Long Live Friendship!!!!!!! some say life is too short, but I know that nothing that we do makes sense if we don’t touch the hearts of others… while it lasts! May you always have Love to Share, Health to Spare, And Friends who Care…..
If you are not outraged your not paying attention
|
|
|
What is your Canadian Dollar really worth
|
|
The Reason Small Businesses Are Disappearing, As Explained By A Small Business Owner Submitted by Tyler Durden on 11/14/2014
This article was written in by USA merchant ...most applies here too
Confused why despite endless daily propaganda that the US economy is getting better - after all "just look at the record high S&P 500" - fewer and fewer Americans believe the narrative, as the Democrats and Obama found out the very hard way in last week's midterm elections? Then the following explanation written by the owner of a small business - the segment of the US economy that has historically led every single recovery but this time was left behind - should help answer some questions.
The reason small businesses are disappearing written by a small business owner.
I want to start out by saying that i am a 27 year old male with a small business in Sacramento CA. I started this business a few years ago with savings of 15k. With a lot of hard work and determination i have succeeded, but it sure as hell was not easy. I am a long time lurker and have never seen anyone go in depth about what its like to own a small business and the reason why they are disappearing. Without going into to much detail, i own a furniture store so obviously things are different then other businesses but a lot of the things are the same. I wanted to begin with the things that are killing small businesses. Also only my opinion.
This article was written in by USA merchant ...most applies here too
Confused why despite endless daily propaganda that the US economy is getting better - after all "just look at the record high S&P 500" - fewer and fewer Americans believe the narrative, as the Democrats and Obama found out the very hard way in last week's midterm elections? Then the following explanation written by the owner of a small business - the segment of the US economy that has historically led every single recovery but this time was left behind - should help answer some questions.
The reason small businesses are disappearing written by a small business owner.
I want to start out by saying that i am a 27 year old male with a small business in Sacramento CA. I started this business a few years ago with savings of 15k. With a lot of hard work and determination i have succeeded, but it sure as hell was not easy. I am a long time lurker and have never seen anyone go in depth about what its like to own a small business and the reason why they are disappearing. Without going into to much detail, i own a furniture store so obviously things are different then other businesses but a lot of the things are the same. I wanted to begin with the things that are killing small businesses. Also only my opinion.
- Small Business Loans - Although they are not killing small business they sure as hell don't help anyone. Unless you are opening a unique small business you are not going to get any funding. By unique i mean something along the lines of creating solar panels. According to a recent investigation by the SBA Inspector General (ill post the article if you would like), over 75% of SBA loans went to large businesses. So basically if you want to open a normal business you need a ton of collateral and a miracle to get a loan.
- Permits and Licensing - In opening my specific business the first year totaled about $2000.00.
- Advertising - Many small business's cant afford to take out pages or flyers in the news paper or TV ads so they only have a few choices such as Yelp or the Penny-saver. (Don't get me started in Yelp).
- Street Advertising - While this used to be a good portion of how you get business it is now off limits. Code enforcement will not allow you to put anything outside. No balloons, signs, anything with your store name, window paint more than 50%, or any mattresses. Also delivery vehicles can not be closer than 50 feet from the curb. In my case that means behind the building.
- Board of Equalization - Cant go into to much detail here but they sure as hell aren't here to help.
- Health Insurance - Now obviously with the people that have a large work force working full time they will be hit hard by obamacare, but i wanted to give you a perspective on a single person. The cheapest rate for myself and me only, and believe me i have looked around, is $250.00/month. Some might say oh that's not bad, but let me explain what that covers, NOTHING lol. Basically if something happens to me i have to shell out 6K before insurance gets involved. Also 100 dollar co pay every time i go.
- The economy - While many know that when the President comes on TV and says the economy is doing great, we all know it is not, some people don't. Every month more people drop out of the Labor Force and the number of families on food stamps is sky rocketing. So for those of you who don't know the economy is terrible because of all the top stories of Kim Kardashian and whoever else, lots of people in america are struggling.
- Merchant Fees - This is for credit card processing machines. The machine itself costs 600.00 plus the percentages on sales and cards. Companies such as BofA charge once a year on top of the regular fees $150.00 to protect you from fraud (which they can't even stop) and yes its mandatory. Paypal or Square seem to be the best options these days.
- Fire Department - Yes even the Fire Department wants a piece. Starting last year you must do your own visual inspection and send them a check for 150! Basically if you don't they will come to your store and give you a million violations for wasting there time.
Happy Anniversary by Mises Updates via The Circle Bastiat blog,
Woodrow Wilson signed the Income Tax into law one hundred years ago today. As direct taxation of Americans was prohibited by the Constitution, a constitutional amendment was necessary before what would become the Revenue Act of 1913 could be legally imposed. The income tax, and the enabling amendment, were sold to the voters as necessary for a tax on rich people that would mean lower taxes and cheaper goods (due to lowered tariffs) for everyone else.
Only one percent of the population was subject to the tax then, and the tax rate was one percent.
The voters need not worry, they were told, because regular people would never ever pay the income tax.
Woodrow Wilson signed the Income Tax into law one hundred years ago today. As direct taxation of Americans was prohibited by the Constitution, a constitutional amendment was necessary before what would become the Revenue Act of 1913 could be legally imposed. The income tax, and the enabling amendment, were sold to the voters as necessary for a tax on rich people that would mean lower taxes and cheaper goods (due to lowered tariffs) for everyone else.
Only one percent of the population was subject to the tax then, and the tax rate was one percent.
The voters need not worry, they were told, because regular people would never ever pay the income tax.
Do we need a Banking sector, not any more December 19, 2013 Charles Hugh Smith .......Of two minds blog
An automated banking utility has no need for parasitic bankers or politicos or indeed, a central bank.
Do we need a banking sector dominated by politically untouchable "Too Big to Fail" (TBTF) banks? Thanks to fast-advancing technology, the answer is a resounding no. Not only do we not need a banking sector, we would be immensely better off were the banking sector to wither and vanish from the face of the Earth, along with its parasitic class of political enablers, toadies and Federal Reserve apparatchiks.
