Tuesday, December 30, 2008

Didymas Account in Banking Needed

Now that we in America have socialized banking with Government/Taxpayer money propping up these useless giants, why not pass some savings onto the consumer by reducing fees for non-existent service providing by passive non-existent outsourced personnel.

The biggest B.S. things out of corporate banks since the rise of robotic banking in the past two decades has to do with charging fees for check overdrafts. They have extended this to electronic banking.

Banks in order to outsource more personnel and make bigger bonuses for CEOs have pushed the idea of convenience and telling you to have an automatic withdraw every month for your utility bills, credit card bills etc.

Well, is you don’t have money in your account at the millisecond that the electronic banking withdraw happens, then BINGO, the bank charges you $35 for each overdrawn electronic banking demand on your account.

Well, you know that this can be inconvenient and a downright pain in the ass besides being a lowering in your life savings in favor of the mandated by God CEO million dollar plus bonus.

I may be cynical and sarcastic here. But we have been the victims of all this free market B.S. for the past thirty years and the bottom line in banking is that you have no rights as a consumer to try and amend this kind of highway FEE robbery that does not in any way reflect the real cost of non-human robotic banking.

I had a temp job twenty five years ago in a big bank and I used to write a manual letter on a typewriter and send it to a bank customer to explain why we were deducting $1.25 for an overdrawn check. The letter also said that we were raising our fee to $5.00 for overdrawn checks shortly. Hey nobody is sending me a real live human generated letter for every one of my overdrawn checks or overdrawn electronic transfers.

The people who used to do these obsolete functions of people to people business communication in banking -those jobs are long gone. Outsourced to Asia. Did the computer that replaced those people cost a lot of money? Yes. But that was twenty fives years ago. The real cost of dealing with overdrawn checks and electronic banking transfers must be pennies on the dollar.

Why don’t we propose to Congress and its committees to write some new Human Rights laws for banking now that we the people own a piece of all these big banks?

What I propose is monthly overdraft insurance fee and for two transactions a month gone awry before a bank can charge a large unearned fee for being overdrawn. I propose a $5.95 per month fee and part of what I call a Ditymas Account whereby this monthly fee can cover the real costs for the odd overdraft situation.

Didymas account meaning twin account where the first two overdraft fees can be recorded, not charged, used as an audit trail for banking activities and or other written off charges.

It would nice if Congress would pretend that is knows and likes and cares about the average citizen who has been tortured for decades now by fees from these robotic banking institutions. We cannot bring back all the jobs from Asia. But let’s even the playing field a bit and in favor of the average American Joe.

You could however interject a little bit of humanity and common sense to this brave new world of bloodless banking.

Monday, December 29, 2008

Age of Robot

Age of Robot is upon us.

The high technology is all powerful. Bow your heads.

ATM machines are robots. Very convenient sometimes.

Telephone answering machines are robots. Not that convenient when you have to spend five minutes getting from A to E trying to pay a bill or get your credit card balance.

Computers are robots - electronic brains that mimic humanity and in need of very specific programs to function.

The Internet with its visual cover blinds us to how we do things now as opposed to how we did things ten or twenty or thirty years ago.

I am cursed. I have a memory. I know what a typewriter is.

In the future, robots may aid sick people in need of medical care.

In the meantime, I am human and everyday I come up against a wall of robots or robotic functions and sometimes I come out ahead and other times I feel like a loser especially when I forget a password.

The corporations that have squeezed more and more profit out of our everyday life are partially responsible for this age of robots. We in our present myopic state of bliss and in need of chronic luxury fed by the by-products or the collateral damage of this new age of robots are also responsible for what we have.

Is this all a complaint? In a way yes. The human touch is gone. The human voice answering the telephone was part of the social equation for close to one hundred years. I got used to it.

I have put up with the bullshit mantra of “change is good” all my life. Maybe change isn’t always good.

I harken back to two jobs I had in Arizona and over a decade ago. Those jobs touched people directly. It was a transition period whereby not everybody was texting or even e-mailing.

One was in a mortgage company and they were putting the telephone answering machine on at lunchtime at the reception/switchboard desk. “No Go” said the regional management which ran into this local matter one day. You got a live customer on the line, you keep them there and make sure you put them through or take an accurate detailed message for the sales force to follow through on. Sales were a crucial part of mortgage business before they threw away the rule book. You don’t let potential customers get turned off and walk away because you turned on the robot answering machine at the reception desk.

