$7 Billion to get you to use plastic.

Advertising for banking, credit and debit card services: $7 billion a year.   

Computer systems to process plastic transactions:  $50 billion a year

814 lobbyists to get laws in your favor: $62.5 million in 2009

Having the government, taxpayers and customers under your thumb:  Priceless.

As a taxpayer you already pay for one currency system: Cash.  But the banks don’t make any money on cash transactions, so they’ve invented another system: Plastic.

Each has its advantages and disadvantages.  You could even say that comparing the two is apples and oranges.  But this isn’t about which currency system is best for what.

Big Banking has done nothing less than put the economy into near depression, take taxpayer money to the tune of $1 trillion dollars, curtail credit and lending, foreclose on homes, and up interest rates and fees.  Something must be done, but what?  What can we do to change the current stacked system?

I believe a simple, effective action against Big Banking is to Use Cash instead of plastic.

Use Cash is about getting some power back into the hands of people to toward ending the current unfair, usury and exploitive financial system.

It requires small, easy actions from large numbers of people willing to suffer a little inconvenience to send a message to Big Banking that enough is enough.

There are no pending plans in Washington to curb or cap usury interest rates, set limits on fees or penalties, stop home foreclosures or free up credit.  Neither is their much happening to get Big Banks and Big Finance to end the casinoland games that gave us the financial crisis. 

To get banking and monetary reform we first need to get the attention of the industry and the government.  Letters, petitions, phone calls or political action will not work against the power and money at the disposal of Big Banking. 

But there is one way to get the attention of any profit driven industry: deprive it of money.

Use Cash is an easy way to constrict an important flow of money to an industry that currently acts with impunity.  Unlike a boycott, you need not deprive yourself of any particular product or service, including using your plastic.  Just use cash more, credit and debit cards less.

This is how using cash will put a burning hurt on Big Banking.

When you use cash to buy something you automatically do the following: deprive Big Banking of 3.5 cents on every dollar spent, decrease the likelihood you will be paying interest on the amount of the purchase, and reduce your chances of incurring an overdraft, over limit or late payment fee, just to mention some of the ways Big Banking makes money on plastic transactions.

When merchants accept plastic for a transaction they pay an average 3.5 cents on every dollar.  They get their money later rather than sooner.  And somehow they have to pass along that cost to their customers, even those who paid cash, in their prices.

Plastic is a great convenience, but it does not come without a cost and ultimately the customer always pays that cost.

So, I’m asking both purchasers and merchants to participate. 

When you purchase something use cash with the comforting knowledge you just took a little money out of the pocket of an industry that is abusing you.

Picture this, you just bought you and your new best friend for life coffees at a chic little cafe downtown, price $10.  Pay cash – that’s at minimum 35 cents not going to Big Banking.  Multiply that by hundreds-of-thousands of people, each a couple of transactions a day, and keep growing the movement until Big Banking cries uncle.

If you’re a merchant, please rethink your current policy of charging all customers for the cost of plastic transactions.  Even the playing field by offering a 5% discount for cash transactions.  You’ll have your payment on the day of the purchase and, instead of sending that 3.5% commission to Big Banking, your cash customers will benefit.  I don’t know about you, but I like my customers a whole lot more than I like Big Banking right now.

Then, we all need to do one more thing to give the Banksters some sleepless nights.  Spread the word.  Go to www.UseCashMovement.org , download the free signs “Use Cash” and “5% Discount for Cash” tape them to your car windows and storefronts.

Go ahead.  It will feel good to take a little power and money away from Big Banking and eventually we’ll get a fairer financial system. 

Okay, one question:  If you’re not willing to do this, what are you willing to do get change before it’s too late?

1)  [Source: Brandweek, Nov. 16, 2009 http://www.brandweek.com/bw/content_display/news-and-features/direct/e3i8ccf864b12d44b62c9f134a54f95b745 ]

2)  [Source: Information Security magazine, January 15, 2009 http://searchfinancialsecurity.techtarget.com/news/article/0,289142,sid185_gci1345047,00.html ]

3)  [Source: Senate Office of Public Records, reported by OpenSecrets.org, downloaded October 26, 2009 http://www.opensecrets.org/lobby/indus.php?lname=F&year=a ]

'Use Cash Movement' to Ignite a Monetary Revolt

'Use Cash Movement' to Ignite a Monetary Revolt

By Chaz Valenza

You're about to start a banking revolution. Yes, you! Not Chase, not Wells Fargo, not Citibank, not even Bank of America or the Fed can or will do what you're going to do.

The government? What a laugh. Big Banking already bought and paid for them.

You are about to use the power of the marketplace to change banking in America, for the better, for you.

