Raising interest rates is good for all of us…

December 14, 2016

The Fed is expected to raise interest rates today after years of 0 interest for banks who purchase money to lend to you. Pretty good deal, huh? They pay nothing and charge you a lot.

So what does the raise in interest rates mean to you, the average consumer?

An article in CNN Money says:

American savers have struggled for years, earning next to nothing at the bank. Now they could be a step closer to light at the end of that tunnel and earn a little more interest on savings account deposits.

When the Fed raises short-term rates, banks pay customers higher interest on their deposits. But how much higher and how fast they will go up will depend on whether the Fed will keep raising rates.

And while I know little about money it seems higher interest rates is good. Higher interest rates allow consumers to make money on their own money, just like the banks (except on a smaller scale of course) and they discourage reckless borrowing that got us into the Great Recession in the first place.

When you have your money in various interest-bearing accounts you are a lender (not directly of course). I was told when I was just a kid better to be a lender than a borrower. Too bad I did not really get it until so many years later.

Borrowing has its place (if for no other reason than if no one borrowed you would have no one to lend money to), but living totally off of borrowed money is the road to disaster for an individual or a nation.

And of course one trick to investing is to somehow use other people’s money or O P M, as they call it. President-elect Trump could fill you in on that.

So I know some things about money, but almost too little too late.


Our economy is held captive by a rigged game on Wall Street…

August 9, 2011

S&P downgrades the U.S. credit rating and predictably stocks tumble in panic selling. And now this morning stocks come back up (for now anyway). So meanwhile people make money in that gambling pit called Wall Street by the fact that those who act quick enough (and computers make this a lot easier) could buy a lot of stocks on the cheap and then reap the rewards when they came back up.

Does this seem a little suspicious?

It seems strange our whole economic health has to be tied to a gambling den where the game is rigged.

The financial markets are not politically ideological, they just want to know what the rules are and will be (and by the way, why are we in Afghanistan?)

August 8, 2011

UPDATE: So now it is late in the day Monday on the East Coast as I write this and Wall Street has taken its biggest dive since December of 2008. But what I said a day or so ago when I first posted this remains true, I think. Investors want to know what the rules will be but are not getting any clear signals due to a serious lack of leadership. And I understand some calming words by our president failed to have any positive effect — platitudes are not what we need. We need action from a strong leadership in both congress and the administration from people who are not afraid to be honest and are not afraid to take criticism from the often loud-mouthed but quite ignorant and mean-spirited rabble.


ADD 1 : I mention the Afghanistan war in this post, but what I did not mention in my original post was that 31 Americans were killed in a helicopter crash Friday, the largest number of U.S. casualties in a single incident in that decade-long war. In war people get killed (and this is a small number when compared to past wars when the daily American casualties were counted in the hundreds and even thousands) — we have to expect that. But what we should be asking ourselves and what I think the majority of Americans seem to be blind to is the question of why are we still there? And if we have good reason to be there, what is our strategy?  Whatever it is, it does not seem to be working. The all-volunteer military and the practice of fighting wars off the budget books so it is not as easily accounted for has made it possible to get into protracted wars with no clear goals or end in sight. It is a terrible waste of money and human life. The electorate as a whole is guilty of not standing up and taking note of this issue and our leaders and potential leaders fail as well. A  lot of guilt to go around.


Before we all get excited about the U.S.’s credit rating being downgraded by S&P, don’t we have to question that credit rating agency’s credibility?

It was among those highfalutin credit rating agencies that did not see the big crash of 2008 coming, the ones who gave glowing ratings to all those junk financial schemes that put us all where we are now. Really it is all a sham.

Some people are probably making money on all the instability betting against America.

But apparently there is a real problem in the markets with extreme instability leading to investor fear and a downward trend, the worst in a couple of years (and probably a great time to buy for those who can afford the risk — and do you think someone or someones plan it that way sometimes?).

The problem in understanding what the markets want out of government I imagine is that markets are not ideological, such as all Republican and certainly not all Democrat (or conservative or liberal). I don’t think the markets in general give a hoot about who is in power, other than someone who would do away with the capitalist system altogether.

The markets just want to know what the rules will be. Once investors know what the rules are they know how to play the game. Some will play it honestly, some will cut corners, and still others will cheat the system wherever they can, but you can’t cheat unless you know what the rules are, the rules you are attempting to break.

Maybe it is about time the centrists in our government, if we have any left, get some courage and defy the reactionaries on the right and the radicals on the left and go for stability.

I imagine the electorate is still in the middle where it always has been. But it has no leadership to follow.

