Get Rich Slick

I had originally entitled this post, “Facebook, The World’s Most Dangerous Application” but I decided throwing in Hitler would be better to make a point.  I admit, I was peer pressured into creating a Facebook account.    Many of my family and friends were on Facebook and kept sending me links or notes to it and I finally relented.   Initially I didn’t have a problem with Facebook until I started digging deeper into their privacy policy and there ever changing stance on what was considered private and what was not.  Worse yet, Facebook took it upon themselves to automatically change privacy settings much to my chagrin allowing more people access than before but here’s a list of things that broke the camel’s back.

First, Facebook seems to love to gather and horde information on you.   Almost daily, I get reminders to define my relatives in Facebook.  Why?   Why does Facebook care who my relatives are and why do they want this information?

Second, Facebook seems to know a bunch of people in my life that aren’t friends or family.  Actually vague acquaintances show up in Facebook under the Suggestions section on who to add to my Facebook.    I don’t know how Facebook is getting this information or why it is in there but it’s rather disturbing to think that data mining is in full force with Facebook.

Third, Facebook desperately wants me to add a picture to my profile.  Why?   A little window kept popping up from “tagged” photos wanting me desperately to link my photo to my profile.

From a security standpoint, I’ve read stories of Facebook members writing posts like, “I’m headed on vacation to the Caribbean”  only to return to find their home has been burglarized during their vacation.  Well that makes perfect sense, why not place a flashing neon sign on your home that reads, “This House Is Full of Stuff and Empty! – Owner on Vacation.”

Of course the most dangerous thing is what happens to this data in the wrong hands?   Imagine if Facebook gets bought by Annoying-Debt-Collectors-R-Us and now ADCRU has full access to all your friends and family!  Yippee!  Imagine the possibilities!

But if history is ANY indication of what will happen someday soon it is the history of evil fascist dictators throughout the past few decades slaughtering and abusing MILLIONS of people.   Imagine if Adolf Hitler’s Germany had access to Facebook, rounding up Jews would be matter of a few clicks.    Mao didn’t like capitalists so imagine him searching for bourgeoisie type people and their friends.    You can use your own imagination and determine who the next Adolf will be coming for via Facebook.   There is really too much complacency by Facebook and the public on these types of data collecting systems but anyone who doesn’t study history is bound to repeat it.

I have deactivated my account and I know wish to permanently delete it but I can’t seem to find a way to do it so perhaps it’s too late.  All I can hope for now is for this company to go bankrupt.   Let the fad end!

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If you recall last year, there was a stampede at a Wal-mart during the big “Black Friday” event in which a person was tragically stampeded to death for the sake of shoppers buying cheap plastic crap from China.    I still can’t figure out the whole marketing genius of keeping/holding all of your sales potential for one damn day.  Often it isn’t even a whole damn day, it’s only a few hours of teaser items which no one is ever able to get unless you show up at 4:00 a.m. and wait for a few hours to be the first one in the store.

Personally, I don’t have any plans on fighting for parking spaces, fighting with crowds, fighting with cashiers or other customer service people to get attention if I need something.   I’d rather just order my stuff on Amazon or online and if I need to go to a store I’ll head over to Costco where the crowd is a bit more subdued.   According to FatWallet, it looks like Wal-mart is finally implementing some sensible rules to keep tragedy from reoccurring this year.

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As far as I know, most Ph.D scholars around the world make nowhere near the kind of money that Wall Street Fraudsters make so why is everyone “worried” about a brain drain on Wall Street if pay limits are imposed?   This is the stupidest argument I’ve seen in a long while for almost anything.    The entire concept that people will leave because they won’t get paid hundred million dollar bonuses is ridiculous.  Don’t let the door hit your ass on your way out buddy!

“These people are considered the brains of the machine. They are who can pull you through the tough times,” said Steven Hall, who runs an executive compensation firm that bears his name. “This will give them reason to leave.”

NewsFlash:  There are millions of hungry Chinese and Indian college graduates ten times smarter than any of the idiots on Wall Street that will work for $50k a year.    Most of these guys do all the back end programming for financial systems anyway so who’s kidding who here?

What a load of crap!

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I received notice from one of my banks with the most draconian new change of terms I’ve seen in a while.   The terms are so draconian that there is even a clause in the agreement that I cannot link to the bank without their express explicit permission!   But the terms include some of the following for my “free” banking:

“I understand that to use <bank online services>, I must first obtain access to the Internet with compatible hardware, software and web browser.”

