Benjamin: February 2009

Saturday, February 28, 2009

Banks Shut Down in Nevada and Illinois | Total Closures This Year 16

Nevada Security Savings Bank shuttered

Only two months into the year, already 16 banks in the United States have been shut down. Nevada Security Savings Bank closed its doors Friday.

Regualtors shut down the bank and turned deposits over to Bank of Nevada, based in Las Vegas. Security Savings Bank had $175.2 million in deposits as of Dec. 31, the FDIC said.

Ailing in Illinois

Since the credit crisis began, a total of 41 banks in the U.S. have been shut down. Another bank closed down along with Nevada Security Savings Bank on Friday. Heritage Community Bank of Glenwood, Ill., also shut its doors Friday. Illinois banking regulators shut down the operation and turned it over to the FDIC.

The FDIC says Chiccago bank MB Financial has agreed to purchase the bank’s assets at a discount and take over deposits.

An interesting contrast

Many small banks that didn’t recieve federal aid have already shut down. However, it appears that some other banks that were in no danger of failing at all have gotten bailout money from TARP funds.

Louisiana bank IBERIA said Friday that it will give back the $90 million in federal aid it received because of new regulations that apply to banks that take TARP funds. Because the bank is doing well on its own and didn’t need the aid in the first place, it is returning the funds so it can resume business as usual.

Eventful spending

Another bank has also made it clear that it did not need the federal aid it took. Northern Trust banks threw a lavish party last weekend in Los Angeles. I had previously accepted $1.6 billion in federal aid. Congress angrily demanded that the bank repay the money it had spent on the party, which included a golf tournament, performamces by high-profile musicians and Tiffany gift bags. ... click here to read the rest of the article titled "Banks Shut Down in Nevada and Illinois | Total Closures This Year 16"

Banks Shut Down in Nevada and Illinois | Total Closures This Year 16

Nevada Security Savings Bank shuttered

Only two months into the year, already 16 banks in the United States have been shut down. Nevada Security Savings Bank closed its doors Friday.

Regualtors shut down the bank and turned deposits over to Bank of Nevada, based in Las Vegas. Security Savings Bank had $175.2 million in deposits as of Dec. 31, the FDIC said.

Ailing in Illinois

The FDIC says Chiccago bank MB Financial has agreed to purchase the bank’s assets at a discount and take over deposits.

An interesting contrast

Eventful spending

The Royal Bank of Scotland Lost Great Gobs of Money

The Royal Bank of Scotland makes the Guinness Book of Records

Royal Bank of Scotland

Remember all those jokes we used to hear and tell about the Scots and the way they thought about money? It seems we were way off course. The Royal Bank of Scotland has just earned the dubious honor of posting the largest annual loss in British corporate history - a $34.2 billion black hole fed by the bank's aggressive acquisition spree of recent years.

According to our jokes, the Scots guys were supposed to be so tight with money that it was impossible to pry it loose from them. We should have tried the Royal Bank of Scotland; they didn't believe the jokes either!

Restructure

A new management team is in place in the bank and has unveiled a drastic restructuring program which includes dumping hundreds of billions of dollars of toxic assets into a government insurance program.

A Scottish pension?

Meantime anger erupted over a $23 million pension pot bestowed on its disgraced former chief executive, Fred Goodwin. It was Goodwin who engineered the expensive takeover of Dutch bank ABN Amro in December 2007 when its investment banking business was heavily exposed to the complex financial instruments hit by the crisis. ABN Amro was responsible for 55 percent of the bank of Scotland's losses.

I’m sorry…

Goodwin, 50, and former chairman McKillop issued a public apology for their roles in the bank's downfall, but controversy continues to rage with revelations that Goodwin – who, in 2004, was knighted by Queen Elizabeth II for services to banking - is receiving a $992,000 a year pension. Sir Fred is widely seen as the architect of RBS’s disastrous strategy of corporate acquisitions, which led to its downfall. ... click here to read the rest of the article titled "The Royal Bank of Scotland Lost Great Gobs of Money"

Friday, February 27, 2009

Freakonomics | Strange Side Effects of the Recession

Desperate times

Some airline passengers might have to pay for the privilege of using a tiny bathroom.

Ryanair passengers might have to pay for the privilege of using a tiny bathroom.

We’ve all seen the stories about unemployment, saving money, companies doing huge layoffs and low consumer confidence. These and many other stories are the predictable fallout of a struggling economy.

However, today I came across a few stories that fall outside the lines.

Toilet tender

I have written previously about U.S. Airways policy of charging for blankets and pillows. That seemingly ridiculous fee pales in comparison to the idea being tossed around by an airline in the United Kingdom.

Ryanair is considering charging passengers 1 pound (a bit less than $1.50) to use the toilet on the plane. As you can imagine, this proposal has not been met with much approval.

