Category Archives: Business

Toxic Assets Take a Back Seat to Health Care Reform

WASHINGTON - MARCH 31:  (L-R) TARP Special Ins...
Image by Getty Images via Daylife

Elizabeth Warren made an appearance on  Morning Joe this morning and woke me up at 5 AM PDT with the force of a revelation: those toxic assets are still on the books of the banks.  The banks, which have taken so much of our children’s futures in the form of TARP money and similar bailouts, have won — not by asking for money, taking it, and using it to fix things, but by taking money and doing nothing.

Remember the good old days, before we got sidetracked by euthanasia, pulling the plug on granny, and letting illegal immigrations hijack our health benefits and take them back to their home countries? (Yes, I heard that all being discussed in the Town Halls I watched yesterday.) Well, we were talking about boring stuff like mark-to-market, an obscure little accounting rule that says you have to call your pig a pig when you take it to market and you can’t call it a Ferrari.

The banks are still accounting for their piles of pigs (or maybe pig droppings) as Ferraris, because Congress now allows them to do so. And they will not sell those assets, even to the government, because to do so would mean they’d have to acknowledge them on the books as pigs, throw away those glamorous photos of  Ferraris that adorn their annual reports, and quietly slink away with their pig tails between their legs, giving the field over to newer, smarter banks.

I was with the conservatives on this issue.  I didn’t want us to bail out the banks. But we did, because we thought the system would collapse if we didn’t. OK. So we put off the collapse for two years, but–my fellow Americans — while you are all worrying about death panels and tax-supported abortions, don’t take your eye off the world around you. Multi-task if you can.

Because 30% of the homeowners in the country are now under water.  Job losses, while not accelerating at such a rapid rate, are still happening, and more and more people can’t pay their mortgages.  The gigantic economic re-set is not over, as the next wave of adjustable mortgages come due in 2010.

This means more foreclosures, along with the imminent collapse of the commercial real estate market as well.  Who needs office space when you are laying off workers and can’t get a credit line to keep your business alive?

What will happen? Bank failures at long last. I’ve got my bets on who goes down first as Congress, now threatened by its constituents with full scale revolt, fiddles with health care while the financial underpinnings burn. One set of lobbyists has replaced another.

At least when we spend money overhauling the health care system the money will reach individuals. Following Elizabeth Warren on Morning Joe was Joe Califano, who was around when Medicare was passed. What he said? No one could have predicted forty years ago the revolution in medicine that led to the explosion in life expectancy. We can’t predict what will happen when the next wave of innovation in neurology and cancer research make life even longer. So the only way to control costs is to keep people out of the sick care system.

So let’s put our eye back on the ball. Focus on ourselves. Let the banks fail, but the people succeed. Survive the re-set in the economy, which is believe is permanent, by getting in shape. I will see you at the gym.

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Filed under Business, Current Affairs, Health Care, Politics

The Next Generation of the Internet, Part Two

Five more companies you may want to know about from Launch Silicon Valley. The general takeaway from this is the preponderance of peer-to-peer services as a way of lowering the cost of streaming content, and the general movement to the cloud.

Update: Here’s the second set of companies.

CellWand isn’t really next generation of Internet; it’s mobile voice apps accessed through abbreviated dialing codes (#taxi #home #pizza). It’s a pay per use app ($1.25-1.79 per call), partnered with carriers. They get big margins from loyal users, and use the wireless carriers, alcohol companies, and media partners for marketing. CellWand is live in Canada, and penetrates at 1 call per 250 mobile phone users. If they penetrate similarly in the US, that would be $1m/month revenue. They also use the carrier billing systems. They have locked up all the Canadian carriers

Surf Canyon
– delivers relevant personalized search results. It re-ranks results according to what you might have clicked on from the first search — on the fly, in real time. Another Firefox add-on, also works on IE. And for good measure, it also personalizes the sponsored links. Works with Bing, Yahoo, Google.

Dacast, a product of Andolis LLC believes the future of TV is multicast. The company has a peer to peer system to cut the cost of live streaming and unite all the Dacast users in an ecosystem. That allows for more appropriate advertising to users. So Datacast is free for content owners, cheaper to stream, and more carefully targeted. The company projects profitability by end of 2010. Every player wins: Advertisers get more clicks, users get free content, content owners get more money.

