November 7, 2017

Roundup on Aging: The Bright Side and the Dark

Americans are retiring later at closer to 67 and dying sooner,

Data released by the Society of Actuaries found that health in the United States is declining and more people are forced to endure shorter retirements.  From 2014 to 2015, mortality rates rose 1.2 per cent marking the first year-over-year increase in the number since 2005. According to a study by journal Health Affairs, people in their late 50s are having the same if not worse ailments than people at those ages a decade ago  At the same time, Americans in the workforce are having much longer careers, forcing the age of retirement to rise. Result: more people are forced to endure shorter, less active retirements.

An 82-year-old man hiked the entire Appalachian Trail. Then he danced a jig
Dale Sanders, 82, stopped to kiss his last trail marker before becoming the oldest person to hike all 2,190 miles of the Appalachian Trail within a year

 Dale Sanders 82 Appalachian Trail

He is, incidentally, two years older than the Appalachian Trail, which was officially “connected” in 1937, meaning people could hike it in its entirety from Georgia to Maine. Sanders hiked it in a “flip-flop” sequence, meaning he did a Georgia-to-Harpers Ferry leg, followed by a Maine-to-Harpers Ferry leg. A naturally gregarious person, Sanders had periods of depression while alone on the trail. He was helped by what he calls “trail angels,” people who recognized him from seeing him on the Internet, who called out his trail name — “Grey Beard” — and hiked alongside him for a stretch. ...His next move?  “I’m done and I’m tired,” he said. “And I can go home."

Dancing Has Greater Anti-Aging Effects On Brain Than Exercising

A new study finds that while regular exercise helps keep us strong physically and mentally, dancing may be the most valuable form of physical activity — so much so that it actually has certain anti-aging effects more substantial than the benefits of general fitness.  ....“In this study, we show that two different types of physical exercise (dancing and endurance training) both increase the area of the brain that declines with age. In comparison, it was only dancing that led to noticeable behavioral changes in terms of improved balance,” says the study author at the German Center for Neurodegenerative Diseases and Otto von Guericke University Magdeburg.

People Over 60 More Content In Life Than All Other Adults, AARP Survey of 2600  Finds.

80-Year-Olds As Street Smart As 20-Year-Olds, Study Finds

The elderly are just as keen at identifying shady figures or situations as young adults, it turns out. Researchers at the University of Portsmouth recruited 126 individuals — about a third of whom were aged 59 to 91, and the rest of whom were 20 to 28 — for a study on whether one’s age can reliably determine their street smarts — that is, their ability to accurately assess dangerous situations. “The results could encourage older people to recognize they are street smart, that their gut instincts are spot on.”

The Financial Abuse is a different story.

Survey: Nearly 7 In 10 Seniors Targeted By Fraud Campaigns

About two-thirds of elderly Americans have been targeted by a fraud campaign, and more than a quarter have actually fallen victim to such efforts, reports a new survey by at the Cooperative Credit Union Association (CCUA), a trade group that represents credit unions, polled nearly 1,200 Americans, all of whom were caretakers of senior citizens, hoping to learn more about the scams that prey on unsuspecting baby boomers.Correspondence via email was found to be the most common (53 percent) attempt at fraud, followed by telephone (49 percent), text message (16 percent), and postal mail (also 16 percent).

How senior citizens can be victims of elder financial abuse

“Each year, elder financial abuse costs Americans more than $36 billion, and 1 in every 5 seniors — age 65 or older — has been abused financially,” Abuses are often committed by people the elderly person knows, and the abuses are often never investigated. Such abuses include theft of valuables, credit card scams and false shipment, as well as home repair and moving scams. “Just 1 in 44 financial elder abuse cases are ever reported,” according to the National Adult Protective Services Association.

In the New Yorker, a bombshell report.  How the Elderly Lose Their Rights by Rachel Aviv
The stories are horrifying. Strangers get appointed guardians and proceed to sell their assets and control the lives of seniors without their consent and without notifying their families, all to reap profits.

In the United States, a million and a half adults are under the care of guardians, either family members or professionals, who control some two hundred and seventy-three billion dollars in assets, according to an auditor for the guardianship fraud program in Palm Beach County. Little is known about the outcome of these arrangements, because states do not keep complete figures on guardianship cases—statutes vary widely—and, in most jurisdictions, the court records are sealed. A Government Accountability report from 2010 said, “We could not locate a single Web site, federal agency, state or local entity, or any other organization that compiles comprehensive information on this issue.” A study published this year by the American Bar Association found that “an unknown number of adults languish under guardianship” when they no longer need it, or never did. The authors wrote that “guardianship is generally “permanent, leaving no way out—‘until death do us part.’ ”
April Parks Parks drove a Pontiac G-6 convertible with a license plate that read “crtgrdn,” for “court guardian.” In the past twelve years, she had been a guardian for some four hundred wards of the court. Owing to age or disability, they had been deemed incompetent, a legal term that describes those who are unable to make reasoned choices about their lives or their property. As their guardian, Parks had the authority to manage their assets, and to choose where they lived, whom they associated with, and what medical treatment they received. They lost nearly all their civil rights.
in a detailed summary of the investigation, Jaclyn O’Malley, who led the probe for the Nevada Attorney General’s Office, made passing references to the “collusion of hospital social workers and medical staff” who profited from their connection to Parks. At Parks’s grand-jury trial, her assistant testified that she and Parks went to hospitals and attorneys’ offices for the purpose of “building relationships to generate more client leads.” Parks secured a contract with six medical facilities whose staff agreed to refer patients to her—an arrangement that benefitted the facilities, since Parks controlled the decisions of a large pool of their potential consumers. Parks often gave doctors blank certificates and told them exactly what to write in order for their patients to become her wards.

Two documents that can help keep you safe from such financial abuse

A bombshell report in the New Yorker detailed how one woman allegedly took control of strangers' financial and health decisions in Nevada.  Simple documents — like a power of attorney form and healthcare directive — can help you retain control, even if you are no longer able to care for yourself.
Posted by Jill Fallon at 2:29 PM | Permalink

July 30, 2017

A Plan to Save Social Security

This Plan to Save Social Security makes a lot of sense to me

Financial Planner Ric Edelman has come up with an idea that is so simple and workable it could transform the aging program and make retirement more comfortable and secure for years to come. Full disclosure: Edelman, who has been ranked three times the number one independent adviser by Barron's, is my financial adviser.
Edelman's solution? The federal government would set aside $7,000 one time for each child born during the next 35 years. The money would be placed in an investment account managed by a blue-ribbon panel of investment experts appointed by the president and Congress.

After 35 years, the government gets back its $7,000 -- increased for inflation -- and uses the money to pay for children born during the next 35-year cycle, making it self-funding.

When the child reaches age 70, monthly benefits are provided -- equal in income to what Social Security provides, allowing the current program to be replaced with no adverse effect on retirees.
To keep the money from being "raided" by Congress, Edelman says each baby would be assigned an individual account, much like an IRA, and would receive annual statements showing the account balance.
Posted by Jill Fallon at 3:34 PM | Permalink

June 30, 2017

A “Suffering Prevention Specialist"

Ron Lieber, the “Your Money” columnist for The New York Times, has written a series of articles on the intersection of faith and finance. The one that caught my eye - The Monk Who Left the Monastery to Fix Broken Retirement Plans

The stream of visitors to his monastery would arrive with many purported reasons. As the junior monk, he did not give much religious counsel. But he soon recognized a pattern: Every person who arrived with a spiritual issue had a financial problem lurking somewhere beneath it.

“So I would say, ‘I’ll pray for you, but let’s make a budget,’” he said. “‘Let’s start paying off student loans. Let’s get the child support you deserve.’ Prayer and contemplation can help you take more mindful action, but action is the outcome of contemplation.
After trying and failing to find a better firm to fix his school’s 403(b), he up and started his own, Lynam Financial Services. His solution? Give people a menu of index or similar mutual funds, enroll all employees automatically and increase their savings regularly.....This was, in effect, a third full-time job for Mr. Lynam — and neither monks nor teachers ever feel as if they are truly off-duty. So in the past year, he has left both teaching and the monastery.

 Doug Lynam Former Monk
photo Rick Scibelli Jr. for The New York Times

Former Christian fundamentalist, Marine officer-in-training and Benedictine monk and math and scienceteacher, Doug Lynam is now a financial adviser specializing in retirement plans, a role he calls being a “suffering prevention specialist.”

He wants to help schools build better retirement savings plans, so their teachers can leave the classroom at a time of their choosing with dignity and grace.....“These plans have drifted for decades,” he said. “There are poor investment choices, high fees and annuities that are abusive. Schools have forgotten that they are fiduciaries, and we’re seeing retirements being torpedoed by negligence, essentially.”
His professional conversations now feel a lot like confession, he said, with people sharing stories of unpaid debts, betrayals and sure things that were far from it. He listens, and then he must hold the mirror up to those who may not want to see the truth.

“Perhaps one of the cardinal sins that I see the most, though it’s not a popular one to talk about, is sloth,” he said. “Some people are afraid but also a little lazy, and they don’t really want to do the hard work of facing their mistakes or lack of organization and knowledge on these subjects and take responsibility.”

Other articles in the series are Does God Want You to Spend $300,000 for College? and He Thought He’d Be Your Rabbi. Now, He’ll Get You a Mortgage.

“A place to live, with an emphasis on live and not place. The mortgage in some ways is the means, but the end is being home.”
Posted by Jill Fallon at 12:30 PM | Permalink

February 12, 2015

“I Put the Device Face Down If My Daughter Wants To Talk or Physically Turn from the Screen”

This great advice for parents today comes from the Happiness interview Gretchen Rubin did with Ron Lieber who writes "Your Money" a personal finance column every week in the New York Times as well as for the Times Motherlode blog

He has a new book that’s just hitting the shelves this week. The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money, which is an essential guidebook for any parents who want to talk sensibly with their children about money — and about good values related to money. This subject is very interesting and important, and I was particularly intrigued by the title, because I’ve often asked myself, what makes a person spoiled?
Gretchen: You’ve done fascinating research. What’s the most significant thing you’ve concluded?
Ron: That there’s an epidemic of silence around money in families, no matter how much they have and no matter where they live. Somewhere along the way, we decided that talking honestly with children about money is impolite or age-inappropriate or will scare them or cause them to be money grubbers. But having money or talking about it doesn’t subvert values. In fact, having the right conversations about it over a decade or two can actually imprint good habits like modesty, generosity and perseverance.

Given what you’ve learned, what habits do you think are most important for parents to try to instill in children?
…. Patience is good; it’s the foundation of saving, after all. Plus if kids have to wait a while before they buy and get things, the yearning just may pass……And let’s not forget curiosity. The primary job of a child is to learn how the world works, and it’s parents’ job to answer their questions. All of them.  Including the hard ones about money.

Do you have any habits that continually get in the way of your happiness?
Holding a device or facing a computer screen while my daughter is trying to talk to me. It makes me feel like a bad dad. I now put the device face down if my daughter wants to talk or physically turn from the desktop screen and lock eyes with her to make sure she knows I’m fully present.
Posted by Jill Fallon at 11:33 AM | Permalink

February 9, 2015

"Key to financial success: cheap housing"

Jonathan Clements gives us his parting words of wisdom in the WSJ. How to Live a Happier Financial Life 

With my final 750 words, here are five notions that—I believe—are indispensable to a happier financial life.

Biggest time waster: commuting.  I have come to view the classic trade-off—accepting a long commute as the price of a big house in the ’burbs—as a pact with the devil. Indeed, research suggests commuting is terrible for happiness. One example: A study in Sweden found that a long commute increases the risk that a couple will separate by 40%.

Best investment attribute: humility.  ….If you want to notch decent returns, put your ego aside and put your money in broadly diversified index funds with rock-bottom annual expenses.

Key to financial success: cheap housing.  A third of the money spent by the typical household goes toward housing. Add car payments and other transportation costs, and you’re at more than half. My advice: Try to keep those two costs well below 50% of your income, especially in your early adult years.

The less you spend each month on housing, cars, utilities and other fixed costs, the less financial stress you’ll suffer. You’ll also have more money for discretionary “fun” spending, be in better shape if you lose your job, and need less income to sustain your standard of living once retired…..

Best way to spend money: experiences.  My advice: Use your spare cash for experiences, not possessions. Pay for the family vacation. Go to a concert. Head out to dinner with friends. This will strike many as counterintuitive. Possessions seem appealing, because they have lasting value, while experiences leave us with nothing tangible.

But this is also the reason experiences can bring more happiness: We have not only the event itself, but also the anticipation before and the fond memories after—and those memories aren’t soiled by the messy reality of some object that gets dirty, breaks down and is eventually discarded.

Top financial goal: not working for money.  Avoid the acquisition treadmill of bigger homes and better cars, and instead save like crazy in your 20s and 30s. Do that, and you could buy yourself the freedom to spend the rest of your life on your terms, rather than one dictated by car leases, credit-card bills and mortgage payments.
Posted by Jill Fallon at 12:16 PM | Permalink

November 19, 2014

Snapshot: Measuring prosperity around the globe

The Legatum Institute annually ranks 142 countries in a Prosperity Index.  They define prosperity as a combination of wealth and wellbeing,  those aspects of prosperity that typical gross domestic product measurements don’t include, such as entrepreneurship and opportunity, education, and social capital.

According to its 2014 rankings, the United States ranks  as #10 overall

17th in economy,  The U.S. rose seven places from 2013

11th in entrepreneurship and opportunity, More prosperous societies promote better and more equal access to opportunity

12th in governance,

11th in education,  Quality and equality of education matter for democracy

1st in health  There is a proven link between health and economic growth

31st in safety and security, Around the world women feel less safe today than at any point in the last eight years

21st in personal freedom, Economic freedom can help stimulate demand for other freedoms

7th in social capital Countries that have strong familial bonds, charitable intent and high levels of trust are also the wealthiest

Compared to last year, the US rose one place to 10th overall, rose seven places on the Economy sub-index, to 17th, and declined five places on the Personal Freedom sub-index, to 21st.  Under Obama, U.S. personal freedom ranking slips below France
In 2009 the U.S. was ranked 9th in personal freedom.  Since then it has fallen to 21st with France, Germany, Uruguay, Costa Rica, the U.K. and Portugal passing the US

Another survey found The world's favorite country is no longer the U.S., but Germany, according to the Anholt-Gfk Nations Brand Index, which measures the image of 50 leading nations. which compiles the results of 20,125 interviews with people in 20 countries.

"Germany appears to have benefited not only from the sports prowess it displayed … at the FIFA World Cup championship, but also by solidifying its perceived leadership in Europe through a robust economy and steady political stewardship," said Simon Anholt, who created the index in 2005.
Posted by Jill Fallon at 12:50 PM | Permalink

September 1, 2014

Investing has got much easier

Index funds are the only way to go.

The debate about whether to hire an active fund manager to beat the market or use a passive index fund is over

Charles Ellis claims in the July/August issue of the Financial Analysts Journal that the “active vs. passive investment debate” is largely over. After their high trading fees and expenses, “active managers are no longer able to earn their keep,” and therefore most investors will get higher returns and pay lower fees with index funds. Ellis expects that the triumph of index investing over active fund management is generating a “wave of creative destruction” that will put many portfolio managers out of business.
My advice is to build your investment portfolio using a variety of index funds — it’s not settling for average, it’s just refusing to believe in the miracles and magic of active management.

No matter what, the long-term investor comes out ahead of the short-term trader

For any manager who outperforms in a given year, only 1 in 10 will continue to outperform in two of the next three years. In other words, 10 percent of our original outperformers — about 3 percent total — can keep their streak alive for three consecutive years. Over five years, only 1 in 33 of our original alpha generators keeps the winning streak going. Once we figure in their costs and fees, it works out to be less than 1 percent — 1 in 100 — who manage a net outperformance of a few basis points a year.

In the real world, the win goes to the passive indexer.
Posted by Jill Fallon at 12:43 PM | Permalink

July 29, 2014

"Another day older and deeper in debt"

A stunning report in the Washington Post  1 in 3 U.S. adults have 'debt in collections'    

An estimated 1 in 3 adults with a credit history -- or 77 million people -- are so far behind on some of their debt payments that their account has been put "in collections."
That's a key finding from a new Urban Institute study.  It examined non-mortgage debt, including credit card bills, car loans, medical bills, child support payments and even parking tickets.  The debt in collections ranged from as little as $25 to a whopping $125,000. But the average amount owed was $5,200.

"It’s a stunning number," said Caroline Ratcliffe, senior fellow at the Urban Institute and author of the report. "And it threads through nearly all communities."
Researchers relied on a random sample of 7 million people with data reported to the credit bureaus in 2013 to estimate what share of the 220 million Americans with credit files have debts in collection. About 22 million low-income adults who did not have credit files were not represented in the study.

We've never fully recovered from the financial crisis that began in 2008.  In fact, the  The Typical Household, Now Worth a Third Less

The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially.
For households at the median level of net worth, much of the damage has occurred since the start of the last recession in 2007. Until then, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets. But much of the gain for many typical households came from the rising value of their homes. Exclude that housing wealth and the picture is worse: Median net worth began to decline even earlier.

The song 16 tons is one of the most covered songs in history, but it was Tennessee Ernie Ford who first topped the charts with it


But we can't blame the company store anymore, it's the government's doing as Monty Pelerin writes in  Government Is Destroying our Standard of Living

The Great Recession had a serious impact on all percentiles in the graph above. All are down from 2007. Liberals want to focus on how much better the "rich" are doing versus how poorly the "poor" are doing. The implication is that the rich are getting richer at the expense of the poor. This ideological nonsense is politically convenient and diversionary. There is no fixed pie where someone who gets a larger piece does so at the expense of someone receiving a smaller piece. That is only possible where government determines who the winners are….

The distribution at the top is not independent of government. The more government controls the economy, the more important it is to "have a friend in government." It used to be what you knew enabled you to succeed. Today, it is increasingly who you know. ….

Were the economy and its components growing at a real rate of 2 - 3%, then median net worth presumably would be growing at a similar rate….American's median net worth has been reduced by 60% to 70% from what might have been expected. How is this possible?

There are several reasons. I would argue that most of the blame goes to government:

Government is taking a much bigger share of the economy.
Government understates inflation which results in an overstatement of real GDP.
Taxes are higher, especially on capital gains which are unadjusted for inflation and taxed as if they were true gains.
Government interventions have destroyed the economy's ability to grow.
Government transfer payments have reduced the workforce, spreading a reduced output over more people.
Government's encouragement of the use of debt has created behavior not in the best interests of unsophisticated citizens.
Posted by Jill Fallon at 1:06 PM | Permalink

June 19, 2014

Stunning Financial Illiteracy

Most Americans can’t answer these 3 basic financial questions correctly

Investment advisor regulator Finra has a financial literacy quiz that includes the following three basic questions:

1. Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?
a) More than $102
b) Exactly $102
c) Less than $102
2. Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, would you be able to buy more than, exactly the same as, or less than today with the money in this account?

a) More than today
b) Exactly the same as today
c) Less than today
3. Do you think that the following statement is true or false? ‘Buying a single company stock usually provides a safer return than a stock mutual fund.’
a) T
b) F
c) Do not know
Among Americans, only one-third of respondents could answer all three of these questions correctly (a, c, b).

Financial literacy has proven a very tough nut to crack - no programs or approaches seems to be working very well.
Posted by Jill Fallon at 7:01 PM | Permalink

January 30, 2014

"The U.S. has become the preferred target for criminal hackers"

If you were one of the 40 million Target customers whose credit or debit card  may have been hacked just before Christmas, Target Offers Free Experian Credit Monitoring for One Year.    Head over to

Target has revealed that a sales assistant's stolen credentials helped cyber criminals pull off a massive theft of customer data during the Christmas shopping season last year.

Around 40 million credit and debit card details and 70 million other private records were stolen by hackers accessing the US retailers' payment system using an unidentified vendor's details.
The disclosure of how the criminals were able to pull off the crime comes as U.S. Attorney General Eric Holder confirmed that the Department of Justice was investigating the massive hacking at Target.
On January 23 it was reported that the FBI also warned U.S. retailers to prepare for more cyber attacks after discovering about 20 hacking cases over the past year that involved the same kind of malicious software used against Target during the holiday shopping season

Target Tried Antitheft Cards  Years Ago Retailer Halted Rollout of Chip-Based Payment System

Chip-based credit cards—in which a smart chip in the card works with special readers installed at stores—are widely used in Europe and Canada, making it more difficult for thieves to profit from the sort of massive data breach that hit Target over the holidays.

Target CEO Gregg Steinhafel is calling on retailers and banks to adopt chip-based credit-card technology to better protect shoppers. But a decade ago, Target pulled the plug on a $40 million, three-year program that did just that. Paul Ziobro reports. Photo: Getty Images.  But the technology has yet to be embraced in the U.S., and as a result, the U.S. has become the preferred target for criminal hackers.
"A lot of the fraud has migrated from international markets to the U.S. because the U.S. is the weakest link," said Rick Oglesby, a senior analyst at Aite Group LLC, a Boston consulting firm that specializes in the payments industry.
Of the 5.6 billion credit and debit cards in circulation in the U.S., only an estimated 15 million to 20 million are chip cards--issued mainly to people who travel overseas frequently.

Magnetic stripes have been used on plastic since the 1970s. Hackers find it increasingly easy to copy the data on them because the information in the magnetic stripe doesn't change, and criminals can easily produce fake cards, because the technology is readily available.

Chip cards, on the other hand, take the cardholder information and turn it into a unique code for each transaction. They also often require additional authentication, such a personal identification number, or PIN. Payment and security experts say the technology wouldn't have prevented the attack at Target, but it would have made it more difficult for thieves to counterfeit the cards and make fraudulent purchases.

Adoption of the cards in Britain has helped reduce fraud from counterfeit cards by 70% from 2007 to 2012, according to the U.K. Card Association. By contrast, breaches have more than doubled since 2007 at U.S. retailers, affecting more than 5,000 records, according to a survey by the Ponemon Institute, a Traverse City, Mich., research firm.

A typical large issuer will spend about $1.30 to buy a chip card, compared with 10 cents for a traditional magnetic-stripe card, according to Aite Group. But if the chip cards were used in the U.S., fraud losses could be halved, Aite Group estimates. U.S. merchants and banks had 2012 losses of $11.3 billion due to credit-card fraud, or 5 cents on every $100 spent, according to the Nilson Report, a payment-industry newsletter based in Carpinteria, Calif.

The economics of credit card security.  Who bears the cost of more secure, chip-based credit cards?  The government made it harder for companies to recoup costs of added card security .

Moreover, even if investments in card security are recoverable, they are capped under the Durbin Amendment at one cent per transaction under 12 CFR 235.4(a). Indeed, I argued some time ago that one unintended consequence of the Durbin Amendment became effective that it would likely discourage investments in card security and other features (such as processing speed) by making it more difficult for issuers to recoup those costs.

Security Expert Hacks Obamacare Website In 4 Minutes; Accesses 70,000 Records with nothing more than a standard browser. “You can literally just open up your browser, go to this, and extract all this information without actually having to hack the website itself,” he said.  Mr. Kennedy testified before Congress Thursday that was “100 percent” insecure, Washington Free Beacon reported.

Posted by Jill Fallon at 10:46 PM | Permalink

December 18, 2013

Hodgepodge of links on finances and the economy

Millennials today are financially worse off than their parents were at the same age

 Chart Age Group Networth

Simon Black on Zerohedge

According to a recent survey by the Pew Research Center, just 33% of Americans think their children will have a better life than they did. On the other hand, 62% believe their children will be worse off.

They’re likely to be right.  The typical American family has seen its real income (adjusted for inflation) fall for 5 consecutive years now, and it earns less in real terms that it did in 1989.

According to the Census Bureau, median household income fell in 2012, and it languishes 8.3% below the pre-crisis peak in 2007.
The Brookings Institution, meanwhile, calculates that real incomes for working-age men in the US have fallen by 19 per cent since 1970.

80 is the new 60 when it comes to retirement

Running out of money in retirement is scaring the hell out of record numbers of older workers, forcing them to stay in the workforce.
Now 80 is the new 60 when it comes to retirement. Many older workers who finally clock out have sharply underestimated their financial needs in retirement, raising the specter of personal financial disaster.

Nearly half of older workers are on the job longer than they had planned to be — on average, by three more years than they estimated at age 40, according to a recent survey of Americans 50 and over by the Associated Press-NORC Center for Public Affairs Research.

Handsome Is as Handsome Gives writes Arthur Brooks in the Wall Street Journal

Donors to charity aren't merely generous souls. They're happier, healthier and better looking too

Camden, New Jersey: One Of Hundreds Of U.S. Cities That Are Turning Into Rotting, Decaying Hellholes

All over America, formerly prosperous communities are being transformed into crime-infested wastelands of poverty and despair.  …… Jobs and businesses are leaving our cities at a staggering rate, and what is being left behind is poverty, crime and extreme desperation. 

In Camden

-"In September, its last supermarket closed, and the city has been declared a "food desert" by the USDA. The place is literally dying, its population having plummeted from above 120,000 in the Fifties to less than 80,000 today."

-"Their home is a city with thousands of abandoned houses but no money to demolish them, leaving whole blocks full of Ninth Ward-style wreckage to gather waste and rats."

-"With legal business mostly gone, illegal business took hold. Those hundreds of industries have been replaced by about 175 open-air drug markets, through which some quarter of a billion dollars in dope moves every year."

-"On January 18th, 2011, the city laid off 168 of its 368 police officers, kicking off a dramatic, years-long, cops-versus-locals, house-to-house battle over a few square miles of North American territory that should have been national news, but has not been, likely because it took place in an isolated black and Hispanic ghost town."

-"After the 2011 layoffs, police went into almost total retreat. Drug dealers cheerfully gave interviews to local reporters while slinging in broad daylight."

-"The carnage left Camden's crime rate on par with places like Haiti after its 2010 earthquake, and with other infamous Third World hot spots, as police officials later noticed to their dismay when they studied U.N. statistics."

A glimmer of good news. Crime Rate in Camden, NJ Going Down After Unionized Police Force Sacked

The reorganization increased the amount of police on the streets and incorporated cutting edge technology such as ShotSpotter rooftop monitors. The initiative has already gotten results, according to city leaders.

Over the summer months this year, the murder rate fell by 22 percent and crime overall was down 15 percent, according to data provided by Camden County officials.

The Census Bureau calculates that there are 46.5 million people living in poverty in the United States, or 15% of the population

"Experts" in the Federal government assure us the unemployment rate is 7%. But if we include the 91.5 million people of working age who could be working (and would be working in a work-fare economy), then the real unemployment rate is double the official rate: 14% or even higher.

We want to believe the fake unemployment rate of 7% rather than the real rate of 14+% because the officially sanctioned forgery feeds our belief that our bloated, corrupt Empire of Debt is sustainable, fair and working well. To accept that we've been bamboozled, ripped off, taken advantage of and ultimately cheated out of an authentic economy and life by swindlers is too painful.

What If There's A Recession In 2014?  Gonzalo Lira speculates.

If policymakers were gunfighters, they’d be out of bullets: They have run out of effective policy tools to improve the economy.
Before facing up to a possible 2014 recession, let’s ask ourselves: What happened during the last recession?…To stave off what looked like financial and economic Armageddon, the Treasury Department first under Henry Paulson and then under Timothy Geithner, and the Federal Reserve under Ben Bernanke, basically threw money into the economy…..   

Rather than take the hit, work out the bad loans, and organically regrow the economy, the Treasury and Fed measures were essentially morphine—or heroin—to dull the pain of the Global Financial Crisis: They made us feel great, but the disease is still there…. Overindebtedness. Bad debts piled on top of bad debts……
So to weather it, you’d have to know what’s going to happen. A basic outline is pretty clear:

Stocks will take the brunt of the beating,…Bonds won’t do so well either, at least not corporate issuance…Real estate? Forget it—….The only store of value will be commodities. Not just precious metals, but all commodities: Industrials, agros, and fossil fuels…..If there is such a rotation from equities and bonds into commodities, then the prices of food and transportation will rise—precipitously.