Fertile industry

Science, technology and the recession have come together to create an interesting phenomenon. More young women are donating their eggs to fertility clinics.

Donating eggs can fetch up to $10,000 in some cases. Many cash-strapped women who also feel good about helping a couple have a baby are taking advantage of this as they struggle to pay bills.

Children: not legal tender

In perhaps the most bizarre money-saving story I’ve seen, a woman in Louisiana traded two children for a $1,500 bird. A couple advertised their cockatoo for sale, and a woman who was caring for a friend’s children offered them up as trade. ... click here to read the rest of the article titled "Freakonomics | Strange Side Effects of the Recession"

U.S. Troop Withdrawal From Iraq Complete by 2012

Stand down. Homeward bound.

Families want to see their loved ones again. Children deserve fathers and mothers. American troops in Iraq will be coming home. There will be a complete U.S. troop withdrawal from Iraq.

Karen DeYoung and Anne Kornblut of the Washington Post report that President Obama will announce plans to withdraw the majority of the 142,000 U.S. troops currently serving in Iraq by August 31, 2010. Until the close of 2011, as many as 50,000 will remain. By 2012, American families with loved ones returned will be whole again.

“A very hard end date”

January 1, 2012 will be set as the deadline for final withdrawal of all U.S. forces from Iraq.

President Obama’s senior civilian and military advisers helped formulate this timetable. They see it as “the best way to manage the exit” without jeopardizing Iraqi security. For America, however, some Democrats object that 50,000 troops is “too many to leave behind.” Republicans, however, were largely supportive. Arizona Senator John McCain said he “supports the plan to leave 50,000 troops in Iraq as briefed by [chairman of the Joint Chiefs of Staff] Admiral [Michael] Mullen and [Defense] Secretary [Robert M.] Gates.”

Coming home to economic trouble

On the fields of battle, there appears to be little concern in Iraq’s government. “We have faith in our armed forces and our security services, to protect the country and consolidate security and stability,” Iraqi Prime Minister Nouri al-Maliki said. “We have no worries for Iraq if American troops pull out. Thank God we have succeeded in ridding ourselves of sectarianism and racism.” ... click here to read the rest of the article titled "U.S. Troop Withdrawal From Iraq Complete by 2012"

Crappy Times

These are difficult days to be blogging about money. There’s lots to talk about, as the economy is front and center in the news, but sometimes it just gets depressing.
This week’s crummy news is that my friend Mortimer got laid off. He thought his job was fairly secure but, surprise! It wasn’t. He admitted to being in a state of shock and denial, but said he at least had some good connections who would recommend him for job opportunities once he updated his resume and started looking. He also said he figured it was time to join Li nkedIn and Facebook to help him network. But his plan for the next day was to enjoy sleeping in and get some laundry done, while waiting for the boxes of his personal belongings from his old office to be delivered.
I didn’t want to sound lecture-y, but I told Mortimer not to lose his momentum. He needs to tackle job-hunting with a vengeance and leave no stone unturned, starting today, not a few days from now.
Those who remember my previous stories about Mortimer will understand my concern. He was laid off once before, and it sent him into a tailspin of depression that coincided with some health problems. For a long time, he was paying for his own health insurance, up to about $900 a month. In the last few years, his finances finally recovered somewhat, but they’re still precarious. He can’t stay unemployed for long.
I would not want to be in his shoes right now, nor in the shoes of many other people I know who have been laid off, or had a spo use laid off. Some of these are people like Mortimer and me,! who onl y have to take care of themselves, but others are parents with kids in college. If I’m a little freaked out these days, I can’t imagine how they must feel.

Amidst all this, I got a phone call the other day from a headhunter. He wanted me to interview for a job that almost sounded perfect– a great fit for my background, a better title, and potentially a raise of about 50% from what I make now. I know headhunters tend to dangle big salaries in front of people, but I knew this could still be a chance to take a good step up the salary ladder, and making more money would help take some of the sting out of all my investment losses. But there were a few reasons I decided not to pursue the job, and one of them was that I just didn’t want to risk making a move right now. My current employer seems to appreciate me, and I’ve already survived some downsizing here. That, to me, seemed safer than going to a new company full of unknowns. This may be a cowardly and short-sighted decision, but it was all I could stomach right now. What would you have done?

General Motors Bleeding Cash: A Blow-By-Blow

General Motors: building better cash coffins

Joe Weisenthal of The Business Insider reports that General Motors is officially America’s “national money pit.” The automaker is bleeding cash at an astonishing rate. One wonders when they’ll file for bankruptcy, particularly after posting a $9 billion loss in the fourth quarter of 2008.

