Investing Curiouscatblog

Tag: government

  • Fed to Loan AIG $85 Billion in Rescue

    Fed to Loan A.I.G. $85 Billion in Rescue

    Fearing a financial crisis worldwide, the Federal Reserve reversed course on Tuesday and agreed to an $85 billion bailout that would give the government control of the troubled insurance giant American International Group.

    The decision, only two weeks after the Treasury took over the federally chartered mortgage finance companies Fannie Mae and Freddie Mac, is the most radical intervention in private business in the central bank’s history.

    This whole meltdown of the companies that exemplified the mantra that government regulation is bad (when they would like to make money by avoiding regulation) that now come begging for government bailouts because of the risk to the economy of failing to provide bailouts sure is disheartening. You might even think real changes will be made. I am sure changes will be made for awhile and then people will forget and special interests will pay politicians to get special favors and we will find ourselves in a different but similar mess a few decades from now.

    Related: Fed Continues Wall Street Welfare – 2nd Largest Bank Failure in USA History – Estate Tax Repeal

  • Federal Deficit To Double This Year

    Federal Deficit To Double This Year

    A weak economy and a sharp increase in government spending will drive the federal budget deficit to a near-record $407 billion when the budget year ends later this month, and the next president is likely to face a shortfall in January of well over $500 billion, congressional budget analysts said yesterday.
    …
    The budget picture is likely to grow even bleaker once government analysts factor in the anticipated costs of the Treasury Department’s decision last weekend to take over struggling mortgage-finance giants Fannie Mae and Freddie Mac.

    It is no surprise those that spend what they don’t have personally elect those that do the same thing for the nation. But as those that spend money they don’t have eventually realize you have to become responsible at some point.

    Related: More Government Waste – True Level of USA Federal Deficit – Lobbyists Keep Tax Off Billion Dollar Private Equities Deals and On For Our Grandchildren

  • Failing Infrastructure in the USA

    The cracks are showing

    For the past few years it has been hard to ignore America’s crumbling infrastructure
    …
    Even worse is the influence of the pork-barrel. Only around 20 states use cost-benefit analyses to evaluate transport projects; of these, just six do so regularly. Alaska’s “bridge to nowhere” is an infamous result of this sort of planning. But it is not exceptional. Two months after the bridge collapsed in Minneapolis, the Senate approved a transport and housing bill that included money for a stadium in Montana and a museum in Las Vegas.
    …
    Such plans stand in stark contrast to the federal government’s strategy today. America invests a mere 2.4% of GDP in infrastructure, compared with 5% in Europe and 9% in China, and the distribution of that money is misguided.

    I think they underestimate our ability to ignore. For example we have over $500,000 in federal government debt per household and continue to raise taxes on future generations without any guilt. I think our capacity to ignore is pretty large and certainly large enough to ignore the decision to spend money on things other than infrastructure repair.

    I think those that don’t somehow manage to remain ignorant all know that China has taken the lead in investing in infrastructure and that the USA has chosen to elect politicians that are gutting infrastructure investments (and still spending far beyond the resources they have available). I can’t imagine many who understand economics have any trouble seeing which country is investing in the future and which country is selling out its future. It is not the choice I wish was being made in the USA but it is obviously the choice we are making.

    Related: USA Infrastructure Needs Improvement – Politicians Again Raising Taxes On Your Children – Manufacturing Takes off in India – True Level of USA Federal Debt

  • True Level of USA Federal Deficit

    What’s the real federal deficit? by Dennis Cauchon, 2006

    The set the government promotes to the public has a healthier bottom line: a $318 billion deficit in 2005. The set the government doesn’t talk about is the audited financial statement produced by the government’s accountants following standard accounting rules. It reports a more ominous financial picture: a $760 billion deficit for 2005.
    …
    The audited financial statement – prepared by the Treasury Department – reveals a federal government in far worse financial shape than official budget reports indicate, a USA Today analysis found. The government has run a deficit of $2.9 trillion since 1997, according to the audited number. The official deficit since then is just $729 billion.
    …
    The new Medicare prescription-drug benefit alone would have added $8 trillion to the government’s audited deficit. That’s the amount the government would need today, set aside and earning interest, to pay for the tens of trillions of dollars the benefit will cost in future years.

    Standard accounting concepts say that $8 trillion should be reported as an expense. Combined with other new liabilities and operating losses, the government would have reported an $11 trillion deficit in 2004 – about the size of the nation’s entire economy.

    The federal government also would have had a $12.7 trillion deficit in 2000 because that was the first year that Social Security and Medicare reported broader measures of the programs’ unfunded liabilities. That created a one-time expense.