The other job I had was in enrollment in an HMO which practiced Japanese style, Covey type management. In that situation, everyone who got a phone call from a customer from the president of the company down to the lowest clerk, which was me, would help a customer and if I could not help, they got put on hold, and I called around until I found a live body, explained what the customer wanted and asked my fellow employee to take charge of the phone call with the customer. That was pro-active. Pro-active in New York City style management I have found is just a word.

In Arizona, it is a thin economic situation. The saying was that if you pissed off one customer, they turned around in their social network and told ten other people about lousy customer service. Those ten in theory might tell another ten. Pass it along.

I, we, can’t change a whole lot of things. We can’t bring back all those outsourced jobs to Asia.

But maybe out of the tens of millions of dollars the CEO gets for being lucky enough to have frat house connections to get the job in the first place, maybe the CEO could give up a lousy few tens of thousands of dollars to put a live person on the phone up front of their marvelously and probably mismanaged robotic organization/corporation.

It’s just a thought.

Dequation Defined

Dequation. An equation formed from the power of deduction. Some results on a previous equation reflect new projected and expected answers on any new results.

Dequation. An equation devoid of common sense. Devoid of humanity. The modern age.

Sunday, December 28, 2008

What a thought ! No e-mail !

What a thought! No e-mail!

I was just looking at an Internet site for a famouse Southwestern Museum and it is very descriptive and helpful but no E-mail address.

It has telephone numbers to call for information.

Is this institution behind the times? Or with a very adequate Internet site, maybe they are telling us something.

E-mail is not all that it is cracked up to be. With the ability to delete and never face another human being, maybe the age of the robot is facing a downturn on the curve as people realize how important a real human being on the phone or in person is - maybe ten times the jack waste of e-mail.

The classics never go out of style. I hope the human race realizes what a gift and what a great value human beings are and how great human direct communication can be.

Put humanity back into all our equations.

Friday, December 26, 2008

American Industrial Redevelopment Bank Needed

Like some third world countries asking for basic loans to build basic infrastructure, it is time to rebuild the decimated industrial base of the American Economy.

I am not talking about municipal bonds to build schools and roads but while we are on the subject, that sounds like a good idea.

Our money system is mixed where the Fed ignores housing inflation and the underground cash economy. The Fed is myopic and only sees Wall Street as the alpha omega of any and all possible investment.

We used to have factories my fine white collared suits currently standing waist high in the debris of the current economic meltdown.

Lets get some new ideas, common sense ideas. Lets start categorizing money according to usage and national need.

Let us start to issue bonds or notes to develop industrial parks building only GREEN. Or refit obsolete automobile assembly lines to do so. It is time to archive an obsolete one size fits all banks Hamiltonian, general nineteenth century Wall Street only money need basis.

Let Americans buy Industrial Redevelopment Notes and make them tax free on interest until America regains its place in the world or at least has a safe at home industrial base to protect in its defense against foreign domination in the industrial sector. Let only industrial lending be done with this bond generated money.

Let the treasury only notes, cash/cash general purpose junk notes, continue to be issued and tax the hell out of money that does not build but only parasites and ponzis money off other money.

Our brilliant nineteenth century economists need new ideas and new formulas that put people, American people, back into all levels of economic equations and dequations.

Friday, December 19, 2008

Audit Reform on Wall Street Needed Immediately

What I remember seeing on TV last night was something like real estate mogul Mort Zuckerman handing a check for thirty million dollars to an investment manager and then that investment manager turned around and outsourced it immediately to Bernard Madoff, ponzi king. Thirty million I am sure with some effort earned got pissed away in a few seconds.

I do not wish to criticize Mr. Zuckerman but I do wish to criticize the casual laissez faire way that Wall Street has been managed and audited for decades. No doubt the old boy’s image of frat house brothers covering each other butts in the market place with insider tips and growing rich together for being ahead of the investment curve is as true as it might be unfair.

The boomer generation and its dream to retire in wealth and not need the poverty dole of living on a social security check has been the goal of so many. In recent months the blatant mismanagement and now outright fraud of so much money and retirement funds of others being pissed away in a few seconds is not myth. It is real.

What I do not understand is that with all the speed and sophistication of computers, why can’t you get a print out in a few second to show where everything is or should be in the inventory of cash, securities and liabilities.

To blame the Securities and Exchange Commission is to blame the wind.

These securities companies have enough confidence to outsource a great number of jobs to Asia from the United States and with the help and sophistication of computers and programming.

When it comes to doing an audit in any of these financial institutions, they would have you believe that a clerk with a green shade on his forehead and picking his nose is the person to see when you want to see or understand the workings of the financial operations. Bullshit!