That amount includes special items; if the numbers for normal operating expenses are taken into account ,the loss was “just” $6 billion. According to Weisenthal, that was $1.5 billion worse than analysts and pundits had predicted. Cash on hand is currently at about $14 billion, which according to Phil Lebeau is only $2 billion higher than the “bare minimum” it takes to run the company.

For all of 2008, the company lost about $31 billion.

Breaking it down

Not surprisingly, the management of General Motors wants $16.6 billion more from Washington. If they get it, it would be shocking if President Obama would allow the same leadership body to remain in charge.

But let’s look at this from a slightly different angle for a moment. A $9 billion fourth quarter loss? In order to swallow these numbers, break it down by the day. It so happens that General Motors was losing $85 million per day in the fourth quarter, which is still monstrous. Let’s go deeper:

General Motors losses…
Quarter: $9 billion
Day: $85 million
Hour: $3.5 million
Minute: $58,333

Give thanks to The Business Insider for sharing these stupefying calculations. Per minute, General Motors lost more than the average household income for the United States in 2007. It’s certainly more than what my household earned. How about you? Would you put that money to better use? ... click here to read the rest of the article titled "General Motors Bleeding Cash: A Blow-By-Blow"

Thursday, February 26, 2009

Bangladesh Border Guards Fighting For Pay, Benefits

Casualties in the war against poverty

When people perform services for an employer, the common expectation is that they will be compensated for their work in the form of salary. As economic skies turn dark across the world, the need for sufficient wages in order to live and support families becomes all the more important.

This is as true in impoverished Bangladesh as it is anywhere else, and this is why border guards have revolted against their government employers. Unfortunately, their standoff has led to the loss of at least 11 lives. That doesn’t count scores of others who have died in previous skirmishes.

Tanks end protest over low pay

The standoff may be over now, fortunately. Parveen Ahmed reports for the Associate Press that a show of arms - tanks - have “persuaded” border guards to end a two-day revolt and lay down their arms. In turn, the government has promised amnesty and claims they will “look into” their demands.

“We don’t want to use force to break the standoff,” Prime Minister Sheikh Hasina Wazed said. “But don’t play with our patience. We will not hesitate to do whatever is needed to end the violence if peaceful means fails.”

When the last straw is drawn

Border guards had been frustrated with pay that was not in line with what Bangladesh had paid members of its army. As food prices began to rise, the border guards’ situation became increasingly desperate. Rubbing salt in the wound, the government began to appoint army officers to head the border guards. On the international scene, border guards are also not allowed to work with U.N. peacekeeping forces, a job detail that would mean significantly more money for the guards and their families. ... click here to read the rest of the article titled "Bangladesh Border Guards Fighting For Pay, Benefits"

Gun Sales Skyrocket. Obamafear?

Must buy guns, must buy guns…

For the moment, it’s good to be in gun sales. Demand is up almost across the board and your share price is on the rise. Why? Some fear President Obama could swoop down at any moment and swallow the best tactical stuff in your inventory. Anthony Mirhaydari of MSN Moneycentral reports that gun buffs across the nation are stocking up on various rifles and pistols - even assault weapons.

Assault weapons? Yes. The ban on their sale expired in 2004, but President Obama is considering reinstituting the old ban. According to Mirhaydari, the president’s main concern is the flow of the weapons south of the border and into the hands of Mexican drug cartels.

A growth industry

Gun makers Smith & Wesson and Ruger, as well as retailer Cabela’s, are reaping the benefits of increased sales. Smith & Wesson projects it will double its revenue within the next three years. Ruger showed an 81 percent fourth quarter increase on new products. It currently has an order backlog that amounts to $48 million. Cabela’s reported a 2.2 percent same-store sales increase over the holiday election season. Normally, that is a difficult time for retail merchants.

Share prices are on the rise. Recently, Smith & Wesson was up 56 percent, Cabela’s 35 percent and Ruger 44 percent. ... click here to read the rest of the article titled "Gun Sales Skyrocket. Obamafear?"

No Job and No Health Insurance, the Rising Cost of Medical Care

No Health Insurance

Pain

I am healthy. I play basketball, I jog miles every day, I eat right, I don't smoke (anything), I don't drink and I always feel great. So, when I was laid off from my job, I didn't buy the health insurance through Cobra. Anyway, everyone knows that medical care costs are through the roof and health insurance premiums are right behind them and with my rather modest paying, new, part-time job, I can't afford stuff like that. So I will just keep on being healthy.

The pain is worse every day

The pain started in my side and was a low grade 'niggle' that I ignored for a couple of hours. It persisted so when I got home from work I took a couple of Tylenols with a glass of water. It got worse. At about 10 I took more pills and drank another glass of water. Pain gets worse. I went to bed and even fell into a half sleep. At 2 am I screamed for the first time. I dragged myself to the door, found a cab and told him to rush me to the emergency room of the hospital.

