Saturday, January 14, 2017

How the big banks screwed us over, in terms you can actually understand...


Mary is the proprietor of a bar in California. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar.

To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around about Mary's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Mary's bar. Soon she has the largest sales volume of any bar in California.

By providing her customers' freedom from immediate payment demands, Mary gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Mary's gross sales volume increases massively.

A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Mary's borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.

At the bank's corporate headquarters in New York, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are then bundled and traded on international security markets. Naive investors don't really understand that the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses.

One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Mary's bar. He so informs Mary.

 

Mary then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts.  Since Mary cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and her eleven employees lose their jobs.

Overnight, DRINKBONDS, ALKIBONDS and PUKEBONDS drop in price by 90%. The collapsed bond asset value destroys the banks liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community. 


The suppliers of Mary's bar had granted her generous payment extensions and had invested their firms' pension funds in the various BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds.

Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, and her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives* are saved and bailed out by a multi-billion dollar no-strings attached cash infusion from their cronies in Washington. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Mary's bar.


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*Of course they were saved.  (They always are.)  They can still be found living the high life in the Hamptons.
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~sent to me by my friend Kathy via Facebook~
Thanks KM




Friday, January 13, 2017

Now you see it, now you....just kidding. You're NEVER gonna see it.


A few years ago we did a fairly sizeable home remodel for a client.  In conversation I learned that the Mrs was a now-retired hospital CFO.  (Her hospital was absorbed into another even larger system, and she took her bonus/payout and retired.)  I shared with her my frustration trying to figure out hospital and doctor statements, and she just chuckled and said, "Of course you're frustrated.  That's by design."

She told me how hospitals had a MSRP Blue Book (my term, as I can't remember what she actually called it) which listed their charges for everything you could possibly imagine.  "Appendectomy $19,300; double heart bypass $94,000; set broken arm $12,600, aspirin $10", etc (I can't remember her actual numbers).  

But then she told me their dirty little secret:  ALL their numbers were totally made up!  They bore no resemblance at all to their actual costs.  There is no industry standard.  And every other hospital had their own Blue Book, too, with their own totally made up prices, and they often differed widely.  That's why you'll hear TV investigative reporters tell of how one hospital charges $300 for a mammogram, while another across town charges $2,700.

Of course insurance companies have contract pricing where they pay MUCH less, but if you have to pay yourself, this is what they bill you.  Some pay, some walk it entirely, but some come back to negotiate (and the hospitals allow themselves LOTS of room to negotiate).  It's a giant shell game!

Some doctors do something similar.  You call a doctor and ask if they take your brand of insurance and are told yes, so you make an appointment.  A few weeks later you find out from your insurance company that the doctor charged more than the "usual and customary" fee, and that the balance is up to you.  Gee, thanks for telling me up front, doc.

Ditto for prescription drugs from your insurance plan or Medicare drug supplement.  They cover what is on their "formulary" list only.  Their what?  If it isn't on their list, you're SOL.  (Shit Out of Luck)  And they list page after page of things like hydrothialomicizinetine trididodickyluckypucky.  WTH?  What happened to "Lyrica" or "Crestor"?  Sadly this is the way our world works today....you're led to believe one thing, only to find out later the fine print screwed you over.

We little guys don't stand a chance!

So now they're going to REPEAL AND REPLACE Obamacare.  OK, great, by all accounts it needed to be overhauled.  But please tell me how they're going to get all those various interests, each with their own proprietary fine print, to agree to a viable replacement?  Each will be maneuvering to throw the other under the bus first. (No honor among thieves, you know.)  And it will eventually have to be voted on by Congress....yes, bought-and-paid-for Congress.  *bend over folks*

There's fine print everywhere....buried in that 8 page credit card agreement, that 75 page mortgage document, your homeowners/renters/auto/life insurance policies, your auto loan agreement, that investment prospectus....everywhere!

Here's the deal:  most businesses today don't WANT you to know how they operate.  They LOVE doing business in the shadows.  Transparency is the LAST thing they want.