President Barack Obama comes off as something of a centrist, but he seems to lack that certain something that is hard to define but that makes one a leader. I also think he lost some of his credibility when he indicated during his campaign that he would get us out of war and then started a new one himself in Libya as well as led us deeper into the Afghanistan morass — and we’re still in Iraq, lest anyone forget. He came in promising to defy Wall Street and then got into bed with that crowd.

What we need is a centrist post ideological candidate with some type of proven track record.

But where would we find such a person?


I write all this off the top of my head. So I have to concede that Obama said he would continue efforts in Afghanistan because that was one might say a righteous war, but the clear implication was that even in that he would go full speed ahead and wrap things up — not so.

Where de fault lies in the threat of default of the U.S. government

July 23, 2011

It seems all but inevitable that the U.S. debt limit will be raised at the last minute, which I guess has to come just before Aug. 2 (I had heard that it has to come just about now because it would take a week to prepare, whatever that means).

But the chance for the far right to use the leverage of the threat of financial default to all but gut every social program they can think of is just too much to pass up.

But I am not blaming just the far right or conservatives or Republicans  or whomever you want to call them.

And I’ll stop right here to just say default would seem to be on its face a disastrous thing because the dollar’s value is based on trust and not much of anything else — not gold, not silver, not anything of hard value, just trust (when I was a kid I was led to believe that the dollar stood for all the gold in Fort Knox. That may have been partially true at one time, but we have been off the gold standard for a long time now. I spent some time at Fort Knox while in the Army. Never saw the gold. Saw a lot of dirty dishes in the mess hall, but I digress).

This just popped into my mind as I am writing this:

The blame probably should go about equally to the electorate as a whole and to the news media as a whole (or particularly the cable news, that seems to be where most people get most of their news), who seem to report opinion more than objective news.

The electorate as a whole does not pay enough attention to details and seems to respond to easily to the hyperbole of the extremes. If political candidates knew that people would not listen to or fall for their exaggerations, distortions and outright lies, they might be forced either out or to be  a little more honest.

Politics is politics and always will be a rough and dirty game, but if the electorate had better objective information (as opposed to debate talking points) and would use it, we might get a better crop of elected representatives and leaders.

The fault also lies with the super liberals who constantly push for the government to do everything for the individual, regardless of the cost, the idea being that the rich can and rightfully should pay for everything. And the super conservatives never met a tax deduction they did not like, but that deduction turns out to be a tax shift to someone else, probably a struggling working middle class (or lower middle class) worker.

And then there is our weird system for fiscal matters:

The legislative branch constantly votes in new programs that call for expenditures without any regard as to how they will be funded. The president, the executive, has no power to pencil things out because there are not sufficient funds. The line-item veto does not exist for the president. There is also no requirement for a balanced budget; it has been tried, but ruled unconstitutional.

Actually, we should all be conservative, at least on fiscal matters, but it seems to me the so-called conservative movement in the U.S. historically, at least in my lifetime, has mostly been about different priorities for spending more than less spending, despite their rhetoric.

And that is really where we are at now. The opposing political factions are arguing over spending priorities more than paying off the burdensome debt that eats up our tax dollars.

So turn off Fox and CNN and take some time to read maybe the Washington Post and the New York Times (I’m talking news stories as opposed to just opinion pieces, although you need to read those too) or any number of publications, mostly available on the internet, that seem to offer fairly objective analysis of the news (complete objectivity is difficult to obtain).

And to those who tend to read or listen only to what they agree with — what’s the point?

And despite the competing claims of the right and left as to where the majority of the American people really stand on the debt ceiling debate, here’s an opinion piece that claims Nixon’s old “silent majority” is mad as heck at all parties in the government — and by and large I agree with the points here, by and large that is: http://www.cnn.com/2011/OPINION/07/23/zickar.silent.majority/index.html?eref=igoogledmn_topstories


And I still think that a way to pay off the national debt would be to institute a “debt tax” (not a death tax) dedicated solely to paying off our loans.

And why is Social Security threatened by default? Is there not a Social Security Trust Fund? Yes, I realize it is filled with IOUs, but those markers should be called in before Uncle Sam borrows even more money. And if Social Security starts to become insolvent, then the only option is to raise the Social Security deductions (as long as that money is actually going for benefits). Al Gore used to talk about  a Social Security “lock box”. He was right, the government should not rob the Social Security account.

Humans can’t beat computers on Wall Street, and some humans are taking advantage…

May 15, 2010

High frequency traders using computers to do thousands (millions?) of transactions in a split second could have been involved in and/or taken advantage of that recent flash crash on Wall Street where the index fell a thousand points in a few minutes and then mysteriously moved back up.