The lack of any standard programming or instant audit reporting to the SEC in a flash of the speed of light is the step and fetch it response of the old boy’s network that make a fraud the size of Madoff’s fraud possible.

There was a story in 1995 about an old lady that died beyond 100 and who had lost everything in the 1929 stock market crash. This woman over six decades managed to accumulate a fortune of $22 million in the stock market which she bequeathed to Yeshiva University for women’s studies. I hope that Anne Scheiber’s bequest to women did not get pissed away last week or last year or in the last decade because of Bernard Madoff and the Duh crowd managing assets on Wall Street with a wink, nod and secret hand shake.

I hope that Mr. Zuckerman with his power in the communications industry will take a personal interest in the Anne Scheibers and Jane and John Q. Publics and the protection of assets on Wall Street. The archaic methods of audit and reputation has got to be replaced with 21st century standardized computer and asset reporting to a new overhauled SEC under the next administration.

There may be a silver lining in this recent tragedy and fraud of so many charitable institutions and individual investors.

Thursday, December 18, 2008

Glass Wax Christmas - Harrowgate

My early memories of Christmas put it starting about two weeks before the holiday in the late 1950's.

The Department stores: Lit Brothers, Gimbels, Stawbridge and Clothier and the top end carriage trade store John Wanamaker all started things the day after Thanksgiving. Going to downtown Philadelphia was an outing for us kids and we came downtown using the elevated train, the Frankford El. The trip was more window shopping than buying.

The close to home activities would begin in earnest about two weeks before the holiday. No doubt Christmas budgeted items came out of the weekly paychecks closest to December 25th.

Recycled items such as a flat plastic sheet, nativity scene, for the upstairs bedroom window came out of the cedar chest along with foil covered paper-mache bells for two living room windows and a plastic Santa's head with an internal light went on the outside of the front door. Single candle sticks were in each window on the front of the row house and with a single blue bulb each.

The lighting of the window lights was a sacred nightly ritual.

One innovation or marketing gimmick I remember was the use of stencils on the windows with a glass cleaning product called Glass Wax. The product was to be spread on windows, let to dry, and then wiped clean with a dry cloth weeks later after Christmas. In this holiday use, you would sponge the opaque pink liquid onto Christmas type stencils of angels, Santa Claus, a snowman and a reindeer etc. It was all very primitive in terms of marketing but magic in terms of a hands-on participating childhood.

I don’t know when others bought real live Christmas trees but we bought ours as close to Christmas eve as a day or two and it sat in the yard until Christmas eve when the older kids got to stay up late and decorate it with blue glass balls and a single string of blue lights. The only thing not blue was a gold glass beaded garland that wrapped the tree from head to foot. That and metal, not plastic, silver icicle strands.

In any case the house smelled of a pine tree that had been cut only days before and traveled from upstate.

We did not have or want those new "Sputnik Trees", all artificial aluminum branches and serenaded with a rotating multi-colored light. That was the kind of tree that older people without children went in for.

Of course I had my doubts how Santa would get to every house in the world – I was already thinking globally. I accepted the facts as my parents relayed them. Santa may come in person but more than likely we would get a surrogate, a Santa’s helper and making deliveries out of an old Nash automobile (they had big interiors). That was how it all worked according to my parents in order to insure my ever growing questions about this whole scenario.

My most vivid memory was waking up at about five a.m., it still being dark, and looking down the stairs at the blue ornamented tree that was not there when I went to bed. The tree stood in the dark with a strange glow of street lights coming through open blinds and muted with a glow of light off a recent snow fall.

I remember the excitement of opening presents. Turkey dinner was not a big deal.

The big deal was the imagination and anticipation and the thoughts of magical myth that gripped a young child’s mind of five.

Wanamaker (Macy's) Christmas Show


Monday, December 15, 2008

No Stamps at the Post Office!

I walked to my local post office. I wanted the exercise and to walk one mile each way. Who these days considers a mile or two walk if an automobile is available? I did not want to spend on gasoline or a parking meter. Worst thing about this story is that I only needed two stamps.

I wrote an article about a previous visit to this local post office and I did not think that things could get worse but here goes.

The post office was out of stamps. I came armed with exact change to deal with the fickle stamp machine in the lobby. No stamp machine anymore. Sign in the Post Office window, presumably from Saturday, is that they were out of stamps and more would arrive on Monday. Hello! It’s Monday.

Hey, it is Christmas season. I can understand running out of Santa Claus and the Virgin Mary but no stamps at all?

