The biggest bank failure of 2009 happened last week when the FDIC moved to shut down Colonial BancGroup of Alabama, along with four other banks, bringing the total thus far this year to more than 70. A quick deal with BB&T to purchase Colonial caused its shares to rise. FDIC will be shouldering much of the losses, of course, which adds billions to the bailout of the banking system while at the same time working to further bank consolidation for the wealthiest banks still standing.

Such situations are a ‘win-lose’ proposition. Win for BB&T and their stockholders, lose for We the Taxpayers. This scheme where the feds cap the buyer’s losses at taxpayer expense is just another outrage to the hard-pressed public at a time when all the glorious pronouncements of economic recovery have yet to even begin to touch the lives of the general public still losing jobs at a high rate while no new jobs seem to be forthcoming.

And on top of the still-dismal economic situation for average people in this country, now we have the extremely contentious health care reform debate ongoing that looks more and more like bad street theater every day. Between the noisy hoards of idle old folks bused around the country to shut down discussion of provisions during Town Hall meetings held by vacationing congresscritters, and the absurd lies being spewed by the usual suspects at FoxNews and right wing radio, it’s looking more and more like the final result will be a significant new tax on the working poor that will be earmarked directly to the health insurance industry by means of mandatory purchase of junk insurance.

The situation is really health insurance reform, though reform isn’t really a good title either considering how much the Death by Spreadsheet crowd will end up getting from the public directly and from the government as subsidies. Yes, they will have to stop excluding anyone with a pre-existing condition, retroactively canceling policies if the insured person gets sick, and simply not paying for covered health care after the fact. But they will more than make up for however much this costs them by the ~40 million new policies the uninsured will have to purchase, and with government subsidies for many of those as well as losses incurred by having to honor their contracts.

And I am sure readers know that “junk insurance” – insurance that has a high deductible and hefty co-pays – isn’t going to help a person living on a shoestring budget already. Whatever ‘extra’ money those people might have saved over months to pay for a doctor’s visit will be taken by the insurers for that junk insurance. Leaving the working poor even worse off than they were before.

Even the so-called “Public Option” Obama and other Democrats have been touting is just another insurance option. Basic buy-in Medicaid, for which the government plans to auto-deduct from people’s bank accounts to make sure their premiums get paid on time. No word yet on whether they’ll do that for bank accounts that don’t have enough money in them to cover the deduction (like mine, for instance), thus causing families to suffer huge bank overdraft charges and messing up their other payment plans, or if a too-slim bank account qualifies people for automatic subsidy to make those insurance payments. But if I were to guess, I’d guess it’s just going to shaft the barely getting by yet again by throwing their bare budgeting into chaos and costing them more than they can pay.

Isn’t it funny how the wealthy and well-off are somehow able to convince themselves that we at the low end of the spectrum somehow have lots and lots of ‘extra’ money they should be able to take at will?

At any rate, we will not know until Christmas at least what the health care bill looks like or what’s in it. None of us should be holding our breath hoping for real reform or actual access to health care. In the end it’s way more likely that the government will simply be able to claim that they’ve ‘fixed’ the access problem – those ~50 million uninsured and ~100 million underinsured – so the U.S. will no longer rank #37 on the list of 37 industrialized nations on all measures of health care. While We the People will simply be poorer than we were before. I’d like to be pleasantly surprised, but don’t expect to be so long as people like Sarah Palin and Glenn Beck are spouting lies about killing granny and the Medicare crowd is hollering for the government to keep their hands off their Medicare. Stupid and/or evil people always seem to win in this country.

If you haven’t called or written your representatives and senators yet, please do so. We don’t have much of a voice in what happens in this country, but they at least need to know we’re out here and want real access to health care instead of just another theft of what little we do have. Then when we lose we’ll have earned our own bitching rights!

