The Bailout’s Impact: Uncle Sam’s debt is YOUR debt

September 29, 2008

moneyComparing the Nations Debt to the Average American family’s Debt

With figures like a $700 billion bailout and $5.3 trillion in mortgage debt, it’s getting a little hard to keep all the zeros straight. Let’s take a look at how that astronomical debt compares to the Average American family’s debt.  According to the U.S. Census, there are about 110 million households in America.

Taxes – The average household makes $50,233 annually, and pays $9,300 in federal income, social security and medicare taxes. Add $3,000 in average real estate taxes, and $700 in annual sales taxes for a yearly household tax burden of $13,000.

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Bailout Bill: Save the Homeowners Too!

September 25, 2008

Since we rescued Wall Street with a $700 Billion bailout, we better make sure homeowners get some guarantees of help, too.  This video tells the story of the grand daddy of all predatory lenders, Ameriquest, and shows why it’s wrong to blame all the borrowers.  Hear how many homeowners dealing with foreclosures ended up there and hear the troubling revelations of employees who were on the front line convincing borrowers they were getting a good deal.

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Medicare and Social Security Numbers

September 24, 2008

Big government is offering senior citizens a trade: secure your money or your health.

Thanks to Medicare, they can’t have both.

Medicare requires Seniors to carry at all times a card emblazoned with their social security number. To receive care – anything from a doctor’s visit to medication – they must hand over the card and their social security number, a key to unlocking their credit, bank accounts and assets, built up over a lifetime, to fraudsters. Read more

Minimizing ID Theft

September 24, 2008

How do you minimize your risk?

Nothing you do can guarantee that you won’t become a identity theft victim, but you can minimize your risk with a few simple steps

  • Protect your social security number. Don’t carry it in your wallet; give it out only when absolutely necessary; and, verify in advance the source before sharing.
  • Be careful where and with whom you share your social security number and private, identifying financial information, such as mother’s maiden name.
  • Treat your trash with care. Thieves pick through trash and recycling bins to capture personal information. Shred credit card bills and receipts, credit card offers, credit applications, insurance forms, hospital and physician statements and expired credit cards.
  • Consider freezing your credit.

Consumers in many states can “freeze” or restrict access to their credit reports. Once the freeze is in place, no one – potential creditors or other third parties – will be able to get access to your credit report until the you lift the freeze.

What credit information can be frozen varies by state. So does the cost. The Consumers Union offers a guide spelling out the ins and outs of state security freeze laws by state that includes information from the three credit bureaus, Equifax, Experian and TransUnion.

Warning: Generic Drugs Not Always Equivalent to Name Brands

September 18, 2008

generic drugs2Beware the potential dangers of switching from a brand name to a generic drug.  Lynn Nelson, of Tampa, learned that lesson the hard way three years ago.

 “I switched from Synthroid to a generic and my thyroid went berserk,” said Nelson.  She’s had hypo-thyroid condition for 25 years and had been taking Synthroid for all those years with no problems.  When the generic version, levothyroxine sodium, came out about three years ago, her doctor switched her prescription. 

 “My hair started to fall out. I was exhausted all the time. I had body aches.  I felt like I had the flu.”  Nelson didn’t understand what was happening, so she jumped on the internet to do some research.  Much to her shock she discovered the generic version of Synthroid had been recalled, but her doctor was never notified.   Read more

Magnetic Therapy: Cure or Hoax?

September 16, 2008

Your local drugstore has “magnetic insoles” for sale that might help relieve foot pain. Your neighbor wears a magnetic bracelet and swears that it has cured his arthritis. On the internet, you can buy magnetic mattress pads, dog collars and knee wraps, all for alleviation of pain. A magnetic insole only costs $18. Should you spend your money on such “alternative treatments?” The simple answer is “No.”

Magnetic therapies have been around since at least the ancient Greeks, and survived through the Middle Ages. The most common claim for such therapies is that they promote blood flow and bring your body’s “electromagnetic field” into alignment with the Earth’s magnetic field. After all, the blood has a lot of iron in it, doesn’t it? Enough people fall for such claims to help make magnetic therapy a $300 million a year industry.

Read the fine print on the ads, however: “All these treatments are being studied. Nothing should be substituted for conventional treatment such as psychotherapy or prescribed medicines.” The truth is that the U.S. Food and Drug Administration has declared that magnets marketed with medical claims are considered to be medical devices requiring FDA medical clearance, and the FDA has not confirmed the efficacy of such claims.