In my entire life of over half a century I have never been in a U.S. Post Office that did not have stamps! This is Intolerable! This is a certain sign of the collapse of American Civilization!

Are the government printing presses only printing money these days and not something as valuable as a 42 cent stamp?

Alright I stand in line and the wait is unbelievable – only five minutes – the usual time is twenty minutes - of course the line is short – there are no stamps.

Other post offices have better service which is where I usually drive to but today I wanted to walk.

The clerk wanted to sell me some 55 cent stamps hanging around. Then I asked that she weigh my two envelopes and put a Pitney Bowes machine price and paid sticker on my envelopes. I had to tell the person with a government job what to do in this unusal situation. Unbelievable! This country has truly gone to hell!

Then I ask for a reason why no stamps? Are they going to close this post office? No reply. Typical modern say rudeness and inferior customer service. But I am not at the Mall and getting store clerks cracking gum in my face or staring a blank stare at me when I ask a simple question in my native English. I am asking a question of a supposed to be qualified quasi-government employee and I get no answer.

Whatever! I won’t write to the postmaster general. Why waste a valuable stamp to wake up one of the bureaucrats asleep at the switch like at every other agency in Washington D.C.!

Below my Ezine Article from February:

American Joe

I went to the post office. I expected to wait. I had a package that weighed over a pound and can no longer be put in a mail box. Another new rule to make the post office more efficient and profitable.

The man ahead of me was extremely upset. The line for service was out the door of the official post office and lining up in the outer lobby with the post office boxes and ready to spill over into the street.

The man stepped out of line and went to the window and demanded to see the supervisor.

He explained to me that he could hear the staff shooting the bull on the other side of the door in the outer lobby marked "staff use only". Finally the supervisor came out and communicated with this irate customer.

"We've got five clerks. Two called in sick. I have one on the customer window and the rest of us are sorting mail."

The irate customer decided to leave and take his very large package to another post office.

I stood in line and saw that most of the customers ahead of me were purchasing money orders and only enough stamps to mail bills.

Somewhere along the time line, the Post Office system has become the banker of last resorts for people off the grid. These people appear to be too poor to have a computer or an Internet hookup.

Most banks will not sell you a money order unless you have an account with them.
Myself, I avoid any interface with the great demon of this modern age, the Internet, when it comes to online banking or paying bills online etc.

No built in protection for the consumer in such a scenario. One company electronically debits your account a day before your direct deposit hit's the account and all of a sudden you have a thirty five dollar insufficient balance fee, the equivalent of a bounced check.

This whole age of electronic banking and Internet shopping has its convenience but it has many a pitfall and the consumer has no rights, just fees, fees, fees.

So back to the post office. You pay your fee for the money order and mail your bill. Such a waste of green resources such as paper and such an old fashioned reassurance that the bill gets paid and nobody is going to fee you to death.

I say this because banks these days are little more than boutiques or executive suites. The people you see in cubicles in a bank are free lancers selling loans, mortgages, annuities for a commission and or a fee. Banks as they used to be are old fashioned and obsolete in the corporate and academic management view of the world.

There was a time when banks only did banking and these freelancers, these fee generators in the cubicles had to follow strict regulations about who and how much you could lend to somebody in the form of a car loan or a mortgage.

You want to know why the American mortgage market is melting down. Let's go back to the holy grail of deregulation in the 1980's where the present crisis has its roots.

The Savings and Loan scandals of the late 1980s were a precursor and an ominous warning of things happening today. Didn't anybody listen or learn anything back then about the ills and flipside of deregulation? America's memory is quite short these days.

The rules of the game keep changing, kind of like trying to find the queen in a street game of three card monty. The playing field is quite unlevel. The golden rule stands.

"He who has the gold makes the rules".

I had to wonder standing there in line at the post office. When did we become such an inefficient nation that banks no longer did good banking and the Post Office had less to do with the mail?

I also had to wonder when we had become such a third world nation to put up with such retarded spreadsheet management techniques invented at Harvard, Brown and Wharton.

There are still little people down on the ground oh great masters of theoretical spreadsheet profits. There is money to be made there from the lesser income markets. But you pick and choose your marketing targets. How graceful and stupid. How MBA of you. Sounds a little like the refusal to make money from minorities back in the days of segregation. Doesn't sound like good business. Sounds more like laziness or the hardening of financial arteries.