Thus we will have inflation, possibly severe inflation. But the Fed will be loathe to rein in inflation via interest rate hikes….The Fed cannot conceive of any way in which to help the economy that does not involve keeping interest rates low.

In other words, the government will not be able to save the economy…The Federal government and the Federal Reserve are out of bullets.
Which means we are on our own come a recession. And we’ll be paying not only for the recession of 2014, but also for the recession of 2007-09, which was deferred, but not worked out.

Here are some of America’s most famous brands currently held in foreign hands:

Budweiser, now owned by Anheuser-Busch InBev N.V., which is based in Leuven, Belgium
Alka-Seltzer, now owned by German company Bayer Schering Pharma AG
Ben & Jerrys, now owned by British-Dutch Unilever
AMC theaters, now owned by the Chinese
7-Eleven, now owned by the Japanese company, Seven & I Holdings
Woman’s Day Magazine, now owned by the French company,  Hachette Filipacchi Médias, S.A
Purina, now owned by the Swiss company, Nestle
Gerber, now owned by the Swiss pharmaceutical giant, Novartis
Firestone, now owned by the Japanese Bridgestone Corporation
Citgo, now owned by the government of Venezuela
French’s Mustard, now owned by Reckitt Benckiser, a British conglomerate
Frigidaire, now owned by Sweden’s AB Electrolux
The Plaza Hotel in New York City, now owned by Israeli billionaire Yitzhak Tshuva’s El-Ad Group
Trader Joes, now owned by German billionaires Karl and Theo Albrecht
Dial soap, now owned by Henkel KGaA, based in Dusseldorf, Germany
Sunglass Hut, now owned by Italian eyewear seller Luxottica Group
Posted by Jill Fallon at 12:07 AM | Permalink

June 24, 2013

What can happen if you don't know you are a beneficiary of a life insurance policy

The eleven insurance companies, including AIG, Hartford, John Hancock, Met Life, Prudential, Transamerica and TIAA-CREF,  agreed to a whopping $763 million settlement, admit no wrong doing but say they have agreed to reforms.

Thousands of Americans being billed for life insurance AFTER they die: Loophole that means companies don't have to tell family… and kept one woman unaware for five years

Millions of Americans could continue being billed for their life insurance policies, even after they have died.

Because most policies require the beneficiary to file a claim, insurance companies are able to legally continue drawing on the policy's cash reserves until funds run out.

Several of the leading insurance companies, including AIG, Prudential and Transamerica, have now agreed to a multi-state settlement under which they will repay about $763 million owed to the families of deceased policy holders.
To keep track on their policy holders, insurers have to keep a death master file based on Social Security details.

When a death is recorded, the insurers will know not to expect further premium payments. But, if the beneficiary does not make a claim, the insurers can continue to draw payments from the policy's cash reserves
, according to ABC.

'Once the cash reserves were depleted, the company would cancel the policy,' a statement from Mr Chiang's office said.

Many people are unaware that they have been named as a beneficiary for a life insurance policy.
A recent Consumer Reports study found Americans had a one in 600 chance of being owed unclaimed life insurance.
'The average benefit that's waiting to be collected is only about $2,000. But some of them are up to $300,000,' Jeff Blyskal, author of the study, said.
Posted by Jill Fallon at 5:44 PM | Permalink

June 22, 2013

The Decline in American Entrepreneurship. "The pessimistic view is we've lost our mojo."

America Falls Behind in Creating Entrepreneurs

A new study from Barclays, "Origins and Legacy: the Changing Order of Wealth Creation," finds developing countries now lead the U.S. when comes to wealth creation by entrepreneurs.

Worldwide, 40 percent of millionaires (which is defined as those with investable assets of $1.5 million or more) cited a "business sale or profit" from their business as their source of wealth. Only a quarter of the millionaires cited inheritance as their wealth source.

In the U.S., only 21 percent of millionaires cited business sale or profit as their source of wealth. A much larger percentage cited saved earnings or personal investments as their sources of wealth.

Risk-Averse Culture Infects U.S. Workers, Entrepreneurs

Three long-running trends suggest the U.S. economy has turned soft on risk: Companies add jobs more slowly, even in good times. Investors put less money into new ventures. And, more broadly, Americans start fewer businesses and are less inclined to change jobs or move for new opportunities.

The changes reflect broader, more permanent shifts, including an aging population and the new dominance of large corporations in many industries. They also may help explain the increasingly sluggish economic recoveries after the past three recessions, experts said.

"The U.S. has succeeded in part because of its dynamism, its high pace of job creation and destruction, and its high pace of churning of workers," said John Haltiwanger, a University of Maryland economist who has studied the decline in American entrepreneurship. "The pessimistic view is we've lost our mojo."

Companies that gamble on new ideas are more likely to fail, but also more likely to hit it big. Entrepreneurs face long odds, but those that achieve success create jobs for many others.
Posted by Jill Fallon at 3:04 AM | Permalink

May 30, 2013

"The lesson for investors is very clear"

You're Paying Too Much for Investment Help by Burton G. Malkiel:

Index funds have far outperformed the average active manager, and at a far lower cost to investors

The lesson for investors is very clear: You can't control what markets can do, but you can control the costs you pay. The less you pay to the purveyors of investment services, the more there will be for you. The quintessential low-cost investment vehicles are index funds, which should comprise the core of every investment portfolio. The high fees charged for active management cannot be justified.
Posted by Jill Fallon at 10:02 PM | Permalink

May 17, 2013

Odds and Ends

These links were saved for posts I never got around to, but they are still worth sharing.

How listening to 'sad songs' heals the blues

Listening to sad songs is best way to get over a break up as it has same soothing effect as a sympathetic friend, researchers find

Heartbreak is 'worse in the digital age'

Heartbreak is worse in the digital age because the history of the relationship lingers in photographs and messages posted on social networking websites, researchers claim…. The pervasiveness of content stored on computers, tablets and mobile phones "creates problems during a break-up" because the reminders of their relationship are ever-present.

To Save The Job Market, Reduce The Medicare Eligibility Age To 55

Here we have the older workers, hobbling to the finish line, but unable to end the race. And here we have young workers, itching to get started, and they can't because there are no jobs, or no middle class jobs, for them.

And the one thing that would cause the many older workers who have saved for retirement to be able to leave the workforce, and clear the way for those frustrated younger workers, is guaranteed medical care.
If you really and truly want to make a dent in the persistent employment problem facing younger workers, allow anyone age 55 or above to buy into Medicare. Charge them annual premiums equal to what they would have to pay into Medicare at their same wage or salary until age 65 if they continued to work. 

Green Jobs.  U.S. Government spent $11 Million per 'Green Job' Created. reports The Global Warming Policy Foundation

The Top 50 Things That Disappear from Stores During an Emergency

Pepper's history spiced with dark moments

The pepper trade was responsible for the deaths of thousands of people, the enslavement of countless others, the establishment of the opium trade in India and the extinction of the dodo…..Columbus didn't sail from Spain looking for Ohio; he was seeking the Far East and its spices, i.e., pepper

What to say to a sick friend. For a Sick Friend: First, Do No Harm

1. Rejoice at their good news. Don't minimize their bad news.
2. Treat your sick friends as you always did—but never forget their changed circumstance.
4. Don't assume, verify
9. Let patients who are terminally ill set the conversational agenda.
10. Don't pressure them to practice 'positive thinking.'

Nation Creating New STIs Faster Than New Jobs or College Grads

The 19.7 million new STIs in 2008 vastly outpaced the new jobs and college graduates created in the United States that year or any other year on record, according to government data. The competition was not close.

How America's Credit Reporting System Gets Away With 40 Million Errors

According to the FTC, between 20 million and 40 million consumers could have errors on their credit reports that could hurt their credit score.

Fish Oil and a Lesson in Happiness From Iceland

Microbes manipulate your mind

Bacteria in your gut may be influencing your thoughts and moods, raising the possibility that probiotics could be used to treat psychiatric illnesses

Study: Reading for Pleasure Make Your Brain Grow, Literally

Ross Douhat:  The Man in the Google Glasses might feel like a king of infinite space. But he’d actually be inhabiting a comfortable, full-service cage.

Posted by Jill Fallon at 1:54 AM | Permalink

March 2, 2013

When Enough is Enough

In the Boston Review Before Greed  Americans Didn’t Always Yearn for Riches

Not only was great wealth an aberration in Lincoln’s time, but even the idea that the accumulation of great riches was the point of a working life seemed foreign. Whereas today the most well-off frequently argue that riches are the reward of hard work, in the Civil War era, the reward was a “competency,” what the late historian Alan Dawley described as the ability to support a family and have enough in reserve to sustain it through hard times at an accustomed level of prosperity.
The idea of having enough frequently trumped the ambition for endless accumulation.

At Mercatornet What money can’t buy

Markets are expanding into spheres of life where they do not belong and we are drifting from participation in a market economy to immersion in a market society. A market economy is a tool for organizing productive activity. But a market society is based on an ideological distortion of the law of supply and demands. He offers scores of innovative ways that investors are monetizing social life, not just material goods, in ways that seem unfair or degrading, both small and big.
And in reducing everything to cost-benefit analysis and in refusing to accept that some things have an intrinsic value, utilitarianism is one of the great enemies of a truly human society.
Posted by Jill Fallon at 5:29 PM | Permalink

January 14, 2013

Unconventional financial and career advice that makes sense

Penelope Trunk has 8 new ways to think about financial security

2. Your ability to make money fast is your emergency fund.

3. Your ability to stay engaged is your retirement account.

6. Your high learning curve is unemployment insurance.

And for all the Young people who are screwed, Bryan Goldberg in Pando Daily recommends

Learn how to make something
There are millions of unfilled jobs in America, and most of them are careers where you actually have to make and build stuff. If you grew up in an affluent environment, then you see your software engineer friends getting jobs easily. But it’s not just them. There are countless labor jobs — everything from HVAC to plumbing — that still pay big dollars. But rich kids don’t even know what those jobs entail.

My advice to young people is to figure out how to make something. That means either working with your hands, or learning how to type code with them.

And his  Lesson No. 4: Don’t worry about your network. Worry about your friends.   

If you have successful friends, you will be successful. It’s pretty much that simple. If you hang out with a bunch of losers, you too will adopt their loser ways and not achieve anything. Regardless of whether or not you go out and network, please make sure that your friends are ambitious and hard working people who you admire.
Your friends bring you up or pull you down. There’s no in-between. Make sure they are pulling you up.
Posted by Jill Fallon at 12:02 PM | Permalink

December 11, 2012

Is Poverty becoming the new normal?

One million Americans entered poverty in the last two months

Release delayed until after the election. Number of Americans on food stamps,  47.1 million,  not only a new all time record, but the monthly increase of 420,947 from July was the biggest monthly increase in one year.

in August and September, over three times as many foodstamp recipients were add to the economy as jobs (324,000).

Robert J. Samuelson  Is the economy creating a lost generation?

This is not a good time to be starting out in life. Jobs are scarce, and those that exist often pay unexpectedly low wages. Beginning a family — always stressful and uncertain — is increasingly a stretch. The weak economy begets weak family formation. We instinctively know this; several new studies now deepen our understanding.

When the labor market operates smoothly, it creates an economic escalator. Just out of high school or college, young workers typically switch jobs frequently until they find something that fits their talent and temperament. Job changes often mean higher pay; people move to advance themselves. The more they succeed, the more confident they feel in marrying and having children.
Fully one-fifth of younger workers belong to the “underemployed.” As Shierholz notes, the young always have higher unemployment rates. It’s just worse now.

There may not only a lost generation but also lost states who have made everything worse by never facing up to their own debt.

In California, schools are taking virtual pay day loans to keep operating and end up getting only more deeper in debt.  According to NPR, one California school district, "a $2.5 million bond will cost the district a whopping $34 million to repay." 

In New York, the state is still repaying debt from the bonds it issued when the state sold Attica prison to itself during Mario Cuomo’s governorship in the early 1990s. The state has continually refinanced the debt and extended the term of the borrowing rather than repay it.

Michael Barone, Soul-crushing Dependency

“This is painful for a liberal to admit,” writes liberal New York Times columnist Nicholas Kristof, in Profiting from a Child's Illiteracy,  “but conservatives have a point when they suggest that America’s safety net can sometimes entangle people in soul-crushing dependency.

Kristof is writing from Breathitt County, Ky., deep in the Appalachian mountains, about mothers whose Supplemental Security Income benefits will decrease if their children learn to read.

Evidently SSI administrators decided to be more generous to parents of such children. But, as Kristof notes, giving parents an incentive to keep children from learning to read works against the children’s long-term interest.

Kristof’s column makes a point similar to that in my Dec. 2 Examiner column on the vast rise in people receiving Social Security Disability Insurance payments. As with SSI, one imagines that those responsible for extending benefits to those not previously eligible did so out of a sense of generosity. But as I noted, “there is also a human cost. Consider the plight of someone who at some level knows he can work but decides to collect disability payments instead. That person is not likely to ever seek work again, especially if the sluggish recovery turns out to be the new normal. He may be gleeful that he was able to game the system or just grimly determined to get what he can in a tough situation. But he will not be able to get the satisfaction of earned success from honest work that contributes something to society and the economy.” Generosity that produces “soul-crushing dependency” is not really generosity.

Ace comments on Barone and expands the discussion to the dismal failure of the government-run, i.e. public school system.

When the media natters Republicans about intransigence and being held prisoner to their most "extreme" and ideological elements-- how come never a single word is mentioned about Democrats' evil obedience to the teachers' unions?

The incredible thing here is that almost every liberal will admit this, and almost every liberal in the business of politics has seen the documentary Waiting for Superman. They know the current system is more of a trap for, say, poor black kids than Jim Crow ever was.  And what do they propose doing about it? Absolutely nothing. Absolutely nothing.
A reformer in Waiting for Superman made this point: If school districts had the power to fire (without the heavy union interference) merely the bottom 6% of teachers, 90% of the problems with public education would be solved.  But Democrats will never permit that. That 6% that is in danger of being fired are the most fired-up members of the Teachers Unions, because their livelihoods depend on the policy of absolutely no terminations for incompetency, and those most fired-up members of the Teachers Unions are in turn the shock troops of the Democratic turnout machine…..

It's the ultimate Cult of the Old -- we do this because we have always done so before. Not a single Member of the Herd of Independent Thinkers ever demonstrates all this "courage" they're always complimenting themselves for to question this demonic policy.

How tough it is these days to get out of poverty.  In Rust Belt, a teenager’s climb from poverty

Tabi shared the rental house with her mother and sometimes her mother’s boyfriend. Her four older siblings were grown. None of them had graduated from high school. They wore headsets and hairnets to jobs that were so futureless that getting pregnant at 20 seemed an enriching diversion. Born too late to witness the blue-collar stability that had once been possible, they occupied the bottom of the U.S. economy.

“I’m running from everything they are,” she said.
Her mother had five kids and no husband at age 23. Tabi, the last born, was a welfare and WIC baby who grew up with evictions and lights getting cut off. Her 39-year-old mother remembers it differently.

The only people who are doing well are government employees. Americans believe public workers better paid and more secure (Bingo!)

"The federal workforce has become an elite island of secure and high-paid workers, separated from the ocean of average American workers competing in the global economy," according to a report this year by the Cato Institute.

That report found the average civilian federal government worker collected just under $84,000 a year in taxpayer money, about $32,000 more than the average private sector worker. That's a total federal worker package of about $236 billion a year.
Even a plurality (48%) of government employees admit their private industry counterparts do work harder.

Another 67% believe that government workers have greater job security than those in the production- profit-driven private sector,

These two states in terrible financial situations,  California and New York, top the charts in the amount they pay their government workers.    There's been a 100%+ increase in California employee state pay since 2005 and at least one state psychiatrist earned $822,000 in one year !

Posted by Jill Fallon at 3:36 PM | Permalink

September 29, 2012

Closer to the cliff every day

The Economy Durable goods drop 13.2% in August.  Q2 GDP downgraded from 1.7% to 1.3%

‘It’s all unraveling’ | Is this the last quarter of the recovery?

James Pethokoukis: Has the U.S. economy turned a corner? Yes, and then another corner and now it’s going backward. A slew of bad economic data today. A taste of what economists are saying:

– It’s all unraveling this morning. OK in the US jobless claims fell and the consumer comfort index improved.  But the downward revision to GDP and the chillingly large drop in Durable goods orders is enough to send chills up your spine. Yes, aircraft and defense orders were the bulk of the weakness. But nothing there is reassuring.

GDP collapse puts U.S. economy into recession red zone

U.S. economic growth is dangerously slow. I’ve frequently written about research from the Fed which finds that since 1947, when two-quarter annualized real GDP growth falls below 2%, recession follows within a year 48% of the time. And when year-over-year real GDP growth falls below 2%, recession follows within a year 70% of the time.

Ace:  I can only express my disgust so many times -- this is huge, and the media is embargoing it entirely.

Much of the news of the economic disaster ahead is being suppressed.

On May 7th, it was revealed that the Obama administration spent $8.35 billion on a “demonstration project” designed to postpone the vast majority of Obamacare’s Medicare Advantage cuts until after the election. On July 31st, it was revealed that the Labor Department warned defense contractors against notifying workers of impending layoffs before the election as well, despite the fact that it would require violating the law to do so. On September 21, it was revealed that a report on the Greek bailout will also be postponed until after the U.S. election. ….
Thus, the president can continue to campaign on the “heartless” cuts a Romney administration will administer to healthcare in general, and seniors’ healthcare in particular, even as those same seniors remain oblivious to the reality that $7.4 billion will be cut from the Medicare Advantage program in 2013. As a result, enrollees will lose an average of $515 in benefits. Americans remain equally oblivious to the reality that family health insurance premiums have gone up by an average $2,730, despite a 2008 promise Obama made to lower premiums by $2500 by the end of his first term.

Friday, the Administration offered a little quid pro quo

If defense contractors don't issue the lay-off notices in October,  the government will "provide the funds to pay the fines they impose on the contractors for non-compliance with regulations written by the government"  You couldn't make this stuff up.

Student loans, "the new subprime' .  The Department of Education released Friday the  federal student loan cohort default rates.
The number, for all colleges, stood at a stunning 13.4% for the 2009 …there is now at least $122 billion in federal student loan defaults. And surging every day.

Disappearing people.  There's the unemployment rate and the real unemployment rate without all the disappearing people.  Real Unemployment rate is 11.7%

Economic Freedom. Zerohedge The Declining Economic Freedom of the United States

The United States, long considered the standard bearer for economic freedom among large industrial nations, has experienced a remarkable plunge in economic freedom during the past decade. From 1980 to 2000, the US was generally rated the third freest economy in the world, ranking behind only Hong Kong and Singapore. The ranking of the US has fallen precipitously; from second in 2000 to eighth in 2005 and 19th in 2010. By 2009, the United States had fallen behind Switzerland, Canada, Australia, Chile, and Mauritius, countries that chose not to follow the path of massive growth in government financed by borrowing that is now the most prominent characteristic of US fiscal policy. By 2010, the United States had also fallen behind Finland and Denmark, two European welfare states. Moreover, it now trails Bahrain, the United Arab Emirates, Estonia, Taiwan, and Qatar.
Posted by Jill Fallon at 4:04 PM | Permalink

September 13, 2012

Obama's war on the young

Walter Russell Mead, a Democrat writes  How The Student Loan Program Became Obama's War On The Young

The federal government that Democrats like to portray as the friend of the friendless, the hope of the poor, the light of the world and the most generous uncle that ever lived has turned into the most inexorable, hard hearted and relentless debt collector in the nation, hounding a generation of students literally into their graves over loans they will never be able to pay and which they cannot escape.

Using techniques that are banned by law when it comes to private debt collection agencies, the federal government is exempt from statutes of limitations and bankruptcy rulings and can garnish Social Security checks and disability payments.

Yes, handicapped, disabled people can have their meager checks cut to satisfy student loan debt on jobs their disabilities now make it impossible to do.
The student loan program is a shining example of the blue social model in the midst of decay. It’s a program that used to work pretty well, but over time has morphed into a nightmare.
This isn’t a minor issue in American life. Helping young people to make the transition from dependency into responsible adulthood is a critical task. When young people are so crushed by debt that they are delaying decisions like starting a family or buying a house, then the system isn’t working at a basic level. When growing numbers of young people are crushed by debts they did not understand, cannot pay and cannot discharge, then society is sitting on a time bomb. A generation of embittered deadbeats and angry, impoverished cynics is not the best foundation for a free and open society. When these alienated people living marginalized lives come disproportionately from the ranks of minorities, the divisive and destructive consequences of a social program gone to the bad can be serious indeed.

25 and deep in debt

At 25 years old, I have $188,307.22 in student debt, all of which is my sole financial responsibility. 

That exorbitant number was abetted by easy lending with a co-signer, negligence and lack of awareness, over-borrowing and the exponential growth of tuition.

I work both a full-time and part-time job, and abide by a strict budget. Yet, I still sleep in my parent’s basement and am dependent for food, gas and health insurance.

I am told I am not alone.

Crushing Debt Drove Me to Kosovo - And Then to Iraq

Ten years ago, I was nearly 30 and over $90,000 in debt. I had spent my twenties trying to build an interesting life; I had two degrees; I had lived in New York and the Bay Area; I had worked in a series of interesting jobs; I spent a lot of time traveling overseas. But I had also made a couple of critically stupid and shortsighted decisions. I had invested tens of thousands of dollars in a master’s degree in landscape architecture that I realized I didn’t want halfway through. While maxing out my student loans, I had also collected a toxic mix of maxed-out credit cards, personal loans, and $2,000 I had borrowed from my father for a crisis long since forgotten. My life consisted of loan deferments and minimum payments.
I was finally reckoning with the fact that I was facing decades of unaffordable minimum debt payments. Any career ambitions I might have had would be put on hold indefinitely, possibly permanently. Travel was over. The full amount that I would have to pay off at the end of it all was too awful to contemplate. I felt trapped and hopeless. I was in a dark place.
Posted by Jill Fallon at 11:22 PM | Permalink

May 30, 2012

"I did learn that when it comes to money I am, for lack of a better word, an idiot. "

Lessons from a woman who declared bankruptcy at 23, after incurring $25,000 in credit card debt during college, much of it on shoes!

I did learn that when it comes to money I am, for lack of a better word, an idiot. I have yet to discern the meaning between need and want.

However, as someone who is now completely aware of this, I do make a valiant effort to be wary of how I spend my funds. I make sure bills are tackled first, groceries second, savings third and only then will I indulge in things I want but don’t technically need.

Apparently, people don’t need over 30 pairs of shoes. And sadly, for me that has been the most difficult lesson to learn.
Posted by Jill Fallon at 11:03 AM | Permalink

May 4, 2012

Financial Infidelity


First comes love, then comes lying: HALF of all people keep financial secrets from their partners

A new study has found that 46 percent of all people have lied to their partner about money and one-third of all people believe that financial infidelity leads to sexual infidelity.

The Today show's website,, and SELF magazine jointly surveyed their thousands of website visitors on all questions of dishonesty for their 'Financial Infidelity' report.

The analysis of their collective 23,000 responses was released this Tuesday, revealing how what couple's have in the bank can affect what happens in the bedroom.

'Our survey makes it clear that money can be a huge stumbling block for relationships if couples don't take the time to talk about it frankly,' said Martin Wolk,'s executive business editor.

The survey was conducted from January 23-27 and a total of 23,230 readers between the ages of 18 and 80 participated.

Respondents confessed to a wide range of money secrets, including lying about purchases, hiding them in the back of the closet and secretly withdrawing money from joint accounts.

But that's going to get harder to do as the Wall St Journal reports in Hiding Money from Your Spouse

Electronic discovery is making it a lot easier to uncover all that covert activity.

Suspicious spouses might dig around in their partners' Web-surfing history and social networks to find traces of hidden bank accounts and business deals. They might install software on home computers that records every keystroke their spouses make—whether it's secret stock trades or cash transfers to paramours—and use smartphone and GPS tools to show when they've been making sneaky withdrawals from ATMs.

Meanwhile, divorce lawyers and forensic experts are employing new strategies of their own. Instead of having to sift through reams of paper records to find irregularities, they're now able to use advanced search tools to analyze thousands of digital bank statements, credit-card bills and other files in the blink of an eye.

"While in the past a paper trail might be hidden by a second set of books or the shredding of documents, the trail left by files on a computer is etched onto a hard drive somewhere, just waiting to be discovered," says Ken Altshuler, president of the American Academy of Matrimonial Lawyers.
Posted by Jill Fallon at 11:14 AM | Permalink

March 28, 2012

"The 'Take Care of Me' Society is Wrecking the USA"

Charles Sykes writes in the Fiscal Times, The Entitled States of America: We Want More!

The 'Take Care of Me' Society is Wrecking the USA
Wants have been transformed into "rights" in America and ultimately into obligations and entitlements.
The entitlement state appeals to voters who believe they will bear no consequences for the costs or sustainability of the program. Questions of affordability don’t come into it, because they know they will never have to pay for it. (Recall that 49.5 percent of Americans pay no federal income tax at all.)

They are not thinking of the burden to their children, their grandchildren, their friends, their fellow citizens of the country, or anyone else. As long as it is free to them – it’s free. And good luck telling them otherwise.

Like Troy Senik at Ricochet, I think Dave Ramsey is doing more to fix America's economy than our President.

America, it turns out, is not just a debtor nation; it is a nation populated by debtors.....U.S. households owe a combined $11.5 trillion on credit cards, car loans, mortgages and other consumer debt, according to the Federal Reserve Bank of New York.
Ramsey – who counsels against the evils of debt at every turn – has become a sensation throughout the country, largely because his methods, when faithfully applied, consistently work. Against the trend of the age – the get-rich-quick scheme – he preaches instead the virtues of prolonged, patient savings, budgeting, and abstention from debt.

That there is such a robust market for his message augurs well for us. That so many Americans had to turn to their radios for lessons that were taught at the kitchen table only a few generations ago does not.
Posted by Jill Fallon at 4:54 PM | Permalink

November 11, 2011

Losing his house changed the way this financial advisor deals with his clients

How a financial professional lost his house and brought his family to the brink of disaster.

this is the story of how I lost my home, the profound ethical questions that arose along the way, and what my wife and I learned from the mistakes that led us to that point. It made me better at what I do, but it wasn’t much fun getting there.
The experience has changed just about everything about how I do financial planning and the advice I give in public. For one thing, I am less quick to judge other people’s financial behavior. I’m also more inclined to take into account personal factors that determine how people behave around money.
Posted by Jill Fallon at 4:12 PM | Permalink

September 25, 2011

You deserve nothing. Remember that.”

What your grandfather learned from the school of hard knocks. 

The 4 Personal Finance Principles That Would Make Your Grandfather Proud from The Art of Manliness

Grandpa learned his financial lessons from the school of hard knocks. He lived through the Great Depression, which taught him to live leanly, to save, and to be grateful for what he had. And he lived in a time where staying out of debt was a matter of independence, pride, and self-reliance, something he believed reflected on a man’s most precious resource–his character.

1. Resourcefulness - 

the intersection of self-sufficiency and creativity.

2. Awareness -

Consciousness of what he was spending by noting all purchases in a pocket notebook.

3. Comfortable negotiating. -

Negotiation is simply when communication and problem solving collide. Anytime there is a problem–and you use communication to solve that problem–you are negotiating.

4, Non-Entitlement Attitude -

“You deserve nothing. Remember that.”

Posted by Jill Fallon at 8:34 PM | Permalink

September 15, 2011

Forget the lottery. Search out medicare/medicaid fraud

One disabled man in New Jersey did and earned $15.4 million.   

In the U.S. a "qui tam" action can be brought by any individual under the False Claims Act with knowledge of past or present fraud against the federal government to bring suit on its behalf.    Whistleblowers, called "relators" , the person filing under the act stands to receive 15-25% of any recovered damages.    With at least $87 billion a year lost to Medicare/Medicaid fraud, there exists the potential to make a
great deal of money for  enterprising individuals or groups  employing all the  technological tools and information at hand to ferret out fraud.