Humans, we know, cannot beat computers. Of course humans behind computers taking advantage of that very fact can do much harm.

We have to ask ourselves what the legitimate function of Wall Street trading is.

While certainly people have a right to gamble with their own money, this gambling is with everyone’s money because the actions there are tied in to the whole world’s economy.

A complete reform of our whole economic system with an emphasis on oversight seems in order. I have a feeling it can only come from those who think neither liberal nor conservative or Democrat or Republican, but think of the good of the people as a whole.

Wall Street continues the fast and loose game that controls everyone’s economy…

May 7, 2010


Friday, May 7: Today I read on the Wall Street Journal website that still no one knows for sure what caused Thursday’s extreme dip or panic sell-off in the stock market, but it may be that it was simply the result of the fact that most trades these days are done by computers, not humans, and that there was some type of computer glitch based on erroneous info or whatever causes computer glitches. Kind of reminds me of the movie I saw all those years ago called “War Games” in which a computer hooked up to our missile national defense system almost started World War III and it was almost not disabled or fooled into calling off missile launches in time. As I recall they even tried to pull the plug but the computer outwitted them somehow. Science fiction has become true, except instead of missiles being the method to destory the world it’s economics, which might be nearly or just as deadly.


If you could “accidentally” dump billions instead of millions of dollars of stock via computer trading on the market thereby running the price down and then quickly buy up a valuable stock that had dropped precipitously and then came back up you could sure make a lot of money in a hurry.

Wall Street stocks were down by a thousand points in five minutes on Thursday, with the sudden dramatic drop blamed partly on TV images of rioting in Greece where the national government has instituted austerity measures because it is facing bankruptcy. But it was also suspected that there might have been some kind of glitch in the trading system.  Stocks moved back up quickly but did not completely regain all their losses. The way I heard it on the nightly TV news was that there was speculation that someone basically hit the wrong key and put billions of dollars worth of a stock on the market rather than millions — whatever.

After what has transpired on Wall Street and its environs over the past several years (and over its entire history), nothing, including purposeful manipulation, seems implausible.

Why do the vast majority of the public, including workers and small businessmen, who simply want to enjoy life while being productive and who want to think that they contribute something for the good of society, have to live with an economic system dominated by a fast and loose gambling game for the benefit of the relatively few, called Wall Street?

Just wondering.


Capitalists may need to know the rules more than they need bailouts…

April 29, 2010

I don’t have the credentials to speak about finance but I have credentials to speak as an ordinary person. And I still say that the government bailouts for Wall Street investment banks and for the auto companies were a mistake.

You’re not likely to get bailed out when you go to a casino and lose a bet, why should you get bailed out when you bet in the securities markets?

In fact the whole gambling industry would go down the tubes if there was such a thing as a bailout. The game would be ruined.

For there to be winners there has to be losers and for there to be big winners, there has to be big losers — win, win does not really happen in gambling and in Wall Street securities trading.

But it is important for the game to be on the up and up — people lose interest once they realize the deck is stacked. And if they do not realize it, they stand to lose their retirement in the financial markets.

An article I read in the Wall Street Journal (I believe it was there) indicated that regulatory agencies were understaffed. While it does seem to be true that some of the high-priced lawyers were wasting time looking at porn on government computers when they should have been doing whatever they could do to protect the investing public, the article noted, the agencies were understaffed, with lawyers having to do menial work usually given to support personnel. I would say the agencies need to be beefed up and maybe we need some more dedicated personnel.

But what really caught my eye was one of those debate articles in which a for and against position was given on whether collateral debt obligations have any social value. That article was in the New York Times. It was referring to so-called synthetic CDOs that play into the Goldman Sachs controversy.

Without getting into all the technicalities, the one side suggested that they were an innovation with no social value and should not be allowed. And that in fact they were partly responsible for causing the meltdown in the housing market.

But the other side argued that innovations, such as CDOs, are not the culprit. Instead, the culprit is a lack of regulation and the expectation that if things really go wrong, the government will bail people out.

Well that was my quick interpretation of it anyway. If I have misrepresented the arguments, I still basically believe what I’ve said. I know next to nothing — well more accurately, nothing, about CDOs themselves, but I would think most people agree there needs to be at least a modicum of regulation for financial markets to be fair and work for everyone and thus have utility for society, other than to be just crooked gambling casinos. And people who know they stand to lose everything (with no Uncle Sam to bail them out) will likely put a lot more care into what they do, be they buyer or seller.