I wondered if all this crap, inefficiency, and a belief in outsourcing mentality was why we lost, or remain losing the war in Iraq. Remember the term "mission accomplished" came from the lips of an Ivy League MBA. I mean if we didn't have expensive contractors there doing little or nothing, we could have used a draft based military to really win and get out etc. if it truly was in our strategic interests to do so.

Excuse my frustration; it took twenty minutes in line to mail my package. I guess I am stupid and was supposed to take it to the expressy mail shop or some other new fangled such way of doing things. I am not ahead of any new curve whatever that gimmick or spin currently is.

Stand on your head. Scream like a chicken. The average American Joe is discounted and not considered as valid on many real corporate or government spreadsheets these days.

Sunday, December 14, 2008

Hedge Fund Blowout on Wall Street

Who can you trust anymore?

There is this Hedge Fund Blowout on Wall Street. A thought to be very trusted guy with a lot of credentials, track record and street experience has been accused of running a Ponzi scam with a projected loss of $50 billion dollars to investors.

The investors appear to be very rich and famous people as well as charitable trusts. Also Banco Santander of Spain appears as of this writing to have a $3 billion exposure and probable loss in this matter.

I wrote something in March entitled Big Bank, as an Ezine Article.

---To a simple person such as myself, big words like derivatives, kind of go over my head. I am reminded of a former bank that I worked for. For the sack of political politeness, let us call this defunct Wall Street dinosaur Big Bank. This is going back over twenty years.

Big Bank started to sell new fangled derivatives to their best customers until their best customers got burned. I remember news through the grapevine said that the CEO told his traders and brokers to go out and find some more big customers to replace the ones they just lost with this new Chinese checker style financing. Guess what. Word was out on the street. Nobody wanted to do strange business with Big Bank anymore.

Big Bank no longer exists. It got sold to a foreign bank that knew how to treat its customers.

What I am seeing on Wall Street these recent days is two things.

One, pyramid or ponzi schemes all eventually fail. You run out of suckers who trust the sell and end up with a terrible loss or pay out.

Two, big banks, traditional and so called investment banks, all are hiding so called assets on their books. Why hide them? Well greed is one answer. If you never report the assets, the government cannot tax the profits.

The recent scenario in banks going belly up is not necessarily the result of deregulation.

The government, a slow lumbering giant, cannot regulate new or hidden forms of so called creative investment.

Now that the Social Security Trust Fund is indirectly bailing out all these marvelously lousy, incredibly stupid, non traditional fiscally irresponsible investment schemes, maybe it is time for big government to call a truce, work out what taxes if any it is willing to put on these new ponzi investment schemes and hedge funds.

The old adage about alcohol and tobacco should be applied. Legalize whatever it is you are doing in secret and tax the sin (hell) out of it!

The truth will set you free.

If you are such good business leaders, why are you hiding your activity? Are these legendary CEO bonuses co-conspirator bribes and not true earnings? Are you legitimate businesses or do you in your hearts fear Rico style investigation of your new global Enron styled accounting enterprises?


Not to pat myself on the back. A lot of people saw this tragedy coming and unfolding.

But nobody listens or learns. Nobody thinks that they can get burnt or get caught.

I assume that the business schools do not teach the History of Business Failure as in John Bunting and First Pennsylvania Bank or the Savings and Loan Scandal caused by deregulation in the late eighties or NOW! They should teach something like that along with their so called “ethics” course.

The irony of this whole thing and I know I might sound dumb saying this - maybe this Madoff guy was doing business the same way Bear Stearns and Lehman Brothers and Merrill Lynch etc. were doing business - the only problem that Madoff ran into with his ponzi scheme - and he probably did not know it was a ponzi scheme - he was just performing the normal way Wall Street has done business for the last thirty years - shell games, three card monty - ?

That the real problem Madoff had in the end was probalby the credit crunch caused by big corporate dinosaurs lying about assets and borrowing, borrowing, borrowing.

The Fed can't keep printing money indefinitely.

I knew the system was broken when they got a little fish - Martha Stewart - for $60,000 profit on insider trading related matters – obstruction of justice.

The whole freaking industry is a nest of good ole boys - insider tips - brokers and bankers skimming the system with fees, commissions and bonuses until the geese that laid the golden eggs - Freddie and Fannie - could not find any more bodies including the ones in funeral parlors to sign off on and buy sub prime mortgages.

Who is going to be honest when commissions and bonues are involved? Do you really think that anyboby will work for a $100K salary and a $50K bonus when you can opt for a $100K salary and a $10 million dollar annual bonus?