Ever hear of the Consumer Financial Protection Bureau?  It was an outgrowth of the financial meltdown back in '08.  Its supporters will tell you it exists to slap down businesses that take advantage of unsuspecting consumers (ie: non-lawyers who can't understand all that legalese/fine print).  Detractors, such as the Big Banks, the US Chamber of Commerce, and I'm sad to say the Republican establishment, will tell you it "interferes with their ability to conduct business as they feel they need to", and besides, regulations are JUST DOWNRIGHT UN-AMERICAN!!  *saluting flag*

Seems to me if the Big Banks, the US Chamber of Commerce, and the Republican establishment (and probably more than a few Democrats, too) would behave the way their mamas taught them, there wouldn't be a need for a Consumer Financial Protection Bureau.

What you DON'T know WILL hurt you, or at least COST you.  Caveat Emptor now more than ever, my friends.

S


Wednesday, January 11, 2017

Ummm, don't look now, but....

I'd hate to be the one to burst your bubble regarding America's seeming military invincibility, so I'll just let you down gently by pointing out we have several military Achilles Heels.  I recently read an article that points them out which says, basically, that while we are no doubt immensely powerful, we are putting a lot of our eggs in several fragile baskets that we may not have a good grip on.  (You can read the article for yourself here.)

After WWI the world thought of France as one of the preeminent Continental powers, with a large army and navy, only to see it collapse like a house of cards after the Nazi's breached its vaunted Maginot Line in 1940.  The United States today, much like the French with their Maginot Line, puts much faith in just a handful of our weapons systems.  Without getting too geeky, here are our problem areas:



Supercarriers....we currently have 10 nuclear aircraft carriers able to project power around the world. They carry a powerful wallop, but they themselves are huge targets.  In fact, there have been several incidents recently when real-world friendly naval forces, acting as "adversaries", managed to get their (old, not very sophisticated) submarines close enough to an American carrier to shoot virtual torpedoes into it.  (Story here.)  

In other words, it's easier than you might think for a non-state-of-the-art submarine to put a few million-dollar torpedoes into a multi-BILLION dollar aircraft carrier and send it to the bottom of the ocean.  Due to the lack of a worthy adversary after the USSR collapsed in 1991, our anti-submarine warfare skills have noticeably declined.

Should we begin to de-emphasize our carriers, and accelerate building many more, and much more survivable, submarines of our own?  Are we depending on our carriers too much? 




Stealth aircraft....most people don't understand what "stealth" means.  The common perception is that a stealth aircraft is invisible.  NOT true!  Stealth means "low observable".  Instead of showing up on radar as a big aircraft, it shows up the size of a small bird.  It's hard to see, but you CAN see it.  And now our adversaries are developing (and I'm sure we are also) things like "passive radars" that can see stealth aircraft coming from miles away.  Our stealth fleet is still plenty impressive, but it's losing its aura of invincibility.

As much as I like the romanticized idea of a swaggering jet jockey sitting in the cockpit of a $100M+ aircraft, maybe we should consider buying many, many more smaller, simpler, and cheaper unmanned aircraft.  (Much of the complexity and cost of a manned aircraft is due to the need for "pilot survivability" components.)  Look at how well our unmanned, armed drones have done!  As with our carriers, are we depending too much on our "stealth" aircraft?



And finally, our "network-centric warfare" capability....we have developed a superb system linking in real time our command, control, communications, and computers (C4) with their land, air, and sea assets.  This means we can respond almost immediately with any or all of our forces in a highly-coordinated counter-attack.  The problem is, for this to work, everything must be connected, which is currently done through satellites in space. 

Now the Chinese have successfully launched an armed satellite-killer into space and destroyed one of their own to prove its viability, and the Russians have launched a satellite into orbit which they maneuvered into close proximity to one of our satellites, presumably as a test to see if they could get close enough to blow it up.  (They can.)  As our satellites are unarmed and cannot defend themselves, they're sitting ducks!

So maybe we should look carefully into developing weapons and systems that are simpler, cheaper, and more likely to survive an attack by    ?    .  We should study the history of the French Maginot Line carefully to make sure we haven't developed an American Maginot Line. 

