Tag Archives: finance

TrickleReaganTrumpanomics

28 Sep

Image result for reaganomics

Donald Trump announced his grand economic plan at the debate last night. And mostly it includes tax cuts for the wealthy because the wealthy love to create jobs for the common folk and so if you give the wealthy more money then they will spend it on you.

Sadly, we can never propose to give the poor folk more money because that would be socialism and the more money you give to the poor the worse it gets for them because they only get lazy and then waste the money on drugs and then need more socialism.

The wealthy however are never lazy and do not waste any money on drugs but rather only wish to spend their excess money on making things better for the poor by creating more business/job opportunities which is a good thing that in turn makes more money for the wealthy which is another good thing and since there is nothing social about it, just business… It is a great thing.

Except no matter how many times this economic plan is tried, no matter where, no matter when, it always fails to produce the results expected…or hoped for. And why is that? Because when wealthy people get more money, they keep it and add it to their collection of money. Or they spend it on the extravagances that they enjoy that require special services and servants and not you…unless you are a low wage worker in one of the many service industries. Or they pass it on to their relatives.

Who, thanks to Mr. Trump’s other tax proposal (to eliminate the inheritance tax) can keep it all without paying any taxes on it, ever. So they can in turn pass it on to their relatives and so on and so on ad infinitum, tax free.

And even Mr. Trump agrees that to not pay any taxes is a good and smart thing to do if you are wealthy. When he had to show his income taxes to NJ state authorities when he was trying to get a casino license, they showed he didn’t pay any federal income tax at all. “That makes me smart.” Said his wealthiness.

And as the debate continued, Mr. Trump complained that the U.S. Treasury has accumulated too much debt while the government has neglected American infrastructure. “We’re a debtor nation,” he said. But no matter, because even if Mr. Trump and his fellow wealthy Americans paid their fare share “It would be squandered, too, believe me.” He added.

So to sum up Donald trump’s tax plan:
Give more money to the wealthiest Americans in the form of tax reductions. They in turn, will create great jobs and bring their businesses and money back to America…unless they are  smart and possess good business minds, then of course it will be their business duty to figure out how to pay even less or nothing in taxes, while continuing to make things in China and Bangladesh, like Trump companies do.
And that is how he will fund the rebuilding of our infrastructure, continue the wars in Afghanistan, Iraq and with ISIS, fight cyber-terror, build the wall on the Mexican border, deport millions of illegal aliens, pay down the debt and make America Great again.
After all, who needs money to pay for government expenses? I’m sure that when you try to think of ways to pay your ever inflating expenses your first thought is always: Hey! Maybe I can reduce my income?! Yeah that oughta do it…and declaring bankruptcy 4 times might help also…oh, but I think that’s for rich people too.

The American Dream is Dead! (mostly)

26 Feb

 

 

According to a recent Harvard poll, just about half of all American millennials say that the American dream is dead! Actually 48% said it was dead and 49% said it was still alive… with 3% left among the undead I suppose?

For those who don’t do a lot of dreaming anymore the American Dream is the age old belief that in a society of freedom and opportunity (like here in the USA)  every US citizen should be equal in their ability to achieve success and prosperity through hard work, determination, and initiative…regardless of ones social class or circumstances of birth.

But today in the 21st century Millennials owe over 1 trillion dollars in unpaid student loans, a far cry from their grandparents who went to college for free under the GI Bill and their parents who could pay their tuition with a summer job.

And they owe it mostly to a  U.S. government that owes 18 trillion dollars itself! Neither of which are very good signs that the “Dream” will be awakening from its coma and coming off life support any time soon.

Plus, home ownership in America, (another staple of the American Dream) is down, especially for Millennials,…And the median American household income, when a Baby Boomer is the head of household, is 20 times greater than when the household is headed by a Millennial…and the promise of doing better than the generation before you (also part of the dream) is now more hope than promise.

So achieving the American dream still involves one’s self achievement, determination and initiative and while Millennials are still graduating from college and still determined to be successful and still believe in family and home ownership, just like the generations of Americans before them,  it’s now costing a lot more and being financed with debt and not income.

But money is the stuff dreams are made of and debt is definitely not dreamy!… Unless one dreams of not having to pay it back…So where did all of the money go? And who’s responsible for killing the American Dream and why are they doing it? Or is life just the stuff dreams are made of…all hope and little promise?

As the new millennium continues, I guess we shall see…but so far many Millennials are not looking forward to what may be a rude awakening.