Disabled New Jersey Man Earns $15 Million Exposing Largest Medicaid Fraud In History

Richard West was shocked when he went for some dental work and found his Medicaid benefits had maxed out.
Pulling up his Medicaid record, he totaled the care he'd received, the bills submitted by his provider -- and found the problem.
According to The Star-Ledger, West, 63, found the company arranging his nursing care, Maxim Healthcare, was over-billing the government for hundreds of hours of service from people he'd never seen.


After calling several government hot-lines and receiving no help, he got a lawyer of his own. That phone call unraveled a fraud stretched across 40-states and resulted in a $150 million settlement  -- the largest for healthcare fraud in history.  Monday, Maxim agreed to return $121.5 million in state and federal claims; $8.4 million to the VA, and pay a $20 million fine.

For exposing the fraud West will receive $15.4 million.

Tuckerton man's resolve helps uncover multimillion-dollar health care fraud

A one-time auto mechanic, truck driver, commercial fisherman and carpenter before his disease — a genetic disorder that prevents muscles from functioning — put him in a wheelchair, West gets 16 hours of nursing and home health care a day. He said he brought his case only because no one would listen to him.

He said it was not hard to figure out what was going on. "The hard part was turning them in," he remarked.  West, who lives in Tuckerton, said he tried going through a county social worker, to the state Medicaid waiver office, and then the Medicaid hot line for fraud.  "No one ever did anything," he complained.

Robin Page West, his attorney (and no relation to him), said winning will be a mixed blessing.  "He no longer qualifies for Medicaid," she noted with a smile.

"The three most salient characteristics of Medicare and Medicaid fraud are: It’s brazen, it’s ubiquitous, and it’s other people’s money, so nobody cares," writes  Michael Cannon in Entitlement Bandits.

Judging by official estimates, Medicare and Medicaid lose at least $87 billion per year to fraudulent and otherwise improper payments, and about 10.5 percent of Medicare spending and 8.4 percent of Medicaid spending was improper in 2009. Fraud experts say the official numbers are too low. “Loss rates due to fraud and abuse could be 10 percent, or 20 percent, or even 30 percent in some segments,” explained Malcolm Sparrow, a mathematician, Harvard professor, and former police inspector, in congressional testimony.

The GAO reports that Medicare Fraud is Four Times Greater than the profits of all the health insurers in the country!

Posted by Jill Fallon at 12:51 AM | Permalink

August 24, 2011

Turning a generation of young people into debtors

Student loan debt is approaching $1 trillion, more than what all households owe on their credit cards.  This is disastrous for students who may not find  a job or take the job they really love instead of the one that pays the most or buy their first house.    They will be "hounded for life" and may  never be able to pay back all that they owe. 

Nathan Harden on The next debt bubble: college loans 

Moody’s rating agency recently issued a report that should be a wake-up call to every student now considering taking out large loans to pay for college.

Total student debt is at an all-time high -- and may top $1 trillion this year. Meanwhile, default rates are rising alarmingly. Skyrocketing tuition, lax lending standards and high rates of unemployment have created the perfect financial storm.

Some advice to college students: Learn from our government’s mistakes and avoid borrowing your way into a hole.

The Student Loan Bubble: Only Stupid People Will Be Surprised When It Bursts

Today we have more evidence that the student loan market is headed for disaster. We live in a world where the cost of education has become completely disassociated from the value that the education provides. The tuition is too damn high, and there aren’t enough high paying jobs available for all of the young people with enormous debt.  For many recent college graduates, default is inevitable.

Huffington Post

Outstanding student debt has climbed 25 percent since the start of the financial crisis in 2008, according to the Federal Reserve Bank of New York — an increase from $440 billion then to $550 billion now. By contrast, every other major category of consumer debt, including mortgage debt, credit card debt, auto loans and home equity loans, is lower today than it was in the fall of 2008.
Not only has student debt risen precipitously, but more and more of those loans aren’t getting paid off on time.
The problems of student-loan delinquency and default are only expected to get worse. Salaries and employment rates for recent college graduates have dropped, 

The Atlantic has a good article on The Debt Crisis at American Colleges, calling it a "pernicious trend that the colleges themselves are encouraging."

How do colleges manage it? Kenyon has erected a $70 million sports palace featuring a 20-lane olympic pool. Stanford's professors now get paid sabbaticals every fourth year, handing them $115,000 for not teaching. Vanderbilt pays its president $2.4 million. Alumni gifts and endowment earnings help with the costs. But a major source is tuition payments, which at private schools are breaking the $40,000 barrier, more than many families earn. Sadly, there's more to the story. Most students have to take out loans to remit what colleges demand. At colleges lacking rich endowments, budgeting is based on turning a generation of young people into debtors.

Worse still is that college loans are not dischargeable in bankruptcy.

So even if you file for bankruptcy, the payments continue due. Hence these stern word from Barmak Nassirian of the American Association of College Registrars and Admissions Officers. "You will be hounded for life," he warns. "They will garnish your wages. They will intercept your tax refunds. You become ineligible for federal employment." He adds that any professional license can be revoked and Social Security checks docked when you retire. We can't think of any other statute with such sadistic provisions.

At Inside Higher Ed, James Miller advises professors, Get Out While You Can

Tenure won’t save us from a higher education collapse. Start making alternative career contingency plans now because this collapse could be sudden and catastrophic.

Biggest college regrets

The day that I signed on the dotted line of my promissory note, I didn’t even understand what it would mean to have to pay back more than $40,000 in student loans. I’ll tell you what it means: living in a crappy apartment in Queens well into my 30s. I vaguely remember my dad trying to get the message through to me, but I must have had cotton in my teenage ears.

via Instapundit who said "As stories like this spread, the higher education bubble will deflate.

He says, "Something that can’t go on forever, won’t. This can’t go on forever."

Posted by Jill Fallon at 10:26 AM | Permalink

July 9, 2011

No way would I give up the Internet for a million dollars

Posted by Jill Fallon at 11:51 PM | Permalink

June 28, 2011

"Retirement is on life support, if not indeed dead"

The top financial worry among Americans is funding their retirement, 58% of adults according to Gallup.

Retirement As We Know it Is “Dead”

There's good reason to worry, says Michael Pento, senior economist at EuroPacific Capital. "Retirement is on life support, if not indeed dead as we know it today," he tells Aaron Task in the accompanying interview.

"Where is the income going to come from to sustain a viable retirement?" Pento asks. The problem, as he sees it, is simple -- income and asset values have plateaued over the last decade, while pension and entitlement programs are underfunded.
"Americans are have negligible savings, the real estate market is still in secular decline, stock prices are in a decade's long morass, real incomes are falling, public pension plans are insolvent and our entitlement programs are bankrupt."
Pento believes these issues could be resolved if the government takes the right steps. What might those be? He recommends lowering taxes, reducing inflation and balancing the budget as a means to increase the value of the dollar. If the dollar had more purchasing power and interest rates were higher, retirees would be able to live off their fixed income, he says.
Posted by Jill Fallon at 3:54 PM | Permalink

June 21, 2011

Some personal financial tidbits in the news

In the Washington Post, 7 life lessons from the very wealthy

1. Having money is better than not having money.

2. Don’t become “cash rich” and “time poor.”

3. Memories are better than material objects

4. Watch your “lifestyle leverage,” especially early in your career.

5. Having goals is incredibly important.

6. You must live in the here and now.

7. It helps to be incredibly lucky.

Called before a grand jury to face questions about kickbacks  and money laundering in "one of the largest and most brazen frauds ever committed against the city",  one husband and wife team stole $90 million from NYC and got away .

Here's another life lesson from Richard James Verone who worked for Coca Cola for 17 years but was laid off three years ago.  This Guy Robbed A Bank Just To Get Healthcare In Jail

With a undiagnosed growth on his chest and two ruptured disks, Richard James Verone needed medical attention and to get it he handed a note to a bank teller demanding $1.
His plan includes a three year stint in prison, multiple surgeries, and then release -- just in time to collect social security.

Posted by Jill Fallon at 10:56 AM | Permalink

June 15, 2011

Some money-saving tips

There's never been a better time to learn to live more frugally.

Here are 62 Money-Saving Tips to Help Survive Another Recession

Bank “found” money in a separate account. With any income above your normal earnings, bank the amount in a separate checking or savings account and use the money to pay down debt, build up savings, or offset increased expenses. Overtime, tax refunds (and stimulus checks), gifts and similar windfalls belong here.

When in the store, look high and low for deals, literally. Marketers know that eye-level is the place most people tend to shop, so they put the items with the highest margins right in front of you. Better deals are usually found on lower shelves.

Divide credit card minimum payments in half and pay that amount twice a month.
Interest is calculated based on the average daily balance of your account for the entire month. By making a payment every couple weeks you are reducing that average balance and therefore reducing the finance charges assessed, as opposed to waiting until the end of the month to make a single payment.
Posted by Jill Fallon at 5:14 PM | Permalink

April 28, 2011

The most selfish generation

A recent survey by US Trust of 457 high net worth individuals revealed that the Boomer Wealthy Are Saving Inheritance for Themselves.

"These are mainly self-made people," 50 percent of whom said they paid a price in personal relationships and possibly their own health when they made their wealth, US Trust President Keith Banks told CNBC. So they think "I’m going to get a return on that investment for myself, number one, and maybe my children down the road."

Far from the 'greatest generation', boomers are the most selfish generation.

Posted by Jill Fallon at 11:38 AM | Permalink

February 4, 2011

A view of retirement at 107

He never made more than $10,000 a year in his life and now at 107, after living in retirement for 41 years, he's still getting by on his own resources which are savings, social security and a lifetime annuity he purchased before he retired.

He tells us how he did it by following basic principles

Thrift, real estate investments, using debt well, working even when jobs were hard to find, saving and investing conservatively, and staying healthy.

Posted by Jill Fallon at 11:58 AM | Permalink

February 3, 2011

The Immateriality of Wealth

The most crucial elements of a successful culture and a prosperous society are "intangible, immaterial, spiritual" argues Jay Richards, in The American,

His Top Ten Ways to Alleviate Poverty show The Immateriality of Wealth.

1) Establish and maintain the rule of law.

2) Focus the jurisdiction of government primarily on maintaining the rule of law, and limit its jurisdiction over the economy and the institutions of civil society.

3) Implement a formal property system with consistent and accessible means for securing a clear title to property one owns.

4) Encourage economic freedom.

5) Encourage stable families and other important private institutions which mediate between the individual and the state.

6) Encourage belief in the truth that the universe is purposeful and makes sense.

7) Encourage the right cultural mores.

8) Instill a proper understanding of the nature of wealth creation and poverty.

9) Focus on cultivating your comparative advantage rather than protecting what used to be your comparative advantage.

10) Work hard.

There is a striking correlation between societies that exhibit these traits, or some subset of them, and the large-scale wealth creation. But notice that only one of them describes a material good. All the others are intangible, immaterial, spiritual. You can’t find economic freedom or cultural mores on a map or put them in a safe. You can’t bottle diligence or weigh the ingredients for stable families and voluntary institutions on a scale. These goods involve beliefs, social conventions, institutions, commitments, virtues, and creativity.

In 2006, the World Bank released a study - Where is the Wealth of Nations? - highlighting the importance of "intangible wealth" as distinct from "natural capital" and "produced capital" with a snapshot of wealth for 120 countries at the turn of the millennium.

Posted by Jill Fallon at 10:00 PM | Permalink

December 20, 2010

Common sense that's funny, not boring

Funny and practical, I loved this piece by Gregory Sullivan at Maine Family Robinson, The Top Ten Dumb Things Other People Want You To Do To Wreck Your House and Save Money . As a contractor and carpenter, he's seen and worked at good houses and bad ones and knows what he is talking about. As a writer he's funny as all get out. Just take a look at his bio.

1: CFLs: You don't have to pass laws to force people to do things if they make any sense. Exhibit A: We'll soon be squinting at things using only the wan, greenish-yellow, light-like waves dribbling out of the expensive, delicate, miniature Superfund sites screwed into our lamps where a proper lightbulb used to go. Yes, Compact Fluorescent Lightbulb use is already the law of the land, phased in over a period of years. We're supposed to pay quintiple for one-fifth the light, all to save us from the dreaded "waste heat." I live in western Maine. "Waste heat" is as mythical a beast as I've heard of. Rarer than honest State Senators and more elusive than pretty girls that pay for their own drinks. I'm thinking of going back to Coleman lanterns instead.

2. Venting Clothes Dryers Indoors

3. Boarding up Your Fireplace

4. Blanketing Your Water Heater

5. Spray In Insulation

6. Space Age Windows and Doors

7. Open Floor Plans

8. Low Flow Shower Heads

9. Ceiling Fans

10 Elaborate Tax-Subsidized Boilers

Posted by Jill Fallon at 4:43 PM | Permalink

October 25, 2010

Too much money

He won the lottery in 2005, quit his job and began drinking.  Two years his wife divorced him and he drank more 'out of boredom'.  While being treated for alcohol dependency, he met a fraudster who conned him out of more than a million dollars. Finally, the 'Bored' £9million lottery winner drank himself to death

Keith Gough, 58, said in an interview last year that his life had been 'ruined' by his lottery win.

He said: 'Without routine in my life I started to spend, spend, spend. In the end I was just bored.

'Before the win all I would drink was some wine with a meal. I used to be popular but I've driven away all my friends. I don't trust anyone any more.

'When I see someone going in to a newsagent, I advise them not to buy a lottery ticket.'
Posted by Jill Fallon at 10:00 AM | Permalink

September 7, 2010

When to disclose how much you owe

There's a whole new obstacle to marriage these days - debt.  Especially if you don't know how big it really is.

How Debt Can Destroy a Budding Relationship.

Nobody likes unpleasant surprises, but when Allison Brooke Eastman’s fiancé found out four months ago just how high her student loan debt was, he had a particularly strong reaction: he broke off the engagement within three days.

Still, all of this raises the question: At what point do you have a moral obligation to disclose your indebtedness during courtship? On the eighth date? When you get to third base? In your eHarmony online dating profile?
Ms. Eastman in San Francisco says she knows that now. “What would I have done differently, besides bringing a copy of my credit report on the first date?” she said, with a rueful chuckle. “I would have been more responsible.”

And while she hasn’t dated anyone seriously enough in recent months to get to the point of disclosure, she says it’s probably necessary by the eighth or 10th date. “I know that now,” she said. “But it had never occurred to me that this is something that might end up being a deal-breaker.”
Posted by Jill Fallon at 11:22 AM | Permalink

August 19, 2010

Hidden traps on campus

There are many hidden financial and privacy traps that Karen Blumenthal in the Wall St Journal warns parents about in Packing for College, 2010 Style

Among them:

1. Not reading what the college health insurance policy covers and doesn't.

2. Not having your college student sign a health care power of attorney as well as a HIPAA release form.

3. Not getting insurance riders for that brand new computer for college.

4. Not getting clear about how money will get to the student.

Posted by Jill Fallon at 1:13 PM | Permalink

March 19, 2010

Bad credit derails job seekers

If you're looking for a job, you have to realize that More Employers Are Conducting Credit Checks on Job Applicants.

Companies typically look back over a period of years for patterns in applicants' behavior, says Mike Aitken, the professional group's director of government affairs. "It's a longer-term snapshot to see if that's indicative of fiscal responsibility," he says.

The vast majority of employers who conduct credit background checks do so for jobs with fiduciary or financial responsibility, such as accounting, budgeting or those involving cash or sensitive credit-card information. Nearly half the respondents also consider the credit of candidates for senior executive positions.

Lawsuits or other judgments outstanding, or multiple accounts in debt collection, were the types of credit information most likely to keep an organization from extending a job offer, according to the survey.
Certain factors that could hurt your credit score, such as a recently reduced credit-card limit, would be unlikely to hurt your job prospects. Employers focus on issues like collections and defaults, says John Ulzheimer, president of consumer education for Inc..

Just one more reason to pay what you owe, keep your credit rating high and check your credit report  yearly .

Posted by Jill Fallon at 10:31 AM | Permalink

February 9, 2010

"I had the feeling I was working as a slave for things that I did not wish for or need."

The Millionaire who gave away the fortune that was making him miserable.

"My idea is to have nothing left. Absolutely nothing," he told The Daily Telegraph. "Money is counterproductive – it prevents happiness to come."

Instead, he will move out of his luxury Alpine retreat into a small wooden hut in the mountains or a simple bedsit in Innsbruck.

His entire proceeds are going to charities he set up in Central and Latin America, but he will not even take a salary from these.

"For a long time I believed that more wealth and luxury automatically meant more happiness," he said. "I come from a very poor family where the rules were to work more to achieve more material things, and I applied this for many years," said Mr Rabeder.

But over time, he had another, conflicting feeling.

"More and more I heard the words: 'Stop what you are doing now – all this luxury and consumerism – and start your real life'," he said. "I had the feeling I was working as a slave for things that I did not wish for or need.

I have the feeling that there are lot of people doing the same thing."

Posted by Jill Fallon at 12:43 PM | Permalink

November 18, 2009

When unemployment continues to rise, what to do?

A terrific multimedia timeline graphic on the rise of unemployment across the country from 2007-2009.

"The worst is yet to come" writes Nouriel Roubini, one economist who saw the trouble coming and about whom Fortune magazine said
In 2005, Roubini said home prices were riding a speculative wave that would soon sink the economy. Back then the professor was called a Cassandra. Now he's a sage.

Unemployed Americans should hunker dow for more job losses.

This is very bad news but we must face facts. Many of the lost jobs are gone forever, including construction jobs, finance jobs and manufacturing jobs. Recent studies suggest that a quarter of U.S. jobs are fully out-sourceable over time to other countries.
Based on my best judgment, it is most likely that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more.

The weakness in labor markets and the sharp fall in labor income ensure a weak recovery of private consumption and an anemic recovery of the economy, and increases the risk of a double dip recession.

Ben Bernake is more circumspect

In remarks to the Economic Club of New York, Bernanke predicted the economy should continue to grow next year, but he warned of "important headwinds," including a weak job market and tight credit for small businesses and households.

Those forces "likely will prevent the expansion from being as robust as we would hope," he said

So what's an average person to do?

Megan McArdle who blogs on economics for the Atlantic has had her own share of economic travails.  Newly engaged, she was surprised to find herself converted by financial guru David Ramsey whose message is simple Lead Us Not Into Debt.

Nonetheless, Ramsey has made a convert out of a secular journalist with one of the pricey M.B.A.s he likes to poke fun at. I have never felt as serenely in control of my finances as I have during these months of knowing that every single dollar is where it is supposed to be: either in the bank, or on a well-chaperoned date with our envelope organizer. The process has been surprisingly painless but, even more surprisingly, pleasant.

Posted by Jill Fallon at 10:43 AM | Permalink

June 25, 2009

Financial Advisor Kidnapped and Tortured

No doubt a lot of people fantasized about this, but in Germany a group of wealthy pensioners actually did it.

Zimmer frame gang 'tortures advisor' who lost $4 million of their savings.

The pensioners, nicknamed the "Geritol Gang" by German police after an arthritis drug, face up to 15 years in jail if found guilty of subjecting German-American James Amburn to the alleged four-day ordeal.

Two of them are said to have hit him with a Zimmer frame outside his home ..before he was bound with duct tape, bundled into the boot of an Audi A8 and driven 300 mileso a home on the shores of a popular holiday lake in Bavaria.

During his alleged confinement in an unheated cellar, Mr Amburn, 56, claims he was burned with cigarettes, beaten, had two ribs broken, was hit with a chair leg and chained up "like an animal".

Posted by Jill Fallon at 9:26 AM | Permalink

May 26, 2009

Credit card facts

Now here's a credit disclosure I like modeled after the standard format of nutrition label that we are all know.

Hats off to the graphic designers.

David Gibson, Carla Hall and Sylvia Harris are graphic designers and directors of Design for Democracy, a nonprofit group that promotes accessible and transparent civic communications.


Posted by Jill Fallon at 11:08 AM | Permalink

May 20, 2009

Hitting the Worry Motherlode

Suze Orman is Having a Moment in the Sunday New York Times Magazine

The career of any financial adviser thrives on worry, and Orman, already the best-known financial adviser in the country, has hit the worry motherlode. In January, “Suze Orman’s 2009 Action Plan,” a guide to the economic crisis, made the best-seller list. Around the same time, Oprah Winfrey began giving the book away free in digital form on her Web site. (After Winfrey announced the offer, the book was downloaded more than two million times in one week.) Overall viewership on “The Suze Orman Show” is up 22 percent from this time last year, and the urgency of the calls has increased, too. Instead of asking about what kind of mortgage makes the most sense, her viewers are calling with questions of survival like, If I have to default on one of my various lines of debt, which one should I abandon first?

With the change in the economic climate, Orman’s role in the culture has shifted from pop finance guru to something more like a trusted national adviser.

What’s most striking about Orman’s frenetic, outsize celebrity is how starkly it contrasts with the sober simplicity of her message.
Track your spending. Stay out of debt. Take care of your car. Look into a Roth I.R.A. Though she is larger than life and wealthy, her primary message is not about larger-than-life ambition or a sky-high entrepreneurial spirit. Orman’s advice rarely sounds like “Go West, young man.” It sounds more like, “Everyone should have a liquid eight-month emergency fund.”

Posted by Jill Fallon at 12:58 PM | Permalink

May 16, 2009

My Personal Credit Crisis

I tip my hat to Edmund Andrews who did what none of us can imagine - expose his personal financial delusions - to write  all about My Personal Credit Crisis

If there was anybody who should have avoided the mortgage catastrophe, it was I. As an economics reporter for The New York Times, I have been the paper’s chief eyes and ears on the Federal Reserve for the past six years. I watched Alan Greenspan and his successor, Ben S. Bernanke, at close range. I wrote several early-warning articles in 2004 about the spike in go-go mortgages. Before that, I had a hand in covering the Asian financial crisis of 1997, the Russia meltdown in 1998 and the dot-com collapse in 2000. I know a lot about the curveballs that the economy can throw at us.

But in 2004, I joined millions of otherwise-sane Americans in what we now know was a catastrophic binge on overpriced real estate and reckless mortgages. Nobody duped or hypnotized me. Like so many others — borrowers, lenders and the Wall Street dealmakers behind them — I just thought I could beat the odds. We all had our reasons. The brokers and dealmakers were scoring huge commissions. Ordinary homebuyers were stretching to get into first houses, or bigger houses, or better neighborhoods. Some were greedy, some were desperate and some were deceived.

I felt foolish, ashamed and angry as I confessed to Bob. Why had I been trying to live a lifestyle that I couldn’t afford? Why had I tried to keep up the image of a conventional suburban family man, when nothing about my situation was conventional? How could I have glossed over the fact that we had been spending about $3,000 more than we were earning, month after month after month? How could a person who wrote about economics for a living fall into the kind of credit-card trap that consumer groups had warned about for years?


Neo takes a much tougher view. 

Andrews remains mystified as to how this could have happened to him. I can help him out on that: greed and denial. No one forced him to do any of this, and he of all people ought to have known better. But his story is an excellent example of how far many people in this country have come from any idea of personal responsibility.

Reality bites and hard.

In the comments, Beth said...
I read this with disbelief. This guy, after child support, was bringing home less than $3k a month, and his fiancee at the time had no job at all, and it made sense to borrow HALF A MILLION BUCKS???? He keeps saying how easy it was to borrow it, but until months after the bills actually start coming in, he never thought about how hard it would be to pay back. That's the kind of thinking I've seen in friends with manic depression, in a manic phase.

Posted by Jill Fallon at 9:35 AM | Permalink

April 20, 2009

"Do not for a moment think that a brokerage firm is your friend"

Jeffrey Goldberg in The Atlantic on Why I Fired My Broker

For most of our  our adult lives, my wife and I have behaved in the way responsible cogs of capitalism are supposed to behave—we invested in a carefully calibrated mix of equities and bonds; we bought and held; we didn’t overextend on real estate; we put the maximum in our 401(k) accounts; we gave to charity; and we saved, but we also spent: mainly on gasoline, food, and magazines. In retrospect, we didn’t have the proper appreciation for risk, but who did? We were children of the bull market.
Well, goodbye to all that. I took a random walk down Wall Street and got hit by a bus.

IT TURNS OUT that my crucial mistake was believing that the brokers and wealth managers and cable-television oracles who make up the financial-services industrial complex actually had my best interests at heart. Or so say the extremely smart—and wealthy—people I asked to help me figure a way out of my paralysis. One of these people was Robert Soros, the deputy chairman of the fund started by his father, George. I went to see him at his office, where he spent two hours performing an autopsy on my assumptions.

“You think a brokerage should be a place you go to pay commissions for fair and unbiased advice, right?” he asked.

“Yes,” I said.

“It’s not. It never has been.” He then cited another saying of Buffett’s: “‘Wall Street is a place where whatever can be sold will be sold.’ You are the consumer of their dreck. What they can sell to you, they will sell to you.”

“But they told us—”

“They lied.”

He went on: “You should be disheartened and disappointed. But don’t kid yourself. You’re a naive capitalist. They were never your advisers. Do not for a moment think that a brokerage firm is your friend.”ß

Who Will Guard Your Nest Egg 
Brokers are not legally bound to put your best interests first.

Independent registered financial advisors are.

Vetting a Potential Financial Advisor

Posted by Jill Fallon at 10:01 AM | Permalink

April 13, 2009

Vetting a potential financial advisor

From the Wall Street Journal comes Seven Questions to Ask When Picking a Financial Advisor

The first step is to realize that you're ultimately responsible for your family's money -- you're the chief executive of your own investment company. Your financial adviser, mutual-fund manager, wealth manager and anyone else who handles your investments should report directly to you. Even if you don't understand the ins and outs of investing as well as they do, you're responsible for ensuring that they handle your money properly.
Once you recognize that you're in charge, you can approach your advisers like a boss -- not just a client. That means putting them through a tough vetting process to make sure they're competent, trustworthy and looking after your best interests.

1. What's in the advisor's background?
2. What do the advisor's clients say?
3. How does the advisor get paid?
4. Where are the advisor's checks and balances?
5. What's the advisor's track record?
6. Can the advisor put it in writing?
7. What do other pros think?

Read the whole piece for Shelly Banjo's discussion.

Posted by Jill Fallon at 11:56 AM | Permalink

April 7, 2009

Who Will Guard Your Nest Egg?

There's a power struggle in Washington that will shape how investors get the advice they need.

On one side are stockbrokers and other securities salespeople who work for Wall Street firms, banks and insurance companies. On the other are financial planners or investment advisers who often work for themselves or smaller firms.

Brokers are largely regulated by the Financial Industry Regulatory Authority, which is funded by the brokerage business itself and inspects firms every one or two years. Under Finra's rules, brokers must recommend only investments that are "suitable" for clients.

Advisers are regulated by the states or the Securities and Exchange Commission, which examines firms every six to 10 years on average. Advisers act out of "fiduciary duty," or the obligation to put their clients' interests first.

Most investors don't understand this key distinction. A report by Rand Corp. last year found that 63% of investors think brokers are legally required to act in the best interest of the client; 70% believe that brokers must disclose any conflicts of interest. Advisers always have those duties, but brokers often don't.

Now the battle is over whether Finra should adopt a fiduciary standard that puts the clients' interests first.


Posted by Jill Fallon at 10:38 AM | Permalink

March 26, 2009

"There are two automatic responses to anything money-related – boredom and fear"

A recent study seems to show that the brain switches off rationality when given 'expert advice.'

Financial advice can make us take leave of our senses, according to research that shows how the brain sets aside rationality when it gets the benefit of supposedly expert opinion.

When a bank manager or investment adviser recommends a financial decision, the brain tends to abdicate responsibility and defer to their authority with little independent thought, a study has suggested.

Such expert advice suppresses activity in a neural circuit that is critical to sound decision-making and value judgments, scientists in the US have found.

“This study indicates that the brain relinquishes responsibility when a trusted authority provides expertise,” said Gregory Berns, Professor of Neuroeconomics and Psychiatry at Emory University in Atlanta, who led the research. “The problem is that it can work to a person’s detriment if the trusted source turns out to be incompetent or corrupt.”

The findings from Emory University hint at what personal finance journalists have known for years: that there are two automatic responses to anything money-related – boredom and fear.

Most people cannot wait to unburden themselves of their mind-numbing, terrifying money worries so that they can get on with more pleasant decisions, like what to have for dinner.