In the ER

By now I was screaming continuously. The doctor listened to me, poked around and told me to empty my bladder and not flush the toilet. He went in to check and came out saying, "your urine's full of blood. You've probably got a kidney stone. Don't panic, it's not life threatening." I screamed louder. I also noticed that the pain had moved lower. "Good sign, said the doctor, it's on the way out. Spend the night here and we'll see what's going on in the morning. Turn over. This shot will stop the pain." ... click here to read the rest of the article titled "No Job and No Health Insurance, the Rising Cost of Medical Care"

Is there Value in the Paintings Hanging Right on your own Wall?

I'm sure I have an Old Master hanging on my wall

I may have to call in an art expert to examine that dusty old painting that grandpa left me. I was looking at it the other evening, waiting for my creaky old computer to come online, and I thought that the signature read 'van Dingelen'. If it is by the Dutch Master, I may have a fortune hanging on my wall. I read an article in the NYT recently that said that a van Dingelen had come up on an auction at Sotheby's and how there had been enthusiastic bidding. The painting had eventually sold for about 300,000 dollars. Oh man, could I use money like that!

How do I get hold of Sotheby's and Christies?

Will they come out and inspect the painting or do I have to take it to them, meaning expenses that I don’t have?

It would be a dream

This could be as good as a Lotto win. Can you imagine living with a piece of art that you never even glance at as you pass it a thousand times a day and it suddenly turns out to something of great value? Is it possible that the old painting that's been hanging on my study wall since grandpa died in 1957 could really be worth great globs of money? The lovable old guy knew exactly what he was doing. He probably bought it from the artist himself back in the early 1900's when grandpa started making his first money and wanted to help the starving artist.

I'm not the only one taking a new look at the things I live with. We all go through life picking up pieces we fancy, or that we think will go well with the curtains, or some of us with an eye to the future. We live with them and most of us probably leave without doing anything about them.

It could be money

The more I look at the picture the more I am convinced I should call in that art expert. Of course, the painting may turn out to be someone's third lesson at art school, but who knows? ... click here to read the rest of the article titled "Is there Value in the Paintings Hanging Right on your own Wall?"

Samim Anghaie Defrauds NASA, Taxpayers of Nearly $1 Million

Your tax dollars at work

Mike Levine of Fox News reports that the Director of the Innovative Nuclear Space Power and Propulsion Institute at the University of Florida may have defrauded NASA out of “hundreds of thousands” of taxpayer dollars for personal use. A court affidavit says there is “probable cause” that the money was laundered in violation of federal law.

The FBI and NASA are investigating Samim Anghaie, 59, and his wife Sousan Anghaie, 55. She is president of New Era Technology Inc. (NETECH) in Gainesville, Fla. Charges have not been filed as yet.

Contract for the high life

Sousan Anghaie talked NASA into awarding NETECH “several fully funded contracts.” This included about $600,000 to develop and study uranium-related technology. But the FBI and NASA allege that in reality, Sousan and Samim used that money for personal luxury use. Among the purchases made were a $480,000 home, a 2007 BMW, a 2005 Toyota Sienna, a 2008 Toyota Corolla, a 2007 Toyota Corolla and properties for their sons. Then there was another $528,000 project. Wow…

Not surprisingly, federal agents have raided the Innovative Nuclear Space Power and Propulsion Institute.

More accountability with contracts

Among the contributions Sousan sought was $350,000 in order to pay three employees (including her son and brother-in-law). However, it is documented that those three workers received no monetary compensation for their work. Furthermore, it’s unclear whether any of the proposed work they were supposed to be doing was completed. This, according to an unsealed affidavit, is just one of “multiple fraudulent certified contract proposals” the Angahies made to NASA so that they would receive “maximum funds” for their “research projects.” ... click here to read the rest of the article titled "Samim Anghaie Defrauds NASA, Taxpayers of Nearly $1 Million"

Emotional Preparation for Job Loss and Career Change

Who knows how long they will be employed in these troubled times?

Should you prepare in case you lose your job? There’s a book of Chinese curses. One of the curses says, “May you live in interesting times.” One interpretation of this curse is, “May you experience much upheaval and trouble in your life.” The clear implication is that “uninteresting times,” those of peace and tranquility, are more life-enhancing.

Well, we've got the curse.

There are probably more descriptive words for our times than “interesting,” but we won't print them here.

What's actually going on?
Initial thoughts are:

No one really knows.
Everyone thinks they know exactly what's going on.
Everyone thinks they know exactly how to fix it.
So far, no one's made a dent in it.
It's only going to get worse.