Wowd – is now in private beta. It turns the wisdom of crowds into useful work finding content, tagging itself “the web you want.”
“Wowd connects people to a planet’s worth of content.”

YOICS “Your Own Internet Connected Stuff”
Cloud IT services for the rest of us. Private bookmarks only available to you or people you are connecting to, using the internet as your own private LAN. This could also be used for security services, and you would be able to see it on any browser anywhere.

You can use it as a replacement for an FTP service. You can download the Yoics app, drag a file form your computer to it, and make it accessible to a selected group (like a graphic designer could do for clients).

It will be interesting watching these people get acquired by the already-existing companies in the internet space. I think none of them are really stand alones. Again, I’ve jumped to a conclusion here:-)

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Filed under Business, Early Adopter Stuff, Entrepreneurship, Web/Tech

Ten Things You Need to Know About Banks and Credit Card Companies

Credit cards have developed into very complicated financial products. As a result, even if they printed the disclosure in 18 point type, you wouldn’t know what was going to hit you from behind. I have been trying to get out of debt recently, so I’ve been studying the issue. I am now doubling my dose of blood pressure medication and tranquilizers, and practicing yoga so often that I can no longer be gainfully employed. You will need to know what I’ve found out about banks and credit card companies, especially if you are not making them the focus of your life.

1. You cannot close a credit card account. I paid off a balance to Citibank because they had raised my interest from 0%, which I had signed up for, to 29.9% because my payment was one day late due to Wells Fargo’s automated bill pay and the US mail. I asked to close the account. I got the following:

Dear FrancineHardaway: We recently received a request to close your Citi Platinum Select Mastercard account. For your protection, your account has been permanently closed. The closed account cannot be reopened. Please destroy all cards with this account number by cutting the cards in half. A new account number has been assigned to you, and a replacement card will be mailed to you the next business day.

Never mind that I didn’t ask for a replacement card.

2. The card companies don’t want you to pay off the principal. There’s something called a “sweat box” business model for credit cards now. The companies don’t want the principal back. They want the fees. They want to keep the consumer paying.

3. Reforms won’t work because the credit card companies will find a way around them. Every previous effort at reform has just unleashed further ingenuity.

4. Card issuers can make a profit because the interest rates and fees will be so high that they will offset loss of the principal. This is predatory lending: lending with conscious disregard for the consumer’s ability to pay.

5. If you pay too much, they get nervous. In the same mail, I got this notice:

We want to be your number one credit card. We noticed that you recently made a large payment to your Starbucks Card Duetto Visa account and want to make sure we’re not losing your business. That’s why we want to remind you again of these low-rate reasons to stay –it’s our way of showing you that your business is important to us. Enjoy APR’s as low as 0% with check numbers 2993 and 2994. 2.99% APR for 24 billing cycles with check numbers 2995, 2996, 2997. (BTW, there’s a 3% transaction fee to do any of this, and a billing cycle may no longer be a month.)

6.The interest rate on the card does not tell you what the total cost of revolving a balance on a card will be. There are late fees, over-limit fees, annual fees, foreign transaction fees, interchange fees that are charged to the merchant and passed through to the consumer.

7. Convenience checks are subject to the cash advance fee.

8. The new thing is double cycle billing: The balance on which interest accrues is not the balance on this billing cycle, but on this one and the previous one. And if you are late on another card, or perhaps your cable bill, your credit card interest rate will go up. And perhaps your car insurance.

9. There are tricks about when a payment is posted. After 2 PM might count as the next day, and you may pay interest.

10. And then, all this can influence your mortgage refinance or loan modification.

Aurora Loan Services has carefully reviewed your loan for home retention options. Aurora has determined that we are unable to continue pursuit of said options. A home retention workout on your loan has been denied for the following reason(s): Your finances indicate an inability to afford the monthly payments.

Never mind that I am current on every single payment, mortgage or credit card, despite being over $150,000 “under water” on my home. I have no equity and could have “walked” a year ago, but didn’t.

Notice the reinforcement I get for trying to stick with my home payments and pay down my debt, the Suze Orman recommendation.

Take a lesson. The banks own the government, and me, and you. I am finished with them. I am going to get out of debt asap and put my money under a mattress, where at least it somebody eats it, it will be Buppy the Puppy.


Filed under Business, Politics