I understand this response completely which is why I urge people to find a financial advisor they trust, one who is regulated, qualified and experienced who will act as more as a decision partner with you.  You can never turn over the final responsibility.

Posted by Jill Fallon at 3:09 PM | Permalink

March 22, 2009

Renting is often the better choice

Rethinking Rent

But a growing chorus of economists and housing experts say that this mind-set, too, needs fundamental reform. Owning a home is not right for everyone, they say: In some ways it's overrated, and it can even have harmful effects for individuals and society. It is now glaringly clear that buying a home is a financial risk, not the surefire investment it is often perceived to be. Widespread homeownership may also have a negative impact on the economy, because, among other reasons, displaced workers can't easily relocate to new jobs. And some of the alleged rewards of homeownership, such as greater self-esteem, health, and civic engagement, have been called into question by research. The government, critics argue, should focus on ensuring high-quality, affordable housing rather than promoting homeownership for its own sake.


According to this view, renting offers many advantages, and should be considered a viable long-term option for people of all ages and socioeconomic levels. Renters enjoy flexibility and freedom from the responsibilities of maintenance. Given the often overlooked costs and risks of homeownership, renting is in many cases a wise financial choice. And the experience of a place like Switzerland - a well-functioning country with only about a 35 percent homeownership rate - suggests that rental housing per se does not unmoor society.

The emotional tug of owning a home can't be discounted. But in recent years, as jobs have become less stable, environmental concerns have risen, and the costs of owning a house have become apparent, the case for renting has become more compelling. According to Eric Belsky, "People are saying, 'Hey, it's OK to rent.' " Instead of starting with a presumption in favor of homeownership, he asks, "Why don't we help people make informed choices?"

Posted by Jill Fallon at 8:43 AM | Permalink

March 20, 2009

"The banks, which, to paraphrase Willie Sutton, is where the money used to be"

It is time for the president to state the obvious: This recession is not caused by excessive executive compensation in government-controlled companies. The economy has been sinking because of a lack of credit, stemming from a general lack of confidence, stemming from the lack of a plan to detoxify the major lending institutions, mainly the banks, which, to paraphrase Willie Sutton, is where the money used to be.

As usual Charles Krauthammer bores to the heart of the matter, this time  in Bonfire of the Trivialities

Posted by Jill Fallon at 10:58 AM | Permalink

March 16, 2009

"You’re going to have a smaller house, and a smaller car — if not a basement flat and a bus ticket"

Mark Steyn on The Brokest Generation

Our kids are the ultimate credit market, and the rest of us are all pre-approved!

the future of all our children is that they’ll be paying off the past of all their grandparents.
This is the biggest generational transfer of wealth in the history of the world. If you’re an 18-year old middle-class hopeychanger, look at the way your parents and grandparents live: It’s not going to be like that for you. You’re going to have a smaller house, and a smaller car — if not a basement flat and a bus ticket. You didn’t get us into this catastrophe. But you’re going to be stuck with the tab, just like the Germans got stuck with paying reparations for the catastrophe of the First World War. True, the Germans were actually in the war, whereas in the current crisis you guys were just goofing around at school, dozing through Diversity Studies and hoping to ace Anger Management class. But tough. That’s the way it goes.

Posted by Jill Fallon at 9:12 AM | Permalink

March 12, 2009

Identity Protection

If you're thinking of buying some identity protection, be sure to read Cardholders Buy Peace of Mind if not Security in the Wall St Journal. 

As the number of data breaches rises, there's a growing cottage industry of companies selling protection to consumers. The companies can help monitor and prevent outright identity theft for those who lack the time and technical know-how to keep a constant eye on their credit reports or monitor the Internet to make sure their personal information, such as their Social Security number, hasn't been stolen. But they won't stop a more common crime: preventing a thief from using your credit-card number to make fraudulent purchases.

The number of reported data breaches of all kinds in the U.S. climbed to 656 last year from 446 in 2007, according to the Identity Theft Resource Center, a nonprofit organization based in San Diego that helps identity-theft victims. These breaches affected some 36 million records -- including Social Security numbers, credit-card accounts and other personal data.

Overall, more than 250 million records containing personal information have been lost or stolen since 2005, according to the Privacy Rights Clearinghouse -- and that's driving more consumers to companies that say they can prevent theft.


The services, which usually cost less than $100 a year, typically place an alert on a customer's credit report, which requires the person to approve over the phone any attempts to access the file or open a new account. In the event that a fraud takes place, they say they help customers fill out the right forms, and help them reach out to credit bureaus, banks and other institutions.

Statistically speaking, the risk to any individual from data breaches is small. Fewer than 1% of breach victims ever suffer credit-card fraud or identity theft, according to Javelin Strategy & Research, a research company focused on the payment industry.

But Amy Rosen prefers having someone else looking out for her. The marketing professional from Chicago signed up for a service from TrustedID last year after twice having cellphone accounts opened in her name in 2004 and 2007. While the service hasn't yet stopped any new fraud attempts, it has given her peace of mind. "This is the one thing that makes me feel like I'm protected and that someone else is looking out for me," says Ms. Rosen.

Posted by Jill Fallon at 10:06 PM | Permalink | TrackBack

Policy-making by perpetual crisis?

First there was Tom Friedman in This is Not a Test.  This is Not a Test

Our country has congestive heart failure. Our heart, our banking system that pumps blood to our industrial muscles, is clogged and functioning far below capacity. Nothing else remotely compares in importance to the urgent need to heal our banks.
Right now, there is too much uncertainty; no one knows what will be the new rules governing investments in our biggest financial institutions.

Then Richard Fernandez, after noting that the London Telegraph said that President Obama was too exhausted to give British PM Gordon Brown a proper welcome writes 

Maybe part of the reason the White House is frazzling itself into the ground is that they’re trying to remake everything. Everything has now become part of the delta. Everything is changing. Now they are facing the revenge of the second derivative: the rate of the rate of change. They are trying to restructure the government so it is run with Czars instead of cabinet secretaries; “engaging” hostile nations with little or no preconditions and getting blown off; changing the basis of the economy to conform to their untried vision of the future; creating the single greatest expansion of government since FDR; redesigning health care; holding consultations on everything and planning to save the world from Climate Change. They’re busy because crisis creates an “opportunity” for their own vague revolution.

The cumulative consequence of these actions is a vast increase in the amount of risk the entire system has to endure because variables are being added faster than they are being solved. The margins are gone — removed by design. The margins are in the way. But while things might hold together for so long as the road ahead is smooth, what happens if things hit a bump? What happens in the Obama administration, too preoccupied to “even fake an interest in foreign policy meets a sudden challenge?

Andrew Grove says Mr. President, Time to Rein in the Chaos

I find myself wringing my hands, not over the goals President Obama has set but over the ineffectual ways the administration has pursued them. I have no qualifications to judge how well the Obama team manages the political dynamics, but as a business executive with 40 years' experience, much of it managing change, and a part-time academic dedicated to studying why so few corporations succeed in navigating change, I feel compelled to comment not on the what of the Obama team's efforts but on the how.
We have gone through months of chaos experimenting with ways to introduce stability in our financial system. The goals were to allow the financial institutions to do their jobs and to develop confidence in them. I believe by now, the people are eager for the administration to rein in chaos. But this is not happening.

Until the administration does this, we should not embark on attempting to fix another major part of the economy. Our health-care system may well be ripe for a major overhaul, as are our energy and environmental policies. Widespread recognition that all of these reforms are overdue contributed to Barack Obama's victory in November. But if the chaos that resulted from initiating such an overhaul were piled on top of the unresolved status of the financial system, society and government would become exhausted. Instead, the administration must adopt a discipline; not initiating a second wave of chaos before we have a chance to rein in the first.
The answers to the questions "What is wrong?" "What are we going to do?" "How are we going to do it?" and "What should we expect?" should be drummed home relentlessly. This needs to be an ongoing process, where clarity, consistency and repetition are key. It is hard work and requires a laser-like focus on the solution.

One wonders what purpose there is in perpetuating the crisis in the financial system.

Mark Tapscott asks Does Obama's strategy require the perpetual crisis his economic policy produces?

White House chief of staff Rahm Emanuel gave the game away back in November with his observation that:

"You never want a serious crisis to go to waste. What I mean by that is it's an opportunity to do things that you think you could not do before. This is an opportunity…And this crisis provides the opportunity for us, as I would say, the opportunity to do things that you could not do before."

Initially, Emanuel’s disturbing words were dismissable as just his own, but the president himself and most recently Secretary of State Hillary Clinton have since repeated variations on the theme. So it is clearly the Obama strategy to use the current economic crisis as justification for his radical agenda.

Call it policy-making by perpetual crisis.

Posted by Jill Fallon at 12:11 PM | Permalink

March 11, 2009

45% of world's wealth destroyed

World Bank says collapse has arrived

THE World Bank has broken a taboo, becoming the first official organisation to predict the global economy will shrink during 2009, to collapse for the first time in more than 60 years.
The new World Bank assessment, prepared for next week's meeting of finance ministers and treasurers from the world's 20 largest economies, was not specific about the extent of the collapse other than to say that global economic activity would shrink "for the first time since World War II, with growth at least 5 percentage points below potential".

Global industrial production would be down 15 per cent by the middle of this year, with world trade on track to record its largest decline in 80 years.

An astonishing 53% of Americans believe the US will enter a depression like the 1930s says new Rasmussen poll.

So it is all the more discouraging that the White House has yet to nominate anyone to fill the top positions at the Treasury Department aside from Secretary Tim Geitner. 

In an astonishing breach of diplomacy, the head of the civil service in the U.K, Sir Gus O'Donnell, complained that he can't get anybody on the phone at Treasury to talk about preparations for next month's G20 summit  to deal with the global economic crisis.  O'Donnell  said it was "unbelievably difficult" to hold discussions ahead of the meeting of world leaders in London.

The CEO of Blackstone private equity company says 45% of world's wealth destroyed.

As Tom Friedman says today

Friends, this is not a test. Economically, this is the big one. This is August 1914. This is the morning after Pearl Harbor. This is 9/12. Yet, in too many ways, we seem to be playing politics as usual.

Ed Morrissey details the 18 top positions unfilled and underscores the failure of the White House to nominate people to fill those jobs.

Why has Obama neglected Treasury?

The White House has responsibility for appointing these 18 positions.  Those appointments get handled by the Senate Finance Commitee, which after receiving the formal nominations, has to do background checks and other information gathering to prepare committee members for their hearings.  It takes some time to get a nomination from the White House to a confirmation vote, but the clock doesn’t start — it can’t start — until Obama makes each nomination.

Posted by Jill Fallon at 2:17 PM | Permalink

March 9, 2009

Warren Buffett talks, people listen

The US economy has fallen off a cliff said Warren Buffet in an interview on CNBC.

“If you’re in a war, and we really are in an economic war, there’s a obligation to the majority to behave in ways to not go around inflaming the minority. If on Dec. 8, or maybe it was Dec. 7, when Roosevelt convened Congress to vote on the war. He didn’t say, ‘I’m throwing in about ten of my pet projects,’

“Job one is to win the economic war. Job two is to win the economic war and Job 3,” Buffett said. “And you can’t expect people to unite behind you if you’re trying to jam a whole bunch of things down their throats. So I would absolutely say, for the interim until we get this one solved, I would not be pushing a lot of things that, that you know are contentious.”

Learning that US Treasury Secretary Tim Geithner is practically alone on the job, working night and day to cope with the worst economic downturn in decades is worrisome and not just to me.

Jack Welch, former GE CEO said

This guy is locked in another world. And he’s throwing all these initiatives into this game in the middle of a crisis. Focus on the crisis! Focus on the economy!
it’s the economy, Mika. It’s the economy. It’s getting the banks going. It’s a clear message to everybody: all hands on deck. We have a crisis: let’s deal with this. Not one day, carbon tax. One day, take the kids out of the Washington schools. I mean it’s, it’s crazy!

Until a plan comes out in sufficient detail to deal with the problem in the banks, stock investors will continue to see declines in the value of their portfolios. 


Posted by Jill Fallon at 8:08 PM | Permalink

March 5, 2009

How a "well-educated, historically rational human beings committed one of the single greatest acts of madness in financial history."

I don't think there's a more entertaining - or illuminating - writer on financial topics than Michael Lewis. 

Here he is on Wall Street on the Tundra in Vanity Fair.

Iceland Demonstration
Iceland's coalition government collapsed in January, fallout from the financial collapse

Iceland’s de facto bankruptcy—its currency (the krona) is kaput, its debt is 850 percent of G.D.P., its people are hoarding food and cash and blowing up their new Range Rovers for the insurance—resulted from a stunning collective madness. What led a tiny fishing nation, population 300,000, to decide, around 2003, to re-invent itself as a global financial power? In Reykjavík, where men are men, and the women seem to have completely given up on them, the author follows the peculiarly Icelandic logic behind the meltdown.

Iceland Wideweb

Back away from the Icelandic economy and you can’t help but notice something really strange about it: the people have cultivated themselves to the point where they are unsuited for the work available to them. All these exquisitely schooled, sophisticated people, each and every one of whom feels special, are presented with two mainly horrible ways to earn a living: trawler fishing and aluminum smelting. There are, of course, a few jobs in Iceland that any refined, educated person might like to do. Certifying the nonexistence of elves, for instance. (“This will take at least six months—it can be very tricky.”) But not nearly so many as the place needs, given its talent for turning cod into Ph.D.’s. At the dawn of the 21st century, Icelanders were still waiting for some task more suited to their filigreed minds to turn up inside their economy so they might do it.

Enter investment banking.

Posted by Jill Fallon at 9:03 AM | Permalink

March 4, 2009

The Formula that Killed Wall Street

Hey, bet you don't what  a Gaussian copula function is.

It's a Recipe for Disaster and the Formula that Killed Wall Street

Li's Gaussian copula formula will go down in history as instrumental in causing the unfathomable losses that brought the world financial system to its knees.

Investors exploited it as a quick -and fatally flawed- way to assess risk.

David Li incidentally is a star mathematician who grew up in rural China in the 1960s.  Ah, the irony.

No one knew all of this better than David X. Li: "Very few people understand the essence of the model," he told The Wall Street Journal way back in fall 2005.

"Li can't be blamed," says Gilkes of CreditSights. After all, he just invented the model. Instead, we should blame the bankers who misinterpreted it. And even then, the real danger was created not because any given trader adopted it but because every trader did. In financial markets, everybody doing the same thing is the classic recipe for a bubble and inevitable bust.

Nassim Nicholas Taleb, hedge fund manager and author of The Black Swan, is particularly harsh when it comes to the copula. "People got very excited about the Gaussian copula because of its mathematical elegance, but the thing never worked," he says. "Co-association between securities is not measurable using correlation," because past history can never prepare you for that one day when everything goes south. "Anything that relies on correlation is charlatanism."

Posted by Jill Fallon at 6:21 PM | Permalink

February 15, 2009

Hoping it's not so

 Rainbow's End

Rainbow's End in California.  Photo by amateur photographer Jason Erdkamp.

No pot of gold found.

Is it possible that  Federal obligations exceed world GDP?

The $65.5 trillion total federal obligations under GAAP accounting not only now exceed four times the U.S. gross domestic product, or GDP, the $65.5 trillion deficit exceeds total world GDP.
"Social Security and Medicare must be shown as liabilities on the federal balance sheet in the year they accrue according to GAAP accounting," Williams argues. "To do otherwise is irresponsible, nothing more than an attempt to hide the painful truth from the American public. The public has a right to know just how bad off the federal government budget deficit situation really is, especially since the situation is rapidly spinning out of control.

"The federal government is bankrupt," Williams told WND. "In a post-Enron world, if the federal government were a corporation such as General Motors, the president and senior Treasury officers would be in federal penitentiary."

via Instapundit who said  "I don’t think it is. I certainly hope not." 

Me too.

Posted by Jill Fallon at 9:11 AM | Permalink

February 11, 2009

Who was behind the electronic run on the banks?

Rep Kanjorski: $550 Billion Disappeared in "Electronic Run on the Banks"


It was about September 15th [sic]. … On Thursday at about 11 o’clock in the morning the Federal Reserve noticed a tremendous drawdown of, uh, money market accounts in the United States to the tune of $550-billion was being drawn out in in a matter of an hour or two.

The Treasury opened up its window to help, and pumped in $105-billion into the system, and quickly realized it could not stem the tide. We were having an electronic run on the banks. They decided to close down the operation, to close down the money accounts. … If they had not done that, in their estimation, by 2 PM that afternoon $5.5-trillion would have been withdrawn and would have collapsed the U.S. economy and within 24 hours the world economy would have collapsed.

We talked at that time about what would have happened. It would have been the end of our economic and our political system as we know it.

So that's what  former Treasury Secretary Paulson and Fed Chairman Bernake told the Congress behind closed doors, scaring the bejezzus out of them and shocking them into supporting the first $700 billion to bail out the banks.

More at Capitalism Gone Wild

Posted by Jill Fallon at 8:54 AM | Permalink

February 9, 2009

I'd much rather buy Australia

Now, I can understand, much as I don't like it, bailing out the banks because without a functioning financial system, the economy breaks down.

What I don't understand is the pressure to pass the stimulus bill, in truth a spending bill.  This recession is nowhere near as bad as the recession in 1981-1982 or 1973-1975 as this graph from JMF shows


Viking pundit via Maggie's Farm says

Including debt service, the cost of the Generational Theft Act is estimated at $1.175 trillion, all of which will be borrowed to be paid by America's children.

Think of it this way: we're going to borrow and spend almost one Russia, or one India. We could buy South Korea or Mexico.
We could have our own continent by purchasing Australia and all their handsome actors and actresses. We could have Belgium, Sweden, and still have some pocket change left over for Greece. We could have five Hong Kongs.

Personally, I'd much rather buy Australia.

Harvard economist Robert Barro, says in the Atlantic

This is probably the worst bill that has been put forward since the 1930s. I don't know what to say. I mean it's wasting a tremendous amount of money. It has some simplistic theory that I don't think will work, so I don't think the expenditure stuff is going to have the intended effect. I don't think it will expand the economy. And the tax cutting isn't really geared toward incentives. It's not really geared to lowering tax rates; it's more along the lines of throwing money at people. On both sides I think it's garbage. So in terms of balance between the two it doesn't really matter that much.

Posted by Jill Fallon at 2:16 PM | Permalink

What causes personal bankruptcy?

Megan McArdle on a recent study that finds job loss and medical condition NOT the major cause of personal bankruptcy.

Rather, it's over-consumption, spending on houses and cars,  that people can't afford that drives people to file for bankruptcy.

This paper utilizes the population of personal bankruptcy filings in the state of Delaware during 2003 and finds that household expenditures on durable consumptions, such as houses and automobiles, contribute significantly to personal bankruptcy. Adverse medical conditions also lead to personal bankruptcy filings, but other adverse events such as divorce and unemployment have marginal effects. Over-consumption makes households financially over-stretched and more susceptible to adverse events, which reconcile the strategic filing and adverse event explanations.

Posted by Jill Fallon at 9:05 AM | Permalink

February 8, 2009

Recession will end in 2009 says CBO even without stmulus

So why spend the money?  After reading what the nonpartisan Congressional Budget Office said about the stimulus package,

CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

the more I think it's a bad idea.

International Business Daily wrote

The agency projected the Senate bill would produce between 1.4 percent and 4.1 percent higher growth in 2009 than if there was no action. For 2010, the plan would boost growth by 1.2 percent to 3.6 percent.

CBO did project the bill would create jobs, though by 2011 the effects would be minuscule.

"The American Republic will endure, until politicians realize they can bribe the people with their own money" is on point even if often misattributed to Alexis de Tocqueville

UPDATE:  An amazing graphic in the Washington Post on Taking Apart the $819 billion Stimulus Package

Posted by Jill Fallon at 10:57 PM | Permalink

A fog so thick ...

"The financial system created a fog so thick that even its captains could not navigate it."

In Our Epistemological Depression, Jerry Muller argues that major recessions are characterized by something novel. 

This crisis was not created by something that gets reflected in the financial system, but a crisis caused within the financial system itself.

The most important bubble of the last decade or so was not of the housing sector, but of the financial sector, a bubble reflected by the 20 percent of S & P 500 profits that were made in the financial sector.
a large role was played by the failure of the private and corporate actors to understand what they were doing. Most heads of ailing or deceased financial institutions did not comprehend the degree of risk and exposure entailed by the dealings of their underlings—and many investors, including municipalities and pension funds, bought financial instruments without understanding the risks involved.

Diversification and complexity, which are both supposed to reduce risk, turned out to have unintended and unanticipated negative consequences. The purported virtues mutated into vices.
Without financial institutions that people have faith in, a fiscal stimulus is unlikely to have much of a multiplier effect.

Posted by Jill Fallon at 8:36 AM | Permalink

February 3, 2009

What's going to happen to the Protestant ethic?

The emergence of what Max Weber described as the Protestant ethic represented an important point in the evolution of capitalism because it combined a reverence for hard work with an emphasis on thrift and forthrightness in one’s dealings with others. Where those virtues were most ardently practiced markets advanced and societies prospered. And, as Wesley foresaw, what slowly followed was a rise in materialism and a reverence of wealth for its own sake.

To survive all of this it seems capitalism needs a new dose of restraint. But absent a vast religious revival in the West, which seems unlikely, where will a renewal of the virtues of the work ethic come from? That question becomes ever more difficult to consider because as religious practice fades and our institutions reject traditional values, so too does the memory of the role that these elements played in the rise of capitalism.

Can Free Markets Survive in a Secularized World by Steven Malanga

Posted by Jill Fallon at 11:04 AM | Permalink

February 2, 2009

Madoff and the SEC

Have you wondered why the SEC didn't take action against Bernie Maldoff despite warnings from Harry Markopulous, an independent  financial fraud investigator and past president of the Boston Security Analyst Society who wrote the SEC to say that Madoff was running the world's largest hedge fund back in 2000?

Arnaud de Borchgrave reveals a family connection I've not seen reported anywhere else in Ignorance is not bliss.

Another is the interesting relationship between Mr. Madoff's niece Shana, a rules-compliance officer at her uncle's business, and her now husband, Eric Swanson, an attorney and former SEC compliance officer. Mr. Swanson was also tasked with reviewing Madoff's business in 1999 and again in 2004. He married Shana in 2006. A co-founder and former head of the Nasdaq stock exchange, Mr. Madoff was widely regarded as beyond reproach. He also bragged about his ties to the SEC.

Posted by Jill Fallon at 8:56 AM | Permalink

January 24, 2009

'Because when you guys are my age, the whole thing is going to fall apart.'

I don't know about you, but I'm getting awfully nervous about all these bailouts and stimulus plans.

Cary Doctorow at Boing Boing says the Bailout costs more than the Marshall Plan, the Louisiana Purchase, the moonshot, S&L bailout, Korean War, New Deal, Vietnam war and NASA's lifetime budget COMBINED.

There seems to be no shame I just wonder how Merrill Lynch paid out $15 billion in bonuses after it took $10 billion from TARP.  John Carney calls it Wall Street's Sick Psychology of Entitlement

Even the sharpest critics of the bailout never imagined that it would be used to make wealthy idiots even wealthier.

It seems to have embarrassed Bank of America sufficiently that they have shown the door to former Merrill Lynch CEO John Thain.
Mr. Thain resigned from Bank of America on Thursday following news that Merrill Lynch had rushed out its year-end bonuses, paying them just before Bank of America completed its acquisition of Merrill Lynch and sought $20 billion in additional government bailout money.

Nick Gillespie says
taxpayers now guarantee some $8 trillion in inscrutable loans to a financial sector that collapsed from inscrutable loans.

Political interference seen in bank bailout decisions
"It's totally arbitrary," says South Carolina Gov. Mark Sanford. "If you've got the right lobbyist and the right representative connected to Washington or the right ties to Washington, you get the golden tap on the shoulder," says Gov. Sanford, a Republican.

Instapundit hit a bullseye when he wrote
This is not so much a stimulus, as a massive transfer of wealth from the politically unconnected to the politically connected.

It's a good thing that the majority of boomers plan on working in retirement, because more and more will have no other choice,

I want some TARP, they're giving money away for free

Ann Rand Poster

After reading Atlas Shrugged: From Fiction to Fact in 52 years by the senior economics editor of the Wall St Journal, the book seems prescient.
For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises -- that in most cases they themselves created -- by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.

A few weeks ago I started a post entitled "What are we afraid of".  I didn't publish it because it was all too depressing, so instead I just focused on just how big is a trillion.    But I want to include some quotes by the Anchoress
I wonder if we are finally moving past the adolescent angst, and the numbness, and ... simply waking up to the fact that a bunch of loud, exploitative so-called “friends” crashed the house, called it a party, drank all the liquor, cracked Mom’s prize crystal egg and then decided to have a tug-of-war donnybrook on the front lawn before toilet papering the trees, puking and passing out. The press? Some “friends.” Congress? Some “statesmen.”

Hungover, we’re stumbling around, and realizing that if we do not start demanding adult behavior, adult leadership, less spin and a little honesty, not only from our leadership and our “elites” but from each other, we’re not going to be around to demand much of anything, of anyone.

She in turn quotes Peggy Noonan
In terms of public support, Mr. Obama shouldn't get too abstract. He should be thinking hardhats. People want to make their country stronger—literally, concretely, because the things they fear (terrorism, global collapse) are so huge and amorphous. Lately I think the biggest thing Americans fear, deep down—the thing they'd say if you could put the whole nation on the couch and say, "Just free associate, tell me what you fear?"—is, "I am afraid we will run out of food. And none of us have gardens, and we haven't taught our children how to grow things. Everything is bought in a store. What if the store closes? What if the choke points through which the great trucks travel from farmland to city get cut off? I have two months of canned goods. I'm afraid."

But it was this anecdote that Peggy Noonan told in 2005 that really got me.
Do people fear the wheels are coming off the trolley? Is this fear widespread? A few weeks ago I was reading Christopher Lawford's lovely, candid and affectionate remembrance of growing up in a particular time and place with a particular family, the Kennedys, circa roughly 1950-2000. It's called "Symptoms of Withdrawal." At the end he quotes his Uncle Teddy. Christopher, Ted Kennedy and a few family members had gathered one night and were having a drink in Mr. Lawford's mother's apartment in Manhattan. Teddy was expansive. If he hadn't gone into politics he would have been an opera singer, he told them, and visited small Italian villages and had pasta every day for lunch. "Singing at la Scala in front of three thousand people throwing flowers at you. Then going out for dinner and having more pasta." Everyone was laughing. Then, writes Mr. Lawford, Teddy "took a long, slow gulp of his vodka and tonic, thought for a moment, and changed tack. 'I'm glad I'm not going to be around when you guys are my age.' I asked him why, and he said, 'Because when you guys are my age, the whole thing is going to fall apart.' "

Mr. Lawford continued, "The statement hung there, suspended in the realm of 'maybe we shouldn't go there.' Nobody wanted to touch it. After a few moments of heavy silence, my uncle moved on."

Lawford thought his uncle might be referring to their family--that it might "fall apart." But reading, one gets the strong impression Teddy Kennedy was not talking about his family but about . . . the whole ball of wax, the impossible nature of everything, the realities so daunting it seems the very system is off the tracks.

And--forgive me--I thought: If even Teddy knows . ..

Atlas shrugged.

Posted by Jill Fallon at 11:12 AM | Permalink

January 8, 2009

'There's no one to bail out America'

I don't know whether it's not as bad as we think or even worse.

Some people see the Good News from a Bad Year

The last 12 months may prove not to be the most fondly recalled in recent American history, but things aren't all that bad. Most social indicators are still moving in the right direction. In general, our standard of living continues to improve. Advances in technology are helping us beat the diseases most likely to kill us; giving us more leisure time; making us more comfortable; giving us more convenience; and with the Internet, putting much of the world—quite literally—at our fingertips.

It unnerves me that no one really knows what to do about the financial mess we're in. 