Those of us attempting to live on what was a shoestring budget even before the Great Unending Recession/Depression have probably been watching the large insanity of vacationing Congresscritters attempting to hold Town Hall meetings with their constituents back home with some bemusement. It’s no secret that the WingNut Network [a.k.a. Fox] and Hate Radio pundits have been inciting their faithful dummies to riot, since this has been ongoing ever since they lost the election last November in a big way. Between the clueless idiots who can’t believe a black man is a real American citizen (or that exotic Hawaii is actually a state) and the Bermuda shorts and gray hair crowd shouting “Keep the government OUT of my Medicare!” one really does have to wonder if maybe there’s something in the water making people lose what few IQ points they might have had back in kindergarten.

Some of us also know that going to a doctor regularly if you aren’t actually sick is not wise, thus are probably better off if we don’t suffer some chronic condition with our very limited access to the health care system than we might be if we had annual check-ups and the ability to demand whatever drug is advertised on television nightly. While it’s a sad truth that ~50 million Americans have no access to the health care system – and that’s an insurance issue – I haven’t seen anybody talking much lately about the health care system itself, which just happens to be the third leading cause of death in the United States.

Thus they’re fighting about “Health Insurance Reform” while the dismal failure of doctors and hospitals to confront the outrageous error rate, hospital-acquired infection rate, etc. that KILLS at least 195,000 Americans every year. Americans who DO have access to the system! The U.S. pays more per capita of our GDP on health care than any other industrialized nation – most of which have universal, single-payer health care systems – and are at the very bottom of the list on all measures of health care outcome. Life expectancy, infant and maternal mortality (tied to our ridiculous C-section rate and lack of prenatal care), general health, number of chronic diseases, etc., etc.

We’d all like to see universal access to health care. We’d like for insurance companies to be barred from canceling policies if the person gets sick, from refusing to cover those with pre-existing conditions, and from raising the rates at five times the rate of inflation every year just because they can. We’d like for the poor and working poor to be able to get health care even if they don’t work for a company that offers it, or don’t earn enough to participate. We’d really like to get our bones set and our cuts stitched when we need to without going bankrupt, and we’d like to get treatment for our cancers and our other serious ailments instead of simply dying of them because health care is beyond our reach.

But because something must be done about the current situation in this country no matter how loudly the idiots yell about not offering their government health care to others who need health care, we can expect that something minimal will indeed be done. Best advice to those who have managed to get this far in life without being regular users of the health care system or the drug companies’ medicine chest is to approach new access with caution. Nothing is being done to cure the rate of iatrogenic disease and death (iagrogenic means “doctor-caused”) in any of this political maneuvering, so increased access only means that the delivery system will be able to harm or kill even more Americans every year.

Make use of your intelligence and your access to the internet, go looking for reliable information if you or someone you love gets sick. Merck has their entire medical manual on-line, the Physician’s Desk Reference is available as well with good information about drugs and which ones may conflict with others – something too many doctors don’t keep track of, and a large contributor to deaths from prescription errors. There are lots of physician websites offering information about various conditions, as well as patient associations that often have collected information from people who have or have dealt with particular conditions with even better information. Always be careful of information, make sure it’s good and not just another quack selling the magical ‘cure’ for AIDS or cancer or whatever, because those are out there too.

And if you’ve got questions, write them down, collect the good information you’ve gathered, THEN take it to your primary care provider and ask. Don’t tolerate a physician or practitioner who gets his or her nose bent out of shape because you’ve done your homework, and never put up with a doctor who balks if you ask for a second opinion. If you’re in line for surgery or some other serious treatment, go to the website of your state government’s medical regulatory agency and search until you find a list of the physicians and other practitioners who have been disciplined by the agency for gross or repeated malpractice or errors. If your doctor’s on the list, get a new one.

And most of all, keep always in your mind the fact that your personal choices affect your health for the better more acutely than anything an insurance company or doctor or hospital can. No one else can “heal” you – people’s own bodies do the healing, health care providers can only help it along. Best not to get sick in the first place, and we’ve no excuse not to know that our diets greatly affect our health. Eating well, getting exercise, maintaining our environment, etc. will stave off many a nasty illness or condition – avoiding the plagues that come with obesity is much better than treating this plague or that plague after they’ve developed.