So my “free” banking and “free” online bill pay now requires that I have and pay for my own internet access, hardware, software and web-browser.   OK, so you would need that anyway right if you’re going to bank online so what’s the big deal?   Well the big deal is that the bank is now REQUIRING that I get all my statements online.  In essence, they no longer plan on sending out paper statements so the burden is now on me to have a computer with internet access to get my statements from the bank!

“You are also responsible for maintaining your own connection to the Internet. Internet connections are not part of the services of <my bank>. Furthermore, we recommend that you also have a printer connected to the computer from which you are accessing your account so that you may print and save these disclosures and other information you receive electronically, including your online statement. You understand that you are responsible for installation, maintenance and operation of your computer and its software. You assume full responsibility of ensuring these requirements are met should any changes be made to your existing computer system. The Bank is not responsible for any errors or failures of your computer or its software.”

So printer, toner, paper are now all on my dime to print out the disclosures, statements and anything else the bank wants to send me!

“You understand that you may create a bookmark in your web browser to the Bank home page. You may not create any link to either the  Bank home page or any other of the Bank’s web site pages without the written approval of  Bank, including, without limitation, a link on a publicly accessible web site.”

Wow, I wish I could link to the bank page to show you but I’d get in trouble.   Oh well, not to worry, I’ll be closing my account before the terms take effect next month.

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Over the past few weeks I’ve seen snippets and clips of people complaining about the health care bill Obama has proposed and I honestly haven’t read the bill nor kept up with most of the discussion on it because I’m really tired of watching MSNBC wackos and Fox News wackos nonsense all the time but I did hear something about some alleged “death panels” on one of these sound bites while I was flipping through channels.

I did a little research and found that the death panels are nothing more than end of life counseling by doctors and if I’m mistaken perhaps someone can correct me but I then ran across this article on CNBC regarding new “exotic” investments Wall Street is eager to bank roll.

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

The earlier the policyholder dies, the bigger the return — though if people live longer than expected, investors could get poor returns or even lose money.

So clearly, behind the scenes there is a huge profit motive from Wall Street banks to incentivize the early demise of the elderly and what better way to do so than though the health care system?  The article claims that the earlier the elderly die, the bigger the profit to the investor, how quaint.   I told a friend not too long ago that I stopped believing in coincidences a long time ago, too many things all seem to be inter-related on some level and I find the timing between the controversial health care plan and Wall Street too convenient and too timely.    Sometimes, free market capitalism makes me sick.

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Well I’m in the process of ordering books for my MBA classes and one thing that hasn’t changed since the last time I was in college it is the ridiculous cost of college text books.   What really gets my blood boiling is the incessant distribution of new editions when there is hardly anything new in edition x than from edition x-1.

I have a proposal to solve this problem, the government should mandate that publishers should release a digest between editions that encompass all the changes from edition x to edition x+1.   By doing this we’ll get the full benefit of recycling older additions while minimizing the publishing costs of reprinting a full book where the only difference is the color of the book and a couple of paragraphs of content.

Like the movie and music industry, the book publishers have to know what they have coming to them by now if they don’t change – massive book pirating when books go mostly digital.   From my orientation, the professors stated that most students were using electronic editions of the books and yet the costs haven’t come down…hmmm….why is that?  Publishers used to claim that publishing costs kept growing ever year as inflation eroded their profits because of the high cost of ink, paper, and labor to print, bind and distribute books but a funny thing happened on the way to the publishing shop…it became obsolete!

So what’s the excuse now book publishers?  Electron transfers inside a copper wire are crippling your profitability?

I understand capitalism and free markets but I don’t understand unsatisfiable greed when it comes to college text books.  It’s all about expanding people’s knowledge morons!   I don’t know the real statistics but I’ll venture to guess that an educated person is about 50% less likely to commit crime or at least violent crime.   An educated society is better than an uneducated society and all you need to do is look no further than any fourth world country where there is 90% illiteracy to understand the truth to this statement.

In the near future, just like the health care crisis we face today, we’ll have a college cost crisis and I can already here the pointless bickering between the red and the blue as fewer and fewer people have access to education.   Hey maybe the health insurance industry can sell “college book insurance” policies instead once they get the boot from Obama but then again Obama II might institute “start of college life counseling” which would be so controversial it would be stripped from the bill…ignorant college students are fairly profitable after all.