Michael Lewis sees The End of the Financial World as We Know It

AMERICANS enter the New Year in a strange new role: financial lunatics. We’ve been viewed by the wider world with mistrust and suspicion on other matters, but on the subject of money even our harshest critics have been inclined to believe that we knew what we were doing. They watched our investment bankers and emulated them: for a long time now half the planet’s college graduates seemed to want nothing more out of life than a job on Wall Street. 

This is one reason the collapse of our financial system has inspired not merely a national but a global crisis of confidence. Good God, the world seems to be saying, if they don’t know what they are doing with money, who does?
What’s interesting about the Madoff scandal, in retrospect, is how little interest anyone inside the financial system had in exposing it. It wasn’t just Harry Markopolos who smelled a rat. As Mr. Markopolos explained in his letter, Goldman Sachs was refusing to do business with Mr. Madoff; many others doubted Mr. Madoff’s profits or assumed he was front-running his customers and steered clear of him. Between the lines, Mr. Markopolos hinted that even some of Mr. Madoff’s investors may have suspected that they were the beneficiaries of a scam. After all, it wasn’t all that hard to see that the profits were too good to be true. Some of Mr. Madoff’s investors may have reasoned that the worst that could happen to them, if the authorities put a stop to the front-running, was that a good thing would come to an end.


Rather than tackle the source of the problem, the people running the bailout desperately want to reinflate the credit bubble, prop up the stock market and head off a recession. Their efforts are clearly failing: 2008 was a historically bad year for the stock market, and we’ll be in recession for some time to come. Our leaders have framed the problem as a “crisis of confidence” but what they actually seem to mean is “please pay no attention to the problems we are failing to address.”

Could it be that our elites have become more impressionable and so too easily snookered?

more removed from everyday problems, more trusting of what they hear, and more likely to adopt unthinking viewpoints based on brand or emotion.

Bernard Madoff proves the point. Here he is, in the most numbers-dominated part of our economy, and no one questioned his numbers. He sold himself to people on the basis of brand, and he got access to more marks by using the smart, rich and famous to introduce him to more of the smart, rich and famous.
Elites are on information- and time-management overload, and the result is that they have been making big decisions with less information, not more. They throw their hands up in the face of adversity and complexity, relying upon the judgment of others instead of forming their own.

The entire financial crisis was started by small microtrends overlooked by some of the best and brightest minds at institution after institution.

Maybe we're all easily snookered.  After all, isn't social security the largest Ponzi scheme of all?

The problem is that generations of U.S. workers have been misled to believe that Social Security's annual surpluses accumulate in a trust fund that will be used to meet future costs. But like Madoff's investment fund, these assets are largely smoke and mirrors.

All surplus Social Security taxes that the Treasury collects are spent immediately, used to pay for government programs or interest on the national debt. In exchange, the Treasury gives Social Security nonmarketable special-issue government securities: IOUs. That's what accumulates in the trust fund.

These promissory notes are backed by nothing of tangible value, other than the political promise that Washington will come up with a way to redeem them when they're needed.

That day of reckoning is coming soon. Social Security actuaries have estimated that benefit payments will exceed revenues starting in 2016, less than a decade from now.

Just as the schemes of Charles Ponzi and Bernard Madoff collapsed, Social Security will become unsustainable when payroll taxes no longer cover program benefits. Then, benefits will have to be cut or more money will have to be pumped into the system through increased payroll taxes, higher income taxes or increased borrowing.

I just want to know when our elected officials will begin to deal with the serious entitlement crisis that can no longer be put off.  After all, there's no one to bail out America.

Posted by Jill Fallon at 11:45 AM | Permalink

Smart Cookies

The Smart Cookies on How to Make More Dough in 2009

A bit of background: The Smart Cookies were born in 2006, when, instead of starting a book club, five thirty-somethings from Vancouver, British Columbia formed a finance group. In order to participate, each member had to take a hard, honest look at her finances, spending habits and money goals. They vowed to be frank with one another about their finances and areas of improvement. So far, the Smart Cookies have paid down debt, switched careers and saved money in creative ways. They recently brought their message to the masses with a book, “The Smart Cookies’ Guide to Making More Dough” (Random House).

Sandra: New Year’s resolutions are tough to keep because we generally make promises to ourselves that are too hard to keep. This year don’t resolve to cut back but instead find yourself $100 dollars worth of hidden money each month. Scan through your cell phone bill and your credit card bill. I bet you’ll find almost $100 in charges you can negotiate on. Finding money you already have - now that is something easy to stick to.

Sound like the book will be worthwhile reading.

Posted by Jill Fallon at 11:16 AM | Permalink

December 18, 2008

Talking About Money

In The Madoff Inheritance, Daniel Henninger of the Wall St. Journal says

A big lesson of the past year is that we all should be talking more about money. One reason we don't talk about money is we are afraid of what we might learn.
Though living in an era of fantastic money tales, it is remarkable how little serious literature is written about money in business or money in politics. In fiction or drama characters can be made to say truths real people would never tell a journalist.

That's what he found in The Vosey Inheritance, a 1914 British play adapted by David Mamet that played off Broadway last year.

One answer emerges from the Voysey drama when Edward tells wealthy family friend George Booth and Vicar Colpus that he plans to admit the fraud and face justice (Mr. Voysey having conveniently died). They try to talk him out of it. They want Edward to continue the scheme. For them, at least, the scheme seems to work. They want to believe it can still work. Edward demurs, and they are outraged that he will not continue business as usual.

 Vosey Inheritance

From the New York Times review of The Vosey Inheritance

Edward Voysey ( Michael Stuhlbarg), who has just inherited the reins of the firm and breaks the bad news, is the only member of the family moved to shame at the discovery that the just-deceased paterfamilias had been bilking clients to support his brood in style. Edward is determined to call in the law, come clean, and face the consequences.
The wonderful Fritz Weaver plays Voysey père, whose casual admission, in the first scene, that he has been monkeying with the business sets Edward on his voyage of disillusionment. (The business is a firm of solicitors, which translates, practically speaking, to personal bankers or brokers.)

Coolly explaining to his perturbed son the practice of borrowing from one client’s account to pay dividends due to another, he sighs, “Oh, why is it so hard for a man to see clearly beyond the letter of the law!”

It is not so hard, if such double vision serves a man’s personal interest. After their father’s sudden death and the revelation of his free-form accounting, Edward’s brothers profess perfunctory shock and dismay. But they also begin bringing him around to the idea that little good will come from airing dirty laundry that had, after all, been kept from public view for 30 years with little injury to any of the parties involved.

Posted by Jill Fallon at 9:06 AM | Permalink

December 17, 2008

"We all hoped, but we knew deep down it was too good to be true, right?"

Robert Chew on How I Got Screwed by Bernie Madoff

I think everyone knew the call would come one day. We all hoped, but we knew deep down it was too good to be true, right? I mean, why wasn't everyone in on this game if it was so strong and steady? We deluded ourselves into thinking we were all smarter than the others. When it came to the investment game, we had it figured. And what was the game anyway? The way it was vaguely described to us was that the "New York people" had a system whereby they placed a series of instant trades — at once with futures, currencies and stocks — and out of this magic recipe fell a tiny 1% guaranteed, no-risk profit for the group. You do that 20 times a year, take away management fees and, voilà, a steady 15% return. Man, these guys were good.

But of course the call did come, as it always does with such things. It was not an ordinary Ponzi scheme we were all part of; it was the biggest in the history of the world, valued at some $50 billion. Lucky us. Small investors, institutions, hedge funds, global banks, pension funds — all fell victim to usual suspects: a smooth huckster and greed.

You never want to hear the words that come with such a phone call. "We are all wiped out."

Posted by Jill Fallon at 12:48 AM | Permalink

November 29, 2008

"Money is based on trust"

Money is based on trust says Niall Ferguson  Confidence in the free market and capitalist institutions  is based on trust. 

What is money after all but a promise to pay? 

Without a foundation in society based on religion or religiously-based ethics, there's no reason to believe that such promises will be kept.

We're in such a mess because Congressmen and bankers abused our trust to satisfy their political agendas or their greed.

Investors' Business Daily takes note of the Pope's remarks to say

What he really said was not clairvoyant, but self-evident: Economic freedom demands ethics.

Of course, we are not without fault as Ed Morrissey writes in Has America learned a lesson about consumption?

the period between the last recession and now has been marked by the unique phenomenon of assets-based consumption.  We need a return to income-based consumption, and the transition is going to sting:
The entire precipice was built on sand, and it’s now turning into quicksand.  For some, the lesson will come too late.  For the rest of us, it’s a lesson we need to learn for good.  Many of us have heard the advice our parents and grandparents learned in hard economic times: Don’t spend beyond your means.  Many in the previous couple of generations had a well-deserved skepticism about credit, and they’ve been proven right yet again.

Niall Ferguson was prescient when he started his book to explain the current economic crisis in the span of 4000 years of financial history. (Hat tip to Cat at Brits at their Best.)  He saw the liquidity crisis coming.

"The Ascent of Money: A Financial History of the World" (Niall Ferguson)

Here is Ferguson, Tisch Professor of History at Harvard, speaking with Harry Kriesler at the University of California, Berkely on his new book.

It's wonderful to be able to hear and learn so much on the internet.  The good news is that U.S. has a better chance of riding out the crisis than other countries because people around the world believe that the correct response is to put their cash into dollars

Posted by Jill Fallon at 3:22 PM | Permalink

November 3, 2008

"There's nobody to bail out America"

What does a noted historian have to say about the financial mess we're in?

Paul Johnson writes in Forbes

The financial crisis, detonated by greed and recklessness on Wall Street and in the City of London, is for the West a deep, self-inflicted wound. The beneficiary won’t be Russia, which, with its fragile, energy-based economy, is likely to suffer more than we shall; it will be India and China. They will move into any power vacuum left by the collapse of Western self-confidence.

If we seriously wish to repair the damage, we need to accept that this is fundamentally a moral crisis, not a financial one. It is the product of the self-indulgence and complacency born of our ultraliberal societies, which have substituted such pseudo-religions as political correctness and saving the planet for genuine distinctions between right and wrong and the cultivation of real virtues. India and China are progress-loving yet morally old-fashioned societies. They cannot afford liberalism. …
We are traveling along the high road to incompetence and poverty, led by a farcical coalition of fashionably liberal academics on the make, assorted eco-crackpots and media wiseacres. This strain of liberalism is highly infectious. The Indians and Chinese have yet to be infected. They’re still healthy, hard at work and going places, full speed ahead.

Alice Rivlin thinks it's a teachable moment for the much bigger problems down the road
--the much larger economic storm now unfolding could convince Washington -- as it is pressed to take bold and sometimes unpopular action related to the credit crisis -- to wrap in some forward-looking solutions to rising costs associated with Medicare, Social Security and Medicaid -- costs that will make the taxpayers' Wall Street rescue effort, which could amount to more than $1 trillion, seem petty by comparison. A General Accounting Office study concluded that in less than 20 years, the cost of Social Security and Medicare will exceed all government revenues.

The broader problem quite simply is this: America is already dangerously deep in debt, and will soon see an explosion in costs to provide Social Security, Medicare and other entitlements it has promised to tens of millions of retiring and soon-to-retire baby boomers. While federal spending is now roughly 20% of the American gross national product, which has been relatively constant in the last half-century, that ratio could rise as high as 42% by 2050 if current federal policies on entitlement spending and taxes remain unchanged, according to Bixby. That would be the same rate as when the U.S. was waging World War II. The impact would fall hardest on today's young people.
"There's nobody to bail out America," said Walker, "so the sooner we get started, the better."

Joe White in the Wall St Journal calls it the Boomer Bust
Baby Boomers have pumped up the global economy with their profligate ways for nearly two decades. It's been a great party. Now the music's over.
But what Baby Boomers of all persuasions have done, without dispute and to an unprecedented degree, is spend money instead of saving it. During the 1990s, Baby Boomers accounted for about half of all consumer spending in the U.S., according to a recent McKinsey Global Institute study.

"This is like winter coming," adds Harry S. Dent, an author and consultant who says the U.S. is headed for a slump that will last until 2020. It will take that long for the financial wreckage from this boom-bust cycle to be cleared away, he says, and for the 79.4 million strong "Millennial Generation" -- most of whom are still in high school or college -- to enter adulthood and start buying homes, cars and gadgets of their own. "It happens once every 80 years," Mr. Dent says of this sort of demographics-driven economic cycle. "It's going to be difficult."
Olivia Mitchell, a professor at the Wharton business school and a former member of a bipartisan commission established by President Bush to study possible reforms of the Social Security system, says the market crash should be a wake-up call for Boomers to "understand risk better," starting with the risk that they may live way past 64.

"The Baby Boomers are going to have to work longer and eat less," Ms. Mitchell says. "And go back to what my mother was doing -- saving string

Posted by Jill Fallon at 9:44 AM | Permalink

October 28, 2008

The Main Lesson? Save your money.

Ben Stein You Don't Always Know When the Sky Will Fall

closer to home, a talented makeup artist who works with me almost daily in my TV appearances asked what happened to people in a recession. (She is young.) I said that fear and insomnia happened to most people but that a few million would actually lose their jobs and millions more would lose income.

“What do they do?” she asked, looking worried.

“They find other work or live off their savings,” I said. “They certainly cut back on their spending.”

“What if they don’t have any savings?” she asked. “I don’t have any savings,” she said. “No one I know except you has any savings.” She looked extremely worried.

This is perhaps the main lesson of this whole experience. It is basic but still unlearned: human beings must have savings. This is not just a good idea. It’s the difference between life and death, terror and calm. So start saving right now, and don’t stop until you die.

Posted by Jill Fallon at 9:27 AM | Permalink

October 7, 2008

ACORN "Uniquely militant organization... reinforced by contentious action"

ACORN. First they intimidated banks, then they went after Congress with a combination of bullying, smooth talking lobbyists and campaign contributions to change the regulations at Fannie Mae and Freddie Mac,

Stanley Kurtz outlines how ACORN planted the seeds of disaster.

Swarts, a strong supporter of ACORN, has no qualms about stating that its members think of themselves as “militants unafraid to confront the powers that be.” “This identity as a uniquely militant organization,” says Swarts, “is reinforced by contentious action.” ACORN protesters will break into private offices, show up at a banker’s home to intimidate his family, or pour protesters into bank lobbies to scare away customers, all in an effort to force a lowering of credit standards for poor and minority customers. According to Swarts, long-term ACORN organizers “tend to see the organization as a solitary vanguard of principled leftists...the only truly radical community organization.”

This sweeping debasement of credit standards was touted by Fannie Mae’s chairman, chief executive officer, and now prominent Obama adviser James A. Johnson. This is also the period when Fannie Mae ramped up its pilot programs and local partnerships with ACORN, all of which became precedents and models for the pattern of risky subprime mortgages at the root of today’s crisis. During these years, Obama’s Chicago ACORN ally, Madeline Talbott, was at the forefront of participation in those pilot programs, and her activities were consistently supported by Obama through both foundation funding and personal leadership training for her top organizers.

Up to now, conventional wisdom on the financial meltdown has relegated ACORN and the CRA to bit parts. The real problem, we’ve been told, lay with Fannie Mae and Freddie Mac. In fact, however, ACORN is at the base of the whole mess. ACORN used CRA and Democratic sympathizers to entangle Fannie and Freddie and the entire financial system in a disastrous disregard of the most basic financial standards. And Barack Obama cut his teeth as an organizer and politician backing up ACORN’s economic madness every step of the way.

Posted by Jill Fallon at 10:51 AM | Permalink | TrackBack

October 6, 2008

"Built on sand"

Pope says world financial system 'built on sand

''He who builds only on visible and tangible things like success, career and money builds the house of his life on sand''.

We are now seeing, in the collapse of major banks, that money vanishes, it is nothing. All these things that appear to be real are in fact secondary. Only God's words are a solid reality''.

The Anchoress notes in The Pope, the Word & the World that a greater battle is being played out just as the Pope began a week-long televised reading of all 73 books of the bible.  You can see the live stream here. 

The Word being breathed into the air, unabridged, and the Holy Spirit rides on the breath. This is very cool.

And then today, the whole world financial picture runs precarious, and Benedict steps up and says, essentially, “it is better to take refuge in the Lord, than to trust in princes…” (Psalm 118;9)

Prayer may be all we can do right now

Posted by Jill Fallon at 2:27 PM | Permalink

September 30, 2008

The opaque dark matter on the balance sheets

I'm beginning to understand 'credit default swaps' , what Warren Buffett called 'financial weapons of mass destruction' after reading The Monster That Ate Wall Street.

What could possibly go wrong with freeing up all that money in capital reserves to cover loans outstanding when you could buy insurance to protect against that risk?

Since credit default swaps are privately negotiated contracts between two parties and aren't regulated by the government, there's no central reporting mechanism to determine their value. That has clouded up the markets with billions of dollars' worth of opaque "dark matter," as some economists like to say. Like rogue nukes, they've proliferated around the world and now lie hiding, waiting to blow up the balance sheets of countless other financial institutions.

Posted by Jill Fallon at 6:21 PM | Permalink

"Cut everything"

The one thing you can control right now is how much you spend. 

Brent Arends in the Wall St Journal says Stash Your Cash.

Cut everything.

Drop your cable package and TiVo. Say goodbye to Applebee's and Starbucks. Cancel the ski trip.

Slash every single penny you possibly can from your household budgets and start building up cash.

Yes, I'm serious. The shocking collapse of the rescue package on Capitol Hill threatens a disaster on Main Street. Unless this gets reversed almost immediately, it could turn a slowdown into a slump, and a slump into a depression.

It's hardly possible to make any sensible recommendations about investments or other financial matters until we get a better sense of what will happen next.

Ordinarily in a panic like this I'd be urging people to invest. My usual approach is that the worse people are panicking, the more aggressively you should buy. And that might still be the right thing to do.

But the political and financial situations right now are chaotic.

So you need to get an iron grip at least on one thing you can actually control: Your own personal budget.

Even saving $10 a day by making your own sandwiches and taking your own Super Grande Latte to work is a small victory.

This is now a financial war: You versus the economy. And most Americans are badly prepared. They have far too little cash on hand to cope with a major downturn.

Posted by Jill Fallon at 3:45 PM | Permalink

September 26, 2008

"The whirlpool sucking down finance"

If you like me have spent the past few days trying to figure out what in the name of all that is holy has been going on in Washington and on Wall Street  that threatens our lives as we know it,  let me point to two articles that helped me.

First Ben Stein.  Everything you wanted to know about the credit crisis but were afraid to ask

...First, the alert reader will notice that Ben Stein said many times that the amount of money at risk in the subprime meltdown was just not enough to sink an economy of this size. And I was a point. The amount of subprime that defaulted was at most - after recovery in liquidation - about $250 billion. A huge sum but not enough to torpedo the US economy.

The crisis occurred (to greatly oversimplify) because the financial system allowed entities to place bets on whether or not those mortgages would ever be paid. You didn't have to own a mortgage to make the bets. These bets, called Credit Default Swaps, are complex. But in a nutshell, they allow someone to profit immensely - staggeringly - if large numbers of subprime mortgages are not paid off and go into default.
These Credit Default Swaps have been written (as insurance is written) as private contracts. There is nil government regulation of them. Who writes these policies? Banks. Investment banks. Insurance companies. They now owe the buyers of these Credit Default Swaps on junk mortgage debt trillions of dollars. It is this liability that is the bottomless pit of liability for the financial institutions of America.

Because these giant financial companies never dreamed that the subprime mortgage securities could fall as far as they did, they did not enter a potential liability for these CDS policies anywhere near their true liability - which again, is virtually bottomless. They do not have a countervailing asset to pay off the liability.

This is what your humble servant, moi, missed. This is what all of the big investment banks and banks and insurance companies missed. This is what the federal government totally and utterly missed. This is what the truly brilliant speculators in these instruments did not miss. They could insure a liability they could also create and control. It is as if they could insure a Cadillac for its value upon theft - but they could control what the value the insurer had to pay off was. The insurer thought it might be fifty thousand dollars - but it was manipulated into being two million.

This is the whirlpool sucking down finance.
As I said, the pit of loss is bottomless. Warren Buffett, the smartest man of all time in the world of finance, has called financial derivatives - of which Credit Default Swaps are a prime example - "weapons of financial mass destruction." And so they are. As with the hydrogen bomb, no one thought they would ever be used to end the world. But unless someone figures a way out - and maybe the new RTC is and maybe it isn't - we are in real peril. This should never have happened. Now that it did happen, should the taxpayer pay to make the billionaire speculators whole on their bets? What the heck is to be done?

Second, Steve Pearlstein, Gut Check

You're angry. I'm angry. House Republicans are angry. We're all angry at having to put up huge amounts of cash to rescue a financial system because a lot of very rich people rolled the dice with other people's money and lost.

Now let me tell you something very simple and very important: You can try to prevent a financial meltdown or you can teach Wall Street a lesson, but you can't do both at the same time.
First, stop fixating on Wall Street executives -- there will be time to deal with them later.
Second, we need to act quickly. The financial situation is now downright scary. Don't look at the stock market -- that's not where the problem is. The problem is in the credit markets, which are quickly freezing.
People are so nervous, and there is so much distrust, that all it would take is one more hit to trigger the modern-day equivalent of a nationwide bank run. Financial institutions would fail, part of your savings would be wiped out, jobs would be lost and a lot of economic activity would grind to a halt. Such a debacle would cost us a lot more than $700 billion.

Third, the latest proposal hammered out between the Treasury and Democratic leaders won't cost anywhere near $700 billion unless we get a 1930s-like Depression, in which case we'll have much bigger problems to worry about.

Posted by Jill Fallon at 8:53 AM | Permalink

September 18, 2008

Fast, far fall

Days of wine and Porsches over

Personal fortunes amassed through decades of work are being vaporized.

Lehman boss Dick Fuld had a $1-billion stake in his firm just 18 months ago, took home a $34-million paycheque, and enjoyed a sterling reputation.

This week, his holdings are worth $1.3-million, he's unemployed and his name is mud.

Posted by Jill Fallon at 10:24 AM | Permalink

September 16, 2008

I could just spit

The potential liabilities of Fannie Mae and Freddie Mac total about $5 trillion. Putting that in perspective (as the Wall Street Journal did pre-bailout), until a week ago, the entire United States national debt equaled $9.5 trillion. We’ve now increased it by more than 50 percent.

Andrew McCarthy says Book 'Em

Well the political class, which created the disaster that is Fan and Fred and seems desperate to preserve them,
As Democrats continue to champion these “quasi-government” entitles, the Bush administration quietly announced on Friday (as all eyes were on Lehman) that though the government is now running the mortgage giants — and thus all of us are officially on the hook for their liabilities — it sees no need to incorporate their balance sheets and the business operations in the federal budget.

Does that sound familiar? It should. When managers who don’t happen to run the United States government decide to park their losses and liabilities off the books, we call that corporate fraud. When they did it at Enron (in a scam involving a pittance of what we’re talking about here), the execs went to jail for a long time. Even their accounting firm was prosecuted, causing countless employees who had nothing to do with the scheme to be put out of work.

I don't trust public-private partnerships because they seem to benefit only the politically well-connected who take out enormous fees for putting deals together and some enormous salaries and bonuses.

I don't understand why we can't go after them for abuse of trust in the same manner we went after the executives of Enron .

When I read about Jamie Gorelick, Mistress of Disaster  I get so mad at "the political class", I could, as my mother would say, just spit.    This is a damning piece.

It’s not often that one person plays key roles in two — count ‘em, two — trillion-dollar disasters. Welcome, my friends, to the world of well-connected Democrat Jamie Gorelick.

Investors' Business Daily  says it was the obsession with multiculturalism by those in the Clinton administration who dictated new rules and regulations that led to this mess.

Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.

Apparently one Clinton crony Franklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of
almost $100 million in compensation by the time he left in early 2005 under an ethical cloud.

Other Clinton cronies, including Janet Reno aide
Jamie Gorelick, padded their pockets to the tune of another $75 million.

Raines was accused of overstating earnings and shifting losses so he and other senior executives could earn big bonuses.

Clearly if the executives in charge were overstating earnings and shifting losses so they could earn big bonuses as alleged, a criminal investigation should begin immediately.  Book Em is right.

Just Barking Mad sums it all up
Let’s be clear. The risky financial instruments that are now the major source of such pain and misery were pushed hardest by a former Clintonista trying not only further a Liberal social engineering plan but to enrich her own self in the process. America…what a country!

Posted by Jill Fallon at 9:28 PM | Permalink

July 9, 2008

Who pays income taxes?

In the Wall St Journal, a leak from an upcoming IRS study on who pays how much in taxes.

My contacts at the Treasury Department tell me that for the first time in decades, and perhaps ever, the richest 1% of tax filers will have paid more than 40% of the income tax burden. The top 50% will account for 97% of all federal income taxes, while the bottom 50% will have paid just 3%.

Posted by Jill Fallon at 7:59 PM | Permalink

Adding to the costs in your life

What do car insurance, job, housing, utilities, cell phones, school loans, elective medical procedures and marriage have in common?

They all cost more if you have a bad credit rating.

Bad credit hurts in many ways

Posted by Jill Fallon at 9:37 AM | Permalink

June 24, 2008

How Rich People Spend Their Time

They don't lay about watching TV.

People who make less than $20,000 a year, for example, told Kahneman and his colleagues that they spend more than a third of their time in passive leisure -- watching television, for example. Those making more than $100,000 spent less than one-fifth of their time in this way -- putting their legs up and relaxing. Rich people spent much more time commuting and engaging in activities that were required as opposed to optional. The richest people spent nearly twice as much time as the poorest people in leisure activities that were active, structured and often stressful -- shopping, child care and exercise.

How Rich People Spend Their Time

Posted by Jill Fallon at 9:59 AM | Permalink

June 23, 2008

You know that money you were counting on?

8 Reasons You Should Not Expect an Inheritance

...with each passing year, the pressures on the nest eggs of those older people will only grow. The truly rich will be fine, as they usually are. But a lot of other people, even retirees with net worths well into the seven figures, could end up spending every dime before they die.

Posted by Jill Fallon at 2:27 PM | Permalink

June 16, 2008

For graduates starting their first real job

You would do well to pass on A Primer for Young People Starting Their First Job to those who have never before encountered taxes, health plans and 401(k) plans they had to pay for.

Posted by Jill Fallon at 8:06 PM | Permalink

May 18, 2008

Identity theft among illegal immigrants

When you think about it, it makes sense.  Who needs illegal documents?  People who want documentation to get jobs, credit and driver's licenses and appear as if they are in the country legally.

Steven Malanga, senior editor of  City Journal writes in Illegal in More Ways Than One

As everyone knows, America is experiencing an epidemic of identity theft. In the last five years alone, complaints to the Federal Trade Commission from U.S. residents who have had their identity stolen have skyrocketed 60 percent, to 258,427 in 2007—one-third of all consumer fraud complaints that the commission receives. What’s less well understood, however, is how illegal immigration is helping to fuel this rash of crime. Seeking access to jobs, credit, and driver’s licenses, many undocumented aliens are using the personal data of real Americans on forged documents. The immigrants’ identity theft has become so pervasive that the need to combat it is “a disturbing front in the war against illegal immigration,” according to U.S. Immigration and Customs Enforcement.

The FTC’s latest statistics help show why. The top five states in terms of reported identity theft in 2007 all have large immigrant populations—the border states of Arizona, California, and Texas, as well as Florida and Nevada.

Government statistics probably grossly underestimate the size of the problem. Many local police departments don’t track identity theft accurately, and the FTC only reports complaints that it receives. By combining data on complaints with FTC consumer surveys—which show that far more people have had their identity stolen than report it—Identity Theft 911 estimates that in Arizona alone, some 1.57 million people, or a quarter of the state’s population, have been victims over the last six years. About one-fifth are children—whose Social Security numbers are especially valuable targets, since the kids usually aren’t employed, making discovery of the fraud less likely. “We just don’t know how they’re getting all this information on minors,” says Maryann McKessy, bureau chief for fraud and identity-theft enforcement in the Maricopa County attorney general’s office.

One disturbing theory: health-care employees with access to children’s files are working for organized gangs that trade in illegal documents and are willing to pay richly for the data. “We have a major problem with workers in medical offices stealing patients’ identities, selling them and making a direct profit,” Sergeant James Bracke of the Phoenix Police Department told authors of the Arizona report.

