Friday, February 26, 2010

Paraphrasing Yoda

A favorite saying of mine is by Yoda, in The Empire Strikes Back;  "...Do or do not, there is no try." Sometimes just trying is doing. I'll try just about anything once. Those who have known me a long time will attest to that fact.  I've tried all manner of foods. Snake, shark, squirrel, tongue, and chitterlins just to name a few. And lets not forget my attempt at Thai cooking that even my dog wouldn't eat. I tried that too.  Like most college students, I tried liquors that were probably better used as industrial strength degreasers.  Herbal medicine? Yep. So it's probably no surprise to them that I've decided to try a relatively unknown holistic technique I learned of over the internet to try and regain some additional use of my right hand. 

Having recovered nearly all of my mental functioning (my brother can stop laughing now) and most of my physical functioning after a major stroke 12 years ago, I'd like to have my right hand working again if I could. Now, no talk here of the 2 year rule that says your recovery is pretty much over after 2 years.  Our brains aren't nearly as static as once believed. Our attitudes, yes, our brains no. Since this gentleman is based in the UK, a visit at this time is way out of the question so I did the next best thing - decide to give the method a try for much less than the trip.

Now, it hasn't arrived yet. God willing it does. This is what I say about anything I get over the internet, even from the most reliable retailers. I understand how snake oil salesmen work. They promise the moon, and can't even deliver a piddling stress ball that looks like the moon. Another of my favorite sayings is "if it's seems too good to be true, it probably is." But, and it's a big but, there are some times and situations where you have to go out on that proverbial limb to reach a goal if you can. I happen to think a hand, particularly my hand, is worth that shot in the dark. The trick is to minimize your losses by not overextending yourself. Paying $30 through PayPal is a far cry from emptying my savings account.

 If this works, great! I'll be singing hallelujah with the angelic host on high. If it doesn't, I knew it was a long shot going in to this. If it never arrives, I know it's snake oil, and I'm not out all that much.

I'll let you know what comes of this if anything. But I simply have to try...

Thursday, February 25, 2010

Overdraft fees... Part 2

Yesterday, we talked about overdraft fees and how they apply to checking accounts on the personal level. Recall my pretend account overdrawn by $10, and that $30 fee. Before we go into the fees on the institutional level, we need to take a short field trip into what a bank really does.

A bank takes in deposits (your money and mine) and in essence puts it in a big communal pot. For the most part, I don't need all of my paycheck at one time, and neither do you. Overall, we consumers spend it in dribs and drabs. The bank is required by law to keep a certain amount of it's deposits on reserve, not all of it. What isn't held on reserve is loaned out, and the person who borrows the money pays back what they borrowed over time plus interest. The interest (profit) goes back into the communal pot. This is a very simple description of what a bank does and how it makes money. The field trip is now over, so lets go back to those pesky overdrafts, and peskier overdraft fees.

The really big picture comes into play with the thousands of checking accounts any financial institution maintains. Remember, paying an item into overdraft is an extension of unsecured credit (loaning you money without collateral to back it up). As a former bank employee, I can promise you that the just overdrawn $10 or less or only by one item scenario I used is the exception rather than the rule. I conservatively guesstimate that there are easily 10-15 accounts overdrawn by $200+for each account overdrawn by under $10.

Sticking with my most conservative guess, 10 accounts overdrawn by $200 each plus my piddling $10 equals a whopping $2010 just the first day these 11 accounts are in the negative. Multiply that times the hundreds, perhaps thousands of overdrawn accounts, daily, and you can see that we're really dipping into Uncle Bank's pocketbook. Not only are we dipping, but it's a double dip. The number and amounts of loans a bank can make is affected by this extension of seemingly insignificant amounts of credit. Fewer loans going out = less interest (profit) coming in. Overdraft fees help recover that loss of income.

Before you get your knickers all twisted up, remember the fees are still much less expensive than the lawyer for court costs…and if you can't afford the fees, I strongly recommend investing in a pencil and paper to maintain your check register. They're much cheaper than the overdraft fees!

Tuesday, February 23, 2010

Overdraft fees, yea or nay? Part 1

It seems that most of America is bent on blaming the banking industry for all failures in our society. Problem there is that they are not responsible for every ill on the face of this green earth. Case in point, the dreaded overdraft fee . To be brutally honest, there is an incredibly easy way NOT to pay an overdraft fee; Don't overdraw your checking account! Stay with me, and snarl at me later...

Depending on your banking institution's policies, you may be charged per item paid into overdraft, or per day overdrawn, or both. I've listed the policies from least mercenary to most mercenary on the part of the financial institution.

America has forgotten this first crucial financial fact: Writing a check, swiping your card, and establishing automatic electronic payments are promissory notes that promise the person you're paying that the funds are in the bank waiting for them to collect their payment. Ever wonder what those neon notices are at cash registers? They're a reminder that your check is a promise of payment for the services or goods that you just purchased.

Believe it or not, there is a legitimate business case for overdraft fees. I vote yea for the least mercenary method: a charge per item overdrawing the account. The business case for OD fees is quite simple: paying an item into overdraft is an extension of unsecured credit on the part of said financial institution. When you don't have the money in the bank to cover your check/debit card transaction/ACH payment and the bank pays it for you, they have loaned you money on your promise to pay that item. Reread that highlighted part for me now. I've rewritten it for you here: they have loaned you money on your promise to pay that item.