Hey! Hello! We are talking about human nature here. The so called free market capitialism B.S. is like Santa Claus or the Easter Bunny - a nice story to tell kiddies or the public but get real - your broker has only one agenda - his/her own!

Oh well!

Si La Vie!

“All the king’s horses and all the king’s men can’t put” - Wall Street back together again.

Friday, December 12, 2008

The Bunting Dequation of Banking

There is not a whole lot on the Internet about late First Pennsylvania Bank which was one of the large regional banks in the sixties and seventies. Being a native of Philadelphia I remember gossip and talk about this institution. There was a dynamic young Turk who was President of the that bank. His ultimate failure in my opinion was in going from local and going global ahead of his time. His name was John R Bunting.

Bunting was not Ivy League but got his degree from the state supported Temple University. I think that the chairman of 1st Pa. brought him to shake things up in the usual Ivy League, Union League thin blooded banking crowd.

To make a long story short let me describe Philly in the late sixties and seventies. Philly used to be a factory town. It called itself the “workshop of the world” because of all his manual nineteenth century steam powered might. After World War II, the factory base changed. The textiles industries went south to find cheaper labor. White flight to the suburbs and across the river to New Jersey left a drain on the general economy.

Some of the big stodgy banks on south Broad Street were investment banks for the trust funds left over from the glory days of Robber Barons in coal and railroads from the nineteenth century. These banks only invested their money in stocks and bonds – money making money.

A bank like First Pennsylvania made its big money from loaning to businesses. And let’s face it business was leaving the city and the profit margins were low on loans to existing businesses in need of modernization like factories.

Talking to a realtor in the middle seventies I was told that First Pennsylvania Bank would not make a conventional home mortgage loan for less than thirty thousand dollars. The average row house in Philly was selling for 10-20 thousand at the time. Thirty thousand was the bottom end of suburban home prices.

One of the things that brought down that bank was easy money. Large origination fees and positive publicity had First Pennsylvania loaning big amounts to the then thought to be future growth market in banking – emerging third world countries. No doubt dinner with the United Nations and State Department crowd and lets not forget those big origination fees made for a long term headache and eventually demise of the largest bank in Pennsylvania and not to mention one of the oldest banks in the U.S..

There was a quasi kind of gentlemen’s agreement with the government to make loans to countries that were in line with the foreign policy goals of the United States. The government was thought to be the unofficial guarantor of such third world loans

The basic Bunting Dequation is this:

Know and keep your local base secure.
– and –
Never assume that the government will guarantee your bad loans.

I think that there will come a time in the next six to eighteen months when the U.S. government will no longer in reality be able to bail out these presently merged toxic loan based mega banks.

The catch phase in 2008 has been something like “they are too big to let them fail”.

The catch phrase in 2009 and 2010 will I think be something like “make some room to let those dinosaurs roll over and die.”

Chinese Checker Mortgage Scam

One of the reasons I did not get in on the recent national ponzi scheme real estate scam and buy a house around 1999 in Staten Island was the fact that the people on the other side of the desk were selling what I thought was a bizarre witches brew of credit to qualify for a mortgage loan.

I qualified for a certain amount but the average price of houses was just a little bit higher. This might get complicated. I’ll start at the beginning.

When I went out to Arizona many years ago for personal reasons, I ended up as a loan processor in a mortgage company and in the tail end of the Keating Five style across the board Savings and Loan scam. The mortgage company I worked for was double documenting all its government loans, FHA, VA, because of the formerly unsavory practices of commission only sales/loan originators.

The government backed loans were the most regulated and the most affordable to the average person. Outside of the FHA, VA loans were the commercial or conventional mortgages that were not so heavily regulated. You did not need inspections. You could buy a house "as is" with a conventional mortgage loan. And these were serviced/packaged through the Freddie and Fannie fandangle government bureaucracy.

The conventional mortgage loans were thought to be a better risk because they wanted a minimum of 10% down and up to 20% in order to avoid mortgage insurance on top of the loan. Traditionally most lender’s believed that if they had twenty percent down on a property they could break even – even if the borrower defaulted and went into foreclosure. Funny how nineteenth and early twentieth century business concepts get recycled and never questioned even by the new young Turks of financial fantasy land.

The Mortgage Insurance was a guarantee to the lender that the lender would recover the full cost of the mortgage should the borrower default and go into foreclosure. All in all, conventional mortgage paper was thought to be easier and cleaner in terms of paperwork and servicing of the investment by the lender.

I cannot explain the Freddie and Fannie fandangle bureaucracies except to say that any note can be packaged together in say a ten million dollar security and sold as a paper investment anywhere on the planet.