The key to understanding why big banks have outlived their purpose is to grasp the implications of computing power, self-organizing networks and crowdsourcing. Banks came into existence to manage the accumulation of capital (savings) and distribute the capital to borrowers in a prudent manner that minimized risk and still yielded a return for savers and the bank's investors/owners.
Back in the pre-computer era, the record-keeping and risk management processes of these two core functions required a complex bureaucracy and a concentration of accounting skills and lending experience. The costs of operating this record-keeping and risk management bureaucracy was high, and these costs justified the bank's fees and interest rate spread. In an idealized scenario, a bank might pay depositors 3% annual yield on their savings and charge borrowers 5%. The 2% spread was the bank's to keep for performing the accounting, collection and risk management functions.
Today, computers running scripts/programs can perform these functions with minimal human oversight and at very low cost. The tracking and recording of millions of transactions and accounts no longer requires thousands of clerks and a large institutional bureaucracy; a relative handful of software engineers are all that's needed to maintain these services, which are in effect a low-cost utility.
Risk management and lending are also computerized; the human interface of a banker is a bow to tradition, not necessity. Crowdsourced funding is entirely computerized: those with money/capital choose to join a pool of lenders who accept the risk of lending to an individual, household, project or enterprise for a specified return.
This process of aligning excess capital (savings) with borrowers is already automated. Is there a role for regulation? Absolutely: such a system requires transparency that can be trusted. Those who violate this trust with cooked-books, lies, misinformation, etc. must suffer negative, long-lasting consequences, starting with being banned from the system.
It is an abiding irony that the present banking system's secret portfolios and processes (shadow banking, derivatives designed to fail and trigger profitable defaults, etc.) are considered core competitive advantages: in other words, eliminating transparency generates the highest-return bank profits.
And let's not overlook the political consequences of these immense profits: a political and regulatory order that is easily captured to serve the interests of big banks. The number one agenda item is of course to arrange Central State protection of the most profitable (i.e. the least transparent) parts of the banking sector's operations.
This lack of transparency distorts the financial market, rendering it systemically vulnerable to malinvestments and risky speculations and the financial crashes that result from these systemic distortions.
The other top agenda item for bank lobbyists is to arrange Central State/Federal Reserve subsidies of bank profits. These subsidies are also known as financial repression, as the Central State/Bank rigs interest rates and regulations to favor bank profits at the expense of both savers and borrowers.
Thanks to the Federal Reserve's Zero Interest Rate Policy (ZIRP), savers have been robbed of hundreds of billions of dollars in income--money that has been effectively transferred to the banks by the State. This is why I call our system State-Cartel capitalism, as the State and cartels rule in a mutually beneficial marriage at the expense of the real economy, the citizenry and especially what's left of the dwindling middle class.
Since the core functions of banks can now be performed by cheap processors and software, we can get rid of the entire parasitic banking sector, once and for all. But what about investment banking? That too can be automated. What about wealth management? In a world where index funds beat 96% of money managers over a long time-frame, that too can be automated.
But what about the tens of millions of dollars in campaign contributions politicos skim from the bankers? Now we finally reach the real reason why the parasitic banking sector is allowed to exist, even though it has outlived its purpose and value: the political class of parasites benefits immensely from the banking sector's giant state-rigged skimming machine.
An automated banking utility has no need for parasitic bankers or politicos or indeed, a central bank. The only legitimate regulatory function of the state is to enforce transparency; beyond that, its actions are all subsidies of one sort or another of politically powerful constituencies at the expense of the real economy's productive people, communities and enterprises.
JP Morgan Criminal Charges at Last? Posted on October 2, 2013 by Martin Armstrong
Finally, the political pressure is building to bring some sort of criminal charge against a New York Bank. The Justice Department has been pursuing criminal charges against J.P. Morgan & Co regarding the sale of mortgage securities that the allegation is based on information from an inside person from the bank. The gist of this will be that nobody goes to prison and the bank will admit criminal activity and the fine will be around $11 billion, with perhaps $7 billion would be cash that goes to the government and $4 billion in relief to consumers according to the Wall Street Journal.
The political pressure is building globally and a lot of flak is coming at the US for doing absolutely nothing against the bankers when their actions have cause the rising deficits, exploding taxes, and the trend toward BAIL-INS rather than BAIL-OUTS.
Finally, the political pressure is building to bring some sort of criminal charge against a New York Bank. The Justice Department has been pursuing criminal charges against J.P. Morgan & Co regarding the sale of mortgage securities that the allegation is based on information from an inside person from the bank. The gist of this will be that nobody goes to prison and the bank will admit criminal activity and the fine will be around $11 billion, with perhaps $7 billion would be cash that goes to the government and $4 billion in relief to consumers according to the Wall Street Journal.
The political pressure is building globally and a lot of flak is coming at the US for doing absolutely nothing against the bankers when their actions have cause the rising deficits, exploding taxes, and the trend toward BAIL-INS rather than BAIL-OUTS.
China begins To Sell Oil Using Yuan Threatening The Petrodollar On September 12th, something happened that could very well change the structure of our economy and the health and wealth of the dollar as the world reserve currency. China made the announcement that it plans to bypass using the American dollar for oil purchases, and plans to sell oil using the Yuan. This is the first time anything like this has happened since the 1970s when Kissenger created the trade agreement with the Royal house of Saud that oil will only be bought and sold using U.S. dollars. For the U.S., this turn of events has significant importance as it could change the way the world purchases energy, and could threaten the dollar’s position as the world reserve currency.
How Will The Yuan Being Used For Oil Purchases Impact The U.S? On September 6th, China announcemend that their banking system, communications, and transfer systems were all ready to make oil trades, and that if any nation out there wishes to do so, they could trade using the Yuan rather than the U.S. dollar. Since that date, we have seen the dollar fall from 81.467 to 79.73. To further complicate the matter, on September 7th, China made an agreement with Russia, where Russia agreed to sell China as much oil as they desire without any limitations and they will only sell oil using the Yuan, not the dollar.
