Main Street vs. Wall Street by Kevin Kelly
Fees are only one part of the problem. Several owners I spoke to talked about how difficult it has been to get loans, or how restrictive loan covenants had become. “My bank won’t even talk to me,” confessed the owner of one local eatery who had received a Small Business Administration loan nearly two years ago that financed an upgrade and expansion of his kitchen.
As for my relationship with Wells Fargo, it endures. Our line of credit comes up in six months, and I’m expecting the bank to try to boost our interest rate, especially given how much it has complained about how it’s too low. Where we once bundled many of our services through Wells Fargo—including our corporate, commercial, and equipment lending and our 401(k) plan, a policy the bank encouraged to deepen our ties—we’re looking to back out of some pieces…
Good idea, big banks have shown over and over again they take pride in consistently raising fees, reducing service and treating customers as though they are a bother. It is annoying that the big banks are constantly buying out the little banks to eliminate competition (and that regulators allow this is a sad commentary on our disrespect for the principles of capitalism) but when that happens move your banking needs to a small bank and you will be much better off in the long run.
Choosing to deal with big banks is bad idea. They have provided lousy service for quite some time. Obviously they do not chose to provide value to customers.
It switched to a system that separates insurance from employment. Each individual or family is required to buy coverage, and insurers must offer a basic package of benefits to all applicants. They can’t profit from selling basic coverage, but they can from supplemental plans. Premiums are deducted from paychecks; the unemployed and poor are subsidized.
Despite opposition from insurers, drugmakers, and business, the plan passed by a bare majority and went into effect in 1996. Switzerland now spends 11% of its gross domestic product on health care, just as it did before. But everyone is covered, insurers are more profitable than ever, and its high-quality health care has been maintained.
The lesson, as laid out in The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care, by T.R. Reid, is that “health-care systems can be changed, even in the face of powerful…interests.”
Many Americans boast about having the best health care in the world, even though the U.N. ranks the U.S. system 37th, based on a broad range of measurements
At the same time, he learned that almost all countries use one of four health-care models: Germany’s Bismarck system, in which hospitals and insurers are private entities and financing comes from payroll deductions; Britain’s Beveridge Model, with the government providing health care financed by taxes; the Canadian plan, where private doctors and hospitals are paid by the government through taxes; and the out-of-pocket care found in most poor nations, where those who can afford care get it, while the rest suffer or die. Unlike any other country, the U.S. combines all four models
Related: posts on the economics of health care – Broken Health Care System: Self-Employed Insurance – Many Experts Say USA Health-Care System Inefficient, Wasteful – USA Spent $2.2 Trillion, 16.2% of GDP, on Health Care in 2007 – International Health Care System Performance
The company failed to deliver on its promises, she said, forcing Anderson-Howze, of St. Paul, to become one of hundreds of Minnesota consumers to seek help from Minnesota Attorney General Lori Swanson.
Swanson sued Moneyworks LLC and two other debt assistance companies on Tuesday, alleging that the companies made unsolicited phone calls promising lowered interest rates, guaranteed savings and money-back guarantees. Swanson alleges that Washington-based Priority Direct Marketing, Clear Financial Solutions of Florida and Moneyworks LLC, based in Georgia, “charged financially strapped people a lot of money to lower the interest rates on their credit cards, only they failed to do so, leaving people even further behind on their bills.”
Swanson also sent a letter to the Federal Trade Commission asking it to adopt federal regulations to prohibit companies from charging consumers until services are delivered satisfactorily.
Many organizations overing to help with debt relief are fraudulent. They are constantly being shut down for illegal activity. You must be very careful when you consider dealing with any of these organizations. Do not pay out money up front. Make sure the organization has a strong reputation and history of ethical behavior. Be financially literate: don’t get taken advantage of.
Several steps were key to making the plan work. Kandy and Russell eliminated discretionary spending. Kandy began buying generic food and frequenting thrift stores for clothing purchases. They stopped exchanging Christmas and birthday gifts with each other and their relatives.
Even with the drastic cutbacks, the Hildebrandts couldn’t cover the $2,000 they were sending to CCCS each month to be distributed to their creditors. At that time, the sum amounted to about half of Russell’s take-home pay. So Russell took on a second job cleaning a local grocery store several nights a week from midnight to 4:30 a.m. He would arrive home from his day job, eat dinner, catch a few hours of sleep and head to work. After his shift, he would go back home, sleep a few more hours and then get up for his day job.
By the fall of 2008, the Hildebrandts had one year to go on the payment plan. Russell even started daydreaming about a new home when he saw a three-bedroom rambler for sale in New Richmond. It had all that they were looking for, including a large yard and a separate bedroom for Joey. Russell let a real estate agent know that they liked the house, but added that the family would have to pay off their debts before taking on a mortgage.