Posted by Jill Fallon at 1:43 AM | Permalink

April 30, 2008

Gen Y broke

Are 20 and 30 somethings in a financial mess?

Emma Johnson writes "Is it because we're dumb, arrogant or simply uneducated?"

Why Gen Y is broke

[S]tats indicate our generation's financial literacy is abysmal, with personal finances to match. Only 52% of high school seniors passed a recent national financial literacy test, meaning adults entering the work force do not know enough about basic budgeting, interest rates or taxes to make sound decisions for their own lives.

Bob Manning, author of "Credit Card Nation" and professor of consumer financial services at Rochester Institute of Technology, says these problems are compounded by powerful cultural forces...,
"This generation feels that somehow or another they're going to figure out some technological advancement that's going to get them out of their financial troubles and outsmart the market," says Manning,

* The median credit-card debt of low- and middle-income people aged 18 to 34 is $8,200.
* The average college debt for recent grads is more than $20,000 and rising.
* People between the ages of 25 and 34 make up 22.7% of all U.S. bankruptcies (but just 14% of the population at large), according to a recent report.

Because it is not instinctual, financial literacy is a life skill that must be taught and developed with each generation.

Posted by Jill Fallon at 11:33 AM | Permalink

April 25, 2008

Stockpiling Food

When the Wall St. Journal says it's time to Load Up the Pantry for a good return on your cash, pay attention.


Reality: Food prices are already rising here much faster than the returns you are likely to get from keeping your money in a bank or money-market fund. And there are very good reasons to believe prices on the shelves are about to start rising a lot faster.
Do the math. If you keep your standby cash in a money-market fund you'll be lucky to get a 2.5% interest rate.
Meanwhile the most recent government data shows food inflation for the average American household is now running at 4.5% a year.

And some prices are rising even more quickly. The latest data show cereal prices rising by more than 8% a year. Both flour and rice are up more than 13%. Milk, cheese, bananas and even peanut butter: They're all up by more than 10%. Eggs have rocketed up 30% in a year. Ground beef prices are up 4.8% and chicken by 5.4%.
You can't easily stock up on perishables like eggs or milk. But other products will keep. Among them: Dried pasta, rice, cereals, and cans of everything from tuna fish to fruit and vegetables. The kicker: You should also save money by buying them in bulk.
The good news is that it's easier to store Cap'n Crunch or cans of Starkist in your home than it is to store lots of gasoline. Safer, too.

Posted by Jill Fallon at 11:26 AM | Permalink

March 20, 2008

Stainless Steel Wallets

Stainless steel wallets are in your future.  Either that or aluminum foil.

Radio-frequency IDs or RFIDs are tags that include both an integrated circuit for storing and processing information and an antenna for receiving and transmitting a signal.  They are tiny little objects you can apply to any product, animal or person.  They are most often used in inventory tracking and management.

You probably are already familiar with the transponders many have on their windshields allowing them to speed through toll booths without stopping even as the information is captured and the charge for the toll will appear on your credit card statement.

Since 2006 RFID tags have been included in all new passports issued by the United States government.  After a demonstration that showed that passports could be read with special equipment from 33 feet away, various  barriers and encryption methods have been incorporated.  The Wikipedia entry explains more than I ever could.

Boing Boing video shows how anyone can swipe your credit card information and other personal data that is on any card employing RFID  by using a reader that cost on $8 on Ebay, just by getting "close to your ass."

The biggest threat to having your identity stolen remains the theft of many thousands of credit card numbers from websites.  Hacker Pablos Holman told TechRadar

“I don’t expect this to be a major threat for a while. People are stealing credit card numbers from websites and that’s still pretty easy,” he says, before adding, somewhat more ominously “with a bigger antenna hooked up to this I can go into Starbucks and get the name of everyone in there.

That's why I say stainless steel wallets are in your future.  Keep an eye out for them.

Posted by Jill Fallon at 1:48 PM | Permalink

March 9, 2008

Giving not Getting

In their later years, more and more people are finding purpose and happiness in what they can give away.

With the help of a grant from the Gates foundation,  Michael Schervish who runs the Center on Wealth and Philanthropy at Boston College is studying the very wealthy to see what motivates them to give away money.

Watching the Rich Give

Once they feel financially secure, the very rich turn to philanthropy.

Philanthropy, he explained, draws people into the kind of direct caring relationships they experience in family life — and extends that caring outward. “This is my basic definition of philanthropy — it’s paying attention and responding to the needs of others precisely because that person is in need,” he said. Anyone can do that, rich or poor. But when the very wealthy do it, according to Schervish, it creates not just ripples but powerful tides.

Posted by Jill Fallon at 10:18 AM | Permalink

February 21, 2008

Raising Kids to be Rich

From instapundit Glenn Reynolds and his instawife, Dr. Helen Smith comes a wonderful podcast on capturing your child's passion and allow them to make money  by being entrepreneurial.

The Glenn and Helen Show: Troy Dunn on Raising Kids to be Rich.

Troy Dunn's book is

"Young Bucks: How to Raise a Future Millionaire" (Troy Dunn)

Posted by Jill Fallon at 10:34 AM | Permalink

January 22, 2008

They call it The Last Laugh

If you're wondering just what's going on in the markets and how the subprime mess is affecting you, I urge you to watch this.

Hat tip Maggie's Farm

Posted by Jill Fallon at 2:23 PM | Permalink

What do you call rich?

If you have a net worth of $1.4 million, you're in the top 5% of Americans. 

But if you ask a rich person, they will $5 million, ask a richer person and they will say $25 million, ask the richest people and they will say $100 million.

A Rich Person's Definition of Rich.  Hint: It's always more than they have.  About twice what they have.

Even the rich pretend to be middle-class.

Posted by Jill Fallon at 8:07 AM | Permalink

November 14, 2007

Reverse Mortgages Hot

If you or your aging parents are considering a reverse mortgage, you'll be happy to learn that the choices are expanding.

Reports the Wall St Journal

Now, nearly a dozen large banks and mortgage lenders have launched reverse-mortgage products with lower fees and larger payouts. One lender has reduced the minimum age requirement to 60; others are making loans on second homes and vacation rentals. "Jumbo" reverse mortgages -- for houses valued at as much as $10 million -- are becoming more common.

With a reverse mortgage, instead of the borrower making payments to the lender, the lender makes a payment or payments to the borrower. The borrower keeps control of the house and doesn't have to pay back the money as long as he or she lives there. When the homeowner dies or moves out, the loan is typically paid off by selling the house, and any money left over goes to the homeowner or the homeowner's estate.

Posted by Jill Fallon at 2:17 PM | Permalink

November 9, 2007

Family businesses doing great, except...

A recent study finds that family businesses are increasingly led by women and expect robust growth, yet many will likely face financial problems because they have not prepared for managerial and ownership succession, nor have they prepared an personal estate plan.

Family businesses, increasingly led by women, need succession and financial planning.

Posted by Jill Fallon at 10:48 AM | Permalink

October 31, 2007

Culture better than globalization for ending poverty

Robert Samuelson writes on the supremacy of culture in overcoming poverty  in The Global Poverty Trap.

Comes now Gregory Clark, an economist who interestingly takes the side of culture. In an important new book, " A Farewell to Alms: A Brief Economic History of the World," Clark suggests that much of the world's remaining poverty is semi-permanent. Modern technology and management are widely available, but many societies can't take advantage because their values and social organization are antagonistic. Prescribing economically sensible policies (open markets, secure property rights, sound money) can't overcome this bedrock resistance.

Capitalism is a prodigious generator of wealth so long as the culture supports it.    Without that cultural support for patience, hard work, innovation and education and tolerance for change and inequality as well as a modicum of trust, societies cannot overcome their poverty even with globalization.

A good culture can make a country rich.

Posted by Jill Fallon at 8:32 PM | Permalink

October 4, 2007

Intangible Wealth

The greatest source of a country's wealth is intangible concludes the World Bank. 

Ronald Bailey dove deeply into the World Bank's publication entitled  Where is the Wealth of Nations?  Measuring Capital for the 21st Century to deliver The Secrets of Intangible Wealth in the Wall St. Journal.

We are all familiar with natural capital those nonrenewable resources such as oil and gas,  farmlands and forests.  Produced capital is what we have made or built - infrastructure, machinery and equipment, buildings and other structures.

But once the value of all these are added up, the economists found something big was still missing: the vast majority of world's wealth!
The rest is the result of "intangible" factors -- such as the trust among people in a society, an efficient judicial system, clear property rights and effective government.
In fact, the World Bank finds, "Human capital and the value of institutions (as measured by rule of law) constitute the largest share of wealth in virtually all countries."

Once one takes into account all of the world's natural resources and produced capital, 80% of the wealth of rich countries and 60% of the wealth of poor countries is of this intangible type. The bottom line: "Rich countries are largely rich because of the skills of their populations and the quality of the institutions supporting economic activity."


In the U.S., according to the World Bank study, natural capital is $15,000 per person, produced capital is $80,000 and intangible capital is $418,000. And thus, considering common measure used to compare countries, its annual purchasing power parity GDP per capita is $43,800. By contrast, oil-rich Mexico's total natural capital per person is $8,500 ($6,000 due to oil), produced capital is $19,000 and intangible capita is $34,500 -- a total of $62,000 per person. Yet its GDP per capita is $10,700. When a Mexican, or for that matter, a South Asian or African, walks across our border, they gain immediate access to intangible capital worth $418,000 per person. Who wouldn't walk across the border in such circumstances?

Methinks again how often people assume wealth consists only of their material assets when the far greater portion of our lives is intangible.

Posted by Jill Fallon at 1:16 PM | Permalink

September 4, 2007

Have You Ever Checked Your Medical Records?

You already know that you should check your credit score at least once a year so that you can correct mistakes. 

What you probably didn't know is that your medical records could contain errors that should be corrected.    Incorrect medical information can lead to ineffective or harmful treatment and affect your insurability

The Wall Street Journal,  Patient Records Need Reviews (subscribers only)

Errors in medical records aren't uncommon. "They happen all the time," says Joy Pritts, research associate professor at Georgetown University's Health Policy Institute.

Mistakes can arise from a mistyped diagnosis code or transcription error to an inaccurate diagnosis or a diagnosis that is out-of-date, say because a patient has gotten his or her cholesterol under control. And, if you have a common name, other peoples' records can end up in your file, says Ms. Pritts. Part of the problem is that the U.S. health-care system relies mainly on paper records, which make it harder to coordinate care and spot errors.

Many hospitals use electronic health records, but until the U.S. develops a comprehensive, consolidated system, the burden falls to individuals to keep tabs on their health histories.

Posted by Jill Fallon at 4:47 PM | Permalink

August 8, 2007

Saving Alone and Together

We trust people who are just like us more than we trust companies, institutions or the government.  So, it was only a matter of time before social networking took on a financial cast with websites that  let people compare saving strategies or trade financial advice.

I haven't checked any of these sites yet, but I wanted to pass on this story about Sharing the Wealth so that you can explore them if you want.

The woman behind one NetWorth profile said she started blogging about her finances because she felt alone.
"Being able to read and see the details of how others were managing (or not) their money was something I found very interesting and powerful," BostonGal, who insists on remaining anonymous because she posts so much detailed financial information online, wrote in an e-mail. "For me, it was finally answering questions such as, 'How can people afford to buy that?' or 'Am I the only one who struggles to save?' "

Posted by Jill Fallon at 9:39 AM | Permalink

August 7, 2007

It's the Taxes

Todd Zywicki analyzes the two-income trap hypothesis.

Comparing a typical family with one wage earner in 1973 with a typical family with two wage earners in the 2000s, he finds that the second wage earner pushes the family into a higher marginal tax bracket. 

[Since 1973] taxes increase in the example by $13,086. By contrast, annual mortgage obligations increased by only $3690 and automobile obligations by $2860 and health insurance $620. Those increases are not trivial, but they are swamped by the increase in tax obligations. To put this in perspective, the increase in tax obligations is over three times as large as the increase in the mortgage (the supposed driver of the 'two income trap') and about double the increase in the combined obligations of mortgage and automobile payments
Overall, the typical family in the 2000s pays substantially more in taxes than in their mortgage, automobile expenses, and health insurance costs combined. And the growth in the tax obligation between the two periods is substantially greater the growth in mortgage, automobile expenses, and health insurance costs combined."

via Instapundit

Posted by Jill Fallon at 6:14 AM | Permalink

July 11, 2007

Deputized Tax Preparers

Because IRS researchers estimate about $290 billion in taxes goes unpaid and because no one wants more IRS agents on the street,  the IRS is "deputizing" tax preparers to police their clients reports the Wall St Journal.

The law is intended to make preparers more cautious about signing tax returns that include questionable or aggressive tax items without disclosing the details to the Internal Revenue Service on a special form. Stiff penalties may be imposed not only on income-tax preparers, but also on those who prepare estate- and gift-tax returns, employment and excise-tax returns, and returns of tax-exempt organizations.

Posted by Jill Fallon at 1:50 PM | Permalink

July 5, 2007

Free loaders

I find this very disturbing, another example of a fraying social contract among citizens.

Around 1 in 6 Americans Do Not Pay Their Taxes.

This is evading taxes, not paying your fair share, not carrying your load.  And every single one of those evaders will have an excuse as to why the law does not apply to them.

It's simple.  Pay no more than what you owe.  Even be aggressive in taking tax deductions,
but pay your taxes.   

Posted by Jill Fallon at 7:52 PM | Permalink

June 2, 2007

Make Your Own Coffee

Damon Darlin gives More Advice Graduates Don't Want to Hear in the New York Times.

1. Save 10% of your income before anything else
2. Learn to cook
3. Never borrow money to pay for a depreciating asset
4, Cut out the lattes.  Make your own coffee.
5.  Find your mate, marry and stay married.
6. Never pay a real estate agent a 6% commission
7. Buy used things
8. Enroll in a 401(k) at work
9 Resist the lunacy of buying premium products
10 Postpone buying hi-tech products

If you can't used to living on less, you won't need so much for retirement.  If you're a new graduate, and can save $50/week, he says, "You're nearly set for life."

The power of compound interest is magnified the earlier you start saving    If 22-year-old Jack puts $2000 away each year in an IRA for six years and, after six years, never makes another contribution, he'll have as much money for retirement as Jill who saved nothing for the first six  then saves $2000 each year for the next 34.

Posted by Jill Fallon at 8:06 AM | Permalink

May 18, 2007

Intelligence is Not a Factor in Becoming Rich

Important advice that bears repeating, You Don't Have to Be Einstein to Get Rich

Intelligence is not the most important factor.  "Staying married, not getting divorced and thinking about savings" is.    So says Ohio State economics professor Jay Zagorsky after studying 7500 middle-aged Americans.

"Intelligence is not a factor for explaining wealth. Those with low intelligence should not believe they are handicapped, and those with high intelligence should not believe they have an advantage."

Posted by Jill Fallon at 7:43 AM | Permalink | TrackBack

May 2, 2007

"if you're so smart, why aren't you rich?"

Why do people say, "if you're so smart, why aren't you rich?"

Because being smart doesn't mean you will be financially well off.

Smarter people are no better off

Here's one example, The Perils of Being Suddenly Rich or sudden wealth syndrome.

Posted by Jill Fallon at 12:49 PM | Permalink | TrackBack

April 25, 2007

Why You Should Spy on Yourself

Since just about anyone can find out all sorts of detailed information about you, consider that the best defense is a good offense.

Why You Should Spy on Yourself in the Wall Street Journal tells you how find out beforehand what a prospective employer, college admissions officer or others might reveal about you.

In a 2004 study by U.S. Public Interest Group found that 79% of consumer-credit reports contained at least one mistake.

1. Get your free annual credit report
The first step in running a background check on yourself: Order your credit report. These are from major credit-reporting agencies Equifax, TransUnion and Experian and can be obtained from or 1-877-322-8228.

Check for unauthorized credit-card accounts and loans, bad addresses and unfamiliar names that could be evidence of identity theft. Notify the agencies and creditors if anything seems amiss.
The good news: Background reports prepared by agencies like these are regulated by the federal Fair Credit Reporting Act. As a result, you're supposed to be notified of the reason if a negative report results in a missed opportunity, giving you a chance to correct mistakes.

2.  Do a pre-employment self check
While Choicetrust will give you a free annual report, expect to pay about $25 for  a national criminal file check or $50 for a search that included employment or education verification that will include information from public records and some courts.

At Choicetrust you can also review credentials of health care professionals,  verify nursing home credentials and check for lawsuits, liens and judgments against those you are thinking to employ.

Lexis-Nexus will also give you a free copy of information contained in a background screening report if you call 877-913-6245.

3. Do a Stolen ID search, a new free service from TrustedID, lets you find out whether your Social Security or credit-card numbers are among some 2.3 million compromised pieces of identification in its database, which it obtains from organizations that compile lists of numbers recovered in fraud investigations.
4. Clean up unflattering online postings
Among the toughest problems to fix can be unflattering online postings. Even just a few years ago, no one would have worried about it. But the fact is, they can linger in cyberspace forever. is designed to scour the Web for unflattering material about you, then will try to either have it removed or make it show up less prominently in search results.

Posted by Jill Fallon at 11:08 AM | Permalink | TrackBack

April 13, 2007

Winning the Lottery and Losing Your Family

So you think winning the lottery will solve your problems.

Jack Whittaker did and he won $315 million on Christmas Day  2002. Whittaker celebrated his good fortune, he had no way of knowing that he was embarking on a journey that would lead to tragedy and the loss of everything he held dear.

Powerball Winner Says He's Cursed

Whittaker now says that he regrets winning the lottery.

"Since I won the lottery, I think there is no control for greed," he said. "I think if you have something, there's always someone else that wants it. I wish I'd torn that ticket up."

Whittaker had the very best of intentions: He truly wanted to share his good fortune and help people.

Posted by Jill Fallon at 9:35 PM | Permalink | TrackBack

March 29, 2007

Biggest credit card heist in history

I like going to T.J. Maxx  for gifts and clothes but I almost never go the Marshalls, maybe because there are no stores nearby.

But the news that at least 45.7 million credit  and debit card numbers were stolen by hackers who accessed the computer systems  maybe even the encryption code, at corporate headquarters makes me a little nervous.

I may be a victim of the biggest credit card heist in history.  I probably am.

Breach of data at TJX is called the biggest ever.

Posted by Jill Fallon at 8:06 AM | Permalink

February 17, 2007

Post Nups on the Rise

Post-Nuptial Agreements on the Rise as couples work to avoid fights in the future over finances.

While some people use a post-nup because they think their marriage is on the rocks, it's not unusual to write one to update a prenup.
Indeed, one factor in the rising use of post-nups is that more couples are using prenups and post-nups, especially in a second marriage.

Post-nups also get written after a major life event such as receiving a large inheritance, taking a business public, or even winning the lottery. Some of the strangest uses of the agreements include limiting the future number of children and, in the event of a divorce, deciding pet visitation and divvying up cemetery plots.

While a post-nup "suggests a lack of trust in one another," said Debbie Cox, a wealth advisor with JPMorgan Private Bank in Dallas, "it's really about prudent management of assets."
Similarly, couples with "blended" families could use post-nups to ensure that the children from a previous marriage receive assets —such as a beloved family vacation home —in the event of a death or a divorce.

Cox said that while couples may not be thinking about a post-nup, a financial advisor should raise the issue to prepare for "a low-probability but high-impact event."

Ferro said that by setting forth expectations and obligations, the agreements actually can reduce everyday stress.

Posted by Jill Fallon at 2:54 PM | Permalink

January 29, 2007

Contrarian View

Of course you should save, but learning to live below your means may be just as important.

A Contrarian View: Save Less, Retire with Enough

Posted by Jill Fallon at 1:23 AM | Permalink | TrackBack

January 13, 2007

Rolling in Bank Fees

The nation's largest banks take in between $30 billion and $50 billion a year, about 44% of all their revenues. 

A quest for 'more info' on bank fees.

That's an awful lot of $3 unexplained monthly fees.

Which might explain why banks approve new cards on torn-up credit card applications.  Cockeyed has photos and more.

  Torn Up Credit Card Application

Since I don't have a shredder,  I tear them up and wait until I can mix them up with garbage - coffee grounds and old Chinese take out works well -  before I throw them out,

Posted by Jill Fallon at 8:02 AM | Permalink | TrackBack

January 12, 2007

The Rich Are Soaked

The top 1% of American earners paid 35% of all taxes paid to the IRS, according to the IRS's annual study of income tax data.

The Top 1% Pay 35%

Here's a way to think of the distribution of current income-tax payments: Imagine a banquet attended by 100 random Americans. If the bill for the meal is distributed like the income tax, the richest person in the room is required to pay one-third of the tab -- or more than all 50 attendees with a below-average income. The three richest people are charged as much as the other 97. And the 30 or so lowest-income people in the room -- those with a family income of $30,000 or less -- pay nothing and eat for free.

This is by any definition a "progressive" tax system. Make that highly progressive. It's true that lower-income workers are also dunned with payroll taxes, but that still doesn't do much to alter the fact that the current tax code really does soak the rich.

Posted by Jill Fallon at 11:06 AM | Permalink | TrackBack

January 4, 2007

Looking Back, We're Doing Well

Life's been getting better for everyone, including the poor, writes economics professor David Henderson in TCS.

....citing data from the aforementioned Cox and Alm and from Kirk Johnson showing that the average poor family in 2001 did as well as or better than the average family in 1971 in ownership of motor vehicles, air conditioners, color TVs, refrigerators, VCRs, personal computers, and cell phones. Of course, the last three didn't exist in 1971, but that's part of the point. When poor families can afford what even middle-income families couldn't imagine having 30 years earlier, aren't things working out pretty well?

Posted by Jill Fallon at 9:24 PM | Permalink | TrackBack

November 27, 2006

Very Rich

When medicine and the law ceased to be professions and became businesses, we shouldn't be surprised when many lawyers and doctors as well as would-be teachers leave it all behind to go to Wall St.

Very Rich are leaving the Merely Rich Behind

Posted by Jill Fallon at 3:34 PM | Permalink | TrackBack

November 8, 2006

Ben Stein on perfect summer days

Ben Stein on how to have a lifetime of perfect summer days and how not ruin your life. 

Even if he could retire, Stein likes going around the country and speaking on retirement readiness to the 75% of baby boomers who are financially ill-prepared for retirement.

In sum, Stein says,

* Don't have irrational expectations.
* Plan, Invest and Save

oh and have a good financial adviser.

Posted by Jill Fallon at 10:22 AM | Permalink | TrackBack

October 31, 2006

Sleazy bank practices in incomprehensible language

Seems as if  the gobbledygook banks use is used deliberately to hide sleazy practices.

• Like penalty rates when you're late on some other bill.
• Soaring late fees that have risen more than 160% since 1995.
• "Double cycle" billing to calculate interest rates.

Editorialized USA Today

What's seems far more unfair - in fact downright sleazy - is imposing onerous rates and fees on consumers and failing to tell them about it in plain language.

Posted by Jill Fallon at 3:09 PM | Permalink | TrackBack

October 23, 2006

Shopping tips

If you're one of those people who are beginning to think of Christmas shopping - it's hard not to with all those catalogs flooding mailboxes - here are some handy shopping tips via Lifehacker and the consumerist.

1. If shopping online, before you click buy, check to see if there are any  promotion codes that might save you money.  Search for the product and merchant name under  or

2. If you've already thrown out a catalog but want to order something from it, search Google Catalog, a comprehensive database of hundreds of catalogs.

3. If your favorite store is having a blowout sale starting Friday, go shopping at 6 pm the day before and avoid the crowds.  I've been doing this for years and it's great.

Posted by Jill Fallon at 1:28 PM | Permalink | TrackBack

October 19, 2006

Online resumes new spot for identity theft

When posting an online resume, be sure to clear it of all personal information.    Never ever post your social security number.  Be sure you are dealing with legitimate companies and recruiters before giving up any of your personal info.

Just assume that Identity Thieves are Reading Your Online Resumes.

When you post a resume, clear it of personal information. Cyberthieves have been able to gain access to resume databases and troll for Social Security numbers and other personal information, such as where you live and your contact information, says Pam Dixon, executive director of the World Privacy Forum, a public interest research group in San Diego.
Think twice before revealing personal information by email or phone. Con artists "phishing" for information through fake interviews may ask for, say, information such as your Social Security number or a scan of your driver's license or passport, says Ms. Dixon, and claim it will expedite the application process.
You can start by searching on the company's name on the Better Business Bureau's Web site. Another helpful Web site is, maintained by a joint federal law-enforcement and industry task force.

If the company that contacts you appears to be a well-known employer, don't think you're in the clear. Criminals are copying company Web sites and tweaking the contact information or links, says Ms. Dixon of the World Privacy Forum. Although a Web site may look credible, do an Internet search of the company to make sure the URL of the official Web site matches the address the employer refers you to. If there's a mismatch, find the phone number of the company's corporate headquarters on the official Web site to verify that the hiring manager who contacted you is an employee.

Since we're speaking of the importance of safeguarding your personal information, here's an ultimate guide to identity theft .

Posted by Jill Fallon at 9:28 AM | Permalink | TrackBack

September 25, 2006

Who doesn't have a bank account?

Would you believe that 3 million of H&R's customers don't have bank accounts? 

How much they must spend in check-cashing fees.  H&R Block sees the need and the opportunity.

From Free Money Finance H&R Block is offering bank accounts

Overall, though, I'd say this is a net win for consumers/taxpayers. It helps people who don't have bank accounts get one, it speeds the time between filing and the refund being received, it saves people money in reduced ATM fees (which can be a killer, by the way), and, for those who HAVE to have a refund in two hours versus two weeks, it will save them money as well.

You can't beat Free Money Finance for money-saving tips, with especially great ones from their readers.

They continue to offer the best of financial advice.

1. Spend less than you earn
2. Invest  what you save.
3. Use the miracle of compounding interest. 

Posted by Jill Fallon at 1:51 PM | Permalink | TrackBack

August 23, 2006

Half of all women fear life as a bag lady

Nearly half of women fear life as a bag lady

    A "startling" 90 percent of women say they feel financially insecure, according to a survey of almost 1,925 women released yesterday by Allianz, a Minnesota-based life insurance company.

    Almost half are troubled by a "tremendous fear of becoming a bag lady" -- 46 percent of women overall, and 48 percent of those with an annual income of more than $100,000. An additional 57 percent are sorry they had not learned more about money matters in school.

    "Money fears of women are complicated. They fear failure, or making mistakes. They fear they are expendable. Their fear of being poor, however, has topped the list for two decades," said Judith Briles, a Denver financial adviser and author of 23 books on money management.

    It seems an ingrained girl thing, though.
    "Bag lady syndrome is a fear many women share that their financial security could disappear in a heartbeat, leaving them homeless, penniless and destitute," MSN money columnist Jay McDonald wrote in January. "Lily Tomlin, Gloria Steinem, Shirley MacLaine and Katie Couric all admit to having a bag lady in their anxiety closet."

Posted by Jill Fallon at 8:26 AM | Permalink | TrackBack

August 14, 2006

Sudden wealth

Why anyone who becomes suddenly wealthy needs advice or counseling, maybe both.

Juan Rodriguez wishes he hadn't been so lucky.

Juan Rodriguez wanted nothing more than to be one of the guys in rural South Texas where he was raised, and he was until six years ago, when he had the misfortune to acquire almost $9 million from the state lottery.

Today, he's lost his anonymity, his buddies, whatever girlfriends he once had, and most of his family, whom he no longer trusts. He rarely ventures outside the trailer here where he lives alone.
The rule of thumb we use is
sudden wealth will ruin people in three to five years," said Thompson, president of Sage Financial Design, a Connecticut-based company whose clients include instant millionaires.

"At the end of five years, the money's going to be gone or the human being is going to be gone. They either lose their money or themselves or both."

Posted by Jill Fallon at 8:45 AM | Permalink | TrackBack

July 30, 2006

Lessons from Felix

Felix Dennis, a publishing tycoon, is filthy rich.  What  with about $400m -$900m in net worth, five homes, three estates, private jets and so on, he's written a book saying If You Want to be Rich, First Stop Being So Frightened. 