The Threat To The Petrodollar Could Seriously Injure The U.S. Economy For the U.S., the implications are far reaching. Oil is basically the standard currency across the world. It’s the commodity that everyone needs, everyone fights for, and it drives economies. Ever since crude oil became the driving force behind the economy, the U.S. has held the petrodollar. This all out attack by Russia and China could provide the catalyst to crumble the U.S. economy taking away. If the rest of the world catches on and begins trading oil using the Yuan instead of the dollar, the U.S. may find it difficult to finance its ever mounting debt load and the full implications of our dwindling manufacturing sector and massive debt load could be felt by the American people. The very reason the Fed has had so much play with the U.S. dollar is because of the position held by the U.S. as the petrodollar. Should we ever lose that status, we may no longer have willing foreign investors to finance our debt, or the ability to exercise such loose monetary policy without feeling the forces of massive inflation.
The U.S. Will Lose Control In The Middle East If The Petrodollar Is Lost Another ramification of this new play by China, is the U.S. may lose its ability to control Iran and other rogue nations within the Middle East. How would the sanctions hold up against Iran, if Iran could simply turn around and begin selling its oil using the Yuan rather than the dollar. That’s a set-up for a nuclear disaster if I’ve ever seen one.
themoneyupdate.com
How Will The Yuan Being Used For Oil Purchases Impact The U.S? On September 6th, China announcemend that their banking system, communications, and transfer systems were all ready to make oil trades, and that if any nation out there wishes to do so, they could trade using the Yuan rather than the U.S. dollar. Since that date, we have seen the dollar fall from 81.467 to 79.73. To further complicate the matter, on September 7th, China made an agreement with Russia, where Russia agreed to sell China as much oil as they desire without any limitations and they will only sell oil using the Yuan, not the dollar.
The Threat To The Petrodollar Could Seriously Injure The U.S. Economy For the U.S., the implications are far reaching. Oil is basically the standard currency across the world. It’s the commodity that everyone needs, everyone fights for, and it drives economies. Ever since crude oil became the driving force behind the economy, the U.S. has held the petrodollar. This all out attack by Russia and China could provide the catalyst to crumble the U.S. economy taking away. If the rest of the world catches on and begins trading oil using the Yuan instead of the dollar, the U.S. may find it difficult to finance its ever mounting debt load and the full implications of our dwindling manufacturing sector and massive debt load could be felt by the American people. The very reason the Fed has had so much play with the U.S. dollar is because of the position held by the U.S. as the petrodollar. Should we ever lose that status, we may no longer have willing foreign investors to finance our debt, or the ability to exercise such loose monetary policy without feeling the forces of massive inflation.
The U.S. Will Lose Control In The Middle East If The Petrodollar Is Lost Another ramification of this new play by China, is the U.S. may lose its ability to control Iran and other rogue nations within the Middle East. How would the sanctions hold up against Iran, if Iran could simply turn around and begin selling its oil using the Yuan rather than the dollar. That’s a set-up for a nuclear disaster if I’ve ever seen one.
themoneyupdate.com
Be money smart
There are many reasons why people fall in debt, such as medical issues, school, starting a business and purchasing a home. Some situation you do not have much of choice and the debt is for a good reason, for example if you get in debt due to school it’s fine because in the long run you will be able to make up for it. However there are some bad reasons why many fall in debt, the list below illustrates the top 11 …well not so good reasons to fall in debt.
1. Leasing a Car – You are basically paying several hundred dollars per month in leasing only to return the car after a few years. After spending tens of thousands of dollars what do you have to show for it?
2. Purse and Shoes obsessions (or any other obsession for that matter) – Unless you are purchasing collectible items that increase in value, this is a pretty dumb way to get yourself in debt.
3. Financing a Car – If you can not afford that $50,000 car why do you think you can afford to finance it? A car loses about 25% of its value as soon as it is driven off the lot. You will be stuck making payments for the next 5 years or longer on something that is losing its value faster …than Wall Street came down.
4. Using Credit Cards – So you want something you can’t afford, you put it on the credit card only to pay 19.99% interest on the item. Now the $150 purchase ends up costing you over $300 in a year. Smart!
5. Financing latest gadgets – If you can not afford the newest Apple Macbooks and other electronic gadgets, not a problem, Best Buy will finance it for you! Now you can enjoy the latest gadgets for the next year and pay for it for the next five years. Three times what it was worth, GREAT DEAL!
6. Having expensive hobbies – Hobbies tend to become money traps. We can’t afford to blow money on all of our hobbies, so we usually pick our favorite one (at the time) and waste all of our money on that. (Collecting comic books, DVDs etc)
7. Spiraling debt – You decided to take the great Best Buy financing offer for the newest LCD HD 52” TV, since you are at it why not get the newest Blue ray player with that….oh and do not forget the home theatre system……oh and the DVDs….etc…and the debt keeps growing …the spiraling debt!
8. Giving family and friends a loan or co-signing for a loan – Want to ruin your relationship with a family member or friend? Just give them a loan or even better co-signing for a loan, not only will you get rid of them but you will be left with a nice chunk of debt as a thank you.
9. Upgrading stuff. Why don’t you just upsize your fries and drink for 58 cents? What’s another $2/month to get the VIP gym membership? If you are already going to spend $200 on a cell phone, what’s another $100 to upgrade to a better one? And another $5/month to get 100 more minutes on your cell phone plan? Little things add up!
10. Playing the lottery or gambling – You are more likely to get hit by a lightening than winning the lottery…and that’s all I have to say for this.
11. Rent-to-own furniture and appliances – You can’t afford a brand new leather couch? Just Rent-to-own it! You don’t have $1000 in cash but you can do $100/month for the next 3 years. What a great deal!
www.financialhighway.com
1. Leasing a Car – You are basically paying several hundred dollars per month in leasing only to return the car after a few years. After spending tens of thousands of dollars what do you have to show for it?
2. Purse and Shoes obsessions (or any other obsession for that matter) – Unless you are purchasing collectible items that increase in value, this is a pretty dumb way to get yourself in debt.
3. Financing a Car – If you can not afford that $50,000 car why do you think you can afford to finance it? A car loses about 25% of its value as soon as it is driven off the lot. You will be stuck making payments for the next 5 years or longer on something that is losing its value faster …than Wall Street came down.