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So I have a family member that is interested in purchasing a home.   They asked if I could join them at the mortgage  brokers office to look over the documents and make sure there wasn’t anything weird going on with the process.    First, I have to give you a bit of a background and you’ll understand why we ended up here.

A few weeks ago, person x found a home they were interested in purchasing.   Person x asked for my help to look at the property and share some thoughts on the possible purchase.   I drove over, checked out the home and thought it was a reasonable deal.  Nothing out of the ordinary in my opinion until……I got a call from person x a few days later saying the Realtor suggested a particular mortgage broker.  We’ll call mortgage broker “Greedy Selfish Bastards Mortgage Broker” or GSBMB for short.

Immediately alarms went off in my head.   Hmmm…Realtor suggests mortgage broker….where have I written this story before?   So without going into a long convoluted story, the quick summary is that GSBMB came in with a ridiculously high loan rate, ridiculously high fees, and ridiculously high selfish greed.   So person X is advised to get someone else by another family member to comparison shop.   Sure enough, the second mortgage broker (SMB) is a bit cheaper because Person X gave them a COPY of what GSBMB  and they reduced the fees, interest and lowered their greed (a small bit).

I come into the story when Person X is heading over to SMB to sign some paperwork.  We get there, I sit down and start looking at all the paperwork and that’s when I go “ugh” and sigh a bit.    I immediately start off by asking why there is $1000 in fees for doing nothing more than shuffling paperwork and the response from SMB agent is immediately, “it’s cheaper than what GSBMB was charging and Person X is getting a great deal.”

Now if you paid close attention, you’ll note that the fees were still high just not as high as GSMBM which made Person X feel better but it’s still a big waste of money.   Unfortunately, Person X is too busy and too much in a hurry to take a step back and consult with another bank or broker and simply wants to get the deal run.  The meter is also running on their contract and they have to close within a particular date and time is dwindling away.

Person X signs the paperwork and we go to lunch.   “What do you think?” is the question I get and I respond, “You were in a hurry and probably paid an extra $2,000 for this home that you didn’t need to spend” is what I say back.    At the end of the day, we both agree that the interest rate is irrelevant because Person X plans on paying off the mortgage within a year or two so it’s no big deal but the fees are pure profit for the worthless mortgage broker.  As best I could tell, the SMB was making at least $3,000 in profit for doing virtually nothing but signing paperwork.

At some point in the near future, I suspect technology will overtake the real estate industry.  We’ve seen companies like Redfine and Zillow start chipping away at Realtor commissions of 6% (ridiculous) and some enterprising young man/woman will come up with a system to automate the whole process.   With the advent of things like Google streetview, Google earth, automated property tax records there is no reason why appraisals can’t become more automated and there really is no reason for the existence of real estate mortgage brokers anyway since you can go to places like Lending Tree or BankRate and get quotes for loans from most banks.

So to all mortgage brokers, I hope you’ve enjoyed the quick and easy cash but it’s all going away over the next generation or so and you will go the way of the dinosaurs!

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I went to make a few deposits today and I overheard two bank reps speaking stating that there is (or perhaps already exists) a plan to partially cash checks and give the remainder of the funds to a customer back on a debit card.  I didn’t hear the full details but I’m guessing if you walk in with a check for $2,000 you might get $500 in cash and $1,500 on a debit card.

I couldn’t believe my ears!   Is this how the Federal Reserve and banks are going to solve their solvency issue?    It makes perfect sense because there are many things you probably don’t know about banking.

First there is fractional reserve lending by which a bank who receives a savings deposit of say $1,000 can turn around and lend out $9,000 and charge interest to make a handsome profit.   Of course the deal got a whole lot sweeter when the Fed let banks use “sweeps” to increase the stated reserves of each bank.    What this means is that if you deposit $1,000 into your checking account, the bank isn’t suppose to use that money and count it toward their reserves because a customer may spend that money at any point in time.   Through the miracle of “sweeps” though, the Fed allows banks to “sweep” the $1,000 in your checking account into a “savings” account and count that as part of their reserves.

So now, instead of having $1,000 to base their deposit reserves on, the bank has $2,000 of  “stated” reserves and basis their fractional lending on $2,000 to lend out $18,000.     But what happens when customers no longer have jobs and no longer deposit money and actually write checks and spend their money?   The whole thing unravels rather quickly and the new trick of the trade seems to be to partially cash a check you get and issue you the remainder of the balance on a debit card.

