No Confidence

I wasn't planning on writing this soon but the banker in me just had to bring up the new banking trend. Some of the biggest US banks began to inform their clients today on a new fee. In the past, if you had millions to deposit you looked for the bank that paid the highest interest rate, right? No more. Instead the new trend is to charge the customer a fee to deposit their money at the bank!

That's right, the rich, businesses or anyone wanting to deposit millions will have to pay for the privilege of banking at one of the bigger banks.





You thought the rediculously small interest paid on savings, money market accounts or CDs was bad - now customers and businesses have to pay the banks to hold their millions! You're better off putting it under your mattress.

I hate to admit this, but as a former banking consultant I can understand why banks are doing this. Basically there is too much cash floating around as investors are getting out of the stock market and real estate. In fact money is so prevalent that the Federal Reserve is charging the few banks that need to borrow money an interest rate of 0%. Yup, it is free to borrow but that isn't the problem, the problem is too much money.

Not to get too technical but banks have to balance out their Assets which are loans and cash on hand vs. their Liabilities of deposits and stocks.







Too much deposits and they can't make enough loans to balance it out. Businesses today are afraid to get new loans as the economy is uncertain and they are afraid of the future impact of Obamacare. There are few mortgages as no one is buying houses and the few customers who try for a loan are turned down as banks are being very strict. So banks can't turn the big deposits into loans today.

In today's economy, banks interest margin (the rates they collect on loans minus the rate they pay out on deposits)has been smaller and smaller. And now they can't even turn around and loan out the big deposits to earn even a small interest fee. Banks are making up that lost income by now charging customers a fee to hold their large deposits.

So I understand why this sort of makes sense from the bank's point of view. But I worry about the bigger picture. I don't like that we have all this excess cash. It is scary to think that people and companies are not investing in our future nor are banks helping out individuals or small businesses with loans.

Some analyst reviewing today's 512 drop in the stock market said it was a vote of no confidence in our future. I agree. For how can you blame anyone for shying away from investing in the stock market after the last few days of free fall and the jump in gold? Not to forget that Washington just agreed to more spending and more debt.

How do we turn our economy around? How do we give our citizens, and big and small businesses confidence in our future?


Unfortunately, does anyone truly believe our economy and unemployment will get any better considering who is in the White House? Or will confidence return only after we get a true leader? Preferably someone with real business acumen, someone who knows how to live on a budget like the rest of us do. Most of all, we need a leader who understands how to give Americans and American businesses the freedom to succeed or even to fail, then learn from it and come back stronger and wiser. Until then, add my voice in with all the others who are starting to shout "No confidence!"

Location:home

Debt Doldrums

I am back. Or for those who hadn't noticed, PC Fugitive has been down for nearly a year due to technical problems. But switching from my PC to my new IPad and adding a blog app and I am finally back in business. Yeah!

The funny thing, however, is that even if I could write I am not sure how much I would have. It just all seems so redundant.



The Democrats want more spending and would increase taxes to pay for some of it while the Republicans, led by the Tea Party, want less spending and fewer taxes and to not raise the dent ceiling. But as we all know now, after months of bitter arguing the debt ceiling was raised, some new spending approved but thanks to the Tea Party there are no new taxes. Yet.

When the president gave a short speech about the new debt ceiling he primarily talked about how we would pay it off. Once again he talked about taxing the rich through new taxes, closing loopholes or taxing luxury items like corporate jets. It's probably a losing battle but let me try one more time to explain why Obama is totally wrong, again.

First, the United States top 10% wealthiest citizens pays 45.1% of all income


taxes. (http://www.taxfoundation.org/blog/show/27134.html) This is more than any other industrialized nation. In France, the top 10% richest payed just 28% while in England it was 38.6% of all personal income taxes. So our richest citizens are already paying substantiously more than their counterparts yet the Democrats want to take even more money from them! We can't let that happen.

As for taxing luxury items, doesn't anyone remember the Carter years? Jimmy had the same idea except instead of going after jets he added a new tax on luxury boats. And guess what happened? The rich stopped buying boats and then all across New England's coast people were suddenly jobless.


No one bought boats so skilled shipmakers were let go. Docks that relied on docking fees were empty. The businesses that catered to the people who were now unemployed started to go bankrupt. So basically the only people hurt by that luxury tax were the middle class. And I don't know this for sure but it only figures that if fewer luxury boats were sold than even with the higher tax rate the government probably collected less tax dollars on the boats. Typical. Whenever the government tries to interfere they always make things worse!

So what is the solution? I have a few ideas (surprise, surprise) but plenty of time to talk about that another day. And now that I have my new iPad and blog app I have no more excuses for not keeping this up-to-date. So thanks for your patience and welcome back!

Location:Home

Babies, Debt and Erasing History

Times are not good. We are in the middle of a recession or maybe it’s a depression or a double-dip but a rose by any other name… People are hurting. Jobs are scarce. Businesses are closing since no one has any income to buy things. In fact there were two recent statistics that caught my eye. People are not having children and they have stopped running up their credit card debt. For once it seems as if the public is actually being responsible. Times really must be tough!