4. Using Credit Cards – So you want something you can’t afford, you put it on the credit card only to pay 19.99% interest on the item. Now the $150 purchase ends up costing you over $300 in a year. Smart!
5. Financing latest gadgets – If you can not afford the newest Apple Macbooks and other electronic gadgets, not a problem, Best Buy will finance it for you! Now you can enjoy the latest gadgets for the next year and pay for it for the next five years. Three times what it was worth, GREAT DEAL!
6. Having expensive hobbies – Hobbies tend to become money traps. We can’t afford to blow money on all of our hobbies, so we usually pick our favorite one (at the time) and waste all of our money on that. (Collecting comic books, DVDs etc)
7. Spiraling debt – You decided to take the great Best Buy financing offer for the newest LCD HD 52” TV, since you are at it why not get the newest Blue ray player with that….oh and do not forget the home theatre system……oh and the DVDs….etc…and the debt keeps growing …the spiraling debt!
8. Giving family and friends a loan or co-signing for a loan – Want to ruin your relationship with a family member or friend? Just give them a loan or even better co-signing for a loan, not only will you get rid of them but you will be left with a nice chunk of debt as a thank you.
9. Upgrading stuff. Why don’t you just upsize your fries and drink for 58 cents? What’s another $2/month to get the VIP gym membership? If you are already going to spend $200 on a cell phone, what’s another $100 to upgrade to a better one? And another $5/month to get 100 more minutes on your cell phone plan? Little things add up!
10. Playing the lottery or gambling – You are more likely to get hit by a lightening than winning the lottery…and that’s all I have to say for this.
11. Rent-to-own furniture and appliances – You can’t afford a brand new leather couch? Just Rent-to-own it! You don’t have $1000 in cash but you can do $100/month for the next 3 years. What a great deal!
www.financialhighway.com
Banks have no shame
|
You get a mortgage from your bank, they give you the loan from other peoples deposits, you pay them 100's of thousand's in interest. And when you have finally pay off your mortgage you have to get a mortgage discharge from them. They have the nerve to charge you, for them to give you a letter stating that your mortgage is paid off.
Their greed has no limits. The New TD Collateral Mortgage Repost: gailvazoxlade.com
TD Bank has always considered itself to be at the forefront of change in Canadian banking. And it has that big green Easy Chair that’s designed to make you feel comfy and safe doing business. But TD has also pulled some major boners they’ve had to back away from and it’ll be interesting to see if the public can put enough pressure on the bank, once again, to make it change its tune. Last week TD Bank announced that effective October 18 all new TD mortgage will be registered as collateral mortgages instead of as the conventional mortgages with which Canadians are familiar. This move is either a bold one setting a new trend (ouch!) or an act of desperation seeking to lock customers in. Time will tell. So what exactly is a “collateral mortgage?” It’s a loan attached to a promissory note and backed up by the collateral security of a mortgage on a property. These aren’t new in Canada. Typically a collateral mortgage is registered for a secured line of credit, allowing the balance of the loan to float up or down depending on the customer’s use. A “normal” conventional mortgage let’s you establish a set amount you are borrowing, the rate for the term you have chosen (say 4% for 3 years) and the amortization so you’ll know exactly when you will have the whole kit and kaboodle paid off. You know what your payments will be for the term and if you stay on track the property is yours at the end of the amoritization. Should you need to borrow more using a second mortgage or by registering a home equity line of credit you can. If you don’t borrow any more money against the property, the principal balance on a conventional mortgage goes only one way: down. And Canadian major chartered banks will accept “transfers” of conventional mortgages from one to the other at little or no cost. The primary security on a collateral mortgage is a promissory note with a lien on the property for the total amount registered so you can register far more debt against the property than the property is worth. In the case of the TD Bank’s new approach, they are registering 125% of property value, even though that amount may not have been advanced to the borrower initially. (This is a very creative way to get around the government’s new guidelines designed to stop lenders from over-lending to clients on their mortgages.) Since the collateral mortgage allows for the “re-advancing” of principal, like a revolving line of credit, the balance can rise, and very often does, with most people ignorant about the holes they are digging for themselves. Most chartered banks will not accept “transfers” of collateral mortgages from other chartered banks, so you have to pay a whack more fees to register a new conventional or collateral mortgage if you decide to move to a new lender. Effectively, collateral charges allow lenders to change the interest rate and/or loan more money to qualified borrowers after closing. All you’ll likely have to do to trigger an increase in interest rate is miss a payment. That’s can’t happen with a traditional mortgage. But since the collateral mortgages are being registered with rates as high as prime + 10% (regardless of what they initially offer you), lenders will cover their potential losses by juicing the rates if they get a whiff of potential default. Based on what I’ve seen from dumb borrowers, if they’re offered the option of being able to get at more and more money to scratch their consumer itch, they will. We’re a easily-led lot, and this is a product designed to lead you further and further into debt. And keep in mind that you don’t have to be bad with money to make this happen. Just be married to a Money Moron and watch all your “security” evaporate. A big “oh-oh!” on collateral mortgages comes at renewal. Now that The Bank has you by the short-and-curlies, they can offer you whatever rate they choose and your options are to suck it up or pay significant legal fees to get the hell out of Dodge. So is this a ploy on TD’s part to ensure retention of new customers? With the competitive pressure to win and keep business at an all time high – the real estate markets are a tad off these days – this could be a case of “golden handcuffs”. Sure, they’ll let you have access to more money if you need it at no extra cost, but if you ever want to take advantage of a better offer, oops! Another pile of poop into which you may step by signing up for a collateral loan involves the other debt you may have. Under Canadian law a lender may seize equity to cover other debt you have with the same lender. So, in essence, you’re securing all your loans – be they credit cards, lines, car loans, or overdraft – that you may have with The Bank with your collateral loan. TD isn’t the only bank to offer collateral mortgages. I’ve been getting letters from folks for years about these. Credit unions use them. The Royal Bank has a “readvanceable mortgage,” which is a collateral mortgage. Scotiabank’s STEP is also a collateral mortgage I believe. What’s different about the TD Bank is that they are totally eliminating all other choices for consumers. Hey, whenever a retailer tells you that you only have one choice, you should walk away! Keep in mind that you’ll still have to qualify as a borrower to take advantage of the extra borrowing power that’s been dangled before your eyes with the collateral mortgage. If the bank changes its qualifying criteria, you may not. And with a collateral mortgage wrapped around your property, no one else is gonna touch you! If The Bank does see fit to lend you more money, there’s no telling what rate you’ll have to live with. Some mortgage brokers are a little unhappy with this recent turn of events, referring to the new TD collateral mortgage as a “mousetrap” and the low rates they’ll use to attract unsuspecting customers as the “cheese.” Not a bad analogy. The questions you have to ask yourself are these: 1. Are you prepared to tie yourself to the TD Bank to the end of your amortization — 25, 30 or 35 years? 2. If you want to switch down the road, are you prepared to pay hefty fees? 3. Do you trust the TD Bank enough to believe they won’t screw you over? (Remember when they changed the rules on their lines of credit? How about when they started dipping into people’s accounts to grab money for outstanding credit card debt? All well within their rights. All a tad smelly.) 4. Are you intending to use your home as a constant source of credit, or do you actually want to get that sucker paid off? For sure, make sure you read the fine print on these new collateral mortgages. If you go into them with your eyes shut, you’re just asking for trouble. Would I buy one of these suckers? Not on your life! Do I look like a mouse to you? |
Cyprus the Damage Done
Republish A defiant Cyprus said no Tuesday to Europe’s most ill-advised bailout scheme. But it was too late
The damage had been done.