We just might have outsmarted ourselves.

S  


Sunday, January 8, 2017

I have the answers, but you won't like them


So this time it was a mentally disturbed individual with a legally possessed gun who shot up an airport terminal in Ft Lauderdale, FL, killing 5 people.  And again, some are asking, "How did this happen, and how are we going to fix it?"

If we lived in an authoritarian society where there are visible police everywhere as well as many more unseen secret police, and a small army of informers to keep an eye on their neighbors, yeah, we might could have prevented this.  Guns and gun ownership would be outlawed, and the mentally ill would simply be locked away.  There would be no "due process".  You would just be picked up one day off the street, and in short order find yourself in a gulag.  End of problem.

But we live in a free society where people have rights.  There are millions of guns in the hands of our citizens right now, and the Supreme Court has validated the 2nd Amendment concept that guarantees Americans the right to own them.  The guns aren't going away, and even if a future, more liberal Supreme Court changes their interpretation of the 2nd Amendment, there will be millions of people who will always say our Founding Fathers said it, SCOTUS be damned! 

So to answer the original questions:  How did this happen?  An obviously mentally disturbed person did not get the help he needed, and he got hold of a gun.  How are we going to fix it?  We need to spend the money necessary to get the mentally disturbed the medical/psychological help they need, and we need to invest in a government-wide computer system that allows names of the mentally disturbed, wanted criminals, felons, those with restraining orders against them, etc, to be added (or subtracted) instantly. 

They won't be able to legally buy a firearm, they will be singled out for searches, both of their body and their checked baggage, if they fly, or perhaps not even be allowed to fly at all.  The same goes if they travel by train or bus.  It certainly won't stop every madman, but it will go a long way.  Right now this type system apparently doesn't exist at all, or if it does, is not kept current and properly utilized.

So, Mr/Ms Taxpayer/Citizen....your choices are to give up your liberties, spend the fortune it would cost to implement a better reporting system, or accept the fact that these things are simply going to happen.  I'm pretty confident we won't choose the first or second options, so we may just have to accept the realities of living in the 21st Century.

Stay vigilant.

S


Friday, January 6, 2017

I don't understand statistics....


I've come to believe statistics are just some high-end slight-of-hand tricks that very highly educated mathematicians use on us to pull in big-buck paychecks.  And by "us" I mean the American taxpayers.  For example, just this morning I heard on 'da news that, according to the Labor Department, in December the US economy generated 156,000 new jobs, AND THE JOB CREATION FIGURE FOR NOVEMBER WAS ADJUSTED UPWARDS TO 204,000. 

What do they mean "adjusted upwards"?  I suspect what they were trying to say, without giving away their little scam, is that they just made up a number a month ago, but since then they've looked around and seen fewer panhandlers on the street, so, yeah, more people are probably working than they first guesstimated.

"So what do ya think, guys?  Should we bump it another 20,000?"

"Sounds good to me.  But hurry it up, Genius Jeopardy is on in 20 minutes."

And how can we check their numbers?  If you Google it, Google refers you to the GOVERNMENT STATISTICS!  

WELL, DUH!  Seems like pretty good job security to me.

Hmmm....methinks I've just figured out their dirty little secret.  *wink*

S

NOTE:  I actually meant this to be satirical, but the more I think about it, the more it seems to resemble reality.


 

Wednesday, January 4, 2017

Get ready to RUUUUMMMMMBLE!


Democrats and Republicans are meeting (separately) in Washington today with their managers and trainers to strategize for their upcoming "To Repeal Or Not Repeal Obamacare" heavyweight fight.

In this corner we have the "Oh Dear God, Save My Legacy" Democrats.  They want to keep Obamacare, pointing out 20M people now have insurance thanks to it.  (But they will quietly mumble that, yes, it needs some major "tweaking".)

And in the opposite corner we have the "Repeal and Replace" Republicans.  They want to kill Obamacare, effective on    fill in a date__.  In the meantime they will work on whatever it is they will replace it with, TBD.