There was an Associated Press release out today that stated we had the lowest birth rate in 100 years with a current birthrate of 13.7 births for every 1000 people. (Although my family is doing their best to bring the number up and yes that is a picture of the newest addition David James Roberts.) Now I am simply quoting an AP report but it seems to me that it would make more sense to state the number of births for every woman or better yet every woman in the child-bearing age range rather than per person. It strikes me as being more than a bit silly to include men and children or even women pasta certain age. But as this is how it was shown then this is what I am stuck with – 13.7 births per 1000 people. In comparison, in 1932 the birthrate dipped below 20 births per 1000 people (another AP phrase so I don’t know the exact number). The lower birthrate today is not surprising considering there was no pill back then. The AP report mentioned another reason for our lower birthrate – fewer births by immigrants. Actually what they were saying is that our bad economy has deterred foreigners from moving here. I suppose that could be the silver lining in a very stormy cloud!

According to CNNMoney, the amount of credit card debt consumers are carrying dropped to an eight-year low and delinquencies continued to decline in the second quarter as consumers look to shore up their savings. The report goes on to state that credit card debt fell 4.1% to an average $4,591 during the quarter. This is the fifth straight quarterly decline and the first time since 2002 that credit card debt has dropped below $5,000. This is pretty amazing news. You would think that the high unemployment might lead people to depend more on their credit cards but apparently not. You can’t help but feel a bit optimistic about people and the future. In fact the politicians should take note that we understand we have to tighten our belts, deny buying and maxing out our credit cards and even hold off on making major life changes. Too bad Obama, Pelosi and Reid don’t understand this. No wonder people are mad – we are doing the responsible thing yet watch helplessly as our Congress continue to spend, increase our debt and make major life changes. Then again, a message may be coming their way in November.

In the midst of our deepening recession, there is one statistic that has not hit the news. Don’t you just know that if a Republican was in office that we would be inundated with reports about the increase in homeless families, overflowing shelters and touching stories about ex-servicemen living on the streets. But I haven’t seen a word about it – have you? Not even when temps were hitting record highs making living on the streets life threatening. I really had to search before I found even one recent story by a mainstream media outlet, in this instance CNN Money which stated that the great recession drove more families into homeless shelters in 2009. The report went on to say that 170,000 families needed shelter last year, up from 159,000 in 2008. I somehow must have missed all the coverage this summer by mainstream media about this growing problem.

Speaking of missing things, I had a strange experience that I just have to mention. For another story I wanted to go back and take another look at all the pictures from Michelle’s trip to Spain. Specifically I wanted to review the pictures of her surrounded by all the security men while she was shopping. When I first wrote that story there was a large selection including a picture showing a very bored First Daughter which I thought I might now use for another story. There was just one problem – all the pictures are now missing. I googled Michelle Obama Spain shopping and not a single picture remains. Oh sure, there are a few showing the First Lady with the King of Spain and even one of her getting off a plane but not one of her shopping. Now I am not going crazy as I know they had been posted during her trip since I used this one in my blog. But now? They are all gone, including the one I used. I’ve heard of revisionism history but this is a bit scary. I thought the internet was a place of freedom and yet somehow somebody, the Obama administration I assume, has managed to delete or hide or misplace these photos. Call me naïve but I didn’t know this was possible. I guess it is.

I couldn’t help but wonder if the Obama administration is truly rewriting history. So I tested out one more image – to find a picture of President Obama with Jeremiah Wright. There was one – that’s it. A lot of picture of just Wright but when I googled Jeremiah Wright and Obama only one picture remains and all other pictures from their friendship, going to his church and having Wright as his spiritual advisor are gone. Sort of like trying to find a picture of Obama with a cigarette even though he continues to smoke or even trying to find many snapshots of Obama on the golf course. Come to think of it, yes, there are a few pictures showing Obama golfing but I have rarely seen pictures of his golfing partner. Who are they and better yet, why is it that much of a secret? This secrecy is very scary. And these were just a few minor issues but I wonder what else is being kept out of the news or disappearing from the web. Why isn't there more of an outcry about this and where are the determined journalists and photographers who have the courage to take these pictures… and keep them on the web for history’s sake.

Greece, GDP and Dr. Seuss

There have been riots in Greece but I didn't really understand why other than Greece's economy was shot. Then I read an article about Greece's debt to GDP ratio and for the first time I truly understood the impact of what they were saying. Before, I would get lost in talks of billions and trillions, it sounds like something out of a Dr. Seuss book* but this ratio made sense. It divides debt (the amount a country owes) into the Gross Domestic Product or GDP (the total market value of all goods and services produced in a country in one year). To make it easy, if a country produced $50,000 and had debts of $5,000 their debt ($5,000) as a percentage of their $50,000 GDP would be 10% ($5,000/$50,000).

