The Worst.com

Posted by admin on September 4th, 2009 in Finance

American Express has got to be one of the worst run companies around.

For the past few years I’ve used an AMEX Corporate Platinum card and have always paid my bill in full on time (usually pretty early). I recently decided that it would behoove me to get a card that reports to my personal credit due to our country’s retarded credit system – you know, the one that exclusively deems people with large debts worthy of acquiring even more debt while screwing over responsible people like myself who actually purchase only what they can afford (more on this in a future post). Anyhow, I applied for and received a shiny new American Express Gold Card. So far, so good.

So, like the responsible person that I am, I spent a couple of hours switching over my many, many auto billed services to my new card. Well, after a day or two of minimal use, I get my first declined charge. I immediately called the bold faced liars at American Express and, believe it or not, they tell me that they want to verify me via a conference call with my bank. A bit confused, I say ok and tell them they could call my main bank; however, after a few minutes on hold, the rep tells me that the bank is closed and we would need to wait until the following day (and the card would be blocked until then). I suggest they try another bank where I have accounts and, after a few more minutes on hold, I am told that everything checks out and that the card would start working again.

The next morning, I get a call from American Express stating that they are putting a hold on my account and that they need me to fill out a form allowing them to receive my IRS information. Mind you, I personally spend close to $10,000 a month on my other card and pay it in full each and every month. A quick review of my charges and the source of my payments would quickly tell them everything they need to know. Nonetheless, I fill out the form and send it back to them within an hour.

A few days have passed and my account, still being on hold, begins rejecting the automatic charges I’ve setup even though many of those charges are tiny and amount to under $20. What a pain in the ASS!!! Naturally, I have to ask who in the right mind would think it is a good idea to send someone a card and then try verifying information? No wonder they needed $3.5 Billion in taxpayer funds plus untold billions more in TALF and shady Federal Reserve programs.

All I can say is that at this point I think I will be cancelling both my cards and really wish I had the balls to just not pay them (but I’m going to). My advice to others is to simply AVOID THE IDIOTS AT AMERICAN EXPRESS.

No Comments

Posted by admin on April 7th, 2009 in Finance

The day started off with reputable analyst Mike Mayo of Calyon Securities saying that U.S. banks’ loan losses may exceed Great Depression levels. Interestingly, within this WSJ opinion piece we learn that only once before did US consumer mortgage debt grow as quickly as it did over the last 9 years (300%)… 1920-1929 – leading us into the Great Depression!

Billionaire hedge-fund manager George Soros said that the Markets’ most recent uptick is nothing more than a bear-market rally. He also stated that last week’s change in mark-to-market rules were a mistake and would stall the recovery. Meredith Whitney told CNBC that while people should be careful shorting in bank stocks right now, she expected home prices to fall another 30 percent.

The Dow 30 (AKA DJIA) was down as much as 155 points to 7,863 at one point today (not a big deal but below the October 9th intraday low of 7,882) but then had a nice comeback to close down only 42 at 7,976. Of course, those October lows were decimated several times since then and everyone seems quite giddy that we are around the 8,000 mark. What a difference a few months make!

Last but not least, my home state of New Jersey, whose pension fund is sucking some serious wind due to extremely poor management and the crash of equity markets, may roll the dice big time and purchase some toxic assets. Why wouldn’t they take some of that cash to Atlantic City and bet it their? After all, at least the money lost would go right back into the NJ economy? Hell, they can even tax the casinos exorbitantly on the money they loose and just bet it again and again until they win!

No Comments

Posted by admin on March 26th, 2009 in Finance

Both the Dow Jones Industrial Average and the S&P 500 have posted incredible gains in the last two weeks since matching their 1997 lows on March 9th 2009. This has been met with a great deal of optimism and the usual declarations of a bottom having been created. Unfortunately, these people seem to ignore the fact that we’ve barely matched the relatively short lived rally we saw from the end of November through the end of January! That’s right, the last time we saw a rally like this, the markets proceeded to give us their largest percentage losses of this bear market so far.

The reason this upsets me so much is that everyday investors are trying to figure out what to do with the tattered remains of their 401Ks, IRAs, 529s and the like. Meanwhile, so called experts are scaring them into once again thinking they’ve “missed the investment opportunity of a lifetime”.

Personally, I hear the arguments that much has changed since our last drubbing and just have to laugh. I mean, how many times have we been told that a government plan is ready to fix the financial system and restore lending? As if it is a lack of credit that is hurting the American consumer as opposed to a massive inflationary trend that household income hasn’t and can’t even come close to keeping up with.