Several months later the agent called and asked if the Hildebrandts would be interested in a rent-to-own agreement. The current owner of the house had some health concerns and was eager to move. The monthly rent would be $1,000, which included $200 to be escrowed for closing costs. They could manage it.
Earlier this year, the owner wanted to accelerate the sale process. In April, using the tax credit for first-time home buyers, the Hildebrandts were able to swing the purchase and pay off the remaining balances on their credit cards about six months ahead of schedule.
It is certainly a daunting task to dig out off such a crushing debt load. It is much easier to avoiding getting in that situation in the first place (how not to get into trouble with credit cards). It is easy to get yourself in trouble by borrowing money. In many cases all it takes to not get into that trouble is just don’t buy what you can’t pay for.
The report, released Thursday by a coalition of retailers, supermarkets, drugstores and other businesses, found that Americans currently pay about $2 in “interchange” fees for every $100 they spend using credit cards. The fee is actually paid by retailers, though consumers feel it in a higher retail price. This rate is twice that charged in the U.K. and New Zealand, four times the rate levied in Australia and more than six times the cross-border rate charged in the European Union, the study says..
“If we paid the same low credit- and debit-card swipe fees as consumers in Australia pay, then the net benefit for American consumers would have totaled $125 billion over the last four years,” the report says.
It truly is amazing how incredibly poor the banking services in the USA are. The banks have managed to provide mediocre service at exceedingly high prices. It sure seems to be due to unfair trade practices (allowed by poor regulation). See our tips on how to avoid getting ripped off by credit card companies, though it won’t help with these excessive fees.
BECKY: All right. Let me go at this another way. Let’s pretend you’re on a desert island for a month. There’s only one set of numbers you can get. What would it be?
BUFFETT: Well, I would probably look at– perhaps freight car loadings and– perhaps– and– and truck tonnage moved and– but I’d want to look at a lot of figures.
BUFFETT: Well, I think that– unfortunately, I think that the — what– what– we’re really talking about reforming health insurance more than health care. So I– the incentives that produce the 16 or so percent of GDP that’s going to health care, I think unfortunately they’re getting– they’re going to get changed. But– so I think that we really– and I’m talking as much about reforming health care as we’re talking about reforming the insurance. And I think that will be an opportunity missed if we don’t do more about looking at what– what the incentives are in the present system and what they would be in an ideal system.
Five consumer laws you really ought to know if you live in the United Kingdom.
Your iconic white MP3 player, the totemic centre of your life, breaks down precisely 366 days after you bought it. The large electronics firm that sold you the MP3 player says that because the one-year guarantee had elapsed, there’s nothing they can do to help you. You’ll just have to buy another one.
if the player has been lovingly treated and has still conked out that suggests something may have been wrong with it at the very beginning.
It works like this. For the first four-five weeks you have a “right of rejection” – if the item you’ve bought breaks down, you can demand a refund.
For the next six months, you are entitled to replacement or repair of the goods. It is up to the retailer to prove there was nothing wrong with it if they wish to get out of having to do the work. And then after six months, there is still a duty to replace or repair faulty goods, but the onus is on you, the consumer, to prove that there was something wrong.
And the key time span is six years. That’s how long goods may be covered by the Sale of Goods Act. It all depends on what “sufficiently durable” means. If a light bulb goes after 13 months, the consumer is not going to be overly gutted.
Extended warranties are general a very bad personal finance move. I never purchase them. Many companies push them on customers because of the large profit margin and because they don’t want to provide value to customers.
Related: 10 Things Your Bank Won’t Tell You – Ohio Acts to Protect Citizens from Payday Loan Practices – Save Money on Printing – Don’t Let the Credit Card Companies Play You for a Fool – Student Credit Cards
I like to buy stocks cheap and then hold them as they rise in price. This is not a unique desire, I know. One thing this lead me to do was find a stock I liked but hold off buying it until I could buy it for less. When that works it is great. However, one thing that happened several times is that I found stocks I really liked and they just went up and went up more and kept going up. And I never owned them.
I learned, after awhile, that is was ok to buy a stock at a higher price once I realized I made a mistake. Instead of just missing out because I made a mistake and didn’t buy it at a lower price than I needed to pay today (which made it feel really lame to buy it now at a higher price) I learned to accept that buying at the higher price available today was the best option.
I have seen two types of situations where this takes place: one I realize I was just way off, it was a great deal at the price I could have bought at – I just made a mistake. And if it was still a good buy, I should buy it. Another is that the stock price goes up but new news more than makes up for the increased stock price (the news makes the value of stock increase more than the price has increased).