 

Debtor’s Prison

14 Jan

This just in! Total student loan debt in the US has reached 1. 3 TRILLION dollars…and that starts with T, which rhymes with P and that stands for Payments you’ll never finish Paying.

Because according to the Associated Press Americans who are between the ages of 35 to 50 still owe as much money on their student loan debt as new graduates do! Thanks to interest… and not the kind that the bank pays you but rather the kind that you pay to the bank when the bank loans you money from the pile of depositors money that they are not paying interest on to depositors… a college loan is the gift that you keep on paying for!

There is even a website that you can go to now to watch the U.S. student debt rise as it happens in real time… at a rate of $2,726.27 per second!

But Huzzah! The Federal government is stepping in with a plan to cap student borrowers monthly loan payments at 10% of their discretionary income. And since discretionary income is the money you have left after deducting taxes, other mandatory charges, and expenditure on necessary items. (loan payments are now even surpassing groceries as the biggest monthly expense for many households) Which begs the question: Are groceries necessary?

So in any event…you should be repaying that loan…forever! Or at least until you check into that nursing home, at which time the Nursing home and your Alma Mater will have to duke it out to see whose debt trumps whose. Or is that whom? Which rhymes with tomb…

College debt is becoming a veritable debtor’s prison, where you get to stay at home, but only if you can afford one, that is.

So parents, when your kids grow up and start to inquire about college you might want to trot out a new twist on an old phrase…”Ignorance is cheap. ‘Tis folly to be wise!”

 

 

 

 

Go West Young Man…but not Too Far West!

27 Dec

According to the latest population surveys and official sources for US poverty estimates the official poverty rate in the United States is 14.8 percent which means that 46.7 million Americans live in poverty. And although the poverty rates in America have not changed over the past few years for most groups, 3 groups have seen their rates increase; people with disabilities, people with at least a bachelor’s degree and married couple-families.

The poverty rate for chil­dren under age 18 was 21.1 per­cent.

14 states now require over 3 times the earning power of the minimum wage in order to reasonably afford a 2 bedroom apartment. The other 36 states require at least twice the minimum wage, or a wage of at least 30,000 dollars per year to afford such an abode.

66% of all Americans earn less than 20 dollars per hour.

It’s not unusual to walk around my neighborhood these days and find a house or two lying vacant. I live in New Jersey and can’t remember a time when that was normal. I’m just wondering how things are where you live?

 

 

It Makes the World Go Round

6 Feb

Recently there has been a spate of computer hacking at large retail stores, most notably,  Neiman-Marcus, Target and Michael’s, where customer credit card information has been stolen from each companies computer systems. This information has been sold to other criminals who in turn use the info to create bogus credit cards which are then used to purchase items on-line in the names of the stolen identities.

If you have ever had your identity stolen or have had fraudulent charges made to your credit card account then you know how upsetting and frustrating this can be…and you also probably know how little surprised and unfazed the credit card companies are by all of this thievery when you contact them.

There are two relatively easy fixes for this problem: One involves these large companies strengthening their computer systems security measures to make it more difficult for the hackers to place malware and other viruses into those systems which then allows the hackers to retrieve valuable data used to steal credit card and customer info. That of course would cost the retailers money.

The second fix involves creating a new type of credit card, one with a technologically superior computerized chip and stripe that requires your also using a 4 digit pass code when making purchases. This would replace the current stripe that is on the back of your card now and which represents a credit card technology that is already 40 years old.

So why not create a newer and safer credit card for all to use?

Because even though the new card would only cost credit card companies about $3 each to replace there are about 5 billion credit cards in circulation in the U.S. alone. And since credit card fraud amounts to about 5.5 billion dollars in fraudulent purchases it’s more cost effective for the CC companies to…you guessed it…do nothing.

So, until the thieves do more thieving it’s up to us to be more vigilant about how we use our cards. One thing to do is to select credit rather than debit when swiping your bank card at stores. And purchasing on-line is safer than in person (go figure) and of course cash…remember that?…is the best way to avoid identity fraud.

Of course then you might have to wait a bit at checkout while the cashiers do the math and count out your change, but having us all do a little bit more math is probably a good thing since nothing is going to get cheaper and thieves are way ahead of all of us when it comes to doing the math.

I’d also mention the old adage, “If you can’t afford it, don’t buy it”… but I can hear you laughing already…

The Great American…Loan

18 May

 

People in the United States owe a lot of money on credit cards. In fact we owe about 700 billion dollars in credit card debt. The only thing we’ve borrowed more money for is home mortgages… but home mortgages aside, who owes more than adults when it comes to borrowing money?