If anything, this market seems primed to test and possibly crash through its lows as we add to our already insane debt burden. I find it amusing that Health Care Reform is deemed to be such an integral part of our economic recovery when the European countries we’re modeling it after are in even worse shape than we are!

Finally, with oil prices being manipulated higher by traders and possibly sovereign wealth funds how can a true recovery take hold? After all, even with historic builds in inventories Oil for April delivery settled 30% higher than February & March and over 50% higher than January. Add to that the reckless cap & trade carbon tax President Obama is proposing and families will be spending even more of the hard earned money on energy and energy related products.

I’ve said it before and I’ll say it again, we need to restore the balance between take home wages and costs of living. As deflation seems to be a dirty word and appears just about impossible to bring about, it seems to me that the only way we can raise take home pay is by getting rid of unfair income taxes and replacing them with reasonable consumption taxes. In this incredible age of technology there has got to be a way to implement a sliding sales tax based on where an item falls on the luxury scale. I just don’t understand how anyone could think it is fair to tax someone on what they earn but not how they spend it!

1 Comment

Posted by admin on March 12th, 2009 in Finance

This weekend the Oil Cartel OPEC will be meeting to decide whether they should cut production once again in an attempt to raise oil prices. Rumor has it that Russia would go along with any OPEC cuts (though they’ve actually raised production since OPEC’s last cuts in late 2008).

US Energy Secretary Steven Chu said yesterday that he will attempt to convince these countries that raising the price of crude oil could stall any recovery and potentially cause the price to fall even more down the road.

It is really amazing that we are still so beholden to a handful of countries, many of which really hate us. After the shock of last summer’s $135 per barrel price run up, there were so many calls about doing something to avoid a repeat. Unfortunately, the worldwide recession has cut demand so much that it seems like everyone forgot about it (US politicians are actually taking steps to raise the price via taxes and other measures).

Many politicians and pundits have been talking about how the plummeting oil prices have actually acted as a tremendous stimulus package, though I personally look at the run up in prices as a gargantuan tax and the subsequent drop as somewhat of a return to normalcy.

Let’s take a look at the closing prices of oil over the last 6 months:

Well, I guess I could understand why Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela would be a bit concerned about the price of oil. Yikes, look at that list! I wish I had the time to go through these countries’ records on human rights and how they treat their average citizen. Nonetheless, ask anyone who’s had money invested in the stock market and they’ll gladly trade the annual and long term run-up in this commodity over equities.

No wonder we have a huge financial crises! The effects of rising oil prices are felt throughout our economy. Manufacturing machines run on it, Plastics are made out of it, just about all transportation relies on it (from shipping to commuting), not to mention we heat our homes and generate a huge percentage of our electricity with it. How are businesses supposed to plan when one of their key cost drivers fluctuates so heavily? I would love to see some statistics on how much the average US family paid in total for these price hikes throughout the entire supply chain (including the direct and indirect increase in food prices). I bet it can make the difference between making a mortgage payment or not!

Is it really possible for the global enconomy to recover with oil starting to get more expensive? After all, even with the price falling, inventories have been building at unprecedented rates since the end of September (21% or 61,000,000 barrels).

No Comments

Posted by admin on March 2nd, 2009 in Finance, Politics

Here’s a quick take on how the Stock Markets (Dow Jones Industrial Average and S&P 500) have reacted to Obama so far:

Wow, the Obama Effect really isn’t too pretty. What really surprises me is that 65% of political donations from the much maligned Hedge Fund industry went to the Democrats and Obama!

Don’t these guys (Obama and his Democrat cronies in Congress) realize they are destroying the life savings of millions of Americans? Don’t they realize that it isn’t just the ‘Rich Fat-Cats’ who have money in the markets? What about the IRAs, 401Ks, pension funds, etc. average hardworking Americans have been paying into for years and years and years?

I know the Liberals love to tax tax tax and redistribute wealth; however, don’t they realize that they won’t have anyone left to tax at this rate?

Not only is Barack Obama insanely naive, he’s also incredibly arrogant. He refuses to acknowledge what the market is telling him: Your agenda is dangerous and will lead this country into a ‘Not So Great Depression’

1 Comment

Posted by admin on February 13th, 2009 in Finance

Let me start this by making clear that I don’t think we are heading for a Great Depression redux, that is, equity markets down 90% off their highs and unemployment at 25%.