    The continued attempts by politicians to distract from the huge taxes they are voting to place on our children and grandchildren is disheartening. And the continued actions that are the equivilent of getting another credit card when they spend so much that even the “official” books that they have exceeded the allowable total federal debt that is damaging the economy. They need to learn how to live within the current taxes they collect just as people need to learn to live within their earning. Either that fails to do so mortgages their future.

    Related: Politicians Again Raising Taxes On Your Children – USA Federal Debt Now $516,348 Per Household – Washington’s Funny Accounting – Lobbyists Keep Tax Off Billion Dollar Private Equities Deals and On For Our Grandchildren – Failed Leadership: Estate Tax Repeal

  • Ohio Acts to Protect Citizens from Payday Loan Practices

    Payday lenders likely doomed in Ohio. Good.

    A hotly debated bill that effectively would spell the end of the short-term, high-interest payday-lending industry in Ohio sailed through the Ohio Senate yesterday despite pleas from lenders that their stores would close and 6,000 employees would be put out of work.

    The Senate was unable to find a compromise that both satisfied payday lenders and eliminated the debt trap that bill supporters said forced too many borrowers to take out new loans to pay for old ones. So it did what the House did last month: dropped the hammer.

    “I think everybody said there is just no way to redeem this product. It’s fundamentally flawed,” Bill Faith, a leader of the Ohio Coalition for Responsible Lending, said of the twoweek loans. The industry “drew a line in the sand, and the legislature kicked the line aside and said we’re done with this toxic product.”

    House Bill 545 would slash the annualized interest rate charged by payday lenders from 391 percent to 28 percent, prohibit loan terms of less than 31 days and limit borrowers to four loans per year. It also would ban online payday lending.

    Yes in a small number of cases payday loans are helpful. In the vast majority of cases they harm citizens and the economic well being of society. Legislators should act to fix practices that harm the economy.

  • Crazy Watchmen

    Who will watch the watchmen? The USA is in desperate need for some people in power that support the ideas of Jefferson et. al. Taking your laptop into the US? by Bruce Schneier (a leading authority on computer security matters).

    So your best defence is to clean up your laptop. A customs agent can’t read what you don’t have. You don’t need five years’ worth of email and client data. You don’t need your old love letters and those photos (you know the ones I’m talking about). Delete everything you don’t absolutely need. And use a secure file erasure program to do it. While you’re at it, delete your browser’s cookies, cache and browsing history. It’s nobody’s business what websites you’ve visited. And turn your computer off – don’t just put it to sleep – before you go through customs; that deletes other things. Think of all this as the last thing to do before you stow your electronic devices for landing. Some companies now give their employees forensically clean laptops for travel, and have them download any sensitive data over a virtual private network once they’ve entered the country. They send any work back the same way, and delete everything again before crossing the border to go home. This is a good idea if you can do it.
    …
    Lastly, don’t forget your phone and PDA. Customs agents can search those too: emails, your phone book, your calendar. Unfortunately, there’s nothing you can do here except delete things.

    This is so sad. The continued erosion of liberty is amazing. I think we need to wonder now how much longer we can expect the right to openly criticize bad government policy. It used to be the USA government looked down on “soviet block” spying on those visiting the country. That the leaders of the USA have so abandoned liberty is very sad.

    20 years from now when the consequences of such anti-liberty behavior results in the much more rapid emergence of other countries that respect the rights of visitors we can wish we didn’t follow this bad path. People can gnash their teeth and wonder why the USA threw away its central role in international trade, science, engineering… This continued path of stupid behavior is condemning the USA to a poorer future.

    So far my worry has been the failure of the USA government to take sensible proactive steps. Increasingly however, my worry is growing from that to include growing concern at very damaging policies that serve to isolate the USA from those leaders of the future that of course will shun those that strip their liberties as a condition of dealing with the USA (some will continue to put up with the ludicrous demands as long as their is money to be made but I bet they will be anxious to find more willing partners as soon as they can).
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  • Dealing with Debt Collectors

    The best method to avoid problems with debt collectors is to avoid debt problems (Create Your Cash Reserve – use your credit card responsibly – Buy less stuff). But if you do run into problems and get stuck dealing with debt collectors in addition to the financial trouble you may find yourself very frustrated and stressed. The Fair Debt Collection resource of the Federal Trade Commission provides useful information:

    Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, debt collectors may not:

    • use threats of violence or harm
    • publish a list of consumers who refuse to pay their debts (except to a credit bureau)
    • use obscene or profane language; or repeatedly use the telephone to annoy someone

    Debt collectors may not use any false or misleading statements when collecting a debt. For example, debt collectors may not:

    • falsely imply that they are attorneys or government representatives
    • falsely imply that you have committed a crime
    • falsely represent that they operate or work for a credit bureau
    • misrepresent the amount of your debt
    • indicate that papers being sent to you are legal forms when they are not
    • indicate that papers being sent to you are not legal forms when they are

    Why is such a resource needed? Because many debt collectors have behaved unethically and illegally. To file a complaint use that link or call toll-free, 1-877-382-4357.