They got the big bail-out. They got the fix in on the Ponzi scheme that was collateralized debt obligations (CDOs) and credit default swaps (CDSs) to the tune of a cool trillion dollars. Now you are going to take that money back. Legally. A little at a time.

The banks are currently so greedy they are increasing the interest rates on existing credit card debt and snaring customers into usury fee and penalty traps as a quick way to hefty profits. They're allowed to do this, it's perfectly legal. The reason it's legal is you and I use their services.

It's just a subsitute for cash

The one service we tend to use the most, usually without a thought as to the consequences, the one Big Banking makes billions of dollars on, is also the one you can do without: credit and debit cards. How did we forget that plastic is just a substitute for good ‘ol cash. (Oh, maybe the billions of dollars Big Banking spends to convince us plastic is better than cash? Is it? Where do they get all that money for all that expensive advertising?)

Think about it, with a little effort, using cash instead of cards is an easy, cost free way to save money and hurt the banks.

You may not be able to pay off all your credit cards today, but you can stop using them, if not completely, less. And, every time you don't use their cash substitute cards is a victory. Each is a small but significant act of subversion the will help end Big Banking tyranny.

Feel good about handling cash again. It's going to be the next big thing.

It's all about the Benjamins

Big Banking needs billions of transactions on plastic to be profitable. Those profits allow them to buy the lobbyist that buy the government that buys the laws, rules and regulations that have let them steal all that money from us. How about we put an end to that?

Here's their current take:

You use plastic for a $100 purchase: $3.50 from the merchant

You use plastic to buy a $3.50 latte and overdraw your account: $35 fee

You use plastic to buy a $35 gift and go over your credit limit: $50 fee

You transfer a credit card balance of $1,000 for a lower rate: $60 fee

Plus interest. Plus the days the merchant doesn't get his/her money.

See: PBS documentary Frontline - “The Card Game.”

So, at minimum, for every dollar we use cash instead of plastic, Big Banking is deprived of 3.5 cents. Every dollar, ever time. Doesn't sound like much, but it adds up and all we have to do is Use Cash.

If just you and I average $5,000 each in plastic purchases per year and, instead, do those transactions using cash, we just deprived the banks of $350 – minimum.

If one thousand of us do the same that's $175,000 – minimum. If just one-million of us switched to cash, less than one percent of U.S. households, $175 Million – minimum – Big Banking is out.

Want to do it?

Step one: Carry some cash and use it. Go to the bank first and get the cash for larger purchases

Step two: Make purchases with cash at merchants that offer a 5% Discount for Cash

Step three: Talk to other people about “Use Cash,” and download the “Use Cash” sign art tack it to your car's backseat window

Are you a merchant?

Step one: Continue to accept plastic, but also offer a 5% discount for cash. (Wouldn't you rather have your money now? And wouldn't you rather give your customers 5% in lieu of giving Big Banking 3.5%?)

Step two: Download the “5% Discount for Cash” sign and hang it in your store window

Step three: Talk to other merchants about “Use Cash” and “5% Discount for Cash”

Transaction by transaction, we can deprive Big Banking of their lifeblood: fees, penalties and interest. Join the movement.

Use Cash. Fuck the Banks.

Use Cash by Chaz Valenza

Here's a simple plan that will bring Big Banking to its feet: Use Cash.

For decades Big Greed has been selling us the idea that markets are just perfecto! Don't regulate them. Don't even bother chasing down fraud. “The Market” (Angelic Voices: Ahhhhh!) is so beautifully simple even scams cannot long survive.

Let's take the “Wisdom of The Market” stick it up Big Banking's rectum, twist, turn and otherwise shove vigorously and often.

Face it, the cavalry is not coming to the rescue if your name is not Goldman Sachs.

Government of the people, by the people, and for the people is temporarily out-of-order, like a soda machine that is taking dollar bills from customer after customer but relinquishes not one quenching 12 oz. can.

No legislation or regulations are in the offing to cap the rising tide of usury interest rates, curb punishing banking fees on debit cards or curtail demonic payday loans.

Here's the bill of fare:

Credit Card Interest: 30%
Merchant Credit Card Fees: 3.5 - 5%
Merchant Credit Card Receivables Loan: 36 – 97%
Payday Loans: 100 – 500%
Debit Card Overdraft Fees,
Over limit Fees, Late Payment Fees, etc:
Interest Equivalent to 12% - 300% and otherwise unlimited

Throw stones – millions of them. Every plastic transaction denied is a slice in the skin of Big Banking.

As a buyer: Use Cash. It's going to save you money verses paying with credit card or making a mistake with a debit card.

As a merchant: Discount 5% for Cash. It's going to save you money in reduced merchant charges and days waiting for credit card receivables. It's also an advantage against the Big Box stores and Big Food restaurants.