My job … and yours

I still have mine but it's hanging on a very thin thread that could snap at any moment.
Is your job secure? Will you still be employed in a week or month or a year? Companies are cutting back. They call it by different names, such as enforced shedding of jobs and retrenching of staff.

Besides learning about Chinese curses, I’ve been learning about the emotions of job loss and career change.

The emotions of being fired

The emotions that are evoked in being fired are:

Manager guilt.
Employee "survivor guilt."
Employee fear of "Am I next?"
Loss of trust.
Loss and grief.

Retrenchment involves a bereavement process. Do management and employees honor or even notice their "departed" colleagues? ... click here to read the rest of the article titled "Emotional Preparation for Job Loss and Career Change"

Nation's Budget Dedicates $634 Billion to Health Care

Gearing up for health care reform

President Barack Obama’s presidential address last night was aimed at instilling hope in the American people and inspiring confidence in their leader. That speech didn’t come a moment too soon.

Obama plans to unveil his plans for the nation’s budget tomorrow. Among those plans, he’d like to dedicate $634 billion over the next 10 years to a health care “reserve fund” that would help pay for overhauling the country’s health care system.

The process begins

Obama’s ultimate plan is to provide universal health coverage. The first step in his 10-year plan is to start a dialogue with Congress on what to do about the 48 million uninsured Americans.

Congress has already approved $32 billion to expand coverage for children in low-income families and $19 billion fund computerization of health records.

A pricey system

Officials called the fund a “down payment” for health care reform. Experts say the cost of paying for all uninsured Americans to have access to health care could easily exceed $1 trillion over 10 years.

Part of the problem is the high cost of health care.

Some experts say 30 percent or more of what the nation spends may be going for tests and treatments of little or no lasting benefit.

Hurting families

Obama says medical bills are a leading cost of individual bankruptcy. The cost of and spending on health care have both continued to rise, even as the economy shrinks.

White House officials say slowing increases in the cost of health care and ensuring everyone has coverage is essential, in the long run, to solving the nation’s budget problems.

More budget requests

Obama’s budget also seeks to extend the $400-per-year tax credit to workers. It also proposes increasing the top income tax rate from 35 percent to 39.5 percent. The proposed budget would also update the alternative minimum tax, which reportedly would add $150 billion to the deficit by 2013. ... click here to read the rest of the article titled "Nation's Budget Dedicates $634 Billion to Health Care"

8 Ways to Create Your Own Stimulus Check

In 2008, millions of people received checks or direct deposits from the government in an effort to stimulate the economy. The extra cash certainly helped many families and individuals, who, like the banks that received TARP funds later in the year, cushioned their bank accounts and paid off debt. Some used the found money to contribute directly to the economy, but not enough people purchased products and services to prevent the global economy from collapsing. It’s usually argued that one of the strongest aspects of distributing checks of this type to the public is to boost confidence in both the market and those in power.

The economy is now worse than it was when the 2008 economic stimulus payments were sent out. The American Recovery and Reinvestment Act of 2009 was recently created to continue the attempts to boost the economy. This time, however, there will be no stimulus checks. Instead there is a new tax credit, the “Making Work Pay” credit, which will allow employees to keep more of the money they receive in each paycheck.

Starting in April, employers will adjust withholding automatically for qualified workers. This will result in $44 additional take-home pay after taxes for individuals, and $89 additional for those who selected “married” on the W-4 employee withholding form. Economists believe this small increase in pay will stimulate the economy more effectively than the equivalent lump sum payment of $400 ($800 for married couples). A lump sum payment is more likely to be saved, used to pay off debt, or spent all in the same place, while a little extra in each paycheck will help families incorporate the money into regular spending, like dining out in restaurants or buying groceries. This helps taxpayers circulate the money in the community rather than hoarding it in a bank account.

But lump sum payments are often better for the individual, even if they don’t stimulate the broader economy as effectively. So here are eight ways you can create your own stimulus check by turning the small weekly or biweekly increase into a larger benefit or by finding other income or savings that can be effectively used to boost your finances.

1. Save the Making Work Pay credit. If you receive a paycheck biweekly, you will be taking home $20 or $39 extra each time. Set up direct deposit to automatically transfer that amount into a high-yield savings account like FNBO Direct. With the interest you earn, by the end of the year you’ll have more than the $400 (single) or $800 (married).

2. Work extra hours. If your boss allows you (mine doesn’t) and if you get paid extra for doing so (I wouldn’t), spend an extra hour a day in the office. Assuming a salary of $40,000 or $20 per hour, and a benefit of time-and-a-half for working beyond 40 hours a week, you could earn an extra $7,500 by working one extra hour a day for one year.