It’s school kids! And although technically they are school adults, if you have 1 or 2 or more of them in your home they are still kids to you…but still, the number one debtor in the United States today are young adults who have taken out loans from the federal government to finance their college education.

Student loan debt has gone over 1 trillion dollars…as in 1 followed by 9 zeros, and the federal government has just forecast a record 51 billion dollar profit this year from student loan borrowers. That’s more than the earnings of the nation’s most profitable companies.

Who knew? Did you?

But the good news? In July the 3.4% interest rate that students are paying on borrowed money now will jump to 6.8% …unless of course Congress passes the “Student Loan Affordability Act” which is proposed legislation that would keep existing interest rates… on some student loans… for the neediest households, fixed at 3.4 percent. However, The bill does nothing for existing student debtors….and besides who doesn’t smell a filibuster in the air?

The Department of Education…that much maligned government entity that oversees our crumbling school system and that also gave us the “No Child Left Behind Act”, has generated almost 120 billion dollars in profit over the last five years from student loans which ironically enough, is the only kind of consumer debt that has increased since the onset of the financial crisis.

And get this… Apparently officials in Washington are now worried that perhaps overly indebted student borrowers will be unable to save enough to purchase a home, take out loans for new cars, start a business or save enough for their retirement…and become, you know…productive American citizens.

What is it that we expected would be the rewards of plunging our children into massive debt? Talk about not leaving a child behind?! What about leaving adults behind?!…before they even get started!

And for some reason these adult/children/student borrowers are also finding themselves unable to refinance their loans even if they graduate from college and secure well-paying jobs, even though  most other borrowers are able to refinance debt at quite low rates. And why is that?

Because these loans have become so profitable to lenders thanks to the Bankruptcy Reform bill of 2005 when both federal and private student loans became non-dischargeable during bankruptcy. This has turned student loans into credit risk free loans for the lender. (with a debtor who literally has a lifetime to repay it) The loans are just too good for any respectable financial institution to give up…as any gambler could tell you,  they’re a sure thing!

Getting a higher education is a wonderful achievement but once again with the help of our nation’s love affair with capitalism, we’ve turned a good thing into a profitable thing and that profitable thing into a must thing…and with ever escalating college costs happily jumping on the bandwagon, (because if you can’t afford this much it’s just as easy to not afford that much!)…this thing is spiraling out of control.

Our children are literally taking loans out on the American Dream, which is being dangled in front of them like a candied carrot on a stick, with money they do not have and may not ever have… and in what may be the most sinister twist of fate…all of their government loan filing and debt approval makes them perfect candidates for…

credit card approval once they’ve graduated.

To the Mattresses

9 Apr

This is basically a re-post of something I wrote a few months ago about savings and banks and sending your children to college but since then it appears that our federal government is up to their old shenanigans again and soon there might be no safe place for your money to reside except…you guessed it… So let’s review:

First of all a word to parents: Parents, I highly recommend college for your children. A college education is a great way to boost your child’s future earning potential but, how can we parents possibly save for it and then pay for it without saddling ourselves and our children with more and more debt?

Well, a few years ago I would have said, buy United States Savings Bonds! Money that I put into U.S. Bonds when my children were little doubled and even tripled by the time they reached college age. But in 2006 Congress voted to reduce the interest rate on bonds from 6 percent annually to .04 percent. That is unbelievably a 93 percent reduction in interest on U.S. Savings bonds and 93 percent is like…well…everything! So thanks U.S. government and forget bonds.

I’d say put your money in a savings account but remember that for every 10 thousand dollars you save this year, next year you’ll have 10 thousand dollars and about… 3 gallons of gas, because unless you haven’t been paying attention banks no longer give interest to you even as a thank you not to mention fair payment for using your money to make money for themselves… So, forget savings accounts.

How about a nice mutual fund or stock portfolio? Well, mutual fund agents used to guarantee 8 to 12 percent average interest over the life of your fund but of course that was a “market based” guarantee which was not actually a guarantee of any kind as they’d always remind you when you were signing up for the fund. And when they say no guaranteed interest boy they sure don’t kid around! No guarantee. No interest, period. The stock market (just like you suspected) really is for people with 14 billion dollars, who really don’t need all that money and who really do have 100 years to not care whether it’s here today, gone tomorrow and back again. So forget the stock market. It’s become tantamount to gambling so you think you will make lots of easy money there but just like at the casino, you won’t make any money there at all.