Now, sit back and enjoy the street theater spectacle of the ‘haves’ trying most desperately to prevent the ‘have-nots’ from getting anything! It’s black comedy at its most absurd, something we’ll probably never see again in our lifetimes. Laugh, because that’s the best medicine in the world!

Surely that odd finding is another consequence of asking the wrong question the wrong way, so perhaps more than 11% of likely voters are fairly aware that the POTUS doesn’t manage the economy as part of his (or someday maybe, her) job description. but judging from how little (and poorly taught) civics is included in a public school general education these days, maybe this misconception is just that widespread.

As Gene Healy wrote at the time in The Cult of the Presidency…, “Our system, with its unhealthy, unconstitutional concentration of power, feeds on the atavistic tendency to see the chief magistrate as our national father or mother, responsible for our economic well-being, our physical safety, and even our sense of belonging.”

In February of 2006, when the inevitability of burst bubbles of debt and oncoming serious recession/depression became too obvious for those paying attention to ignore, Robert J. Samuelson wrote in defense of increasing finger-pointing toward the G.W. Bush White House for Newsweek magazine -

We have a $14 trillion economy. The idea that presidents can control it lies between an exaggeration and an illusion. Our presidential preferences ought to reflect judgments about candidates’ character, values, competence and their views on issues where what they think counts: foreign policy; long-term economic and social policy – how they would tax and spend; health care; immigration. Forget the business cycle.

Now that the “deepening recession” of 2006 has resulted in the complete financial failure of the world economic system in September of 2008, there’s a lot of talk from pundits and the public about what Obama can or should be doing, but the president has no direct control over the Federal Reserve, no control at all over Wall Street or the insurance industry, and basically no control over how much of his budget gets enacted by Congress – where the 1-2% of it that qualifies as discretionary spending gets spent.

He can appropriate emergency funding (if the Fed and Wall Street agree) for stimulating the economy, he can lobby Congress to support deficit spending policies while making promises about the things he really does have control of – like our current ~$10 billion a month commitments to Iraq and Afghanistan – and he can plead with or bamboozle the public over the airwaves to go along. That’s about it.

So buckle up for the ride, it may get rougher before it gets smoother.

For a great many regular hard-working, tax-paying American citizens the way money works in the modern world is very much a mystery. This is not surprising, considering that money has always been a mystery shrouded in mythical associations, psychological phobias and religious overtones. And designed to be thus by those who do know how money works. When the US Federal Reserve was established in 1913, it was not actually made a National Bank under the control of the government, it was established by and for the wealthiest bankers and Wall Street barons as an independent entity with only ceremonial ties to the federal government.

In a critique of the ancient psychological “money complex” in his book Life Against Death, Norman O. Brown explored the debt-guilt association in the essay Filthy Lucre. Brown wrote, “Whatever the ultimate explanation of guilt may be, we put forward the hypothesis that the whole money complex is rooted in the psychology of guilt.”

So perhaps it should come as no surprise that a development in late June of 2008 that rocked the American financial world went largely unreported in this country. It appeared in an article of Spiegel Online on June 26, 2008, entitled The Shrinking Influence of the US Federal Reserve.

It seems that the International Monetary Fund [IMF] became concerned about the rate of inflation Fed Chair Ben Bernanke was allowing in 2008, and how that was affecting the price of goods – primarily crude oil – all over the world and translating into flashing neon signs of coming recession. Because the world’s financial dealings are tied to the US dollar’s value, the IMF exercised an option under its bylaws that it had never before exercised in regards to the United States: it scheduled an audit of the entire US financial system.

As part of that audit the Fed, the SEC, the major investment banks, mortgage banks and hedge funds were to hand over confidential documents to the IMF auditors. About two thirds of IMF member states have undergone this process since the Fund was started, so the US really didn’t have the power to opt out. President Bush refused for seven long years of his administration to allow the IMF audit, even as he ran up the debt grotesquely with his oil wars, no-bid contracts, free-for-all bubble-blowing on Wall Street, etc. Your basic Republican cash-out before turning the country over to Democrats who spend 4 or 8 years thereafter trying hard to repair the damage the greedheads have done.