The bridge between the person who owed on the mortgage and the investor who held the security paper was the servicing company who receives the mortgage payment. The servicer deducts a small fee and passes the balance onto the investor holding onto the paper.

At one time servicers were local and part of the local bank that originated the mortgage loan. At one time the bank held the note in the vault as its own claim to the property with return on investment with each mortgage payment made.

Somewhere along the time line, local got replaced with global. The local bank building is now a factory outlet and the servicer of the mortgage floats around to different corporations from year to year not unlike temporary assignments of HMO doctors to patients. It is all very efficient, shaving pennies and milli-pennies on billions and trillions of dollars. The CEO with Ivy League MBAs no doubt earn their figure salaries and bonuses thinking up ways to squeeze blood from stone.

Back to 1999, what kept me from this new Chinese Checker like rules mortgage game was that I could borrow 10% down on a credit card for a conventional loan and use the cash as down payment on a mortgage. In theory it is 0% down but hey you have got to pay on the credit card besides the mortgage. Perhaps it was against some fake frat house SEC type rule or law to tell me to refinance after I close on the property and pay off the credit card. But I could barely afford the projected mortgage payment and the thought of some four or five hundred dollars a month minimum payment on a new credit card just blew my mind.

ARM loans, adjustable rate mortgages that kick up in interest in one or two years made a lot of people think that the original monthly payment would stay that way for years. Of course others were just speculating and using the ARMs to help pump up the appraised value of property – buy low – sell to suckers.

I did not have the guts to jump into the new brave new ponzi world of mortgage financing.

So, I had to be stoic and watch the real estate values literally go up five to ten percent per quarter and year after year. In retrospect I instinctively knew that this was all a crock of horses*** but I don’t have a MBA in business and I did not work for the Federal Reserve Bank that was supposed to monitor “inflation”.

There was no inflation in housing in the United States for ten years - was there? – just basic out and out old fashioned fraud on all levels from the borrower all the way up to the CEOs buying toxic mortgage backed loans and trying to dump them overseas for a profit.

Congress and government agencies were asleep at the switch and in the case of Freddie and Fannie – they were both pimps and enablers of the destruction of centuries old prudence and classic business logic and ethics.

The housing collapse is an example where big government is the cause of disaster and not the fixer of such.

How does this mess get cleaned up? Slowly and painfully and the government printing presses cannot print the tens of trillions of dollars needed to put Humpty Dumpty Wall Street and Main Street back together again. Only time and perhaps growth in a new green economy may help clean up this entangled ten million house vehicular collision caused by the former masters of the universe.

Thursday, December 11, 2008

Farm Sense = Common Sense

Part of what I am trying to communicate here is that despite the abundance and luxury and seeming opportunities, America seems to have grown stupid.

I say stupid not as a put down, but the younger generations do not know the same things that their parents or grandparents knew. I in fact do not know many of the things my parents and or grandparents knew through life experience.

Every generation has it advances, and laments the traditions that seem to have died with parents, friends and others.

Sometimes I try to say to people something strange sounding as a means to convey what common sense used to mean. I want to convey something perhaps visual in describing a time when 95% of America was involved in farming.

With that I say something like “common sense” used to mean “farm sense”. Meaning that if you lived on a farm, you tilled the soil, planted crops and harvested them. You also fed your chickens and cows and pigs. Otherwise, you die with your unfed farm livestock.

I make that allegory in order to illustrate just how far away we all are from the source of food and the need to follow through and maintain the food cycle. Working on a farm is hard work but there is a closeness to the rhythms and cycles of nature that we also do not touch upon or even understand anymore.

The west sometimes more now than anytime in the past century or before seems to be lost in a box made in a factory somewhere else.

How do I describe a factory to somebody who has never seen or heard or smelled one or where half your relatives have had a job there or are working in that factory?

I mention these things because I think it might be every two generations that sees a more dramatic turning of time and manners and culture. This is such a time.

Two generations ago or forty years ago, America still made things. America not only made things but fixed things. How many modern washer-less faucets are in our houses? My father for ten or fifteen cents would buy replacement washers for a leaky faucet. Part of the cult of adult males, from the turn of the last century to less than a generation ago, was being able to fix your own plumbing. Now if the faucet leaks, you replace it and at great expense. Is it expensive or is it charged on a credit card?

What does an obsolete word like husbandry mean? Is the meaning of that word worth reviving?