3. Turn your hobby into a business. If you like creating and assembling furniture, building computers, knitting, or making jewelery, consider getting serious about selling your products. These could be things you don’t need to make yourself, as well. A coworker of mine recently started hosting jewelery parties, where she enlists her friends to host their own jewelery parties. I believe it’s some kind of multilevel marketing scheme, but it works for her. With this kind of side job, she doesn’t have to make her own jewelery; she just receives a percentage of what is sold as well as free jewelery.

4. Become a tutor. You can leverage your knowledge by offering to share it with others, perhaps middle school or high school students, for a fee. You only need a few students a week to earn a couple hundred dollars a month. Science and mathematics are always in demand, but you can do well if you have skill with musical instruments, test taking, or a foreign languages.

5. Get your bar tending license. A former coworker found that my company wasn’t providing her with enough income, so she started working in a friendly neighborhood bar on the weekend and one day during the week. With tips, she was able to earn several hundred dollars a night.

6. Sell your stuff. You must have unnecessary items around the house. eBay and the Amazon.com Marketplace come in handy here. Thanks to the websites’ reach, you can find buyers for almost everything. Old books, DVDs, electronics equipment, and games are all items you may no longer want but might be in demand.

7. Cut back your spending. Yes, this is typical financial advice you can find anywhere, good for any economic condition. But if you’re financially struggling right now, it’s time to take this idea seriously. I don’t have to tell you many of the easy ways to quickly reduce your spending, such as reducing your ECRD Factor, cutting back your cable bill, switching to compact fluorescent light bulbs, and reducing your energy consumption.

8. Request your cash back rewards. It’s getting much more difficult to take advantage of credit card offers. Credit card companies are dropping rewards programs, raising interest rates, and lowering credit limits. But if you do use a cash back credit card, claim your rewards. I request a check about once a year for a few hundred dollars from one card, while the business card automatically credits my account once a year. These payments provide me with a “stimulus” that I don’t take into account until I realize it’s time to receive the reward.

What else can you do to find extra money to stimulate your own personal economy?

—
Related Articles at Consumerism Commentary: A Personal Finance Blog:

Wednesday, February 25, 2009

Obama Names Third Commerce Secretary Nominee

Third time’s the charm?

Gary Locke

Once again, President Barack Obama has named his nominee to head the Department of Commerce.

Former Washington Governor Gary Locke is Obama’s pick to run the department. The main goal of the United States Department of Commerce is to promote economic growth.

Job description

If the Senate approves Locke, he will oversee many operations, including international trade, oceans policy and the 2012 Census. According to the Associated Press:

Obama praised Locke … as a man who shares his vision for turning around the moribund economy, and as someone who is committed to doing what it takes to keep the American dream alive.

Commerce Department saga

Obama nominated his first choice for Commerce Secretary, New Mexico Governor Bill Richardson, shortly after the November election. However, the Democrat withdrew from consideration amid allegations of wrongdoing regarding contract awards in his state.

This month, Obama nominated Republican Senator Judd Gregg, from New Hampshire, for the position. As negotiations over the economic stimulus package began to wrap up, Gregg also withdrew his name from consideration. He said he had “irresolvable conflicts” with Obama’s policies.

A little about Locke

Locke served as governor of the state of Washington from 1997 to 2005. Now he works for a law firm in Seattle. He deals with issued involving China, energy and governmental relations. He was the United States’ first Chinese-American governor. ... click here to read the rest of the article titled "Obama Names Third Commerce Secretary Nominee"

Massive Layoffs Make Massive Jump in January

Payrolls get the ax

The number of companies that made “mass layoffs” in January is up 50 percent from the same month last year. Mass layoffs are when a single employer lays off more than 50 employees at one time.

A total of 2,227 employers made mass layoffs in January, the government says.

Big companies make big cuts

Companies including Boeing, Pfizer, Caterpillar and Home Depot announced that they would make mass layoffs this year. The Labor Department’s report doesn’t count layoffs that have been announced but are not yet completed.

The 50 percent jump only represents the number of laid off workers that turned in claims for unemployment benefits.

Not even sports are safe

NFL Commissioner Roger Goodell has taken a 20 percent pay decrease, and the league has cut 169 jobs. Milliken & Co., a South Carolina-based textile maker, says it will cut 650 jobs. Zales jewelers plans to shut down 115 stores and cut 245 jobs.

More headed for the chopping block

Spansion Inc., a flash memory maker, said it plans to lay off about 3,000 employees this year. Computer chip maker Micron Technology Inc. says it will lay off as many as 2,000 workers by the end of August.

What’s this? Good news?

Consulting firm Watson Wyatt says the number of corporations that expect to make job cuts has decreased. In December, 23 percent of corporations said they expected to have to make job cuts. Now only 13 percent expect they will lay off employees. ... click here to read the rest of the article titled "Massive Layoffs Make Massive Jump in January"

Massive Layoffs Make Massive Jump in January

Payrolls get the ax

The number of companies that made “mass layoffs” in January is up 50 percent from the same month last year. Mass layoffs are when a single employer lays off more than 50 employees at one time.