Bush finally agreed to the IMF audit, so long as it didn’t begin until his last weeks in office and isn’t scheduled to end until after he was gone. 2010, to be exact. The auditors took up residence last July, just two months before the CDS bubble burst and took both Wall Street and the Fed down with it. Bernanke had already lowered the interest rates so drastically that he practically had to pay banks to borrow money, and this left him no leverage as the shit hit the fan. When our economy tipped, so did everyone else’s. As the IMF was no doubt concerned about.

It’s hard to know who is most responsible for the fix we’re in. George Bush’s wars, his friends’ greed, the Fed’s inaction, the funds’ CDS pyramid scheme, the insurers’ ridiculous gambling bets, or the oil companies who drove the prices up so far in the months before the election that half of America stopped driving (thereby cutting demand way down even as the oil barons racked up obscene profits). We may suppose the IMF is going to find out.

The best indicator that there was collusion and much back room dirty dealing going on is the fact that the audit began in ernest (the paperwork was due) on September 30, 2008, the end of the fiscal year, though the warnings had been issued in June. September 30, 2008 also just happens to be the exact date that George W. Bush claimed that half a trillion dollars’ in immediate bailout money just HAD to be in the hands of those institutions the IMF was planning to audit, or the economy will collapse!

Could it all have been not just unethical, but illegal even by whatever rudimentary banking and investment rules remained after W. wiped most actual regulations off the books early in his term? Does this explain the mass exodus to off-shoring havens of the bonus babies We the People have been forced to pay off with our hard-earned dollars? Will there come a time of reckoning when the world’s crookedest greedheads and game-players will be prosecuted for their crimes against humanity?

Stay tuned, dear readers. This one is bound to keep rearing its dragon head as the audit proceeds. Should be interesting!

Links:

The Shrinking Influence of the US Federal Reserve
Corrente: IMF to audit US Financial System
Did IMF Audit Lead to (expose) US Economic Collapse?
Banks Holding Up in Tests, but May Still Need Aid

Even way back last August, before the economy was officially in terminal free fall, the issues surrounding a college education were in the news. CNN Money asked, Is college still worth the price?

Most of us have come to understand how necessary a college degree – in anything – is to being able to ’successfully’ compete in today’s complicated modern world. Yet the costs of a degree – any degree – is soaring up to four times the rate of inflation even as both jobs and salaries for college graduates are shrinking. How much sense does it really make for families (or students, via loans) to pay $200,000 for a degree so s/he can get a job that pays $30,000 a year or less?

In a rational economy the rapid inflation of college tuition would slow, stop or even reverse as consumers – the pool of applying students – shrank in response to the spiraling costs. But for this particular commodity, there can be no shortage of applicants due to the recognized importance of said degree to the entire future of the prospective student. It is much easier to replace light bulbs and take public transportation to work in order to save on electric bills and gasoline than it is to forego a college education because it costs more than a graduating student can expect to earn.

Until the recent financial meltdown families felt fairly secure in their savings for their children’s educations, and college loans were readily available at low interest to finance most of the rest. Now the credit has dried up and the savings have been “liquidated” by failing Banks and Wall Street brokerages.

Some applicants are considering the traditional “Work Your Way Through College” option, but the kind of jobs a student can get part time in a college environment often pay minimum wage or even less. This won’t even buy a single textbook, much less pay a semester’s tuition. At this point the cost in time and energy simply isn’t worth it.

Some families are taking advantage of local Community College offerings, most of which have straight transfer programs to state universities following the first two years’ worth of standard requisites and humanities, which the community systems can offer much cheaper than universities do. In some states as worker re-training has become a serious mandate, the costs of tuition can be less than the amount available to students from the Pell Grant system. That of course doesn’t pay for textbooks (still outrageous) or transportation, but those same community colleges are offering more and more courses on-line so that students can do the work from home without having the transportation and meals expense.