Guess what the bank gets to do with the debit card funds?   You guessed it, they get to lend out that money, charge interest, and make a nice profit with your money.   What a world….

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Yesterday I wrote about my credit lines being cut but it’s not important anymore because I’m predicting the demise of FICO.   I’m on record as having a great disdain for credit reporting agencies and I’m glad to see change is coming.  We are clearly in a new banking & lending environment and will be so for the foreseeable future so let’s take a look at a few variables that will contribute to the demise of FICO.

Issue #1 – Either Congressional action or Comptroller/Fed rules are going to make banks change some of their business practices.  Specifically, banks will no longer be able to raise rates on universal defaults.    So how does that hurt FICO?  Because banks can’t use universal default to raise interest rates, banks don’t have to pay to monitor consumer accounts monthly anymore.   Why bother checking if someone is late on another bill if it doesn’t impact the bank?   The bank already knows if you’re late or not so why pay for that service?

Issue #2 – Banks are more concerned with verifiable employment (and history) and current income (and history) and cash available before underwriting any new major loans, FICO score seems to have moved to the bottom of the rung so why pay a premium for this information when it only impacts 10% (assumption) of the underwriting standards?  The only thing banks might need to see on a credit report is outstanding debt.

Issue #3 – Trust.  There have been so much “tweaking” and “system gaming” that FICO has taken a credibility hit.  Why are we in this financial crisis after all if FICO was supposed to keep bad loans from happening?  Wasn’t FICO such a marvelous system so optimized and tweaked that no bad loans could ever be written with this system?

Issue #4 – Self – Reliance.   Because banks made so many bad loans, it will behoove them to consider creating their own credit standards and reporting mechanisms rather than relying on FICO.   We are entering a new regulatory environment and you can’t keep doing the same thing and expect different results; that’s insanity!

Issue #5 – Consumer sentiment.   Let’s face reality here, no one is buying cars, houses or much of anything else so consumers don’t care about their credit scores because they have no plans on buying anything.   Commercial consumers don’t want FICO and public consumers don’t want their credit scores so who’s going to pay?   People across the country continue to get their credit lines cut and invariably their credit scores are dropping so why care?  There’s nothing a consumer can do about a bank arbitrarily cutting consumer credit lines so FICO scores are not only wrong, they’re pointless.

My best guess is that FICO has about 18 months of life left in it based on deteriorating economic conditions.   It may be acquired by a bank or a credit agency or be replaced by something more innovative.   In any event I won’t be shedding any tears for FICO.

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In the never ending saga of the city trash collection schedule, I’ve reached a point where I’ve technically become a criminal.  At least, I think it’s criminal to dispose of trash the way I’ve resorted to doing these days.

For a quick primer, the city used to pick up trash twice a week and heavy trash every Friday in my neighborhood.   The city did this during what I call the “golden age” of trash collection about a decade ago.   Over the years, the city changed the trash pick up schedule (for the worse) and has now released a new schedule:

Heavy trash will be picked up every OTHER MONTH on the second Friday of the month while tree/yard waste (recyclable) will be picked up in alternate every other month.  Essentially what this means is that if I decide to trim my trees say next week, I’ll have to wait until sometime  in JUNE before the city will pick up  the tree limbs.   Alternatively, if I decide to trash my grill or some other large object (water heater) I’ll have to wait till May and if I miss that window because I’m on vacation or out of town, I’ll have to wait until JULY to get rid of heavy trash.

The city has also all but abandoned recycling now so paper, glass and other items that used to be recycled are now going back into the landfill.    So where is the criminal in all this?   I decided to sign up for a second trash and I basically fill the second can with whatever garbage I can fit in there:  tree limbs, grass, glass, heavy trash, you name it!

Technically, I don’t think tree/yard waste is supposed to go into the garbage truck but what else am I supposed to do?   I am now a criminal and playing a dangerous game of trash roulette.   I’m sure one day I will likely get a fine and then the city will decide that fining people for “bad” trash will be a great new income revenue stream and there will be garbage “officers” looking for a way to fine citizens for inappropriate trash in bins.

Once that day comes, I’ll be buying a large barrel and burning all my trash and I’m sure many of my neighbors will be joining me in a great trash revolt.  By the way, I’m paying $10/month for that extra trash can so I’m basically paying $120/year to get rid of trash when it used to be free.  This is yet another reason to not buy/consume anything these days because eventually it will get trashed.

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