Obamacare has helped many people for sure, but stories abound of people whose insurance premiums have gone from $400 a month +/- pre-Obamacare to $1,400 a month +/- after.  And even after that, deductibles and copays are still up substantially.

But "replace later" is a joke, too.  There are far too many vested interest "cooks" in the kitchen for that process to ever produce a tasty dish.  Doctors fear socialized medicine, insurance companies fear serious regulation and/or competition, seniors fear having their Medicare thrown under the bus, young people don't even think they need insurance at all, hospitals are for whatever will pay them the most (and don't kid yourself, "non-profit hospitals" are NOT "non-profit"), pharmaceutical companies LOVE the "charge anything you want" sweetheart deal they have now, etc.

And to make matters worse, BOTH sides agree that we need to preserve the "no pre-existing conditions", "no lifetime $$$ limits", and the "keep the kids on mom and dad's policy" provisions we have now, which are THE MOST EXPENSIVE parts of Obamacare.  We want to have our cake and eat it, too!

The other, not-talked-about option is to re-institute the laissez faire system we had before Obamacare, the one that was slowly-but-surely failing.  Every year a few million more people had their stable (?) corporate jobs and insurance benefits disappear as their jobs went overseas or they became "independent contractors/consultants" with no insurance at all.  These people had to either pay through the nose for private insurance, do without proper health care and be sickly, or depend on hospital emergency rooms for care they couldn't pay for, which often led to bankruptcy, none of them good options.

My opinion (whether you want it or not) is that both replacing Obamacare with something that keeps the strong points of it intact, or heavily amending the existing Obamacare scheme, amount to the same thing.  Both sides might as well sit down together and use that as their starting point.

Right now our society has developed to the point that for national security reasons as well as for business reasons, ALL Americans must have health care.  Leaving some without health care weakens us both domestically and internationally, and we can't afford that.  We're too compassionate to leave some behind to suffer, and our adversaries/competitors have become much too strong for us to go toe-to-toe with unless we work harder than ever and ARE HEALTHY.  We're not China....our workers are not expendable.

So let's suck it up buttercups.  We can either pay for it now, or suffer the consequences later.  (And we WON'T like the consequences!)

S


Tuesday, January 3, 2017

Fool me once, shame on you. Fool me twice....


What is it with the Republican-controlled House of Representatives?  Weren't they paying attention last November?  Even a blind man could see that the people were fed up with business as usual in Washington.  The supposed joke of a candidate, Bernie Sanders, turned out to be the guy that set the tone for the entire election.  He turned things upside down, calling out those who were shills for special interests, and promised to represent the people for a change.  And Donald Trump did much the same, in his own way, and in the process earned the votes of many who were fed up with the status quo.   "Drain the swamp" they said.

The big catch phrase has been "transparency", which means to put everything out in the open for all to see.  No secrets, no back room deals, just put the truth out there, period.  And if you're proud of what you've done, or at least not ashamed of it, why not?

So less than two months after the election, what do the sitting Republican House of Representatives members do in a closed door caucus / meeting on their last day before the next Congress is sworn at in?  They voted to strip the Office of Congressional Ethics of its independence and place it under the control of the House Committee on Ethics.

In other words, the members of the House will now be responsible for looking into charges of unethical practices by members of the House.  Are you kidding me?  That idea was proven to be a sham years ago, which is why the INDEPENDENT Office of Congressional Ethics was set up in the first place!  The fox once again has the keys to the hen house!

(In fairness, if the Democrats should again become the majority party in a future election, I don't want them to have this power, either.)

The soon to be* renamed and declawed "Office of Congressional Complaint Review" cannot review any misconduct that took place before 2011, cannot release any of its findings to the public, or alert law enforcement to any criminal activity uncovered, without the permission of their House committee overseers. ('Cause, you know, you've gotta give the crooks a head start so they can wipe off their prints and clean up the blood.)

Transparency my ass!  They've tricked us again.

S

* This is all contingent on the full House and Senate agreeing.  As they are both Republican controlled, and if there is no public outcry in the meantime, expect that to happen soon.