A total of 2,227 employers made mass layoffs in January, the government says.

Big companies make big cuts

The 50 percent jump only represents the number of laid off workers that turned in claims for unemployment benefits.

Not even sports are safe

More headed for the chopping block

What’s this? Good news?

Uptick Rule to Beat Back the Bear, Cries Bernanke

Uptick rule to save share prices?

When stock prices fall during a bear market, what happens? Depending upon the severity of the dive and the overall state of the economy at the time, it’s fairly easy to predict. Typically, investors will go into a panic and rush to sell off as many shares as possible in the shortest period of time. If such behavior occurs on a wide scale - across the stock market - the economy is locked in a stranglehold and brought to the ground.

This is what Federal Reserve Chairman Ben S. Bernanke wants to avoid, and he’ll do it with an uptick rule.

Jesse Westbrook reports for Bloomberg that Bernanke said “there may be a benefit in resurrecting a rule that restricts short-selling stocks when share prices are falling amid the current bear market.”

“No longer relevant?” Please…

Bernanke told the House Financial Services Committee that the uptick rule could be of benefit to the nation right now. In essence, the uptick rule prevents investors from “betting against a stock until it sells at a higher price than the preceding trade.” Not seeing the need for it at the time, the U.S. Securities and Exchange Commission removed this rule in 2007. Interestingly, that’s the year most experts say that the current recession officially began…

The SEC originated the uptick rule in 1938 to prevent what’s happening now from occurring. Once E-trading became popular in recent years, the SEC decided that it was “no longer relevant.” ... click here to read the rest of the article titled "Uptick Rule to Beat Back the Bear, Cries Bernanke"

Alleged Harassment Expensive for Payday Loan Company

Payday Loan company pays big

A payday loan company in Washington is paying a hefty price after customers filed a class-action lawsuit against the company for harassment.

The company settled the lawsuit out of court, which means they do not admit to any wrongdoing on their part. However, the company must fork over a total of $2.5 million to be split among 10,701 plaintiffs.

Allegations

Pacific Financial Holdings Inc. is based in Federal Way, Washington, and owns Loan Ex. According to The Spokesman-Review newspaper in nearby Spokane, Misty Schleve accused Loan Ex of making harassing phone calls after she was late repaying $200 for a payday loan.

According to Schleve, she got a barrage of phone calls from the company in which they accused her of being a thief and used profanity. She says they also contacted her relatives regarding her debt.

Settlement

The terms of the settlement dictate that the company must pay all customers who may have been subjected to similar treatment. This amounts to every customer who defaulted on payday loans between Aug. 18, 2001, and Aug. 18, 2005.

The suit was filed in 2005, and a county judge approved the settlement this month, on Feb. 18. The company has until May 1 to notify all eligible recipients in the suit.

Negotiation

Pacific Financial and its subsidiaries admit no guilt. ... click here to read the rest of the article titled "Alleged Harassment Expensive for Payday Loan Company"

Payday Loans Abound | Bernanke Says Economy Could Turn Around

Americans need payday loans to bail them out

Ben Bernanke

More and more consumers are seeking personal bailouts in the form of payday loans as the economy continues to shrink. Also, more consumers than ever before believe that the financial crisis won’t get better any time soon.

However, Federal Reserve Chairman Ben Bernanke says there is hope.

Just a glimmer

Of course, that little ray of sunshine comes with a big IF. If the government’s bailout succeeds in stabilizing the banking system, Bernanke says the economic contraction could possibly cease in less than six months. However, he also believes that the economy is likely to shrink even more before then.

A long recovery

Even if the recession does cease, families and individuals will still need payday loans to bail them out of financial hardship for a while. The unemployment rate will continue to go up until the economy begins to grow again. Businesses must start pulling in enough money to pay off their debts plus fund more production before they begin hiring again.

Will credit be normal again?

Bernanke says the key to economic turnaround is getting credit and financial markets to operate normally again.

“Only if that is the case, in my view there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery,” Bernanke told the Senate Banking Committee.

A few more IFs

One factor that could have a significant effect on the United States’ economic crisis: The rest of the world. If countries that we trade with continue to have shrinking economies, it will hurt U.S. exports. Also, according to ABC News: ... click here to read the rest of the article titled "Payday Loans Abound | Bernanke Says Economy Could Turn Around"

What Tax Season Taught Me About Personal Finance

This is a guest post from Tara Young.