When the economic history of the Great Recession is written, two dates will stand out.
The first is Sept. 15, 2008 — the day that Wall Street investment banker Lehman Brothers filed for bankruptcy, setting off the financial crisis that started this global slump.
The second is March 16, 2013 — last Saturday. That’s when the tall foreheads of the European Union, the European Central Bank and the International Monetary Fund deliberately sparked a run on Cypriot banks – a run that, even now threatens to spread throughout southern Europe and that could again destabilize the entire world.
If there is one lesson that should have been learned from the Depression of the 1930s it is the danger posed by bank panics.
Banking is by definition a confidence game. We assume when we put our savings in the bank that they stay there. But in reality, the money we deposit leaves again almost immediately, to be lent out many times over.
In normal times, this poses no problem. If you’re withdrawing $100 from your account, chances are that I’m depositing $100 in mine. The bank remains liquid and all are happy.
But if all depositors want all of their money back at the same time — well, there just isn’t enough to go around. The bank fails and depositors lose their savings.
That’s a bank panic. It can wreak havoc
Which is why, out of the experience of the 1930s, governments came up with deposit insurance as a way to assure people that even in the event of bank failure their savings would be safe.
In Canada, individual deposits are guaranteed up to $100,000. In Cyprus, the threshold is supposed to be 100,000 euros.
Deposit insurance, it seemed, had relegated the bank panic to ancient history.
All of which underscores the bizarre actions taken Saturday by eurozone finance ministers and the Cypriot government.
Financially, Cyprus is a mess. During the boom years, its easygoing banks attracted capital from around the world, particularly Russia. The banks then invested in Greek government bonds that — when the crisis hit — became virtually worthless.
Like Greece and 15 other nations, Cyprus uses the euro as its currency. As with Greece, the problems of Cyprus threaten that common currency.
And so Europe agreed to bail Cyprus out in return for its government imposing tough conditions on the populace. Nothing new here.
What was unusual however was that the Europeans demanded — for the first time — that some of the savings deposited in Cypriot banks be used to fund any bailout.
Perhaps the Europeans thought the Cypriot government would confiscate only the savings of Russian Mafiosi. But that is not what happened. The government decided Saturday to confiscate between 6 and 10 per cent of all savings deposited in its banks.
That sent Cypriots lining up at ATMs to get whatever money they could. It was a classic panic, contained only by the government’s decision to keep banks closed until at least Thursday.
Stock markets faltered as did the euro.
In the end, Cypriot legislators bowed to public opinion and rejected the bailout deal their government had negotiated — a rejection that carries its own consequences, including the possibility of the Mediterranean nation being forced from the eurozone.
But the damage has been done. The signal has been sent. In the eurozone at least, no one’s savings are safe. If governments can even contemplate reneging on their deposit insurance promises in Cyprus, they can do the same in Italy or Spain or Portugal — or indeed any other troubled eurozone country.
In such a situation, it only makes sense for depositors to withdraw their savings from the banking systems of weaker eurozone nations.
With luck that will not happen. But we should not be surprised if it does. A full-scale bank panic in southern Europe would make the 2008 financial crisis seem tame.
Reprint: Toronto Star.com
Thomas Walkom's column appears Wednesday, Thursday and Saturday.
Republish A defiant Cyprus said no Tuesday to Europe’s most ill-advised bailout scheme. But it was too late
The damage had been done.
When the economic history of the Great Recession is written, two dates will stand out.
The first is Sept. 15, 2008 — the day that Wall Street investment banker Lehman Brothers filed for bankruptcy, setting off the financial crisis that started this global slump.
The second is March 16, 2013 — last Saturday. That’s when the tall foreheads of the European Union, the European Central Bank and the International Monetary Fund deliberately sparked a run on Cypriot banks – a run that, even now threatens to spread throughout southern Europe and that could again destabilize the entire world.
If there is one lesson that should have been learned from the Depression of the 1930s it is the danger posed by bank panics.
Banking is by definition a confidence game. We assume when we put our savings in the bank that they stay there. But in reality, the money we deposit leaves again almost immediately, to be lent out many times over.
In normal times, this poses no problem. If you’re withdrawing $100 from your account, chances are that I’m depositing $100 in mine. The bank remains liquid and all are happy.
But if all depositors want all of their money back at the same time — well, there just isn’t enough to go around. The bank fails and depositors lose their savings.
That’s a bank panic. It can wreak havoc
Which is why, out of the experience of the 1930s, governments came up with deposit insurance as a way to assure people that even in the event of bank failure their savings would be safe.