Once in the system and receiving the Pell money, students are then eligible for other grants and scholarships the schools – including community colleges – administer. It takes a semester to get into the system, but this may be the least expensive way to do so. The system tends to follow the student – or even run ahead if she or he is obtaining scholarships for grade point maintenance – to the state universities, which have access to even more resources to help students cover the costs of their education.

The trick these days seems to be to avoid loans if at all possible, to NOT spend the savings the family may have accumulated and might still be worth something, but get the degree anyway. Very few careers actually require incoming hires to boast $200,000 degrees, so anyone not expecting to go into those particular careers should avoid the trap.

There are some good online sources for scholarships and grants as well that parents of high schoolers should be signing up with now, to give their kids the best competitive edge in applying as well as the early advantage of winning. Some of these, including FastWeb will target email alerts to what individual colleges and benefactors are offering in your child’s particular fields of interest as well as preferred schools according to your child’s profile. Peterson’s is a similar service, and either or both are highly recommended, FREE services.

So what’s the bottom line? Do what you have to do to get that degree, it’s still worth its weight in gold (and there aren’t a lot of good jobs around right now anyway). Just avoid debt if you can, take advantage of everything you are capable of using, plot your course carefully, and stick to the plan even if it takes longer to get that degree than you’d originally figured. Good luck and happy scholarship hunting!

Links:

The Cost of College In A Bad Economy
15 Ways to Set Yourself Apart in a Recession
Is college still worth the price?
Should your kid work in college?
Beat the college loan crunch
FastWeb: Scholarships, Financial Aid and Colleges
69 Free or Open Source Tools For Students

Let’s face it. The “Recession of 2008″ is now officially over, because it is January, the first month of the “Depression of 2009.” The last jobless statistics for ‘08 showed more than half a million new first-time unemployment filers, which represent only those workers who qualify for unemployment. Final ‘official’ tally for ‘08: 2.6 million jobs lost. These are the worst figures in 16 years, while the average hourly workweek for those underneath the supervisory level doing the real work shrank to the lowest number since the government started keeping such statistics in 1964. That, for the quick-math challenged, is 45 years ago.

Most of us who watch the economic comings and goings in this strange era of bail-outs for super-crooks and callous economic eugenics for working families also know that the ‘official’ statistics don’t come anywhere close to matching what is really going on in the real world. Young workers, seasonal workers, minimum wage workers, temp workers and millions who otherwise don’t qualify for unemployment aid or who have exhausted their eligibility are completely off the books – no one bothers to count them, even if their numbers swell the real unemployment picture to more than double the reported statistics. “Unofficial” numbers can range anywhere from 11.1 million jobless Americans to somewhere very close to 20% of our work force. No one much likes to mention that, since anything more than 10% puts us in that ‘depression’ they’d rather slit their wrists than admit to.

Because lengthy layoffs and lack of available new jobs will tend to swell the ranks of both young and unemployed workers going back to school (one way or another) to expand their horizons, I have found a very interesting website tool called Online College that readers may find helpful for themselves or their children suddenly looking at a bleak employment picture for the foreseeable future. There are good and very useful articles posted to the site, and one stands out right now – 15 Ways to Set Yourself Apart in a Recession.

These are hints on how to make yourself stand out on the job so the bosses looking for employees to lay off skip right over you. Some have to do with expanding your useful role to the company, how to make the best impression while looking for new work, and what you can do educationally while ‘between jobs’ to enhance your hireability when the smoke clears. There are even helpful hints about striking out on your own – always risky even in the best of economic times – to find opportunities that will either get you inside a startup or send you in the direction of starting your own business.

And on that starting your own front, a website called brainz offers some great ideas in 33 Ways to Fund Your Startup Business. With the observation that even in the worst of economic times there is always money out there and people looking to invest, these 33 ideas are pure gold for the budding entrepreneur with a good (and potentially lucrative) idea. Some will cost the idea man less than others, and it’s probably not the best idea in this economic climate to risk one’s own property, if one’s real estate is still worth anything (and that’s not very clear right now in many parts of the country).