Greece’s current debt to GDP is an astonishing 115%. So for every $100 produced, Greece would spend all of it plus owe another $15 giving it a deficit of 15% which it has no way of paying back since it has already spent all of the money it produced in a year. Thus they needed a loan from the UN to make up for its deficit spending. If Greece doesn’t curb their spending then economists predict that Greece’s debt to GDP ratio will top 140% by 2014 which is a 40% deficit! Something must be done but their ideas of drastic changes are ridiculous. Two of the measures they plan to implement include changing the retirement age from 61 to 63 and abolishing a two-month pay bonus which state workers receive every year. Oh my, no wonder protesters were rioting!

The truly disgusting part is that the U.S. helped pay for the bailout given to Greece. And it won’t be just Greece that is falling apart. France’s debt to GDP is 80% and expected to grow to nearly 90% by 2014. No surprise as France is another nanny nation where the retirement age is 60, the typical French worker can expect to spend 24 years in retirement and civil servants will earn 75% of their pre-retirement income, not to mention 6+ weeks vacation when they do work. Yet Sarkozy refuses to discuss cuts to these overly generous benefits. Instead, France hopes that for some reason their workers suddenly become motivated and increase production (a higher GDP would then mean a lower debt to GDP ratio).

So on one hand there are these spoiled European countries with their low retirement ages, high pensions, months off and big bonuses and on the other hand there are us, the United States taxpayers. The US worker is lucky if they gets a 3-week vacation compared to months off in France and Spain. And lately, most US employees figure they will have to work until they are at least 67 to have enough saved for when they can retire. It galls me to think that part of our hard earned money is being siphoned off to support people who riot at the thought of increasing their retirement age of 60 to 63. We thought it was bad when we were burdened with supporting deadbeats and illegal immigrants here in America but it turns out we are also supporting the lifestyle of European citizens through UN bailouts. Maybe it should be the American taxpayers who are protesting. Oh wait, hello Tea Party.

Yet in direct opposition to the Tea Party’s goals, President Obama continues to rapidly transform the United States into becoming more like Europe by spending trillions of dollars and increasing our debt. But what is our debt to GDP ratio, you ask? It will probably come as no surprise that it has grown substantially since the last election. Back in 2006, America's ratio of debt to GDP was 61.9%, and in 2007 it grew slightly to 63.1%. Then came Bush’s bailouts in 2008 which increased our debt to GDP to 70.5%.

After Obama became president, the ratio jumped in one year from 70.5% to 87% in 2009! This year it again increased dramatically to 97.5%! Thanks to Obama’s health care program, stimulus packages and bailouts, the United States is now spending $97 for every $100 we produce. If we keep on this track we are estimated to have a projected debt to GDP in 2014 of 106.7%! Like Greece, we would be spending more than we produce. We are faced with the same basic choices as Greece, France and every other country; either we produce more or we spend less. (Again this is taking a very simplistic view of the situation.)

Right now, it almost seems as if Obama and his team are crippling our ability to produce more. It is hard to increase our output when we have a 10% unemployment rate. Yet after nearly 18 months there are still no comprehensive job programs nor has he used the bulk of the stimulus money. Education is another factor since you would think that the better educated worker would produce more. Our first African American President and First Lady would be wonderful role models to minority children. Michele should be preaching about staying in school and tackling the exorbitant drop out rates in inner cities, not showing off her muscles and harassing pudgy kids.

We also need to be a leader in technology which will help workers to produce more by providing better electronics, tools and equipment. Yet Obama is destroying our 50 year old NASA program which encouraged kids to study math, science and physics, not to mention exploring planets and stars. And on the opposite scale from NASA are the small businesses which Obama is crippling with his new taxes and initiatives. Not to forget big businesses or fat cats as Obama so prejudiciously calls them. He's happy to take their money for his campaigns while blaming them for our country's woes at every opportunity.

I cannot think of a single thing Obama has done that would encourage the businesses, small or big or the government to produce more. Can you? But we can’t continue like this or we will end up like Greece. So if we aren't going to increase productivity then the alternative is for Obama and Congress to decrease spending. Ok, did you have a good laugh, too, at that thought? But if Obama and Congress won’t stop spending then we have to stop them. It's that simple. Vote them all out and vote for leaders who believe in small government and individual and state's rights. And while we’re at it, maybe we should stop handing out our hard earned money to the UN, too.


* My take of Dr. Suess on Obama - Obama handed out millions, our millions, your billions, my trillions, and then he gave to the poor even more billions and trillions and gadzillions. Obama spent and he spent, every dollar and cent, bailing out cars, and houses, and banks, yet those louses never ever said thanks. Then Nancy got antsy and Harry got scary as they scurried like rats to round up their Democrats to vote the right vote or the right left vote. And now there's money for health care, money for car fare, money for stimulus plans and wars in Afghanistan.

But I do not like this, Pres, I says. I do not like Obamacare where everyone's on welfare. I do not care at all I says to Pres, I do not like banks too big to fail and so we bail and spend, and spend and bail so if you fail don't wail we'll bail and don't go pale for you'll get no jail instead give yourself a big bonus all on us. Oh my oh my I do not like this Pres, my friend, I do not like this Pres at all. The end.