In Canada, individual deposits are guaranteed up to $100,000. In Cyprus, the threshold is supposed to be 100,000 euros.
Deposit insurance, it seemed, had relegated the bank panic to ancient history.
All of which underscores the bizarre actions taken Saturday by eurozone finance ministers and the Cypriot government.
Financially, Cyprus is a mess. During the boom years, its easygoing banks attracted capital from around the world, particularly Russia. The banks then invested in Greek government bonds that — when the crisis hit — became virtually worthless.
Like Greece and 15 other nations, Cyprus uses the euro as its currency. As with Greece, the problems of Cyprus threaten that common currency.
And so Europe agreed to bail Cyprus out in return for its government imposing tough conditions on the populace. Nothing new here.
What was unusual however was that the Europeans demanded — for the first time — that some of the savings deposited in Cypriot banks be used to fund any bailout.
Perhaps the Europeans thought the Cypriot government would confiscate only the savings of Russian Mafiosi. But that is not what happened. The government decided Saturday to confiscate between 6 and 10 per cent of all savings deposited in its banks.
That sent Cypriots lining up at ATMs to get whatever money they could. It was a classic panic, contained only by the government’s decision to keep banks closed until at least Thursday.
Stock markets faltered as did the euro.
In the end, Cypriot legislators bowed to public opinion and rejected the bailout deal their government had negotiated — a rejection that carries its own consequences, including the possibility of the Mediterranean nation being forced from the eurozone.
But the damage has been done. The signal has been sent. In the eurozone at least, no one’s savings are safe. If governments can even contemplate reneging on their deposit insurance promises in Cyprus, they can do the same in Italy or Spain or Portugal — or indeed any other troubled eurozone country.
In such a situation, it only makes sense for depositors to withdraw their savings from the banking systems of weaker eurozone nations.
With luck that will not happen. But we should not be surprised if it does. A full-scale bank panic in southern Europe would make the 2008 financial crisis seem tame.
Reprint: Toronto Star.com
Thomas Walkom's column appears Wednesday, Thursday and Saturday.
can you trust your savings in the bank
Letter to the Globe and Mail Here is a cut and paste from page 155 of the recently tabled Federal budget “”The Government proposes to implement a ―bail-in regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants. Systemically important banks will continue to be subject to existing risk management requirements, including enhanced supervision and recovery and resolution plans. This risk management framework will limit the unfair advantage that could be gained by Canada’s systemically important banks through the mistaken belief by investors and other market participants that these institutions are ―too big to fail.”” My comments are as follows: 1 This is a major item and should be front page news could easily have slid by except that courtesy of Cyprus we know tha BAIL IN means taking (stealing in my view) customer deposits 2 The stated objective of limiting unfair advantage through mistaken belief etc is not met but the unfair advantage will be made real by being made legal 3 But the biggest issue is the role the banks play in the lives of every Canadian all of whom now see the banks as a safe place to deposit their money. Most of us are not sophisticated investors and thus should continue to be protected as we are now and not have to worry that BAIL IN will occur if the banks run into trouble. Renewed effort should go into regulating the banks to doubly ensure they are safe. As I recall when the banks wanted to consolidate and expand during the frenzy it was Mssrs Chretien and Martin who said no. In other words we cannot trust the banks and the government must do its job to protect us 4 The banking system is a faith based system in the sense that a bank run in Canada or anywhere would cause any bank to go bust because of the fractional reserve system which at say 30 to 1 means that loans are 30 times as great as deposits. It is imperative that this faith is kept high and not make people think their money (deposits) are unsafe and so help provoke a bank run at a time of obvious stress which would be a catastrophe. 5 FYI my source says that the Basel rules contain the BAIL IN provisions and have already been enacted in New Zealand; plus similar legislation is being prepared in US and UK. It is time for Canada to depart from the herd once again I have read your interesting article in todays Saturday Globe on this topic related to Cyprus and Euroland
Thanks for your contributions Respectfully
John Crispin Georgetown
Thanks for your contributions Respectfully
John Crispin Georgetown
can you trust your savings in the bank
The official 2013 Canadian budget contains an explicit provision that Canada will pursue the bail-in model for systemically important banks for future bank failures!
Titled ECONOMIC ACTION PLAN 2013
From Plan 2013 Page 144: (pg 154 of pdf)
“The Government also recognizes the need to manage the risks associated with systemically important banks—those banks whose distress or failure could cause a disruption to the financial system and, in turn, negative impacts on the economy. This requires strong prudential oversight and a robust set of options for resolving these institutions without the use of taxpayer funds, in the unlikely event that one becomes non-viable.”
From Plan 2013 Page 145: (pg 155 of pdf)
The Government proposes to implement a bail-in regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital.
This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants…
This risk management framework will limit the unfair advantage that could be gained by Canada’s systemically important banks through the mistaken belief by investors and other market participants that these institutions are “too big to fail".
http://www.budget.gc.ca/2013/doc/plan/budget2013-eng.pdf
Titled ECONOMIC ACTION PLAN 2013
From Plan 2013 Page 144: (pg 154 of pdf)
“The Government also recognizes the need to manage the risks associated with systemically important banks—those banks whose distress or failure could cause a disruption to the financial system and, in turn, negative impacts on the economy. This requires strong prudential oversight and a robust set of options for resolving these institutions without the use of taxpayer funds, in the unlikely event that one becomes non-viable.”
From Plan 2013 Page 145: (pg 155 of pdf)
The Government proposes to implement a bail-in regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital.
This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants…
This risk management framework will limit the unfair advantage that could be gained by Canada’s systemically important banks through the mistaken belief by investors and other market participants that these institutions are “too big to fail".
http://www.budget.gc.ca/2013/doc/plan/budget2013-eng.pdf
Don’t buy insurance from banks April 1 2009 by Ellen Roseman
Banks love to sell insurance as an add-on to an existing product.
Sign a mortgage and they wil ask you about getting life insurance and critical illness insurance at the same time. Just a small increase in your monthly payments.
Take out a credit card and they will try to sell you insurance to protect you if you can’t make the minimum monthly payments. Often, they give it free for a few months and give you the option of cancelling afterward.