Indications from all the latest financial news seems to be that some type of recovery from this Great Recession is taking place. And some may tout this as vindication for the bailouts. But I am not sure but what things would have recovered anyway. A lot of time is wasted in bailout efforts, because if nothing else, the capitalists have to figure out how to game that system. There is always capital out there, but it wants to know what the rules are. When you monkey with the system, some of that capital lies idle waiting for a sign as to what the new rules will be. From what I have read one of the greatest things Franklin Roosevelt did during the Great Depression of the 30s was to relieve human suffering. But despite his activism in the financial sector it took nearly a decade and finally World War II and the demand it put on the economic system for production to get the economy going.

While I would never want war to be the answer anyway, today’s modern methods of fighting war seem to be more of a drag on the economy overall.

P.s. P.s.

And isn’t it strange that the American car company that did not take the bailout money, Ford, leads the pack now?

While the bailouts may in the long run have helped GM and Chrysler, they set a bad precedent for business. What seems to be saving all American auto makers now is that they are reportedly doing everything to be competitive, including taking advantage of bad publicity suffered by Toyota for either its safety failures or its lack of or slow response to customer complaints, or all of the above. I think the American auto companies for the most part and for too long shorted customers on real quality and longevity in favor of glitz and planned obsolescence and settled for a high-priced niche market, rather than compete with the foreign companies head on. They seem to be back in the game. And it doesn’t hurt that Ford pickups have such a loyal following.

The Goldman Sachs saga: hedging is one thing, swindling is another…

April 28, 2010

The details of the unfolding Goldman Sachs story are somewhat complicated, but the general scenario of the whole housing market collapse that led to the Great Recession and the Goldman Sachs involvement is simple to grasp.

Led by the high rollers on Wall Street and politicians who supported everyone owning their own house and making it work for them so none of us would ever have to do real work again, millions were induced to buy homes that were too expensive for their own incomes.

This all made a lot of money for a lot of people, to include the lenders (several layers of them since mortgages were bundled and sold as investment) and some borrowers who were quick enough to flip their homes in time.

This could not last forever, but not to worry for some of those connected with Goldman Sachs. While they were selling mortgage-backed securities they were secretly making bets that the housing market would fail (via the procedure of what is called “short selling” — the very securities they were selling).

Now it is not uncommon in business and in fact is considered prudent to hedge your position.

I recall attending a meeting a few decades ago when cattle ranchers were being introduced to the commodities market. They were told that they could lock in a price for their feeder cattle by buying cattle futures as a hedge. The upside would be they would know what the price would be before they committed all the money needed to get their cattle to the selling point. The downside would be that if the price of cattle suddenly spiked at the time of sale, they would have any profit shaved by the difference between the futures price they had agreed to and the newer, higher price.

And certainly securities traders and other investors have all kinds of ways to hedge bets. But hedging is one thing, swindling is another.

The problem, as I see it, is when the actions taken by traders goes beyond hedging and actually unfairly distorts the market to the gain of those who caused the distortion and the loss to unwitting investors.

And there is certainly a conflict of interest when an outfit, such as Goldman Sachs, is both trading something for its own gain and selling the same thing to a client. 

Above all the real problem is when all these games and sleights of hand affect the whole U.S. economy — that is when there is a real public interest in all of this.

To be sure, much of what is taking place in the Capitol Hill hearings is grandstanding by legislators to make themselves look good and the Wall Street folks look bad (so they, the legislators, will look good).

Thee is no doubt need for some improved regulation.  We certainly need protections against the gaming of the system. But I’m sure that there is a danger of over regulation. It’s better to enforce the laws already on the books than to create more laws that will just introduce more expense into the whole process — that expense always eventually paid out of the pockets of working Americans one way or the other.


And then there is this conflict of interest between our federal government and Wall Street.  President George W. Bush appointed Henry Paulson Secretary of the Treasury. Paulson had been CEO of Goldman Sachs. Isn’t it strange that Goldman Sachs was able to make money at the beginning of the fall of the housing market while others were losing and then had the good sense to become a bank holding company so it could get in on the taxpayer-funded bank bailout that was promoted by Paulson?

Bad mortgages: To walk or not to walk? That is the question…

April 21, 2010

Is it wrong to walk away from a mortgage because your house is now worth far less than you agreed to pay for it? And is it even more wrong to do so if you can still afford to make the payment?

Technically the answers are probably yes and of course.

But common sense, the kind that many money makers use, would tell you no, circumstances may well make it the right thing to do.