There is so much in the way of a disconnect that has happened in a mere generation and probably owing to the power of computers. Does anybody know what a typewriter is or how to use one? I might as well describe some weird science fiction object than be able to pass on any useful information to my children regarding archaic machinery.

So too as I stated in the previous article, economics or its understanding is something of a sham or a scam if the tenured people talking economics are only dealing with spreadsheets and are wrapped in a bubble that does not necessary see or touch the real ever changing economy.

Human beings seem to have been factored out of a lot of economic formulas worldwide. Outsourcing talents or skills may save money and inspire paper profit but where is the balance? In life, for thousands of years, has been a concept of balance. If you change the workplace, do you know where you and your neighbors are going down the road.

If you spend more money than was allocated in the government budget, then the budget must be balanced by cutting back somewhere else in the budget or raise taxes.

Classical economics will never go out of style and is much more practical than the mess now masquerading as professional economic theory.

The current financial meltdown seems to suggest that not all the answers in life are found in our universities or in corrupt and or delusional political or corporate bubbles.

It is time for America to symbolically and in a real sense to start building and fixing things again.

Feed the pigs or starve!

Wednesday, December 10, 2008

Economic Dequations - American Style

I am not talking about economic equations.

I am wondering when the prices of houses in the United States skyrocketed out of the reach for the average wage earner - where on all this pious horses***, meal ticket, economics, academic, Chinese checker rules - style federal bureaucratic equations – where did the “inflation” of the price of housing doubling and tripling and quadrupling in a decade – where were these precious announcements from the Federal Reserve Bank about this unaccounted for housing inflation?

The Economics reported in government statistics is many times footnoted to say that this or that segment of the economy with growth or downturn is factored into or out of any general prognostication or economic forecasts and the like.

Didn’t anybody in the government get fired some week or two ago when the news was announced that the recession started last December? What a joke for what passes for competence these days in the fading old dream of America. We are not laughing.

In fact I think I heard the retired Chairman of the Federal Reserve Bank deliver a few pearls of wisdom from his sermons on the mount delivered before Congress in Congressional investigative hearings. I heard a teaspoon of warning about the possible dangers of unbridled deregulation or what not. Then I heard about five pounds worth of "if workers wages go up that would be a dangerous thing – inflationary".

I am talking off the cuff here. But there are many network news stations and major newspapers who seemed to rubber stamp what seemed more like Public Relation Press Releases from the Fed instead of challenging the voodoo, K-Y jelly, free market, 24/7, non-stop economic mantra heard over American airwaves and in newspapers these past decades. That to tell you the truth, what I heard or read back when did not sound or look like the macro or micro economics 101 and 102 that I took freshman year in college.

The retired Chairman, venerated as he was for decades, was in fact retired the first day he took office for all the good or real warning or real sound economic advice that he never bothered to dispense to prevent the present financial meltdown and crisis.

"Faded Jaded Mandarin", a lyric from somewhere, would have been a better title for the Fed Chairman but let us not do the blame game. He looked out his front door and there were no riots or blood in the streets – so his Economic Dequation – like some weather reports was good with only a chance of cloudiness.

And they pay people to do this? Wow! America is a great country! (or at least it once was)

New Age Dawning

I am perhaps a voice from the past. What I saw or perceived as the American Culture to be is changed and changing. There are no simple answers as to what went wrong or what is still good and worth saving.

Of late the meltdown of the world’s economies and based on college educated economists and thought to be sound economic theory is out the window and in the outdoor toilet – outhouse.

The bubble world of bureaucratic and academic ideals has collapsed along with the world religions. Religion these days would seem more comfortable where there is hate more so than love or logic that can glue the human species together.

Indeed on one hand, usury which used to be a sin is ignored by fundamentalist Christians in favor of any dog in politics who will jump to the faith’s smoke and mirror tricks. Dinosaurs are no older than five thousand years old. Yeah right. Science is a sin except when you are a fat bloated preacher in the hospital emergency room and demanding the best in heart transplant technology – imagined design - to keep one’s inflated power on the throne to keep the masses ignorant.

The American individual has succumbed to an unquestioned and passing Age of Chronic Luxury at the expense of the world’s lesser or poor nations.

The beginning of a new age happens when the old and dying age finally takes its last breathes. That is about to happen and it may be a long time before we see the light of new and better day for mankind.

In any case, I will try to comment in a fair and balanced way to current events. I will also endeavor to mention my personal insights or history as a very minor footnote of this age rapidly passing away and witness to the hopefully better new age dawning.

Not much of a mission statement but definitely a secular and honest point of view will be aired here.