Think about it. Who would you rather have that 3.5% you give to Big Plastic on every credit or debit card transaction: Your customer or Big Banking? Isn't that worth the extra 1.5% in the discount?

But it gets better. It's guerilla warfare. It's a simple insurgency. Avoid the banking system to bring it to its knees. Use Cash.

How low-tech is this? How unstoppable? How inconvenient? Yes. But worth it!

Put it on bumper stickers. Make it your email signature. Pass the word in whispers to everyone who works for a living. Write it in magic marker on T-shirts. Design a flag and boldly embroider. Print up window signs. Post it on every blog you visit. Tweet it from the highest mountain. Two simple words: Use Cash.

Will they fight back? Of course they will. They will end Absolutely Free* Checking that is costing us all billions. They may lower their rates and switch up the penalty fee structure. They might even lobby for the end of printed dollars. That's how we'll know it's working!

Here's the future and the future is now. Personal loans? Small business lines of credit? Only to those who don't need them or at a killer rates of interest.

Use Cash.

Every cash transaction snatches a dime, a dollar, thirty-five dollars, a hundred dollars or more out of the greedy, blood soaked hands of Big Banking. Each transaction denied is a cut. Together it's death by a billion cuts daily.

5% Discount for Cash.

You'll be shooting at Big Plastic's feet. Smile as you watch ‘em dance. They have us hooked on plastic. They claim it's faster, quicker, better. People spend more. Yes, they do. Until the abusive fees take your customers' last penny of discretionary cash and they're broke.

Debit or Credit, plastic is really just one thing: a cash substitute provided by a commission taking broker who charges you a fee at every cash register. They intend to milk it for all it's worth. Cut up your cards, today, right now.

And here's the beauty part: We don't need no stinking badges to fight back. Just: Use Cash. Wow! I'm starting to agree: The Market Rules!

Don't worry about freeing up credit or ending the banking abuse, etc. This is action you can take right now, and again and again, day after day after day.

Sure, there are bigger fish to fry: End the Fed, local currency, non-profit banking, total monetary reform, but this is something we can do right now.

It's easy, fast, effective: Don't give Big Banking any small change.

Yes we can nickel and dime the banks to death! Spread the word: Use Cash.

Personal Bankruptcies Posied to Skyrocket

That Light at the End of the Tunnel is the Bankruptcy Unlimited

My analysis of three indicators shows that within 12 months the annualized number of bankruptcies will roar past 1.5 million. 

I believe this is a conservative estimate.  The actual number may top the 2005 record of 2 million U.S. filings, which was set in the rush to beat the implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act.

To make this forecast I looked at three sets of data: historic bankruptcy filing numbers, provided by the Administrative Office of the U.S. Courts, and historic unemployment rates and the personal debt service ratio (DSR) both provided by the Bureau of Labor Statistics.   

The graph below tells the story of how these trends interact.  (Right Click to View.)

 

After the 1983 recession, when unemployment flirted with 10%, families increase their debt ratio from 10.5% to just over 12%.  Bankruptcies soon increased, but with improving employment over the next 10 years, the debt ratio plummets. 

From 1995, bankruptcies skyrocket, and in spite of the debt write-offs, so too does the debt ratio, from 11% to nearly 14%.   Loose lending, exuberant spending and slack real income gains all contribute to raising debt.  The record numbers of bankruptcies between 1996 and 2005 do nothing to stem the tide of red ink.  

In 2008, the distortion of the situation becomes apparent.  High personal debt and high unemployment, the double engine bankruptcy freight train is on the tracks.  Fuel for this train is increasing with credit card companies currently doubling interest rates from 15% to 30%, which more than doubles actual interest accumulation.

This analysis begs many questions, including:  When and how will Main Street emerge from the Great Recession?  Will the Bankruptcy Freight shunt the economy back on track?  Or, will it be a head-on lights out?  

Screw Wall Street Now - You'll Be Gald You Did

Some thirty years ago, when I was in my twenties, friends of my then wife were in the investment business.  They were smart, frugal and sincere in their belief that to live and retire well people should set aside some money and invest a good chunk of it in equities. 

To drive home their point they gave me a business card sized, four-color graph of equity indices – similar to the one above – the Dow, the S&P, etcetera.  It clearly showed that since the crash of 1929 stocks have gone up and down, but unlike a roller coaster, the trend was clearly up, up, up.

So, I invested the small sums I saved for retirement in stocks.

In the summer of 1987, my then wife was also friends with a woman who was married to the technical analyst Ralph Acampora.  You may remember Mr. Acampora as one of the “elves” of the Louis Rukeyser days of the PBS television machine show “Wall Street Week.” He was often a featured guest.