Many people don’t know they have credit balance insurance, since they don’t believe banks use negative option marketing. The information about having to cancel the insurance to stop it is slipped into a package you get along with the card.
Sometimes, borrowers feel they have to buy the insurance or lose the loan. The banks make you sign a waiver form, saying you’re on your own if you get sick or die. Now that’s pressure.
What you may not realize is that banks do “post-claims underwriting.” This means they don’t check your medical history in advance. They just ask you a few questions and then decide, based on your answer, whether or not you qualify for insurance.
Only when you or your loved ones make a claim under the insurance do they contact your doctors and start checking into your medical history. Then, they may decide you don’t qualify for coverage — and in fact, you may never have qualified — despite having paid premiums for all these years.
If you don’t believe me, check the column I did about a couple in this unfortunate position.
Luckily, I helped them get the coverage they thought they had. But the bank insisted they were at fault for misrepresentation on their application.
I know that if you buy insurance from a qualified insurance agent or broker, the proper checks will be done long before you have to make a claim and face possible denial for being ineligible.
www.ellenroseman.com
|
Is a reverse mortgage the way to go?
Ralph and Louise have seen the TV commercials featuring Gordon Pape, the financial author, as the spokesman for Canadian Home Income Plan Corp. (CHIP) reverse mortgages. They were wondering if it would be a good way to go to help ease their current financial situation. A reverse mortgage is simply an advance on the value of your home that accumulates interest. The accumulated debt does not need to be paid off until you die, sell the home or move out of the house. If you qualify, and are over age 62, you can get up to 30% of the value of your home and you can do whatever you want with the money. According to the CHIP website, a reverse mortgage delivers the cash tax-free. Of course, if the money is used to invest and produce an income, some or all of that income will be taxable. It is very important to understand the cost of a reverse mortgage before getting into one. The CHIP website states that there will be an administrative fee of about $1,300 to set up your plan. On top of that, you will be able to choose a term of 6-months, 1-year or 3-years to determine the interest rate on your loan. Rates, of course, will be subject to change at the end of the term. Interest is compounded semi-annually. For example, if Ralph and Louise get a reverse mortgage for 30% of the value of their $250,000 house and choose the 3-year term (7.50% on 13 Sep 2005), they would get $75,000 today to do as they please. Don't forget the $1,300 set-up fee. Louise, at age 62, has a life expectancy of about 24 years. At that time, assuming no change in interest rates, the amount owing will have grown to over $439,026. In spite of escalating home values over the last several years, they haven't appreciated in value much more than the rate of inflation over long periods of time. If we assume an inflation rate of 3%, their home may be worth about $508,199 in 24 years. That leaves only $69,173 after paying off the loan. "The CHIP website states that "if property values decrease, the amount to be repaid is never more than the fair market value of the property at the time it is sold." There are other ways get get money out of their home than a reverse mortgage. Ralph and Louise can sell their home and buy something smaller. They may be better off getting a home equity line of credit and drawing funds only as they need them, usually at much lower interest rates. Garth Turner, former federal revenue minister, said a reverse mortgage "is an ideal strategy if you hate your children." |
|
The Banks are not your Friends
Never forget that the big banks are in business to make money for their shareholders. Serving customers is always going to be a lower priority than boosting the bottom line, despite what their ads say.
No matter what kind of help you seek from a bank, you can be tricked and deceived if you start with the idea that the bank is your friend. It’s not on your side. The overriding goal is to make profits for shareholders.
Canadians trust the banks too much. We think we will get objective help, not tainted by bias or financial incentives. That’s far from the case.
For example, banks push you to buy expensive insurance that covers minimum payments on your credit card if you’re sick or injured. They may enroll you in a plan without authorization when you get a credit card, then put the onus on you to opt out.
When you take out a mortgage, banks often link their life insurance to the application. They don’t tell you that life insurance is optional and is available at much better terms outside the bank.
And why are banks always keen to extend credit so you can contribute to an RRSP or catch up on previous RRSP contributions? If they had your best interests at heart, wouldn’t they tell you that the best investment is to cut down your debt, especially in the early years of a mortgage when interest costs are highest?
Last year, I got more complaints about banks than in the previous five years. They came from people surprised to find the base rate on their lines of credit going up at a time when the Bank of Canada rate was coming down — and from those shocked at the size of their penalties when they renegotiated a mortgage.
www.ellenroseman.com
Never forget that the big banks are in business to make money for their shareholders. Serving customers is always going to be a lower priority than boosting the bottom line, despite what their ads say.
No matter what kind of help you seek from a bank, you can be tricked and deceived if you start with the idea that the bank is your friend. It’s not on your side. The overriding goal is to make profits for shareholders.
Canadians trust the banks too much. We think we will get objective help, not tainted by bias or financial incentives. That’s far from the case.
For example, banks push you to buy expensive insurance that covers minimum payments on your credit card if you’re sick or injured. They may enroll you in a plan without authorization when you get a credit card, then put the onus on you to opt out.
When you take out a mortgage, banks often link their life insurance to the application. They don’t tell you that life insurance is optional and is available at much better terms outside the bank.
And why are banks always keen to extend credit so you can contribute to an RRSP or catch up on previous RRSP contributions? If they had your best interests at heart, wouldn’t they tell you that the best investment is to cut down your debt, especially in the early years of a mortgage when interest costs are highest?
Last year, I got more complaints about banks than in the previous five years. They came from people surprised to find the base rate on their lines of credit going up at a time when the Bank of Canada rate was coming down — and from those shocked at the size of their penalties when they renegotiated a mortgage.
www.ellenroseman.com
cyprus the damage done
A defiant Cyprus said no Tuesday to Europe’s most ill-advised bailout scheme. But it was too late.
The damage had been done.
When the economic history of the Great Recession is written, two dates will stand out.
The first is Sept. 15, 2008 — the day that Wall Street investment banker Lehman Brothers filed for bankruptcy, setting off the financial crisis that started this global slump.