Making money was, and still is, fun, but at one time it wreaked chaos upon my private life. It consumed my waking hours. It led me into a lifestyle of narcotics, high-class whores, drink and consolatory debauchery. As a philosopher might have put it, all the usual dreary afflictions of the seeker after wealth.
After a lifetime of making money and observing better men and women than me fall by the wayside, I am convinced that fear of failing in the eyes of the world is the single biggest impediment to amassing wealth. Trust me on this.

Becoming rich does not guarantee happiness. In fact, it is almost certain to impose the opposite condition — if not from the stresses and strains of protecting it, then from the guilt that inevitably accompanies its arrival.

If I had my time again, I would dedicate myself to making just enough to live comfortably (say £30m or £40m) as quickly as I could, hopefully by the time I was 35. I would then cash out immediately and retire to write poetry and plant trees.

Posted by Jill Fallon at 11:01 PM | Permalink | TrackBack

July 18, 2006

Money stories

The best way to teach your children about money is to tell family stories that illustrate the money lessons you think are most important.

Jonathan Clements in the Wall St Journal says telling stories really worked in his family.  Every one of his siblings is incredibly careful about money because they heard the stories of the maternal grandfather who inherited millions of dollars and how he spent it all, spending his last days working as a part-time gardener to pay the bills.

We all have parents or grandparents who lived through the Depression and they can tell us a few stories and they probably have.

Clements has some pointers.

Choose your stories carefully and embellish them a bit.
Set a good example
Frequent short stories beat long discussions

The Best Way to Teach Kids About Money (subscribers only)

Posted by Jill Fallon at 3:31 PM | Permalink | TrackBack

July 3, 2006

Preparing and Recovering

If you have an expensive home ($1 million or more) and pay a fortune in homeowner's insurance($3500-$20,000), be sure to take advantage of the "concierge service" some insurers are offering this summer to deal with natural disasters like wildfires, hurricanes and earthquakes.

Insurers Cater to High-End Homeowners. (Wall St Journal, subscriber firewall).

They will work out a customized disaster plan and send out risk managers to your home to give you advice. Some even offer pre-screened specialists to give you priority and discounts in clean-up and restoration.

The rest of us can us Amazon's virtual Emergency Preparedness store which gathers together everything you need to prepare before and recover after.

Prepare for the worst. Hope for the best

Posted by Jill Fallon at 5:12 PM | Permalink | TrackBack

June 26, 2006

$24 billion forgotten or abandoned?

$24 billion in assets lies unclaimed says the National Association of Unclaimed Property Administrators .

Common forms of unclaimed property include savings or checking accounts, stocks, uncashed dividends or payroll checks, refunds, travelerís checks, trust distributions, unredeemed money orders or gift certificates (in some states), insurance payments or refunds and life insurance policies, annuities, certificates of deposit, customer overpayments, utility security deposits, mineral royalty payments, and contents of safe deposit boxes.

If a financial institution hasn't had contact with an owner of an account for a year or more, they turn it over to the states who may or may not contact you.

In Missouri, there's $400 million in unclaimed assets in Wealth waiting for the taking.

Last year over 1.3 million claims were paid to owners totaling about $1.2 billion.

You can conduct free searches of state and federal databases. NAUPA tells you how.

Posted by Jill Fallon at 9:53 PM | Permalink | TrackBack

May 3, 2006

How Experts Differ from Novices

From How Experts Differ from Novices

1. Experts notice features and meaningful patterns of information that are not noticed by novices.

2. Experts have acquired a great deal of content knowledge that is organized in ways that reflect a deep understanding of their subject matter.

3. Experts' knowledge cannot be reduced to sets of isolated facts or propositions but, instead, reflects contexts of applicability: that is, the knowledge is "conditionalized" on a set of circumstances.

4. Experts are able to flexibly retrieve important aspects of their knowledge with little attentional effort.

5. Though experts know their disciplines thoroughly, this does not guarantee that they are able to teach others.

6. Experts have varying levels of flexibility in their approach to new situations.

Complex areas where mistakes can be devastating like investing, legal advice or medical knowledge are better dealt with by the experts of your choice. Since you're the expert on your own life and what you like, want you wang and what you are willing to risk, consider your relationship with them a collaboration of experts AND novices.

Posted by Jill Fallon at 10:33 PM | Permalink

March 30, 2006

Financial Infidelity

Financial Infidelity is like, you know, shopping behind your spouse's back.

Can a bit of secret spending add spice to a marriage?

Surveys show that up to half of all couples admit that they commit 'financial infidelity' by lying about purchases they've made writes Jeffrey Zaslow in the Wall St Journal.

How do you and your spouse handle discretionary spending?

If couples haven't set a limit in advance, there's apparently a whole cottage industry of consultants out there ready to help couples negotiate their own "open to buy" amounts.

Posted by Jill Fallon at 1:08 PM | Permalink

March 28, 2006

Money is a Life Skill

For most of us, money is a difficult subject to talk about. It's too personal and tied up with all sorts of emotional baggage.

Still, sometimes we must; for example, before getting married.

even among the most compatible couples, the prewedding vow of personal-finance silence eventually leads to frustration, fights and power struggles.

The Wall St Journal has nine questions partners should ask each other before they take their vows.

1. What are your financial assets and liabilities
2. How do you use debt?
3. What is your money history?
4. Do we need a prenup?
5. What are your financial aspirations?
6. What are your career expectations?
7. How do you propose we divide financial duties?
8. Will we operate from one checkbook or three?
9. Do you have a basic understanding of money?

"Money is a life skill, like swimming," says Ms. Schwab Pomerantz. "Both of you need to know how to swim, because life is full of stormy seas."

Posted by Jill Fallon at 2:49 PM | Permalink

February 28, 2006

Checklist for the Business of Life

The Financial Planning Association and the National Endowment for Financial Education have teamed up to create an online life-stages financial planning tool.

  Life Events And Financial Decisions

Life Events & Financial Decisions is definitely a site to bookmark if only for as a checklist for the Business of Life™.

Posted by Jill Fallon at 9:44 PM | Permalink

February 22, 2006

32 m households have ill-fitting insurance

Everyone knows that major life events - a wedding, a new baby, a divorce, a new house or loss of a job - affect your financial life.

When your life changes, it's time to review your insurance coverage. It's the only way to know if you are over insured or under-insured. Your insurance should cover the major financial risks for your life RIGHT NOW, not the way your life was two years ago.

Some 32 million U.S. households own insurance policies that aren't right for them according to a recent survey. About one third of survey respondents admitted to having outdated policies.


Here are some examples of the findings.

• One in three haven't updated their homeowners policies to cover significant remodeling such as a new room, porch or deck.

• Nearly half of those people with a valuable collection - wine, art, antiques - don't have special insurance coverage.

• 40% of those families who have a young driver move away from home haven't updated their auto insurance even though they would save money.

• 84% of drivers who frequently car pool to a job, school, or activities with children haven't changed their liability coverage to reflect the increased risk of additional passengers.

• One third of the families with new babies haven't updated their life insurance.

• 70% of those who rent don't have renters insurance.

The survey was conducted by ICR for Trusted Choice, a network of insurance and financial services firms that provide customized insurance products.

Posted by Jill Fallon at 6:17 PM | Permalink

December 1, 2005

New Proposals to Save More

Just last night I was talking to an engineer who couldn't understand the complexity of retirement and savings plans and wondered why the government just didn't make it easier to save.

He's not the only one. The Wall St. Journal reports today that the President, his tax-reform commission, some Congressmen and a "bevy of economists and tax experts think so too. A New Approach to Savings Plans (subscription only) reports that support is growing for boiling all the various plans into three simpler ones.

A Save at Work account to replace 401(k)s and other employer-sponsored retirement plans that would allow workers to set aside $14,000 in pre-tax wages for retirement.

A Save for Retirement account to replace IRAs and deferred compensation accounts allowing taxpayers to set aside an additional $10,000 after taxes annually.

A Save for Family account would replace college saving, health care and flexible-spending accounts and allow a taxpayer to put aside an additional $10,000 after taxes annually.

Makes sense to me.

Posted by Jill Fallon at 2:52 PM | Permalink

November 29, 2005

Brat Patrol

With 92% of heirs switching their advisors soon after getting their inheritance, private bankers are pulling out the stops in the battle for assets.

In the Brat Patrol, Barrons reports how private bankers are wooing the next generation.

banks, brokerage houses and boutiques catering to the wealthy appear to be brimming with ideas on how young people can handle money responsibly and gracefully. They're doling out parenting advice, running financial boot camps for clients' children and moderating family disputes. In part, the bankers are responding to clients' anxieties; many wealthy parents fear their kids will become idle layabouts or spoiled brats.

Posted by Jill Fallon at 2:39 PM | Permalink

November 7, 2005

Carnival of Personal Finance

It's the Carnival of Personal Finance over at Blueprint for financial prosperity. Lots of links to posts, one of which may be just what you need to make or save money.

Posted by Jill Fallon at 3:16 PM | Permalink

October 26, 2005

Don't count on an inheritance

Both Marshall Loeb and the Wall St Journal today warn against counting on an inheritance, especially when you are planning your retirement.

The elderly are living longer and better. Those assisted living communities and nursing homes can eat up what you thought you had coming.

An AARP study in 2001 showed that 5 in 6 boomers reported that they had not received an inheritance and the same proportion said they did not expect to get one.

About 64% of those who receive bequests of $100,000 or more are already well off says the Journal.

So save your money boomers. You're likely to be on your own financially.

Posted by Jill Fallon at 2:45 PM | Permalink

October 24, 2005

Sharing your bank book

Marshall Loeb says in Till cash do us part.

Some loving couples would rather share a toothbrush than a bank book. But if you plan to be with your mate for the long-term, sharing your basic financial information is as important as sharing your health history.
At least once a year, you and your mate should talk about what you owe, what you're spending on and what are your future financial goals.
An easy way to have this conversation is to start by making or updating lists of what you own and owe, separately or in common.
You should know the names, email addresses and phone and fax numbers of the financial professionals in your mate's life. They include any stockbroker, accountant, banker, attorney, insurance agent and financial planner.
Then there are the lists of your assets. They include all real estate, bank and brokerage accounts, cars and boats, precious jewelry, works of art and insurance policies.
Keep your lists in the same secure place where you store your wills, property deeds and your marriage license, if you have one.

Posted by Jill Fallon at 2:13 PM | Permalink

October 19, 2005

Household Disasters

Burst pipes, electrical surges, appliance leaks, kitchen fires, sewerage back-ups.

One in three homeowners experience damages each year at an average cost of $2500 not including costs covered by insurance , but only 35% of homeowners budget for them. Yahoo story.

Since most disasters are unexpected, this can cause a financial pinch.
They are also inconvenient say 95% of those surveyed, even traumatic (74%) and it can take more than a week before lives get back to normal.

ServiceMaster Clean commissioned the story and they have tips for preventing, preparing for and recovering from these household disasters here.

Posted by Jill Fallon at 9:22 PM | Permalink

October 13, 2005

No accidents in 80 years of driving

Discount for 100 year old driver No accidents in over 80 years of driving.

Well that's one way to save on car insurance.

Posted by Jill Fallon at 1:40 PM | Permalink

October 7, 2005

USB Gets Best Rankings by Customers

In a recent survey of affluent customers, USB scored the best in customer rankings of the 9 leading financial service firms.

The nine firms profiled in the report are Bank of America, Charles Schwab, Fidelity, Merrill Lynch, Morgan Stanley, Smith Barney, UBS Financial Services, Washington Mutual, and Wells Fargo.
UBS scored tops as a full service provider, a personal service provider, results-oriented provider and low-cost provider.

Well, the Swiss have been doing this for a far longer time.

Posted by Jill Fallon at 8:08 PM | Permalink

September 26, 2005

Money links

A couple of interesting money links

The Five Mistakes Married Women Make according to Free Money Finance

1. Mistake: Handing Over the Purse Strings -- Solution: Pay Attention to the Household Finances
2. Mistake: Losing Your (Financial) Identity -- Solution: Maintain Some Individual Accounts
3. Mistake: Walking Away From Your Career -- Solution: Keep Your Skills Fresh
4. Mistake: Not Saving for Retirement -- Solution: Penny-Pinch Now for Your Future
5. Mistake: Asking for the House During a Divorce -- Solution: Get Financial Guidance

You Need Two Financial Plans says Smart Money
1. Plan A is for becoming rich -the offense
2. Plan B is to keep you from becoming poor - the defense

Posted by Jill Fallon at 7:05 PM | Permalink

September 22, 2005

Automatic Enrollment

If Americans aren't saving enough for retirement, why aren't corporations requiring automatic enrollment in their 401(k)s ?

Fidelity is going to require automatic enrollment beginning in January reports the Boston Globe.

Beginning Jan. 1, all Fidelity employees will automatically be enrolled in the company's 401(k) retirement plan, a move designed to prod the small percentage of the company's 32,500 employees who haven't yet started a nest egg at work.

''If you force that on people, make it part of what they do every pay period, it will become part of a very successful" retirement system, Fidelity chief operating officer Robert Reynolds said in a speech yesterday morning before the Greater Boston Chamber of Commerce

Posted by Jill Fallon at 2:20 PM | Permalink

September 20, 2005

Psycopaths and Money

Those who can suppress their emotions turn out to be the best stock market traders according to research from Stanford, Carnegie Mellon and University of Iowa.

The headline from The London Times. Wanted: psychopaths to play the stock market

Market traders may feel slighted, but this study comes from the growing field of neuroeconomics, which investigates the mental processes that drive financial decision-making.

The experts found that emotions can make investors play it too safe. They claim the emotionally impaired are more willing to gamble for high stakes.
The key was the fear that stopped those with “normal” brains from taking even the most sensible of risks.

Posted by Jill Fallon at 5:11 PM | Permalink

The Treasury Hunt

Each year over 15,000 savings bonds and 25,000 payments return to the U.S. Department of the Treasury as undeliverable. Some $13 billion worth of savings bonds have stopped earning interest, but haven't been cashed.

Now Treasury Hunt from the Department of the Treasury helps you locate bonds that a deceased loved one may have had or bonds you may have that are no longer earning interest simply by entering a social security number.

To access the newly expanded database Go to the main US Treasury page or directly to the Treasury hunt page

Posted by Jill Fallon at 1:45 PM | Permalink

August 21, 2005

There's nothing left

This is what can happen if you don't take responsibility for reading your own banking and investment statements.

From, A 'devasted' Leonard Cohen by Katherine Macklem

it's a true tale, with the bizarre twist of a Tibetan Buddhist suing a Zen Buddhist, Cohen. For the 70-year-old poet, singer and songwriter, it's a nasty, rapidly escalating legal battle that on the one hand accuses him of conspiracy and extortion, and on the other has him accusing both his highly trusted personal manager and long-time financial adviser -- the Tibetan Buddhist -- of gross mismanagement of his financial affairs. The case exposes not only private details of Cohen's finances, but also a dramatic tale of betrayal.
The conflict, which Cohen and others have tried to keep out of public view, has left him virtually broke -- he's had to take out a mortgage on his house to pay legal costs -- and facing a multi-million-dollar tax bill.
Still, when he discovered last fall that his retirement funds, which he had thought amounted to more than $5 million (all figures U.S.), had been reduced to $150,000, he wasn't so sanguine. "I was devastated," Cohen says. "You know, God gave me a strong inner core, so I wasn't shattered. But I was deeply concerned."

Posted by Jill Fallon at 1:57 PM | Permalink

August 16, 2005

SEI: True Wealth is Well-Being

Last week, I attended a seminar to learn about hedge funds.  I learned a lot, but what I was most interested in was the company that put it on. 

(Full disclosure note - Much to my surprise, I won a $200 bottle of Chateau Margaux in the raffle among attendees which I've put away for a special occasion.)

I first learned about SEI investments in May and was quite intrigued by its holistic approach that I think will prove very appealing to aging boomers.    At this educational seminar with no hard sell, I was surprised to learn how long the employees had been with the company and how much they loved their jobs - always a good sign and one of my rules of thumb.  I later learned on the web that SEI has been named four times to Fortune's List of the 100 Best Companies to work for.

SEI has launched SEI Wealth Network,  a new financial advisor business model, that enables advisors to help their clients realize their true life goals, enriching their lives and the lives of others.

It's not about just trying to sell you products but helping people deal with the messiness and complexities of their lives.  The SEI Wealth Network has a broad set of experts to help solve issues their clients face - from elder care, to caring for a special needs child, to career and life redirection.

While SEI is targeting financial advisors who deal with high net worth individuals and families, what they've uncovered as the new wealth code for advisors is quite interesting. 

Old Wealth Code

    1.  True wealth is being rich.
    2.  Money is its own reward.
    3.  Be an expert in your financial field.
    4.  Deliver great products.
    5.  Offer great service.
    6.  Give me a great deal.

    Success Measure:  ROI
    (Return on Investment - Market Driven)

    New Wealth Code

    1.  True wealth is well-being.
    2.  Money helps to realize a rewarding life.
    3.  Become the expert on my life goals.
    4.  Align my wealth with my life changes.
    5.  Help me solve my life problems.
    6.  Create value with me.

    Success Measure:  ROL
    (Return on Life - Goal Driven)

I believe that all of us want the very best of our professional advisors.  We want them to be our advocates, always on our side.  We count on them to be experts in their profession and to know how to deliver consistently strong investment returns.  But what we really want at important times is the best advice to deal with our personal challenges in life.  That's what SEI is looking to do.  I wish them the best of success.

Posted by Jill Fallon at 5:23 PM | Permalink

August 15, 2005

Your Wealth in 3-D

From Marshall Loeb at Marketwatch, a new book, called 3 Dimensional Wealth should be very good in getting people to view their wealth in a far broader context.  Your Wealth in 3-D.

The authors, Monroe Diefendorf and Robert Sterling Madden don't see wealth as a simple collection of assets.  They say wealth is composed of who you are (personal wealth), what you have (financial wealth) and how you can make a difference (social wealth).

I'm glad to see the financial industry beginning to look at wealth at large and in full. 

Posted by Jill Fallon at 9:59 PM | Permalink

August 11, 2005

Portfolios of Investment Clubs

Have you ever wondered what other investment clubs are selecting for stocks? 

Since women predominant in investment clubs, it's quite interesting to see that they select companies based on the products they use and the retail stores where they shop.  No high flying tech stocks here.

Top-Held Stocks by Investment Clubs, ranked by % of Clubs Holding as of August 1, 2005.
1. Home Depot Inc. (HD) — 40.3%

2. Pfizer Inc. (PFE) — 40.0%

3. General Electric Co. (GE) — 35.3%

4. Harley-Davidson Inc. (HDI) — 21.6%

5. Cisco Systems Inc. (CSCO) — 21.4%

6. Microsoft Corp. (MSFT) — 20.0%

7. Intel Corp. (INTC) — 18.7%

8. Johnson & Johnson Inc. (JNJ) — 18.6%

9. Bed Bath & Beyond Inc. (BBBY) — 17.2%

10. Walgreen Co. (WAG) — 16.7%

But if you look at the total amount invested by clubs, the list is different.

Top-Held Stocks by Investment Clubs, ranked by Total $ Invested*

1. Home Depot Inc. (HD)

2. General Electric Co. (GE)

3. Bed Bath & Beyond Inc. (BBBY)

4. Pfizer Inc. (PFE)

5. Johnson & Johnson Inc. (JNJ)

6. Walgreens Co. (WAG)

7. Cisco Systems Inc. (CSCO)

8. Amgen Inc. (AMGN)

9. Harley Davidson (HDI)

10. Lowe’s Companies (LOW)

ICLUBCentral, the market leader in investment club software and web services, released these lists of the most widely-held stocks held by investment clubs as of August 1, 2005

Posted by Jill Fallon at 5:58 PM | Permalink

August 9, 2005

Cash in those FF miles

People aren't cashing in the frequent flyer miles - 2004 saw a drop of 2.1% in the number of FF tickets.

Because airlines must report the approximate cash value of future reward tickets to the SEC as a liability, they want people to cash in their miles for FF tickets and many have revised their policies to make it easier to do so.

If you want a good primer on your various frequent flyer programs or want to compare the policies of various airlines, do get a copy of today's  - August 9 -Wall St. Journal

The Cranky Consumer in Checking When Air Miles Expire has a great chart with threshold and expiration policies nicely laid out,

Posted by Jill Fallon at 8:49 PM | Permalink

August 6, 2005

PBJ your way to riches

How just packing a lunch four days a week can add up. 

Frank saves $20/week, $1000/year with peanut butter and jam sandwiches and fruit.  Healthier too

Brown Bag Your Way to Half a Million via Lifehacker

Posted by Jill Fallon at 2:31 PM | Permalink

July 13, 2005

Hummer Homes

Is your home a hummer, Robert Samuelson asks.

Since 1970 the size of the average home has increased 55 percent (to 2,330 square feet), while the size of the average family has decreased 13 percent. Especially among the upper crust, homes have more space and fewer people. We now have rooms specialized by appliances (home computers, entertainment systems and exercise equipment) and -- who knows? -- may soon reserve them for pets. The long-term consequences of this housing extravaganza are unclear, but they may include the overuse of energy and, ironically, a drain on homeowners' wealth.

Me, I've always preferred cozy cottages and American bungalows.

Posted by Jill Fallon at 9:36 AM | Permalink

July 6, 2005

Identity theft on vacation

1. Don't leave your rental agreement in the glove compartment of your rented car.
2. Password protect laptops AND palm pilots AND memory sticks.
3. Keep your ATM and credit card receipts.  Don't throw them away with your personal data on them.
4. Use your hotel safe.  Your personal information may be just as valuable as your jewelry.
5. Keep your contact numbers for your credit cards packed with your clothes and not in your wallet.  You may want to put it in the hotel safe in a sealed envelope.
6. Pack an extra credit card just in case your wallet is stolen.

All the above useful tips are from Andrea Coombes at Marketwatch.

Posted by Jill Fallon at 8:29 AM | Permalink

July 5, 2005

Blogging for Dollars

If you're interested in blogs about money and finance, BusinessWeek has a round-up of the best in Blogging for Dollars via Instapundit who never ceases in his search for carnivals and round-ups like the Carnival of Personal Finance.

Posted by Jill Fallon at 5:52 PM | Permalink

June 23, 2005

Outside Fiduciaries and Company Stock

More than 27% of all workers hold at least half of their 401(k) balance in company stock.  Some 7% have their entire account in company stock. 

Generally financial planners say no more than 15% of your overall stock should be in your employer's stock.    The debacle of Enron, with hundreds of thousands losing their entire retirement savings is the lesson in point.

Given the recent rash of lawsuits against Merck & Co, Krispy Kreme, General Motors, AIG, EDS and others alleging that company executives breached their fiduciary duty by NOT getting workers out of company stock, things are changing

More and more companies are hiring outside consultants to oversee the handling of company stock in employee retirement plans.

For employees it's an extra layer of protection.  For independent fiduciaries like State Street and US Trust , it's a rich new source of business.

Retirement Plans Get New Safeguards, Wall St Journal (subscription only)

Posted by Jill Fallon at 1:12 PM | Permalink

June 11, 2005

Long term care

There's considerable upheaval in the insurance industry over long term care insurance.

Since 2000, half of the top carriers, those companies with annual sales of more than $10 million have stopped selling long term care insurance according to this report on Marketwatch.  Among them are CNA, Aegon, Fortis and TIAA-CREF

Mistaken assumptions about how to price the product have led a slew of companies to exit the market in recent years, while many of the companies that remain continue to raise premiums on older policies, sometimes by as much as 30%, industry analysts said.

"Insurers have not hit on the right business model yet in order to help people deal" with long-term-care needs, said Martin McBirney, a consultant with 15 years' experience as a pricing actuary, lobbyist and product developer, and operator of LTC Solutions, in Sandpoint, Idaho.

"There is a need out there and the insurance companies have not yet hit on quite the right formula for meeting it," he said.

Be careful before you commit to a policy.  You need the best advice by someone who really understands the industry. 

Posted by Jill Fallon at 2:25 PM | Permalink

French antiques

Those that are wealthier than you or me have already cut back on their real-estate investments according to a recent Cap Gemini and Merrill Lynch report and reported in the Wall St. Journal.(subscription only).  Real estate holdings  now amount to 13% of their portfolios, down from 17% in 2003.   

If you think the real estate market is over-heated, maybe even a bubble about to burst, may be it's time to think about furnishings. 

While people like me think  of Restoration Hardware , Crate & Barrel, or Pottery Barn, the rich are different.  They think about French antiques. 

French antiques cost about half what they did in 2000 and the Wall St Journal reports that pieces from the 17th and 18th century have fallen to the lowest levels in years.  Liberte, Egalite, Frugalite (subscription only).

Posted by Jill Fallon at 1:37 PM | Permalink

June 8, 2005

Six Million, Six Months

With Citibank's announcement Monday that 3.9 million of its customers may have had their personal data stolen, the overall total of such stolen or lost data has now reached SIX MILLION in the past SIX months according to the Washington Post.

The spate of breaches has included federal agencies, universities, banks and other financial institutions, data brokers and data-storage companies.

Posted by Jill Fallon at 4:49 PM | Permalink

June 3, 2005

Seniors Selling Life Insurance

If you or a relative of yours is considering selling their life insurance policy to a "life settlement" company to get money out, please think again.

According to a new Deloitte study, seniors who sold their life insurance policies received just 20 cents on the dollar instead of what Deloitte calculated to be the intrinsic value of the policy, 64 cents on the dollar.

Read Robert Powell on MarketWatch, Seniors get fleeced when selling life insurance  or go to Life Settlements Education to read the studies

Posted by Jill Fallon at 5:15 PM | Permalink

May 30, 2005

Millionaire Mindset

Most millionaires work for themselves, doing what they love, living below their means.

Paul Farrell's who writes at Marketwatch gives 10 tips to the millionaire mindset.

1. Don't obsess over money.  Millionaires spend an average of six minutes a day on personal finance.  They have better things to do

2. Accentuate the positive.  Attitude rules.

3. Think differently
.  Don't fit in.  Go your own way

4. Quit doing what you hate.

5. Do what you love.

6. Find the real you.

7. Invest in "You, Inc.". 

8. Live with passion

9. Live in the moment

10. Make a difference

Sounds like they understand the Business of Life.

Posted by Jill Fallon at 9:59 PM | Permalink

May 27, 2005

Selling $20 bills

If you wonder why so many people, especially doctors, lose so much money with their investments, it could be that they were students of Max Bazerman who has quite a lucrative sideline selling $20 bills.

Psychologist Max Bazerman says that during the past ten years he has earned more than $17,000 by auctioning $20 bills to his MBA students at Northwestern University. In the course of almost two hundred of his actions, the top two bids never totaled less than $39, and in one instance totaled $407.

HT Ming the mechanic via growabrain

Posted by Jill Fallon at 4:16 PM | Permalink

Get Rich Slowly, Clean Quickly

Saving you time and money.

Foldedspace has summarized about a dozen books on personal finance, distilling all their themes into one easy to read post.

Keeping your house clean in only 19 minutes a day, from Real Simple

Posted by Jill Fallon at 12:04 PM | Permalink

May 24, 2005

Data theft an Inside Job

If you're a customer at Bank of America or Wachovia, you may be hearing from them soon.

Seems as if bank employees sold account information of some 676,000  to data thieves in Hackensack, New Jersey.

While the thieves have been arrested and charged, this  biggest security breach in the banking industry has grown bigger and may reach 1,000,000 accounts.

All the more reason, you should be one of the first to buy an RSA SecurID consumer token as soon as they reach the market. 

Posted by Jill Fallon at 7:03 PM | Permalink

May 2, 2005

33 million times a week

Someone is trying to steal your identity through Phishing scams

Phishing, if you don't know the word, is the scam that deceives users into revealing personal information that can then be used to steal your identity.

33 million times a week according to Symantec.

Here are a few tips to protect yourself from Computer Security News

1. Don’t click on links offered in email text, which can often be redirected to illegitimate websites. Instead, type the domain name directly into your browser.