Still following me? Good. Let's put this into play, and have one item overdraw my imaginary checking account by ten dollars, and to make the math easy, the overdraft fee is thirty dollars. So I now owe the bank forty dollars?!? Why not just $10? To quote my daughter, it now sucks to be me, or does it? The bank has charged me the equivalent of 300% interest, that I won't argue. But the bank has made good on my promise of payment when it didn't have to.

But let's look at the larger individual picture now, Remember these words from earlier: they have loaned you money on your promise to pay that item? If your check bounces to a business, that is technically fraud, and the business can prosecute you as such. I happen to think that 300% interest on my hypothetical overdraft of ten dollars is a pretty good deal when compared to court costs and possible imprisonment. It's certainly less expensive than a lawyer.

But it's only ten dollars, you say? Multiply that $10 by all of the accounts overdrawn on any given business day, and you've got an absurdly conservative estimate of how much unsecured credit the bank has issued on that day that keeps the Constable off of your collective fanny. Tomorrow we'll take up the rest of the issue.

Saturday, February 13, 2010

The Heinlein Plan

As far as the bailout of the banks is concerned, I agree with most of America that the bailout so far has done nothing but put taxpayer dollars in the hands of those who created the recession. While the banks are now solvent, most of the rest of us aren't. And credit is still increasingly difficult to find and get just like jobs.

I can't claim this idea as mine, but did anyone in Congress consider Robert Heinlein's idea of opening up military service to anyone interested? How Heinlein's plan could work now is that we have military support needs stateside, bookkeepers, data entry, secretarial functions, and service industries. These positions were the mainstream of our pre-recession economy, and they still are.

Why not allow stateside functions to be handled by those out of work now? Induct them, and put them to work. Yes, this will increase military payrolls, but by doing that tax dollars would be going back into the economy where they belong. And it would definitely help with the health benefits situation, simply by providing health care benefits to the new inductees and their families.

This could provide the much needed Public Option for health care and make the obscenely huge, ridiculously difficult to comprehend Health Care Bill next to unnecessary.

Are you an out of work mechanic, truck driver, administrative assistant? Can you cook and clean? Push a broom? Sign up brother(or sister, as the case may be)!

I'm not talking about fitting grandma out in combat gear. I am talking about the government taking over what is rightly theirs; the Commissaries, the information staff at military hospitals, and all stateside administrative functions to put civilians back to work under the same terms and code as the rest of the military except combat duty. This will help on the civilian side by putting people to work as well as free up able bodied troops for deployment. Like it or not we will always need combat forces, and unpleasant truth be told, they are now, and always will be young. Right now the only real military crossovers with the civilian world are medical personnel. And we civilians need a wakeup call, and military discipline is a perfect fit for that.


I don't claim this idea is perfect. I do however claim that this plan would have benefitted out of work Americans, and ultimately would benefit big business by putting the money where we know it will be spent to support businesses and banks - in the hands of Joe and Jane American. The other main benefit is that we stop giving things to people or businesses for free.

Wednesday, February 10, 2010

A sensible bailout plan

It seems to me that whenever the government sees something needs doing, an agency is created or mandated to do the task. If the task is completed, then I have no issue with it. Witness FEMA, an agency that at best puts people from one state to work "helping" those in an other state who have had the daylight whooped out of them by one sort of natural disaster or another. In theory this is a 'good thing', but how many Americans know we keep begging FEMA funding even now and get told yes?


Ifyou've read my post to Colts fans, you'll know that I am an expat New Orleanian. What you don't know is that I am also a Gulf Coast resident. My beef with FEMA isn't that they took too long to get here. Anyone with even half of a functioning brain cell knows that clearing roads to get in takes time, especially when those poor benighted National Guardsmen have to carry EVERYTHING they need, plus everything we needed. (Thank you again ladies and gentlemen of the Guard!)

My beef with FEMA is that they're still a presence here because we're still asking for help for post Katrina. Does anyone even know how much we've spent on just Katrina? I doubt even the GAO could tell us, and they've got the ledgers, though not enough fingers and toes to count how many billions. Last count -in 2007 mind you! - 116 billion plus dollars.Even now, much of that money is unaccounted for.

That should sound familiar to all of us. Where on earth did all of that money in the recession bailout go? The arrangements for the bailout were instituted by the Fed, ostensibly not part of the government. The monies were promptly delivered into the gaping maw of those who created the recession.

The solution to both situations was simple, and could have saved boatloads of money. For Katrina relief : Cut each household in the affected area a check for one million dollars, with the caveat that no more money is coming. Stay and rebuild, relocate, do as you wish, just don't look for anymore money from us.

For recession relief: the same. Pay off your mortgages, start a new business, invest it, hide it under your mattress, just don't ask us for anything else.

Now, ultimately the money would have wormed it's way back to the banks, but it would have been by our choosing.

Tuesday, February 9, 2010

Open Letter to Indianapolis Colts Fans and the rest of us, too

Your team did what all but one other team did not do - went to the Super Bowl! They played well, and fought hard. Surely more than 11 of you could have shown up and supported your team, clapped them on the shoulder and told them, "well fought, gentlemen!"

In general we have lost the ability to be graceful in defeat, when it doesn't count. And loyal when it does. Though the Super Bowl does generate beaucoup in revenue for the NFL, and much by way of civic pride, when all is said and done it does not cure cancer, or put any of our millions back to work.

The city of New Orleans, in its support of their professional football team over the past 43 years has shown all of us a lesson in graciousness, loyalty, and civility in defeat as well as in victory.

As a proud expatriate New Orleanian, let me be one of the first to tell the Colts what their fans did not - you played well and fought hard gentlemen. I sure wish your fans could appreciate it. And yes, I would have said the same thing had you won. My momma taught me better than that!