What about 401ks? Stock Market again! See above. Plus you get a 10 percent penalty and taxed another 20 percent if you use it before you are 59 and ½. Hopefully your kids are gone by then because you’re going to need that money. Trust me! (And what’s the ½ for? Just to screw with us?)

And now the following bill is being proposed in Congress and recent reports say that it has a 79% chance of passing. It’s called H.R. 992: Swaps Regulatory Improvement Act and as you probably can guess it will not be an improvement of any kind to anything. What it will do as I understand it, is weaken the already weak Dodd-Frank Act that is supposed to protect us from another big bank money grab and public bailout like the one we had in 2008.

Instead this amendment to Dodd-Frank will make it easier for banks to speculate with depositors money again and allow for a future where the FDIC will no longer need to guarantee depositor funds; it can just confiscate them  to recapitalize the banks should they go south once again. This would mean that your money in your bank could be used to bailout your bank’s theft of your money. So the bank of the not too distant future, for all intents and purposes can rob you!…legally!

So, how do we save for college and our children’s future or save for anything if this is what we have to look forward to? The mattress! Yep, you heard me! Every dollar in gets you 1 dollar out plus when you consider adding all of the spare change that falls out of your pocket and lands under the bed your mattress has a higher average annual yield then most government securities! So parents of America, To the Mattresses I say! To the Mattresses!

That’s How We Do: Juxta-Posers

15 Mar

Today I took a drive to the Philadelphia airport and on the drive home, thanks to major construction and the worn out, pot-holed, crumbly highway, I was forced to a crawl just as I passed the relatively new South Philadelphia Stadium Complex. Where the Philadelphia Phillies, Eagles and Flyers play.

I couldn’t help but notice how shiny and new and spectacular the stadiums looked…however I also couldn’t help but notice that the names on the stadiums were Citizens Bank Park Stadium, Lincoln Financial Field and The Wells Fargo Center. And I also couldn’t help but notice that the surrounding neighborhoods were about as shiny and new and spectacular as the interstate highway  that I was traveling on.

And that got me to wondering…Why do we almost always put sports stadiums in the worst parts of big cities where then millions of people have to travel from the suburbs to spend millions of dollars to watch millionaires play? Probably you’ll say it’s so we can get all of that money that is being spent back into the cities…but that’s just not the case

Most if not all of these stadiums are financed by the crumbling cities themselves rather than by the wealthy teams and owners and financial institutions that have their names on them. And even though banks like Wells Fargo and  Citizens bank and Lincoln Financial pay millions for the naming rights, when you consider the recent trillions of dollars spent by the federal government in bailing out these banks then just about all of the money spent on these ballparks comes from…the citizens…not banks.

 That’s just plain crazy.

Many politicians and proponents of these publicly financed stadiums argue that new stadiums bring new jobs and economic expansion but when new sport stadiums are financed with public money, all research has shown that the population is actually worse off economically than before the stadium. 

In fact arenas and stadiums rarely live up to the promises teams, owners, and city politicians use to justify their construction. Cities are often left holding unsustainable amounts of debt because the economic development that is promised never shows up, and as a result, other services that provide more benefit to taxpayers like new roads and bridges and jobs and boring things like that are slashed to pay the bills.

Which when you think about it is insane.

Almost 40 years ago my home state of New Jersey borrowed $302 million to  construct  the Meadowlands and was supposed  to pay off the bonds in 25 years. Today because of refinancing, and redirecting funds for other stadiums the authority that runs the Meadowlands owes $830 million…on a stadium that was just torn down.  

That’s nuts!

Did you know that according to a new study from Harvard: when public-private partnerships are used to build such stadiums, taxpayers finance more than three-quarters of the investment, with teams and owners picking up just 22 percent of the tab…And every NFL franchise is today worth over 1 billion dollars!

It’s so ridiculous that it’s unbelievable!

And while our cities and infrastructures are crumbling around us we are cheering ourselves up by yelling, screaming and cavorting in the midst of abject poverty on urban oases as green as the piles of cash we spend there, named after banks that wouldn’t lend us a dollar under the very same deals and interest rates that they broker to build these coliseums.

Shouldn’t we  really be building these monuments to fame and fortune in the places where they belong like Beverly Hills, Wall Street and Fort Knox?

 It’s so ridiculous that it defies explanation…

But after all…that’s just how we do…isn’t it?

 

 

 

 

 

 

The Crayola Conundrum (#20)

8 Mar

Why does The United States Speaker of the House have orange skin? And should we care?