    FTC 2008 Report on Fair Debt Collection Practices Act
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  • Continued Credit Card Company Customer Dis-Service

    As the credit card companies continue to prove they are not interested in providing value to the customer and making a fair profit from the value they provide. Instead they attempt to do whatever they can to get money from customers. I would guess because they can get more from careless customers that don’t block each attempt to take their money than the companies have to pay back or pay in fines.

    J.P. Morgan Chase — What Every Person With A Credit Card Should Know

    I am so angry at Chase Card member services this morning, I could scream. Instead, I will take a breath and just cancel my credit cards. This anger built up is not only against the credit card company but also our government’s bureaucracy. Can we get anything in our country working again? Or is it all about the almighty dollar? Arrgh! I try to remember at what point in our history did making money become more important than operating ethically-I cannot recall.

    Canceling cards from companies that repeatedly treat customers as a source of ill gotten gains is wise. Unfortunately most options seem to be led by the same unethical tactics. Some credit unions seem to actually believe in providing a fair service and treating customers with honesty and integrity (though many just outsource credit card service to a company that has no interest in the mission of the credit union to serve members). During the era of the robber barrons it was accepted that business was amoral. Since then it is understood morality applies in the business world – some people just case less about morality than cash.
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  • Some Movement on Regulating Credit Cards Companies

    Regulators zero in on credit card reform

    On Thursday, the Office of Thrift Supervision, responsible for overseeing the nation’s savings and loans, endorsed a seven-point plan to tackle “unfair” and “deceptive” practices by companies that issue credit cards.

    The plan would allow consumers more time to pay their monthly bill. It would prevent companies from applying interest-rate increases retroactively to pre-existing balances. And it would ban “double cycle billing,” a practice that computes finance charges based on previous billing cycles.
    …
    U.S. consumers were saddled with $850 billion in credit card debt as of the end of last year, according to the Consumer Federation of America.
    …
    “It’s a good first step in addressing a number of abusive practices,” said Travis Plunkett, legislative director at the consumer federation. “However, it will still be necessary for Congress to step in because the proposal only deals with a few of the problems that have been identified.”

    At the same time, legislators could have quite a fight on their hands. Previous efforts trying to reform the industry have largely failed, while recent legislative proposals have found little support among GOP lawmakers.

    The credit card companies pay politicians a great deal of money. That is the reason sensible regulation has failed. Now those fighting for sensible regulation have to have such an obvious case that even those taking huge amounts of money from the credit card companies can’t stymie sensible rules. Remember to follow our credit card tips to avoid the pitfalls that catch so many – that don’t read our blog 🙂

    Related: Legislation to Address the Worst Credit Card Fee Abuse, Maybe – Sneaky Fees – Incredibly Bad Customer Service from Discover Card – Hidden Credit Card Fees

  • Gen X Retirement

    Half of Gen X Doesn’t Expect to Retire

    Boomers who are frustrated that they can’t afford to retire may turn out to be lucky compared to their kids. A new survey shows that more than two-thirds of Generation X don’t think they’ll be able to retire at all.
    …
    “They are earning money and paying into Social Security and yet they fear they may never see the payback,” said Moloney. “They feel they deserve it, but it looks like a financial black hole to them right now.”

    The government certainly is failing to pay for future obligations today instead choosing to raise taxes on the future. But Social Security itself is actually in better shape than most think. We really do need to move out the benefit payment date (when it began projected life expectancy was almost the same as the date payments would start – which would mean moving the retirement date more than 15 years later, I believe). Going that far is not needed but it should be moved back. But really social security is in good shape for 30 years or more. First, it isn’t going to go from good shape to failed in a day. And second, they will make adjustments as they have in the past to make it work (the adjustment they made in the last 15 years helped a great deal so now they can just add some additional delays in when it starts paying out… and extend the good condition of Social Security without too much trouble).

    Medicare is the huge problem. The country either needs to stop paying an extra 50-80% for health care than other countries do (and thus reduce the cost of Medicare liabilities) or massively cut benefits or massively increase taxes. Likely a combination of all 3.
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