise you that this struggle for freedom will be easy. I do not promise a quick way out of our Nation's problems, when the truth is that the only way out is an all-out effort. What I do promise you is that I will lead our fight, and I will enforce fairness in our struggle, and I will ensure honesty. And above all, I will act." We promptly voted him out of office. We elected new people who opened the gates to hump all that was left of the American Dream in the eighties. The nineties had it's ebbs and flows with both sides focused on the economy. It almost seems serendipitous that terrorists from the Middle East attacked the U.S. in 2001, setting the course for Military-Industrial growth, potential control of the hundred-year-old lifeblood of industry, and the final, senile thrusts of The American Gang-Dream.
At the beginning of the second decade of the 21st Century, we have surrendered our rights to government, our government and wealth to the heads of Corporation, and our children to almost certain poverty. American Imperialism has run it's course. Health (#37 according to the World Health Organization), education (18th among the 36 industrialized nations), infant mortality (the CIA cites 51 countries with lower infant mortality rates) -- the United States has fallen behind on all counts. Even if the U.S. is still the wealthiest country, it is only a very small handful of Americans who hold that wealth in 2011.
We have only two real options at this point:
1. Rise up against the Corporatist State of America
2. Prepare for The Transition
Brace yourself, citizen.
Tuesday, February 22, 2011
I Hate Credit Cards
We've been making good progress on our primary resolution to pay down our debt. Both the wife and I have been stashing money whenever possible and paying as much as we can on the highest-interest debt first. I mentioned in This Time Of Year, we already paid the two credit cards with the highest interest (and lowest balances) and we are now attacking an account with a more significant balance.
This past week we received a generous offer in the mail from said institution. The letter stated that they were introducing "a new way to get out of debt faster!" They offered us a $100 credit to "help you reduce your balance." All we have to do is get online, enter our personal invitation code, and sign up for the offer.
Of course we checked it out. Effectively, the offer is this: if we agree to their terms we get a $100 credit in six months. What it appears they have done is divide our balance by six and round down, coming up with a monthly payment that will not quite pay off the balance at the end of six months. All we have to do is stop paying so much on the account and drag it out longer to get the $100 credit. In the meantime they make hundreds of dollars in interest and the card would still not be paid off, but this is a "faster way".
In reading the FAQ for this program, there are all kinds of caveats to the offer. Any use of the account including automated transactions nullify the offer. All fees and charges associated with the account will still be charged. Basically, it's a deal formulated to look good to anyone who wants to pay off the card but is not good with financial math or details and get more money from them.
I declined the offered and when asked why, I said this:
"Having recently made significant progress toward paying off this debt, this offer seems like a thinly veiled attempt to stretch the balance out and collect more interest. That interest will come to more than the $100 credit after six months.
I intend to be done doing business with [card name] much sooner than six months.
Thanks though."
I hate credit cards.
This past week we received a generous offer in the mail from said institution. The letter stated that they were introducing "a new way to get out of debt faster!" They offered us a $100 credit to "help you reduce your balance." All we have to do is get online, enter our personal invitation code, and sign up for the offer.
Of course we checked it out. Effectively, the offer is this: if we agree to their terms we get a $100 credit in six months. What it appears they have done is divide our balance by six and round down, coming up with a monthly payment that will not quite pay off the balance at the end of six months. All we have to do is stop paying so much on the account and drag it out longer to get the $100 credit. In the meantime they make hundreds of dollars in interest and the card would still not be paid off, but this is a "faster way".
In reading the FAQ for this program, there are all kinds of caveats to the offer. Any use of the account including automated transactions nullify the offer. All fees and charges associated with the account will still be charged. Basically, it's a deal formulated to look good to anyone who wants to pay off the card but is not good with financial math or details and get more money from them.
I declined the offered and when asked why, I said this:
"Having recently made significant progress toward paying off this debt, this offer seems like a thinly veiled attempt to stretch the balance out and collect more interest. That interest will come to more than the $100 credit after six months.
I intend to be done doing business with [card name] much sooner than six months.
Thanks though."
I hate credit cards.
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