Years ago I had a student in one of my classes who would show up for school every day in white face. And I’m not saying that she was pale. What I am saying is that she literally painted her face white each day with make-up. Apparently it was a teenage angst or rebellion thing but there she was every day with her white and somewhat disconcerting visage sitting at her desk in class. She was a good student, polite and respectful and she always did her work and caused no trouble and was punctual and on time each and everyday…except one day when she was conspicuously absent.

I use the word conspicuously only because when you have a white -faced student in class every day you definitely notice when she is not there!

Anyway, she appeared white face and all, on the very next day and I asked why she was absent on the day before…and her explanation made me roar with laughter. (discretely of course)

” I was here yesterday Mr. Picone but the administration wouldn’t let me in and sent me home.”

“But why? I asked. They let you in every day.”

“Because, she replied, yesterday was Halloween and they told me that they do not allow costumes to be worn on Halloween!”

So, as far as our administration was concerned, on every day of the year she had teenage angst or was making a statement about life, death or harlequin romance…but on Halloween they could actually say that they were seeing it for what it was…a costume.

Now I know it sounds like I’m picking on House Speaker, John Boehner, (I’m willing to bet we have many more quirky congressmen on both sides of the aisle) but that’s only because whenever I look at pictures of our Congress he sticks out like an Oompa-Loompa at Will Wonka’s Chocolate factory (at least to me) but I suppose my real question is: Are our emperors finally wearing the new clothes that we can’t say we see or dare to speak of?

When asked by the media about his seemingly constant Crayola #20 glow, Speaker Boehner replied,

 “I have never been in a tanning bed or used a tanning product.”

Which, as far as I have been able to discern through extensive googling, no one believes. So why the pretense? And that got me to thinking…

I remember one time in the dead of winter when a colleague of mine told me that he was going to begin frequenting a tanning salon. When I asked why, he replied, “Next month I’m going to call in sick for a week and go to Florida. If I have a tan before I go, then once I get back no one will suspect that I’ve gone.” (devious I know, and a definite abuse of the rules, but it happens…)

Which is why I suspect that Congressman Boehner remains in a state of vacational awareness so that we the people do not suspect that he is possibly more often than not vacationing rather than trying to get his job done. This would also explain why he never seems to get his job done…and why he is always tan…and why Congress is more often than not…on vacation!

Which brings me to my last question: Have we “jumped the shark” in America? Is Congress on the verge of closing…has the show been canceled and we haven’t gotten the notice yet. Has the good speaker been so brazenly Sunkist because he has been surreptitiously laying the groundwork for an impending governmental migration? Is the country  running up debt like a terminal Kardashian with a credit card because…

… in the not so distant future  the man with the Tropicana tint will appear with his gavel in hand,  crocodile tears in his eyes and announce the final session of Congress and the greatest sequester of them all?

Wham bam, thank you tan…  Cayman Islands… here comes Congress!

 

If It Ain’t Broke…Break It!

7 Mar

 

It’s been almost 5 years but the stock market has finally made it all the way back to where it was when the great financial crash began way back in 2008! Yes, the Dow Jones Industrial Average has finally made it all the way back from its lowest low of 6,547.05, more than doubling to over 14,000!

But for some reason the American people haven’t made it back nearly as far since then. In fact they haven’t even begun the return journey yet! What gives? The stock market’s resurgence is obviously great news for finance but someone forgot to tell people!

We’ve gone from 31 million to 47 million citizens on food stamps since the stock market crash. That’s 15% of our population now using food stamps!

11.1 million people were out of work back in 2008. Now we have 14.8 million people looking for work…but the stock market is all better?

Less food, no work, but more money? For who?

And the news gets better…

 according to Citigroup economist Steven C. Wieting, there are more than 3 million Americans still without work who lost their jobs following the financial crisis.

And…

The National Employment Law Project found that 58 percent of all jobs created over the past two years paid $13.83 an hour or less while just 22 percent were in the “mid-wage” class of $13.84 to $21.13 an hour, even though that group lost 60 percent of the jobs during the recession.

So mid-wage jobs are being replaced with low wage jobs and we’re still 3 million jobs short.

But the financial market is feeling just fine!

I think we can finally close the book on Supply Side, Trickle Down, Reaganomics.

Cut taxes on the wealthy, bailout the richest banks when they fail and what you get in return is not greater largess from a thankful and benevolent upper class. What you get is wealthier wealthy people, banks with lots of money and hungrier poor people, and fewer and crappier jobs.

The verdict is in:

Wall Street loves America and democracy…It’s just the people they can’t stand!

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