At the time, I was a graduate student at New York University’s Stern School of Business.  Mr. Acampora invited me to visit his “office,” which was actually a rather large walk-in vault.  I don’t believe he or his partner ever closed the vault door.  It was just space in the over-crowded, over-priced real estate market of Manhattan. 

Inside the vault were graphs of every statistic known to man on clear plastic overlays.  Placing one on top of another they searched for repeating patterns.  Their job was to figure out what the market was going to do next.

From that surreal meeting I took away a single piece of sage advice: “The second you see interest rates go up, Charlie, bail-out of the market.”  Back then bail-out meant get-the-hell-out, not get a hand-out. 

In June of 1987 interest rates inched up.  I sold my stocks.  Ralph saved me a lot of money.  I got back in the market in January 1988.  After that, my luck ran out, in a number of different ways.

Question:  Why? 

Take a look at that chart again and the trajectory of S&P stocks prices.  Up, up, up.  The S&P needs to lose a whole bunch more before we’re back down to 1995 prices.

Answer: You and I are not the S&P 500.

Further:  You and I, and people like us that must work for a living, have no business in the equities markets.  Not in individual stocks.  Not in mutual funds.  Not even in a broad index fund like the S&P 500, which is most likely the best way to “invest” in equities.

Here are a few, just off the top of my head, reasons why:

1. Picking stocks is for suckers.  You can’t do it; I can’t do it, at least not anymore.  There are just too many variables.  Company financials and fundamentals mean nothing anymore.  Time was the annual 10K reports, required by the SEC, would give you everything you needed to do a complete accounting analysis of a publicly traded company.  Do you know how to do an accounting analysis?  If you do, do you do one on every stock pick?  No matter, there’s no longer enough information in the 10K to do one.  Companies can hide all sorts of important information and totally obscure their bottom line value or lack thereof.
2. External variables are unrelenting and capricious: war, weather, new laws and regulations, systemic economic shocks.  You name it; you don’t know what’s going to happen next.  Worse, some of this is manufactured by Big Greed itself to cheat you legally.  I’ll say it again.  You and I don’t have enough resources to play in this game.
3. You’ll probably ignore what I’m telling you about publicly traded equities.  Billions are spent to make you believe you can pick stocks, futures and currency exchange rates.  Look at the television ads:  A baby can do it, for only $7 a trade, and a very sincere Law & Order actor tells you every night that the investment firm he shills for is behind you all the way.  To where?  Why is it so important for them to make you feel smart and comfortable?
4. Answer: Fees.  All kinds of fees.  You can’t get around the fees.  You’re investing this small amount of retail money, under a million dollars, peanuts, and the fees will quickly wipe out any reasonable returns.  The Big Greed boys are playing wholesale.  What do you consider a reasonable return, 4%, 10%, 15%?  Fees will wipe that out in no time.
5. What return?  Have you heard about Fast Trading?  It’s probably just taking a nano-percent of the returns on a winner that would have gone to you, but it’s also taking a nano-percent of a loser, losing you more.  You know about insider trading; what’s that costing you?  How about derivatives?  Do you think those fancy trades may be sucking some of the blood out of your investments?  A friend who was a bartender once told me there were a dozen ways to steal from the house.  Wall Street has thousands.
6. By investing in publicly traded corporations you are feeding the machine that is screwing you up the butt.  They are taking more money out of your pocket through deals that add nothing to the real economy.  These same “quality” corporations are exporting jobs and using H-1b visas to drive down the wages they pay even the most technologically advanced workers.  They have an unfair competitive advantage over small business in their ability to borrow and sell equity with no intent of ever repaying this funding.  This, in turn, crushes local employment, farming and self-sufficiency.

In the face of all this, where should you put your money?  A contributor to the Motley Fool said, “my recommendation is to focus on the highest-quality segment of U.S. corporations."

What would those be?  As we have seen, no corporation, of whatever historic quality, is capable of protecting their assets in a consumer/worker slaughter-driven market dive. 

Also, how can any small investor get a "fair" return relative to risk with the current situation of trade skimming and who knows what other black box scams?

Any rational investor opted out months ago and is waiting for the storm to pass and the enforcement of necessary regulations to create a market situation where the odds of success can be determined; where risk can be reasonably determined. 

The current market is untenable.  The only people participating are either:  a) ignorant of the circumstances, b) blinded by greed or, c) the same operatives of Big Greed pulling the levers of this the biggest con of all time.

If I haven’t convinced you to sell your stocks, good luck. 

If I have, now is a great time to sell, as this current bubble will soon burst.  Put your cash in an insured account.  Don’t worry about the paltry earnings rate.  Anything is better than the rigged casino they call Wall Street.