In future posts we’ll take a look at some of the ideas out there for small business startups, supply and demand and the most “recession-proof” goods and services people will need regardless of economic situation. So stay tuned, don’t get too discouraged, and begin taking a close look at where your family is right now, what its immediate future looks like, what resources you may have to invest and how best to invest them.

Links:

Free Fall: Jobless Rate Worst Since ‘94
Mid-Cycle Meltdown: Jobless Claims January 15, 2009
15 Ways to Set Yourself Apart in a Recession
33 Ways to Fund Your Startup Business

For those of us out there who still have work and a regular paycheck, and who managed to put some store-bought presents under the tree on Christmas, some shock and awe may be hitting home right about now when the credit card bills are received. Seems the credit card companies have exercised the clauses in the light gray 6pt type nobody ever reads to raise their interest rates and fees through the roof and cutting off available credit altogether no matter how good your credit score may be or how promptly you pay your bill. Some card companies have been creative about shuffling due dates at will, confusing customers and hamstringing small business, and some are refusing to even try to explain to customers what’s going on or what their options may be.

As Kathleen Ryan O’Connor explained in a recent CNN article, Credit cards gone wild: Shocking rate hikes, “Faced with the same economic pressures as other companies affected by the ongoing recession and credit crunch, credit card companies are racing to protect themselves from the costs of more defaults by hiking interest rates and slashing credit limits, even for cardholders with excellent credit histories.” Banking analyst Meredith Whitney predicts that $2 trillion in credit lines will be wiped out over the next year and a half.

As if to add a note of irony to the pain and suffering of consumers and businesses being screwed by their credit card companies, those new card offers are still coming in at the undiminished rate of one a day. One wonders if the marketing department ever even communicates with the front office!

There are ways to cancel your cards and pay out the principle at the old interest rate, but the companies are loathe to actually inform cardholders about this or answer pointed questions. Congress is expected to rein in this current ridiculous situation with emergency legislation early in the ‘09 session, and may even re-implace usury laws stricken years ago so that interest rates could rise as high as loan sharks disguised as credit card companies wished. Similar legislation was passed by the House in 2008, but failed to make it through the Senate, so the Fed, the Office of Thrift Supervision and the National Credit Union Administration imposed some new rules in December that companies are scrambling to get around by the current shenanigans.

Bill Shrink offers an overview of the 8 new rules, as well as Credit Card Bill of Rights: Which cards are complying? – a list of which card companies are obeying the new rules. If you’re disgusted with your company for pulling a fast one, Credit Card Guide has templates and instructions for exactly how to cancel your card in a way the company can’t simply ignore (as they too often do).

Once you’ve got your balance frozen at the lower rate and are paying it down, you may want to consider a new card or two that will allow you the convenience without making you feel as if you owed gambling debts to Mafioso thugs in Vegas. Go ahead and check for compliance on the BillShrink site linked above, then go on over to Credit Card Matcher to check out the Cash Rewards Credit Cards offers. Matcher also lists Gas Rewards Credit Cards offers, a good idea for both commuters and any small business that relies upon deliveries as part of its services. Don’t forget to balance the slightly higher initial rates with zero annual fees, thus making your overall expense quite reasonable. Then the rewards can be factored against that cost, and you the consumer can come out way ahead.

Finally, no matter whose cards you hold, open and read those incoming letters even if they look a lot like junk mail. Companies are using these to inform customers of sudden rate hikes, increased fees and limit freezes, and way too many customers are missing that notification. We can all hope the 111th Congress will step up to the plate and put a real lid on this outrageous usury, but none of us should be holding our breath. The recession (or, depression for many of us) is projected to last through 2011 at least, and some estimates don’t see the economy pulling out until 2017. We’ve got to control our spending habits, manage our indebtedness, and work especially hard to keep our small businesses going in a slow situation.

Happy New Year to all, and here’s hoping that 2009 will bring some relief from the ongoing mass looting of the nation’s wealth by the greedy and inept.