Most people believe the reason we won’t have another Great Depression is that we’ve implemented controls against it such as the FDIC (insuring depositors against bank failures) and SIPIC (insuring investors against fraud). Late last year, the government even increased FDIC insurance for depositors by 150% in an effort to stem bank runs.

While I do think these programs are great, I fear these protections are a bit out of date. Today, most people have their savings as equity in their homes and their retirement funds in 401K & pension plans that have become increasingly tied to the equity markets. To the best of my knowledge, these aren’t insured against the extreme downturn we’ve seen in those markets-just ask anyone who’s opened recent 401K statements or tried selling their homes in the past year.

We also currently have the highest percentage of our citizens at or past retirement age with another huge percent moving close to it. Even if inflation has stopped, the cost of living for these groups has become absurdly high due to sky-high health care costs (not to mention the suckers who agreed to pay their children’s unconscionably high college & graduate school tuitions). Many of these people have also had their cost of living increased tremendously by skyrocketing property taxes.

Due to these issues most people nearing retirement are staying at their jobs, only exacerbating the employment situation. Think about all the new grauates, saddled with debt, who can’t get a job and therefore can’t purchase homes (often from the aforementioned who are counting on selling their home for retirement funds).

The truth is, the only way we’re getting out of this crisis is by returning the balance between prices and income. Just to be clear, I’m not just talking about housing prices, we’ve got to look at all goods and services such as cars, education, fuel, food, etc.

Personally, I believe we can return this balance by doing away with our arcane income tax system and moving to a sliding sales tax which increases based on how luxurious an item is based on where it lies between that type of product’s opening price point and ‘top of the line’ price. For example, an automobile under $15,000 should have a certain incredibly low percent tax while a vehicle between $15,001 and $25,000 should have a slightly higher percent, with the scale increasing every $10,000 or for every 10 percentiles. This way, those who choose to spend more on luxury items will pay appropriately higher taxes.

2 Comments

Posted by admin on February 13th, 2009 in Finance, Politics

There are a lot of ideas floating around about how we’re going to fix the housing problem and by proxy the financial system. Many of the ideas include more of what got us into this mess: allowing people to overleverage themselves with cheap credit. Here are some other ideas…

When it comes to housing, Democrats in both houses of Congress are moving forward on legislation allowing bankruptcy judges to modify home mortgages by reducing both the interest rate and the loan’s principal. I understand the compassionate side of allowing people to stay in their homes (though technically the homes belong to the banks who now own more than 100% of the homes worth). Unfortunately, this idea is really shortsighted and presents many problems, many of which are pointed out in this great article by Todd Zywicki in the Wall Street Journal. Here are a few:

• Considering there are currently 5 million people behind on their mortgages, what affect would this have on a bankruptcy system that handled only 800,000 cases last year. Oh yeah, and there are another 15 million people underwater on their homes.
• What happens when, in an effort to keep their home, those millions file for bankruptcy and no longer need to pay their car loans, credit cards, medical bills, etc. Can you say trickle down?
• Knowing that judges can rewrite mortgages, who will be giving to offer them and at what cost? Rates will certainly go up tremendously to mitigate lender’s risks.

Today, Barak Obama’s plan to modify mortgages before they become delinquent was partially announced. The key here is partially as it seems all Obama administration plans are only partially announced (like tax evading Tim Geithner’s bank plan). Like that plan to purchase toxic / illiquid assets from banks (the same one the Bush administration also considered before realizing it was impossibly expensive), I suspect this plan will also prove to be far more expensive than anyone can imagine and therefore impractical. Also, we still have the problem of who from the private sector will get into purchasing mortgage backed securities if they can be modified.

Personally, I think the only true solution is to allow home prices to regress back to where they should be naturally, that is, REASONABLY IN SYNC WITH MEDIAN HOUSEHOLD INCOME.

I can’t believe that no one is focusing on this absurdly simple principle. How can we expect people to be able to afford homes if home prices are completely out of whack with their income? The only way, of course, is one of the biggest factors in this economic crises: exotic mortgages and the extension of unwarranted credit. Not to mention the fact that municipalities have gone berserk when it comes to property taxes (especially here in New Jersey).

While I’m on property taxes, I need to mention a simple fact home sellers and realtors seem simply incapable of comprehending: If a home’s property taxes go up by a total of $6,000 a year over a 5 year span (not at all uncommon in these parts for a $500,000-$600,000 home), the carrying costs of that home goes up by $500 a month which is almost $100,000 in a mortgage. So, even if the market stayed flat, the home is in effect worth $100,000 less.

4 Comments