The second is March 16, 2013 — last Saturday. That’s when the tall foreheads of the European Union, the European Central Bank and the International Monetary Fund deliberately sparked a run on Cypriot banks – a run that, even now threatens to spread throughout southern Europe and that could again destabilize the entire world.
If there is one lesson that should have been learned from the Depression of the 1930s it is the danger posed by bank panics.
Banking is by definition a confidence game. We assume when we put our savings in the bank that they stay there. But in reality, the money we deposit leaves again almost immediately, to be lent out many times over.
In normal times, this poses no problem. If you’re withdrawing $100 from your account, chances are that I’m depositing $100 in mine. The bank remains liquid and all are happy.
But if all depositors want all of their money back at the same time — well, there just isn’t enough to go around. The bank fails and depositors lose their savings.
That’s a bank panic. It can wreak havoc
Which is why, out of the experience of the 1930s, governments came up with deposit insurance as a way to assure people that even in the event of bank failure their savings would be safe.
In Canada, individual deposits are guaranteed up to $100,000. In Cyprus, the threshold is supposed to be 100,000 euros.
Deposit insurance, it seemed, had relegated the bank panic to ancient history.
All of which underscores the bizarre actions taken Saturday by eurozone finance ministers and the Cypriot government.
Financially, Cyprus is a mess. During the boom years, its easygoing banks attracted capital from around the world, particularly Russia. The banks then invested in Greek government bonds that — when the crisis hit — became virtually worthless.
Like Greece and 15 other nations, Cyprus uses the euro as its currency. As with Greece, the problems of Cyprus threaten that common currency.
And so Europe agreed to bail Cyprus out in return for its government imposing tough conditions on the populace. Nothing new here.
What was unusual however was that the Europeans demanded — for the first time — that some of the savings deposited in Cypriot banks be used to fund any bailout.
Perhaps the Europeans thought the Cypriot government would confiscate only the savings of Russian Mafiosi. But that is not what happened. The government decided Saturday to confiscate between 6 and 10 per cent of all savings deposited in its banks.
That sent Cypriots lining up at ATMs to get whatever money they could. It was a classic panic, contained only by the government’s decision to keep banks closed until at least Thursday.
Stock markets faltered as did the euro.
In the end, Cypriot legislators bowed to public opinion and rejected the bailout deal their government had negotiated — a rejection that carries its own consequences, including the possibility of the Mediterranean nation being forced from the eurozone.
But the damage has been done. The signal has been sent. In the eurozone at least, no one’s savings are safe. If governments can even contemplate reneging on their deposit insurance promises in Cyprus, they can do the same in Italy or Spain or Portugal — or indeed any other troubled eurozone country.
In such a situation, it only makes sense for depositors to withdraw their savings from the banking systems of weaker eurozone nations.
With luck that will not happen. But we should not be surprised if it does. A full-scale bank panic in southern Europe would make the 2008 financial crisis seem tame.
Thomas Walkom's column appears Wednesday, Thursday and Saturday.
reprint: thestar.com
The damage had been done.
When the economic history of the Great Recession is written, two dates will stand out.
The first is Sept. 15, 2008 — the day that Wall Street investment banker Lehman Brothers filed for bankruptcy, setting off the financial crisis that started this global slump.
The second is March 16, 2013 — last Saturday. That’s when the tall foreheads of the European Union, the European Central Bank and the International Monetary Fund deliberately sparked a run on Cypriot banks – a run that, even now threatens to spread throughout southern Europe and that could again destabilize the entire world.
If there is one lesson that should have been learned from the Depression of the 1930s it is the danger posed by bank panics.
Banking is by definition a confidence game. We assume when we put our savings in the bank that they stay there. But in reality, the money we deposit leaves again almost immediately, to be lent out many times over.
In normal times, this poses no problem. If you’re withdrawing $100 from your account, chances are that I’m depositing $100 in mine. The bank remains liquid and all are happy.
But if all depositors want all of their money back at the same time — well, there just isn’t enough to go around. The bank fails and depositors lose their savings.
That’s a bank panic. It can wreak havoc
Which is why, out of the experience of the 1930s, governments came up with deposit insurance as a way to assure people that even in the event of bank failure their savings would be safe.
In Canada, individual deposits are guaranteed up to $100,000. In Cyprus, the threshold is supposed to be 100,000 euros.
Deposit insurance, it seemed, had relegated the bank panic to ancient history.
All of which underscores the bizarre actions taken Saturday by eurozone finance ministers and the Cypriot government.
Financially, Cyprus is a mess. During the boom years, its easygoing banks attracted capital from around the world, particularly Russia. The banks then invested in Greek government bonds that — when the crisis hit — became virtually worthless.
Like Greece and 15 other nations, Cyprus uses the euro as its currency. As with Greece, the problems of Cyprus threaten that common currency.
And so Europe agreed to bail Cyprus out in return for its government imposing tough conditions on the populace. Nothing new here.
What was unusual however was that the Europeans demanded — for the first time — that some of the savings deposited in Cypriot banks be used to fund any bailout.
Perhaps the Europeans thought the Cypriot government would confiscate only the savings of Russian Mafiosi. But that is not what happened. The government decided Saturday to confiscate between 6 and 10 per cent of all savings deposited in its banks.
That sent Cypriots lining up at ATMs to get whatever money they could. It was a classic panic, contained only by the government’s decision to keep banks closed until at least Thursday.
Stock markets faltered as did the euro.
In the end, Cypriot legislators bowed to public opinion and rejected the bailout deal their government had negotiated — a rejection that carries its own consequences, including the possibility of the Mediterranean nation being forced from the eurozone.
But the damage has been done. The signal has been sent. In the eurozone at least, no one’s savings are safe. If governments can even contemplate reneging on their deposit insurance promises in Cyprus, they can do the same in Italy or Spain or Portugal — or indeed any other troubled eurozone country.
In such a situation, it only makes sense for depositors to withdraw their savings from the banking systems of weaker eurozone nations.
With luck that will not happen. But we should not be surprised if it does. A full-scale bank panic in southern Europe would make the 2008 financial crisis seem tame.
Thomas Walkom's column appears Wednesday, Thursday and Saturday.
reprint: thestar.com
|
|
|
|
|