Links:

Credit cards gone wild: Shocking rate hikes
Cash Rewards Credit Cards
Gas Rewards Credit Cards
Bill Shrink: 8 New Rules
Credit Card Bill of Rights: Which cards are complying?

We’ve seen a lot of desperation as the world (and US) economy tanks in the wake of the mortgage-loss pyramid scheme crash. We’ve heard a lot of hyperbole and rhetoric from the candidates who want to replace Bush-Cheney as President and Vice-President of the United States. This is The Week That Was, votes will be counted tomorrow night, and we should know sometime in the wee hours of Wednesday which of the contestants gets the erstwhile “prize.”

As Wall Street began its precipitous fall, Republican candidate John McCain was busy informing the nation that the ‘fundamentals’ of our economy are strong. No, they aren’t strong, they’re utter failures after years of massive tax cuts to the wealthy, heavy borrowing to support two wars, and the “Unfettered Free Market” [TM] frenzy allowed by blanket de-regulation of the banking and investment sectors.

To get an idea of just how outrageous things had gotten, consider the so-called “Mortgage Meltdown” that took so many once-staid capitalist houses into ruin. We all know that housing prices had ballooned in most urban areas of the country, a ‘bubble’ sustained by the practice of lending to workers whose incomes haven’t seen even a minimal rise in more than 30 years, for houses that cost easily twice as much as they could hope to afford and three times what they were actually worth. Many of these loans were made with specific criminal intent to skim fees off the top, and saddled with adjustable interest rates that worked just like time bombs to force people into bankruptcy.

Knowing that these time bombs would explode X number of years down the line, the banks and futures traders on Wall Street invented a new paper vehicle called “Credit Default Swaps” for the express purpose of betting on strapped families defaulting on their mortgages. [Greenspan Slept as Off-Books Debt Escaped Scrutiny]These are an insurance vehicle, insurance to be paid out to the holders of the policies on bad mortgages. And those policies – as “Credit Default Swaps” were sold and resold hundreds of times. This is what led corporate insurance giant AIG to be one of the first Big-Time Players to fail, our government moved right in to nationalize it.

This situation is a prime example of the philosophy of “Privatizing the Profits, Socializing the Losses.” It’s a bail-out to rich gamblers necessitated by unregulated greed. Pure and simple. Look at how it worked…

The number of risky, possibly criminal, largely ARM mortgages in the US that have or soon will default amounts to approximately 1% of all the mortgages outstanding. The re-insurance scam ended up valuing these mortgages at 5 times the annual Gross Domestic Product of the entire world. They were of course never worth anywhere close to that much, this is just the amount of insurance pay-outs once they DID default. And default they did, that brought Wall Street – and the world markets which participated in the scam – to their knees.

Despite the fact that candidate McCain did not seem to have the slightest grasp on the impending doom (his chief financial advisor Phil Gramm famously called people concerned about the situation “whiners”), his tax promises to the nation if elected is still to maintain George W. Bush’s blanket tax cuts to the top 2% of wealthy citizens and corporate giants. Democratic challenger Barack Obama would reverse this situation by taxing the rich and giving significant tax cuts to the middle classes. Even to the point of eliminating income taxes altogether on seniors who make less than $50,000 a year.

McCain of course calls this tax-the-rich situation “Socialism,” as if that’s as scary a word these days as it was back in the ’50s. It is not. All governments receive taxes and use them to support infrastructure, public education and other social programs, thus all government is essentially socialist at heart. The fine points always apply to who pays the taxes and gets the benefits of governmental largesse.

CNNMoney recently published an article about the different tax plans of the candidates, along with a breakdown of just how much your taxes will go up or down according to your income. McCain, Obama and your tax bill is recommended reading for everyone out there who hasn’t already voted, and is concerned about the recession/depression that we now know will last more than a year.

Then get out there and vote on November 4th, as if your way of life depended on it – because it does!