I missed out on the Google IPO, even though I really wanted to buy. Then the price went way up and even though I had learned this (don’t avoid buying a stock today just because you made the mistake of not buying it at a lower price earlier) tip I wanted to buy it for less than the current price and so kept not buying it (emotion is a real factor in investing and that is another thing I have realized – you need to accept it and deal with it to be a good investor). Then Google announced spectacular earnings and it was finally enough to get me to buy the stock a few days later at $219 (which was well over twice the price 6 months earlier). But it was a great buy at $219 and losing that just because I should have bought it at $119 is not wise – but something I did many times in the past.
In March of 2009 I bought some ATPG at $3.20. In August I bought more at $11. The news was bit better but really it was just a huge huge bargain at $3.20 and I should have bought a lot more. In the last 5 trading days ATPG was up $5.12 (16.78 – 11.66). A nice gain. Right now, it is up another 68 cents today at $17.43. Now this is a volatile stock and until I sell it may not turn out to be profitable investment, but the odds are good that it will.
It is also hard to know when to sell – in fact for many selling at the wrong time (either selling too late – after it collapses [for good or sell it after a collapse only to see it recover], or too early missing out on huge gains) is the biggest problem they have in becoming a successful investor). One trait of many successful investors is holding the right investments for huge gains. A few stellar performances can lift the entire portfolio to long term investing success. And if you sell those stocks early you miss huge opportunities.
Holding on for the huge gains is a mistake I do not want to make – and so when the opportunity is there for such gains I am willing to risk losing some gains for the potential of a much larger gain. Right now the balance is keeping me from selling any ATPG, though I am likely to sell some if it increases (while continuing to hold some of the position).
Related: Great Google Earnings April 2007 – Nicolas Darvas (investor and speculator) – Not Every Day is Profitable – Does a Declining Stock Market Worry You? – 401(k)s are a Great Way to Save for Retirement – Beating the Market, Suckers Game? – Sleep Well Fund
Mark Mobius is an investment manager with Franklin-Templeton that I have invested with for over a decade (through the Templeton Emerging Markets Trust and Templeton Dragon Fund – they are closed end funds). I believe in Templeton’s emerging market investment team and Mark Mobius and believe his thoughts are worth paying attention to. He recently wrote an overview on Emerging Markets:
In Mexico, GDP contracted 10% y-o-y in the second quarter of 2009 as a result of the global economic crisis and swine flu outbreak. In comparison, GDP fell 8% in the first quarter of the year. Declines in the manufacturing, construction and retail sectors had negatively impacted GDP during the period.
Since 1995, portfolio inflows into emerging markets have totaled more than US$123 billion. A significant amount, considering it includes the US$49 billion in net outflows in 2008 as a result of the global financial crisis. The recovery in emerging markets and hunt for attractive investment opportunities, however, saw these funds return just as quickly with inflows totaling more than US$44 billion in the first seven months of 2009, nearly 90% of the outflows registered all of last year.
Emerging markets account for more than 80% of the world’s population. With economic growth accelerating and population growth decelerating, per capita income is one the rise. In our view, markets such as China, India and Brazil stand at the front of the class.
As of end-August 2009, the benchmark MSCI Emerging Markets index had a P/E of 16 times, cheaper than the MSCI World index which was trading at a P/E of 21 times.
There are several issues with economic data, as I have mentioned before. These issues have to be considered when analyzing economic data and being financially literate requires an understanding of the problems with economic data. The political pressures for manipulating the data to appear good exist is every country. The practical difference is the other forces that push for data that is more accurate (businesses, investors, economists… need accurate data to succeed) and practices that have been adopted to provide accurate data.
Foreign Policy magazine takes a look at problems in How China Cooks Its Books
But local and provincial governmental officials are the ones who actually fiddle with the numbers. They retain considerable autonomy and power, and have a self-interested reason to manipulate economic statistics. When they reach or exceed the central government’s economic goals, they get rewarded with better jobs or more money. “The higher [their] GDP [figures], the higher the chance will be for local officials to get promoted,” explained Liu.
Last October, Vice Premier Li Keqiang said in a speech after inspecting China’s Statistics Bureau, “China’s foundation for statistics is still very weak, and the quality of statistics is to be further improved” — a brutally harsh assessment coming from a top state official.
China’s economy grew at an annualized 6.1 percent rate in the first quarter, and 7.9 percent in the second. Yet electricity usage, a key indicator in industrial growth and a harder metric to manipulate, declined 2.2 percent in the first six months of the year. How could an economy largely dependent on manufacturing grow while its industrial sector shrank? It couldn’t; the numbers don’t add up
My guess is China’s data is highly questionable and still China’s economy is fairly strong. But because the data is so questionable it does make the risks of being wrong on that guess fairly high. Even the US government data is flawed: it is no surprise China’s data is less reliable.
Related: Is China’s Recovery for Real? – Misuse of Statistics – Mania in Financial Markets – Manufacturing Employment Data – 1979 to 2007 – The Long-Term USA Federal Budget Outlook –
Data Shows Subprime Mortgages Were Failing Years Before the Crisis Hit