This winter marks my fourth season as a volunteer tax preparer under the Volunteer Income Tax Assistance Program, which provides free tax preparation services for lower income and elderly taxpayers. The experience has been quite rewarding, and I've learned more about U.S. personal income taxes than I ever imagined existed — or wanted to know.

After completing several hundred returns, the following recurring themes resonate with me in my journey towards financial independence:

Know yourself
Conventional Wisdom says that a large tax refund is a free loan to Uncle Sam and therefore bad news for the individual taxpayer. This logic doesn't compute for every individual.

Many taxpayers I help have a difficult time saving and are often tempted to spend any extra money they have on hand. In many instances, clients lament their inability to build an emergency fund, delay purchases for luxuries, or say no to friends and relatives who need a bail-out. For them, excess withholding is a forced savings vehicle that enables them to declare various purchases out of range and short-circuit loan requests.

There are interest-bearing savings choices out there, but it's more important to know your own situation and adapt your approach to saving accordingly.

Organization pays
Shoddy or incomplete record-keeping can mean missed opportunities. Each season, many clients miss out on deductions or credits because they don't have the proper documentation at hand.

Some folks are aware of the documents they need; they just forget or don't want to go to the trouble of keeping orderly records. Other clients have no idea the deductions/credits exist and scramble to collect the appropriate records before the filing deadline.

For example, how many times have we ended up paying full price on an item for which we have a coupon or discount code that we cannot locate? “Play good defense,” as Thomas Stanley and William Danko say in The Millionaire Next Door, so that you can keep more of your hard-earned money.

Invest in yourself
Invest in your education, your physical and mental health, and that of your family as well. The hardest stories I've heard revolve around folks who cut short their education or took poor care of their bodies and now struggle to make ends meet in dead-end jobs or government disability benefits.

As the primary breadwinner for my family, I'm familiar with the pressure to provide and put others first. However, one cannot provide for others if she cannot provide for herself. The US Census Bureau has reports on the correlation between educational attainment and income. [J.D.'s note: I've written before about the value of a college education.]

Quality trumps quantity
This is especially true for often-used or mission-critical equipment. The organization I volunteer with completed more than 4000 tax returns last year. Since we are required to provide a hard copy of the return to each taxpayer, and the average return runs 10 pages, we print about 40,000 sheets of paper in 3-1/2 months.

Churning 40,000 pages through two bargain-bin printers was not pretty. Forty-odd tax preparers lost time and productivity clearing paper jams, reprinting eaten pages, and coaxing print jobs to completion like something out of The Little Engine That Could. This year, we're getting spiffy new laser printers that are more suited to the workload. The upfront costs are higher, but the cost of ownership will be lower allowing us to better server our clients.

I started this volunteer journey knowing I'd learn a lot about taxes. I've learned a lot about myself and human nature as well. I'm looking forward to a good tax season.

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Layoffs or Not, How Some Ways Companies Let Employees Go

Layoffs are never pleasant, but there are some layoff procedures that just makes you feel even worst. I’ve heard of a few recently that caught my attention as either unique, disastrous, or both. Here they are and hopefully business owners can read this and understand how these layoffs not only burn bridges, they actually affect productivity for the people that stay on board.

The One by One - This is a crazy method which will sure kill your employee’s moral. Some companies will fire one person each hour for that day, one by one, until they are done with the layoffs. You might be saying good bye to your long term friend and showing sympathy one hour and be booted yourself the next.
The Yes and No Rooms - During the dot com bust, floors of buildings were being laid off. One of the least humane ways of layoffs are when everyone would be asked to go to two rooms, where they would wait to see whether they were the room that stays or the one that needs to leave.
My Keys Were Changed - Some companies would just change the security code to prevent you from even enter the building when you get to the office in the morning. I mean, come on. Can’t you even save me some gas by telling me the day before?
Just Quit Already - Some supervisors don’t have the guts to tell people that they are being laid off and instead do everything they can to get you to quit.
Make Them Fight for It - I didn’t think this was done in reality but my friend told me that her employer asked two people to go into the room and told them that one person is going to be let go and for the two to give reasons why he/she should be the one staying. I sincerely wish that those people who do this end up losing all the good employees.
Giving You the Chicken - Here’s some historic and culture sharing. Back in the old days when many people work for small businesses in Hong Kong, the owner would always treat all the employees for dinner during Chinese New Years. It is said that during the meal, the boss giving you the chicken leg means that you are fired. (I heard this from a TV show long ago and I can’t verify it now, but I remember believing the story at the time)
The Only Kind That is Acceptable - Every employee should be told via a company get together in exactly what’s happening and each supervisor should have heart-to-heart talks with the employees separately and let them know honestly why they are being let go. If I spent 40+ hours working for you, I deserve to at least get an explanation!

It’s already bad that we are being laid off. Please don’t upset us even more by doing it the wrong way!

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