Links:

McCain, Obama and your tax bill
Greenspan Slept as Off-Books Debt Escaped Scrutiny
Economists see recession through 2009

It’s true, and should come as no surprise that modern day pirates are responsible for the current mass chaos in the markets. I mean, this is just the sort of things pirates do, isn’t it? Or, so says Peter Hayes, Senior Lecturer in politics at the University of Sunderland.

In Dr. Hayes’ latest paper, ‘Pirates, Privateers and the contract theories of Hobbes and Locke’, the argument is developed and interesting. Not only did pirates practically invent participatory democracy by electing their captain, voting on major decisions and distributing the booty in fairly equal shares, but they were often backed by financiers in distant countries. Which, according to Hayes, makes your average pirate ship roughly equivalent to a modern corporation.

“Pirates had a democratic structure, and relative equality, but they were doing all this to violate the rights of other people,” Hayes says. “The idea of a social contract is that it protects human rights. But what if you create a social contract to say that we’ll observe rights toward each other, but we won’t observe rights for outsiders?”

Hmmm… Maybe Hayes has a point. Or maybe pirates themselves were an expression of the basic xenophobia that has existed ever since early tribal society. But pirates are a more popular romantic icon these days than simple hunter-gatherers, so Hayes can use them as a selling point. Somehow, the robber barons of today don’t elicit the kind of romantic idol-worship or secret sympathies from the vast amount of us in the out-group they’re busy hijacking day to day.

For the most part, they’re disgusting. Which is why when AIG and other failed brokers and bankers take $70 billion of a trillion-dollar taxpayer bailout to pad the top privateers’ junkets and golden parachutes, the taxpayers aren’t very happy with it. Off with their heads, I say!

Well, it was a tough weekend. After insurance giant AIG hinted that it might be heading for bankruptcy, investment bank Lehman Bros. went ahead and filed Chapter 11. Merrill Lynch grabbed at a $50 billion takeover from Bank of America, which is already regretting its takeover of the nation’s largest mortgage lender [Countrywide]. Stocks fell worldwide on Monday even after intervention from the Fed promising eased restrictions on emergency funds.

It’s not difficult to find gloom and doom on Wall Street today over how many jobs in the financial sector are going to be lost. Worse, that concern will in fact translate into a whole lot more jobs lost out in the real world where you and I live. Factories will be closed, inability to finance durable goods orders will exacerbate the problems, and GM is about to go under too. It ain’t even close to over yet, folks. If all you lose is your home, you’ll be among the lucky ones.

I’ll be posting more good information on stretching leftover dollars for those real people being harmed by all this, maybe even have something to say about the fact that there’s no gas in my region right now at all, leaving nothing to ration. Or tell you how I fare on my plan to sell my now-useless diesel ‘vintage’ Mercedes so I can buy a horse (have plenty of grass and kudzu). But in the meantime, best advice – if you’ve got gas – is to head directly to your regional farmer’s market and buy as much rice, other grains, fresh veggies and fruits as you can possibly afford. I’ll talk a bit about how to preserve it through the winter too, since it’s not really that hard.

I will also start posting information about growing some of your own food, even in the winter. There will be lots of links to great sources for information on these strategies too, so please stay tuned. The best advice I can give to people who end up here after searching something on Google because they’re just now joining our Shoestring Budget ranks, is…

Don’t Panic.

All you really have to do is survive. The future is the future, it’ll bring its own problems and opportunities. Right now you just need to “ride it out” in one piece (and all of a piece family-wise). Money’s just paper at this end of real life, you CAN learn to make do on much less of it. And who knows? Once you’re out the other end of the tunnel, you might even find that you can live a much happier, fulfilled and truly shared life without all that much of it. It’s a good lesson to learn. It puts things in perspective, something this modern world could use more of.

Links:

Lehman Brothers collapse stuns global markets
Lehman Files for Bankruptcy, Merrill Sold, AIG Seeks Cash
Wall St.’s Turmoil Sends Stocks Reeling
Credit Crunch: How to Survive the Recession
20 Ways to Live on Almost Nothing
Uninsured? More Ways to Survive