There have been several studies of the effects of magnetic fields on the human body. The way you scientifically study such a claim is to run a “double blind” test, in which you compare two sets of test subjects, one with the magnetic product and one without. It is important that neither group knows which set they’re in, and the laboratory assistants running the test are likewise without this information. This eliminates the “placebo effect,” in which people who think something will help them can easily convince themselves that it does. Tests run as a true double blind have consistently discredited magnetic therapy claims. One study at Baylor seemed to show a slight improvement, but has been criticized as having used improper double blind controls.

One sure sign that magnetic therapies are scams are their repeated misuse of scientific terms. “Electromagnetism,” “electromotive force,” and “polarity agent effect” all sound very scientific, but in the context of the ads for such products they make no scientific sense. The fact is that the human body has an almost unmeasurably weak magnetic field. If it were otherwise, medical devices using much stronger magnetic fields, such as MRI’s (magnetic resonance imagery), would play havoc with your body. No, pulling scientific terms out of thin air does not mean your product is based on sound science.

So if you want to go around with magnets in your shoes, go right ahead. Just don’t expect any improvements in either your health or your pocketbook.

Victory for the Little Guy!

September 16, 2008

Jury gives woman $1.25M in lawsuit over mortgage

Baltimore Business Journal – by Eli Segall

A Baltimore native who defaulted on a subprime loan has been awarded $1.25 million in damages from her lender, Wells Fargo Bank N.A. The case may lead to similar lawsuits nationwide, and also may help Baltimore City’s suit against the bank, claiming it targeted minority neighborhoods with subprime loans, legal and banking experts say.

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Why you Can’t Believe Government Statistics: Part 3 –THE REAL GDP — YES, WE ARE IN A RECESSION

September 11, 2008

Most Americans will tell you in no uncertain terms– yes, we’re in a recession.  But economists and political pundits still find themselves debating the reality we’re all living.  Why? It all comes down to the government’s convoluted twisting of statistics.

The usual definition of a recession is two consecutive quarters (half a year) of declining Gross Domestic Product (GDP).   GDP is the monetary value of all goods and services produced within the borders of the United States.   If a company has a factory outside of the U.S. that output is not included in the GDP.

With jobs and factories leaving the United States you might wonder how our GDP continues to expand.  It is accomplished by the magic of “imputed value.”  Imputed Value is not real goods or services.  It is made up goods.

The most outrageous example is the imputed rental value of owner-occupied houses (OOH).   This is the average market rent all homeowners who live in their homes would get “IF” they rented their homes.  Only problem, of course, is they do NOT rent their homes.  They live in them!   And yet, somehow the government has decided to include this ficticious number as part of the GDP.  It is impossible to comprehend how imputed rental value has anything to do with goods produced in the United States.

But wait.  It gets worse.  OOH value makes up more than 10% of our GDP.  Yes, 10% of our GDP is imputed (made up) and not goods or services we actually produce.   We have used OOH since the 1960’s, but back then it was only 5.9% of the GDP.  Since then, it’s nearly doubled as we struggle to maintain the fiction of growth by using imputed value, while at the same time shipping more jobs and factories overseas.

To measure real growth in the value of goods and services, inflation has to be deducted from the raw growth figures.  The Commerce Department recognizes this and uses what it calls a “deflator.” The deflator is supposed to factor out inflation and, as a result, measure real value.

Check out the numbers.  In the first quarter of 2008, the Commerce Department reported GDP growth at .9%– which is not great, but still positive.  If Commerce would have used the Consumer Price Index (CPI), the traditional measure of inflation, the GDP would have come in at negative .4%, which shows a shrinking economy.  Can you say recession?

It gets even crazier in the second quarter of 2008.  While the Department of Labor reported inflation (CPI) increased by 1%, the Department of Commerce reported inflation (the deflator) decreased by 1.4%.

Using the deflator, The Department of Commerce reported the GDP was up 3.3% for the second quarter.  If Commerce would have used the CPI to account for inflation, the GDP would have been negative .5%.  This would confirm the classic definition of a recession – two consecutive quarters of declining GDP.

The bottom line — our economy is not growing it is getting smaller.

So if it feels like we are in a recession, we are.  Department of Commerce has a magic number, the deflator.  It can use it to make the economy look like it is growing, but we all know better.

Bear Stearns & EMC Agree to Pay $28 Million in Settlement

September 9, 2008

Former financial giant Bear Stearns and its subsidiary loan servicer EMC have agreed to pay $28 million to settle Federal Trade Commission charges of unlawful loan servicing.  Read more

Fannie and Freddie: Guess Who’s Going to Pay?

September 9, 2008

Hold your nose. The stench of the S&L crisis of the 80’s fills the air once again. It all came rushing back over the weekend when the Treasury Department announced that the federal government was going to bail out the mortgage giants Fannie Mae and Freddie Mac and take them over. Remember the S&L crisis?
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