2. Be suspicious of any website address that doesn’t end in “.com”.

3. Check that the website is secure. A secure website begins with “https” rather than “http”. Look for a “lock” symbol at the bottom corner of the web page and click on any “SSL Certificates” to make sure they are valid.

4. Keep your browser and Windows operating system updated. Microsoft and other software providers frequently release security patches that close holes in your computer system. These holes could be exploited by Phishers if left un-patched.

5. If you get an email or pop-up message that asks for personal or financial information, do not reply or click on the links. Legitimate companies do not ask for this information via email.

6. Review credit card and bank statements as soon as you receive them. Notify your bank immediately if you notice any unauthorized charges or suspect you are the victim of identity theft.


Posted by Jill Fallon at 7:36 PM | Permalink

April 23, 2005

Men are too emotional

Seems as if women make fewer investing mistakes  while men are TOO EMOTIONAL and so make more investing mistakes according to a recent survey by Merrill Lynch.

Hannah Grove, chief marketing officer at Merrill Lynch Investment Managers says this about women investors -  Women have the potential to be better investors.  They learn from their mistakes, they are less likely to repeat mistakes, they're very realistic about their weaknesses and they have good habits

Posted by Jill Fallon at 1:55 PM | Permalink

April 1, 2005

ID theft resolution service

MetLife, one of the nation's largest insurers is rolling out a new program this week to provide free help in resolving cases of identity theft for all its policy holders of homeowner insurance  reports Security Awareness for Ma, Pa and the Corporate Clueless.

Posted by Jill Fallon at 1:54 PM | Permalink

March 28, 2005

Your Secret Nest Eggs

If you haven't left an information map as to where the money is, your family might give away your secret nest eggs and not even know it.

Posted by Jill Fallon at 1:53 PM | Permalink

March 24, 2005

Are you a financial grown-up?

From Money Magazine. You are a financial grown-up when you realize:

  1. The right time to save is always now.
  2. The only one you can count on is you.
  3. You are your own best financial advisor.
  4. You'll screw up sometimes -  and that's okay
  5. Less really is more.

HT: The Budgeting Babe

Posted by Jill Fallon at 11:22 PM | Permalink

March 15, 2005

High trust companies.

There seems to be a strong link between a company's workplace culture and its financial performance.  Stocks of the the public companies on Fortune's 100 Best Companies to Work For" list beat the market by over 300%.

Great workplaces have significant competitive advantages as a result of the high trust relationships between employees and management,” says Amy Lyman, Ph.D., President and Co-founder of Great Place to Work Institute, the firm that selects companies for the Fortune list. “Trust can contribute to higher levels of cooperation, greater commitment, lower employee turnover, decreased use of sick time and improved customer support.”
Posted by Jill Fallon at 1:36 PM | Permalink

March 4, 2005

Muffler Man

Here's an anecdote from Dervala that makes my case about Happiest Workers.

Leo had majored in Romance Language Literature at the University of New Mexico but when his young family came to California years ago he decided to apply himself to an honest trade.

“People think that because I know all these languages, and poems, and books, I should have been something more than a mechanic. But if I worked in my academic field, I’d be fighting to make twenty or thirty thousand a year. And guess what? Last year I took home over two hundred grand from this little shop.”

As I backed my car off the hoist he was belting out a Puccini aria.

My muffler man does good work, and is easily the happiest person I’ve met so far in California.
Posted by Jill Fallon at 8:40 PM | Permalink

March 3, 2005

Financial Voyeurism

Terri Cullen in her Fiscally Fit column for the Wall Street Journal takes a peek at the personal finance blogs that are poking up on the Web and so are thousands of others.  Blogs Expose Personal Finance: The Good, the Bad and the Ugly.

While you might not want to take advice from any of these bloggers, you can take encouragement in realizing that most everyone struggles with their money matters.  Here are the personal finance bloggers she mentions:

I will teach you to be rich.  personal finance basics for students and recent college grads.
My personal finance journey by someone who's looking to retire at age 40 with at least a million dollars.
My Money Blog.  Jonathan stumbles along the path to financial freedom.
The Budgeting Babe. dedicated to all the young, working women who what to spend like Carrie in a Jimmy Choo store but have a budget closer to Rosanne.
Neville's Financial Blog.  tracking the road to financial success from the age of 22
Savvy Saver.  It's not how much you make, but how much you keep.

What impresses me about these blogs is that they are all by young people, maybe showing that financial education is convincing them to start planning early.

Posted by Jill Fallon at 4:26 PM | Permalink

February 25, 2005

Annuities for IRAs?

If your broker or financial advisor recommends that you put your IRA in a variable annuity.
Don't do it.  Or at least get a second opinion.  And read what Jeff Voudrie, President of the Legacy Planning Group has to say about it.

Posted by Jill Fallon at 4:21 PM | Permalink

ReadAway for financial postings

If you're one of those people who research and trade stocks online, you might be interested to know you can go to one place to read postings from all the financial message board communities.

So now searching for rumors, ideas, opinions, stock research, insider trading information and company financials can be quicker and faster. It's call ReadAway, an all-in-one financial message boards search.  Readaway at Board Central

Posted by Jill Fallon at 4:15 PM | Permalink

February 21, 2005

Gleanings from the Carnival

Some interesting posts over at the Carnival of the Capitalists. 

Take a look at Anita Campbell's Small Business Trends e.g. Religion and Entrepreneurism

Owning your own small business is not about worshipping the almighty dollar. It's about being self-sufficient: taking charge of your destiny, earning a living, and providing a living for others.

much like the fishermen who followed Jesus and the monks who support themselves selling jams, fruitcake or ,like Lasermonks, ink cartridges for printers. 

Matt Fisher at Financial Planning 101 tells you how sales incentives offered at brokerage houses often result in a conflict of interest.  Brokers and financial advisors are encouraged to sell their in-house mutual funds with their less than average performance because they get a commission.  What's in the customer's best interests gets lost.

Posted by Jill Fallon at 10:19 PM | Permalink

February 18, 2005

Are You Shortchanged on Your Interest?

If you have a cash sweep account at one of the major brokerage houses, you just might want to check your interest rate.  Seems as if some brokerage firms are steering clients to accounts that deliver sub-par rates (less than money market fund rate) according to the Wall St Journal today (subscription only) - some $350 billion in fact.

The NYSE has issued a warning to those firms to improve their disclosure practices or face new rules and possible enforcement actions.

"As we became more familiar with the practices, we became more concerned that customer interests may not be properly accounted for here," says Grace Vogel, executive vice president of member-firm regulation at the NYSE

Posted by Jill Fallon at 2:31 AM | Permalink

January 21, 2005

Stockholders vs Workers

Last August Bernard Condon wrote about "The Coming Pension Crisis"   in Forbes  to say that 13 companies in the S&P 500 owe its workers more in pension payments than the companies would be worth in liquidation.
They are:

  • Delta Air Lines (DAL)
  • Lucent Technologies (LU)
  • Goodyear (GT)
  • Delphi (DPH)
  • Navistar (NAV)
  • AES (AES)
  • Avaya (AV)
  • Maytag (MYG)
  • Hercules (HPC)
  • UST (UST)
  • Allegheny Technologies (ATI)
  • Avon Products (AVP)
  • Ford Motor (F)

If six months later the picture hasn't changed, how do these companies continue to attract investors?

Posted by Jill Fallon at 8:04 PM | Permalink

January 19, 2005

Some fools get $10 million bonuses

Tired of the idiots at work?  Here's a safe place to vent.  I work with fools allows you to share anonymously work-related stories.  It could become a Page Six  for the Dilbert crowd.

I work for a major financial institution once known for using bleeding-edge strategic technology to make dramatic profits in the market. About 3 years ago management decided that technology was not strategic, technology was a commodity, yada, yada, yada. Anyone who felt differently was pushed out the door. Management arranged to outsource the entire global technology organization to another major corporation known more for their commercials professing their ability to provide technology services on demand, than for their ability to actually deliver said services, for a savings in excess of $2.5 billion. Of course our CEO received a $10 million bonus for this fantastic feat of magic. Three years later, after both companies experience exorbitant and unplanned technology-related costs for substandard technical services, the same management announces that technology is strategic (duh!) and should be developed and retained in-house. Furthermore, management has budgeted $5 billion to insource the jobs (not the people) over the next 3 years. Our CEO is receiving another $10 million bonus this year for bringing the technology jobs back in house; the architects of the original disastrous outsourcing, are now orchestrating the new operational model involving insourcing.
Who's the CEO and what company could this be?
Posted by Jill Fallon at 4:43 PM | Permalink

January 14, 2005

21st Century Lost and Found

You know how easy it is to lose stuff.  I 'm still looking for a pair of eyeglasses I lost a week ago.  I don't even want to think about the cell phone, PDA, wallet, backpack, camera and laptop that I carry around with me.  Fortunately, Stuffbak has.

Stuffbac is a comprehensive system for identifying and returning lost property.  You buy a package of labels, attach them to the devices you might lose, activate the labels through their website and then rest easy.  If you then lose something, the label allows anyone to drop off the item at the nearest UPS store or have Airborne Express pick it up directly.

All you pay is the shipping charges and any extra reward you want to give.  Stuffbak gives the finder 20 free stuffbak labels.


Sounds like a cool tool.  Nice testimonials on the Stuffbak site.

Posted by Jill Fallon at 7:32 PM | Permalink

January 7, 2005

This year Financial Fitness

Jonathan Drucker has Seven steps to financial fitness for 2005.  They are:

  1. Start saving more. 
  2. Rethink real estate
  3. Trim credit card debt
  4. Reevaluate your portfolio
  5. Update your insurance and will
  6. Stick to a budget
  7. Develop an emergency fund

Read what he says about each one.

As Will Rogers said, "The time to save is now.  When a dog gets a bond, he doesn't go out and make a down payment on a bigger bone.  He buries the one he's got. "

Posted by Jill Fallon at 11:03 PM | Permalink

December 15, 2004

Money doesn't buy happiness

The wife of the lottery winner who took home the richest undivided jackpot in U.S. history says she regrets his purchase of the $314.9 million ticket that has thrust her family into the public spotlight. CNN quotes his wife Jewel Whittaker as saying
I wish all of this never would have happened," "I wish I would have torn the ticket up."
The report from The Charleston Gazette.

  • UPDATE. December 22. Sadly I read that Jack's grandaughter Brandi Bragg was found dead, wrapped in a blanket and tarp outside her boyfriend's home. The title of the Charleston Daily Mail piece is "From Riches to Sadness, Death"
    May she rest in peace. My condolences to her family. My best wishes that Jack and his family have a better and happier New Year.
Posted by Jill Fallon at 2:09 AM | Permalink

November 23, 2004

The Power of Compound Interest

Oh, how I wished I learned this lesson when I was very young. Former janitor leaves millions to school

    When Genesio Morlacci left $2.3 million to a small college here, many people were astonished at the wealth amassed by a man who operated a dry-cleaning shop and later worked as a part-time janitor in retirement.
    Morlacci died last month at age 102. The University of Great Falls has announced that his endowment will generate roughly $100,000 a year for scholarships at the Roman Catholic school, a quiet campus with about 800 students.
    "He worked very hard for this, 18- and 20-hour days, and during each of those working hours he was doing something good for a student he will never meet," university president Eugene McAllister said.
    Morlacci, a widower, did not have any children. He gave the college nearly all he saved through work, investments and old-fashioned thrift -

Posted by Jill Fallon at 11:51 AM | Permalink

November 9, 2004

What About the Rest of Us

In the Wall St Journal recently, Kathy Chu wrote how asset growth spurs adviser demand as more people join the ranks of millionaires and their finances get more complicated. There are about 7.7 million people world wide who have more than one million dollars in financial assets, up about 7.5% since 2002 according to Merrill Lynch. (It's about 2.5 million in the US)

    Even at a wealth level of $5 million in investable assets, individuals may have three or more advisers, including financial planners, accountants, insurance agents, attorneys or professionals affiliated with financial institutions, according to HNW.

    The demand for a formal relationship manager -- to oversee various financial professionals -- is growing. It's enough that Northern Trust, a Chicago wealth-advisory company, started a new title two years ago called chief wealth adviser

Well, I'm here to say that you don't have to have $5 million to have a financial planner, an insurance agent, an attorney and maybe an accountant. Normal middle-class people have several bank accounts and investment accounts, retirement accounts, numerous insurance policies, a lawyer or two and a tax preparer. They need a way to keep track of their assets and their advisors. That is the need we mean to fill with EstateVaults™.

Posted by Jill Fallon at 11:55 AM | Permalink

November 8, 2004

Analyst Blogs

In Analyst Blogs versus Investment Bank Research, Francis Good writes about independent industry sector advice that is truly independent from the inherent conflicts of interest existing at investment banks. It's blogs.

James Enck, a telecoms analyst at Daiwa Securities writes at eurotelcoblogwho reads 45 blogs with regularity picks his 3 favorites.

    I select these three [Andy (, Om (, and Martin (] because they, to my mind, demonstrate the highly individual qualities of blogs which collectively deliver what brokers' research typically lacks. All three have very sensitive BS meters, and are not afraid to court controversy. All three possess wide expertise and that rare quality of 360-degree, joined-up thinking, which allows them to consider the broader implications of what Company A is saying/doing, rather than the all-too-typical broker treatment: "Company A announced X. This is line with our expectations. STRONG BUY." The former quality is what good fund managers increasingly seek out, the latter is something they find oppressive (because their in-boxes are full of it) and irrelevant.

Blogs are live online, interactive and independent. They reflect a much wider view of the world and, in the aggregate, pose real competition to the analysis provided by investment banks and stock brokers. .

Posted by Jill Fallon at 11:18 AM | Permalink

October 6, 2004

Women respond to bonding not greed

Michelle Miller at Wonderbranding has posted a fascinating entry on Emory University's study of real time MRI's during social interaction among women in Getting to Know You - Part 11.

    The Emory researchers initially set out to show that a woman’s brain reacts the same way each time it strives for a goal, no matter what the plan is for achieving that goal. What they discovered was quite surprisingly the opposite. When a participant’s chosen strategy for increasing her money reflected a selfish or greedy premise, a small region of the brain showed activity. But when cooperative alliances were formed with other women toward the same goal, the brain not only lit up like a Christmas tree, it radiated in regions that scientists know to be directly related to reward behavior… the same areas that respond to chocolate cake, sex, beautiful pictures, and other assorted delights.

    Even more interesting, it was the perception of bonding with other humans, not the money, these women responded to. When participants played the same game against a computer, the reward behavior regions were significantly less responsive.

This has enormous implications for the financial services industry who have yet to understand how to make their female customers a community of friends.

Posted by Jill Fallon at 5:30 PM | Permalink

Featuring Customers in Ads

Financial advisory firms often feature customers in their ads, usually to show how close the financial advisor is to his clients and how he helps his clients achieve their dreams. In the single most disastrous ad I've ever seen, Middleoffice, a Swiss financial advisory firm is now featuring Yasser Arafat in banner advertising on Al Jazerra, the Arab TV station. The estimates of Arafat's personal wealth ranges from $1.2 billion to $10 billion. The main source of Arafat's wealth is believed to be the approximately $6 billion contributed by the United States, Japan and European countries as well as financial aid to the Palestinian Authority from 1993-2000. The evidence is based on financial documents confiscated from the PLO chairman's headquarters in Ramallah.
1 2

Hat tip to Harry's Place where Gene pointed out that he has made the difficult decision not to send them his life savings.

Posted by Jill Fallon at 9:07 AM | Permalink

October 2, 2004

Is your 401(k) supporting terrorism?

I don't know about you, but I don't want my investments with any company that does business with terrorist countries like Iran, Saddam Hussein's Iraq, Syria, North Korea and Sudan. Funny thing is I never thought about it until I learned about

    What we did not realize -- until now -- was that each and every one of us actually can play a pivotal role in winning the War on Terror. How? By demanding that our public and private pensions plans, college endowments, individual retirement account managers, 401(k) plans, and other investment vehicles exploit the leverage represented by investments in publicly traded companies that operate in terrorist-sponsoring states. In a unified front, we should all be saying "This is my money and it will not go to support terror." is a nationwide campaign aimed at some 400 public companies worldwide that are providing revenues, technology and moral cover to governments that sponsor terrorism.The primary objective of this campaign is to force governments to choose between their sponsorship of terrorism and critical partnerships with publicly traded firms.

The site lists a dirty dozen of companies doing business with terrorist states. They are
Alcatel SA, BNP Paribas, ENI SPA, Hyundai, Lundin Petroleum, Oil & Natural Gas Corp, Siemens AG, Statoil ASA, Stolt Nielsen, Technip Coflexip, Total SA and UBS AG.

The facts supporting the listing of the Dirty Dozen are derived from publicly available sources. This is what writes about UBS.

    UBS AG

    The Swiss Bank, UBS AG, has ties to the financial sector of Iran and Libya and was fined for its ties to Saddam's Iraq prior to the war.  While the cumulative value of its business activities in these countries is relatively modest, the company recently faced public scandal and substantial U.S. government fines after investigations of the company’s undisclosed ties to Iran uncovered significant transfers of U.S. dollar bank notes directly to Iran. 

    In May 2004, UBS AG was fined $100 million by the U.S. Federal Reserve for violating a contract that stipulated that UBS would not, as part of its work program, transfer dollar notes to U.S.-sanctioned countries.  Until the termination of its contract in October 2003, UBS was a part of the Federal Reserve's "Extended Custodial Inventory Program" that is designed to facilitate the introduction and circulation of new U.S. dollar banknotes.  U.S. investigations discovered that UBS employees had filed false reports to the Federal Reserve that covered up illegal dollar transfers with Iran, Libya and other sanctioned countries, including Cuba and the former Yugoslavia, that totaled some $5 billion.1

    Additional ties to Iran have included UBS's announced intention to confirm letters of credit for Swiss exports to Iran dealing with a number of Iran's most important banks, including Bank Mellat, Bank Melli Iran, Bank Saderat, Bank Sepah and Bank Tejarat.2


The Swiss Bank, UBS AG, has ties to the financial sector of Iran and Libya and was fined for its ties to Saddam's Iraq prior to the war.  While the cumulative value of its business activities in these countries is relatively modest, the company recently faced public scandal and substantial U.S. government fines after investigations of the company’s undisclosed ties to Iran uncovered significant transfers of U.S. dollar bank notes directly to Iran. 

In May 2004, UBS AG was fined $100 million by the U.S. Federal Reserve for violating a contract that stipulated that UBS would not, as part of its work program, transfer dollar notes to U.S.-sanctioned countries.  Until the termination of its contract in October 2003, UBS was a part of the Federal Reserve's "Extended Custodial Inventory Program" that is designed to facilitate the introduction and circulation of new U.S. dollar banknotes.  U.S. investigations discovered that UBS employees had filed false reports to the Federal Reserve that covered up illegal dollar transfers with Iran, Libya and other sanctioned countries, including Cuba and the former Yugoslavia, that totaled some $5 billion.1

Additional ties to Iran have included UBS's announced intention to confirm letters of credit for Swiss exports to Iran dealing with a number of Iran's most important banks, including Bank Mellat, Bank Melli Iran, Bank Saderat, Bank Sepah and Bank Tejarat.2

A subsidiary of the company, UBS (USA) was fined $14,750 by the U.S. Treasury Department's Office of Foreign Assets Control to settle charges that UBS violated U.S. sanctions on Iraq.  Its ties to Iraq allegedly included illegal funds transfers that took place in 2001.3

UBS' activities place it on the "Dirty Dozen" list for the following reasons:
• Hard Currency: UBS illegally provided U.S. banknotes to sanctioned terrorist-sponsoring countries.  The U.S. government's punitive actions against UBS underscore the point that,without hard currency, it would be difficult for these governments to continue their sponsorship of terrorism and costly weapons of mass destruction programs.  Indeed, the purpose of sanctions is to deny the type of cash to these countries that UBS provided.
• The Role of Finance: Banks play a vital role in the economies of terrorist-sponsoring states by underwriting projects that create substantial revenues for the government.  Without the financial life-support provided by leading banks such as UBS, the governments of Iran, Libya and other terrorist-sponsoring states would find it more difficult to ignore diplomatic efforts to discourage their sponsorship of terrorist groups.
• Moral and Political Cover:  When leading global companies such as UBS do business with terrorist-sponsoring states, it sends a clear message to these governments: Sponsoring terrorism is not a concern as long as there are corporate profits to be made.  This message undermines U.S. sanctions and international diplomatic efforts.

1. Associated Press Online, 5/10/04; and PR Newswire, 5/10/04.

2. Company Press Release, 5/31/01.

 3. U.S. Treasury Department Office of Foreign Assets Control Website, 2003.

Posted by Jill Fallon at 2:52 PM | Permalink

August 17, 2004

Some Financial Planners Evolve Into Niches

Remember when the only choice you had to make when it came to toothpaste was regular or mint? Today, there are well over 200, enough to confound anyone at the drugstore. Colgate alone has 49 varieties and Crest has 21 varieties in twenty four different flavors.

    Toothpaste used to be dull. Now it plays songs, comes in scratch-'n'-sniff boxes, and stores floss in the cap. It's gone beyond tartar control to "dual-action whitening" and "sensitivity protection." One rejuvenating toothpaste, targeting women, is supposed to make users feel younger. There is toothpaste for children. ...Colgate introduced a Looney Tunes tube this year that begins to play "Yankee Doodle" when the lid is opened and keeps at it for 70 seconds to keep the child brushing....Aquafresh has toothpaste with dental floss in the cap to remind brushers to floss.
If you use a biological metaphor to understand the economy, it makes sense. A single species of plant or animal evolves in different ways in different places in the battle for survival in a particular niche. Something similar is happening in the financial planning industry. There are more of them, there are more types of them and many are specializing in certain niches.

This is good news, even a godsend writes Laura Koss-Feder in "Coming to the Rescue" in TIME

    Approximately 25% of the nation's 40,000 bona fide financial advisers are devoting their practices to assisting certain kinds of clients: seniors, individuals going through divorce, small-business owners, those with disabled family members and high-net-worth corporate executives. Some advisers specialize in serving clientele in certain occupations, such as medicine and teaching. Others work with those who have newly acquired wealth, like lottery winners.

    Planners with specific expertise can be a godsend. For example, Dee Reeves, a hair-salon owner whose son Sean, 32, has Down syndrome, found the right professional advice with financial planner Mary Anne Ehlert 11 years ago. Eighty percent of Ehlert's business — which includes the services of staff social workers — is devoted to helping families with disabled children, spouses and parents navigate both their finances and the social-service system. Ehlert is trying to create a special designation for other financial advisers across the country who want to work with similar clients. Ehlert's 16-person firm, based in Vernon Hills, Ill., charges an average fee of $2,500 to $3,000 a year.

    Divorce planning is one of the fastest-growing specialties. The Institute for Divorce Financial Analysts in Southfield, Mich., certifies specialists, who have to pass exams on how to handle monetary issues related to divorce, according to its president, Fadi Baradihi. The institute's membership of 1,500 is growing about 20% annually.

If you don't need specialized advice, a regular financial planner is just fine. But if you need specialized advice, by all means, search out specialized planners in your area. "With tax laws and regulations becoming more complex every year, specialists can really help you. They also can serve as an advocate in your corner," says Linda Sherry, a consumer advocate at Consumer Action, a San Francisco — based nonprofit organization.

I've written earlier about the special needs of parents of special needs children. A team approach consisting of a financial planner, an estate planning attorney and a social worker or advocate seems to work the best

Posted by Jill Fallon at 4:49 PM | Permalink

August 1, 2004

When a Wall Street Settlement Provides a Competitive Edge

Beginning June 27, 2004, major Wall Street firms must provide clients with stock recommendations by outsiders, that is a second and independent source of research apart from their own analysts. Last year's $1.4 billion settlement with the SEC and state regulators forced this change to resolve charges of conflict of interest by investment banks touting stocks to buy in which they had a financial interest.

Just how this independent research will work out for the average investor remains to be seen. I believe it will a long time before trust can be restored. People burned will turn towards independent financial planners and analysts before they put their trust in the large Wall St firms.

What's interesting is that some firms, like Fidelity, that were not "slapped by regulators seem to view such reports as a competitive threat" according to BusinessWeek. In a short article entitled Fidelity Flaunts Its Bona Fides that's not yet online, reporter Mara Der Havanesian writes that Fidelity will soon add research from seven new independent firms "to get up to par with its admonished rivals."

Posted by Jill Fallon at 12:27 PM | Permalink

June 21, 2004

Have Sex, Get More Sleep, Happiness Isn't Money says Major Bank

The news article reprinted below in its entirety is not from The Onion, but from Reuters' Oddly Enough

LONDON (Reuters) - June 18, 2004 A major investment bank is advising clients to have sex, get more sleep and stop equating happiness with money -- turning the industry image of hard-nosed dealmakers on its head.

German-owned Dresdner Kleinwort Wasserstein offers the advice in a note to clients by its strategist James Montier.

"I thought it was time that I reminded people there was more to life than watching screens every day," he told Reuters.

The note recommends clients have sex, ideally with someone they love, reflect on the good things in life, give their bodies enough sleep and exercise regularly.

But they shouldn't get too carried away.

"I still need a little bit of money just to keep me happy," said Montier.

Posted by Jill Fallon at 3:43 PM | Permalink

June 4, 2004

Special Needs Children Outliving Their Parents

Parents of a disabled or special needs child realize their financial planning is more complicated than most. How to insure their child's quality of life after they die becomes a burning issue.

BusinessWeek in Disabled -- But Financially Secure reports on strategies to getting costs covered and on choosing the right financial planner as well as sites for getting online financial help.

Merrill Lynch is apparently the only major brokerage firm with a Special Needs Financial Services Group with over $1.5 billion in client assets and 700 trained financial advisors. Chris Sullivan, a deaf analyst who sparked the creation of the separate group, recommends a team approach with a financial advisor, an estate planning attorney and a social service representative or disability advocate so that all three areas can be addressed together.

Posted by Jill Fallon at 9:20 PM | Permalink

April 30, 2004

QuickTake on Charles Schwab

So where can you get independent insights into the financial services industry? You might want to checkout the daily weblog of Tom Brown's Bankstocks Here's a sample from QuickTakes:

    Charles Schwab's FEE FRACAS: Not many companies in the financial services industry have historically provided better customer service than Charles Schwab--but even Schwab now seems to have tripped itself up as it figures out how to migrate its 1 million or so no-fee-for-life IRA accounts to its new, heavily hyped, Independent Investing Signature product:

    Dig deep into the fine print that accompanied Charles Schwab's recent letter to customers about "upgrading" their service and introducing new fees, and you'll discover alarming news for the tens of thousands of recipients who enjoy lifetime fee waivers for retirement accounts held by the San Francisco brokerage.

    On the second page of a closely spaced, legalistic "terms of service," it says that "accounts with pre-existing permanent fee waivers" -- in most cases, individual retirement accounts worth at least $10,000 that were opened between 1992 and 2000 -- will lose their fee waivers if the account holder is in Schwab's new Independent Investing Signature service.

    Not the kind of thing that endears one to ones customers! My guess: the consultants who came up with the Schwab Personal Choice schtickthe product set that the company is more or less betting its future onfailed to think through those little annoyances known as details and "execution." To Schwabs credit, its apparently trying to find a customer-friendly way to solve this unanticipated problem. It would have been a lot more helpful, though, for the product maestros to have foreseen the issue in the first place.

Posted by Jill Fallon at 11:52 AM | Permalink

April 19, 2004

The Tax Preparation Industry

One blogger Jeff Cornwall estimates its a $5 billion industry for the preparation of individual tax returns alone. If you add corporate tax work, compliance and audits. Why would this industry want easier, simpler taxes?

    The tax industry is quite duplicitous with the source of all of their business: the government. Whenever tax reform or tax simplification legislation is proposed, hold on to your wallets. Most of this legislation is written by the very professions, accountants and lawyers, who run the tax industry. Tax law is purposely vague. Audits, and the tax law they create through IRS court cases, creates billions of dollars more for this industry. We pay this industry to create new tax law by defending us when faced with audits that are the result of ambiguous tax code they helped to draft.

Having worked in government, I appreciate how "vagueness" in laws is often deliberate.

Posted by Jill Fallon at 4:31 PM | Permalink