The story on the TV I was watching said that the Mortgage Bankers Association was urging underwater homeowners not to default. “Think of your neighbors” , they said. It depresses property values, they said, but the narrator of the story pointed out that, paradoxically, the bankers association defaulted on the mortgage for its own skyscraper because of the lost value of it.

So there you go.

If you can’t afford to make the payments anymore there is really not much recourse.

I know from personal experience and from that of some people I know that the banks, contrary to what many so-called advisors will tell you, are not willing to listen to any renegotiation talk, and besides, you may well have nothing to offer them anyway.

Interestingly, a high number of the relatively few people who have managed to get assistance from the emergency rescue program from the Obama administration have wound up re-defaulting.

Defaulting is essentially just an unofficial bankruptcy.

Now as to willingly defaulting when you have the means to pay just because you make a gamble and lost, that does seem a tad immoral. But then again it’s human — it’s what people do to survive. And the big boys on Wall Street did get bailed out by the taxpayers on their gamble and on their crooked dealing — so there’s something to at least rationalize with.

Part of me says or wishes the government would have bailed out the homeowners, not the investment bankers, but part of me says neither was a good idea.

Consumers and big time investors were operating in a phony, corrupt market. The consumers should not have tried to take on more than in their hearts they knew they could handle and the high finance people knew what they were doing was wrong and could lead to no good. There was a collective lapse of judgment and morals and now so many are paying the price — not all. The shameless, such as Goldman-Sachs, are probably snickering as they stuff their pockets and rationalize away all their thievery, blaming any wrong doing on a few bad apples and ignorance of what was going on in the next cubicle or office.

When we get back to strict oversight in financial dealings, aimed not at protecting investments but rather insuring honest dealing, and when we let it be known that bailout is not an option, our economic vigor will recover.

And then maybe we an go back to producing things and services people really need rather than trying to make wealth out of nothing and winding up with nothing in the long run.

I ask Goldman Sachs: have you no shame? (well no…)

April 18, 2010

I am just as mad or madder than anyone in the so-called Tea Party movement. We might even be on the same page on this one.

I just read a headline on the Huffington Post that said that Goldman Sachs is paying out some $5 billion in bonuses to its employees even as it is under federal investigation for fraud and even though it took taxpayer dollars to save itself from going under.

At this point I have to wonder why anyone pays their taxes at all.

Even the British prime minister says Goldman Sachs is morally bankrupt, and he and the Germans are contemplating lawsuits.

I know President Obama has criticized Wall Street for not being more circumspect in its awarding of bonuses after taking billions of dollars in government bailout money, but his words are not enough — meanwhile his administration seems to  not fully get it or maybe the problem is that he has Wall Street insiders trying to fix the problem. Yes, I know he is pushing for finance reform and it is his administration who has filed a civil suit against Goldman Sachs, but from what I am gathering, the reforms may end up being tailored more to Wall Street needs that that of the general public (not sure on this one).

Personally, I don’t think Wall Street should have anything to do with putting together financial reform. Wall Street needs to have new and tougher rules put upon it, and then good luck, because I think history clearly shows it is incorrigible.

Meanwhile, we need a new and honest financial system.

For one thing, I think, we would be a lot better off with a system in which money was based on gold (yes, a return to the gold standard) or something of real value, rather than something based on imagination and speculation and fraud.

From what I have read, one problem with something like the gold standard is that there is only so much gold and that results in capital being hard to come by. And shipping gold bars back and forth across the ocean is not all that practical.

Nonetheless, it would be good to have fairly tight credit (too easy credit got us into the current mess) and money that was based on something real to save us from drastic inflation and wild speculation.

And you know, while I am not an Adam Smith philosophy of capital follower (necessarily), I think I may believe in laissez faire more than some ultra-conservatives.

Capitalism carries with it great opportunities and great risks. Let’s keep it that way.

Wall Street seems to want to have its cake and eat it too (yes, I always have thought that a rather strange saying too; of course if you have a cake you would want to eat it, but you know what I mean). It wants to keep its profits private, but to socialize its risks (government bailouts).

There is some sign in all of this that the Obama administration, however misguided it has been, is cracking down. Go for it.

The Republicans do not know what to think or do (and this may divide them — oh too bad). Do they support their normal constituency, Wall Street, or do they satisfy the Tea Party crowd and crack down on the bailout pigs?

So far, some of them are trying to do the bidding of Wall Street by making everyone think that the financial reform bill actually helps Wall Street (does it?).

While I am not sure that Obama’s financial reform package does enough or is the right approach, I think we can safely assume that if Wall Street is against it, it must have something good in it.