The Case Against the Banks

If you have been at all awake in the last year, and have been watching the news, banks have been at the forefront of multiple scandals.  If you happen to be among the minority of people affected by the economic downturn and thus are not concerned, I would like to attempt to convince you that it does matter.  I have hoping that by the end of this blog you are convinced to drop that Bank of America, Chase, Wells Fargo, big national naughty bank from managing your money.

I used to bank with Bank of America.  I had a Gold account and it was great.  (Long story about how I got that)  A few years into that relationship, some middle manager noticed that I did not meet the requirements for said gold account ($10,000 min balance) and canceled that account and moved me to a more plebeian account worthy of my student life savings.  A few months later, my meager account was barraged with little stupid fees here and there.  Then I was watching some debt documentary, I think it was "In Debt We Trust" http://topdocumentaryfilms.com/in-debt-we-trust/ where I learned that MBNA/Bank of America was George Bushes biggest campaign contributor at over $900,000.  (Now with Citizen's United ruling, these number is probably pocket change but who knows since donating to Super Pacs shields you from having to disclose who is donating)  I promptly left and never looked back.  This was years before all the craziness began in the economy.

As the economy continued to melt away, more and more evidence is pointing to these banks bad behavior at the source of the economic downturn.  I will spare everyone the details, if you want to know more google it.  Then the Obama administration bailed out the banks with taxpayer money and no rules on how the banks use the TARP bailout funds.  So, they paid themselves record bonuses and continued to pillage the rest of us.

The best way to fight all this is to take your money out of these institutions and put them in places that are not destroying the economy with their business practices.  In November there was a Bank Transfer Day Movement that definately affected Bank of America and Chase.  This had a direct effect on their bottom line as their stock value plummeted.

These big banks are also frequently responsible for the bankrolling of big scale projects that have a destructive effect on the planet such as drilling oil, natural gas, nuclear power, ect.  If you don't like these things, then don't give your money to those banks (and minimize electrical use)

JP Morgan executive Jamie Dimon made news with his testimony of being unaware of a blotched derivitive trade loss by his bank somewhere between 2 and 9 billion (with a b) dollars.  http://dealbook.nytimes.com/2012/06/29/will-the-whale-swallow-jpmorgans-2nd-quarter-earnings/
What's a derivative?  It's very confusing... So confusing it seems that most bankers and economists don't understand them, and they are very unpredictable.  Here is a simple explanation: http://www.youtube.com/watch?v=EH_52gFFhXM

So how do these big banks do all this?  They do it with our deposits!  Not only that but they can leverage it at a 9 to 1 ratio which means for every $100 deposit they can loan $900.  During the last depression there was legislation enacted called the Glass-Stegall Act enacted to separate banking deposits from being used by banks to speculate on the stock market with those deposits.  (Good idea right, so if stock market tanks, it doesn't take our deposits with it!)  Thus separating commercial and investment banking.  Then in 1999 the Gramm-Leach-Bliley Act struck down sections in the Glass Stegall act that separated commercial from investment banking.  This was signed into law by President Clinton.  This now allowed banks to use our deposits to speculate on the stock market, yet still have the money protected by FDIC insurance, a nice deal!  With your $100 deposit they can speculate with $900 in global markets.  If they loose the money your deposit is still protected.  The problem with all this is that they are speculating with money that does not exist where the rest of us have to use money that does exist if we want to buy stocks, bonds, and other investment banking products.  As all this debt is created, then more money has to be released into the system, but more money in the system means money is worth less.  This is known as Inflation. 

The solution?  Since Congress seems unable or unwilling to properly regulate the banking and finance industry, then we will have to do it ourselves.  We can best do this by not banking with the banks that are causing all the trouble in their pursuit of profits by creating money that does not exist.  Please remove yourself from the following banks: Bank of America, Chase, Citibank/Citigroup, HBSC, Wells Fargo.  Without deposits there is no money to leverage and cause trouble with.  Please change your bank to a small local credit union.

Oh, and be forewarned; if you are out to dinner with me and you pull out a Chase card, I will comment on it and how unAmerican you are acting by giving money to economic terrorists that are causing all the economic troubles.

Special Tax Day Rant

So I am about 2 seconds away from either joining the Tea party or moving to Sweden (where taxes pay for education not war).  First, my accountant calculated my taxes last min... ie this afternoon.  He got my info on the 30th, so I don't quite get what the hold up was.  Then he proceeds to tell me that I have a gigantic tax bill.  Then he wants me to buy an IRA and drop several thousand dollars into it... Today.  Needless to say this is right in the middle of a full day of patients (2pm) and I don't have time to find someone to open a last min IRA.  I then was also notified that I would pay less taxes if I owned a house, a car, and claimed my child this year (this is not my year).  Yes, I pay more taxes because I don't have a car to deduct miles from!  Then, I get a $500 bill from them for their services.  I was pretty livid!  Between not claiming my child and not maximally contributing to my Roth IRA I will pay $9000 more in taxes than I would need to!  WTF! 

For some reason I was still a nice person as I very calmly (probably creepily calm) told him that I was dissatisfied with his services, not to mention his bill.  In my head it was something like "Why the #$%& are you telling me this hours before the %&*#ing thing needs to be filed???

Here is what I learned in this 2011 Tax season:
1.  I need to put away at least 30% of my income to pay taxes. (best paid in quarterly installments... who knew?)
2.  I need a new accountant.
3.  I need to open and max out an IRA
4.  I need to max out my Roth IRA
5.  I need more children. (both for the tax break and because I don't trust that social security will be around to take care of me in my old age!)

Why is the tax code so complicated?  So rich folks can have a bunch of loop holes to hide money in that do not apply to the rest of us slaves.  Between paying the IRS and the Banks that own my school loans, not much is left, yet it looks like I make plenty of money!

I feel like I got ripped off.  For all this schooling, I have no car, no home, no furniture other than a bed, and no future financial stability.  I am poorer now than ever (but have great credit)!  HA! The kicker is that I feel most terrible about paying the taxes as it is likely funding wars I do not believe in.  Yes, I have become a good Idahoan ranting about taxes and the power of the federal government!  Ron Paul for President!  Better yet, lets just get rid of the executive branch and save us all some money... What do they do anyway?

On a personal note, I have been learning alot about what pushes my buttons in my mind and it is predominantly money (thank you Zen meditation/David).  The flawed logic goes something like this:  I would like to be loved/have a life partner.  Men are providers.  I am a Man.  As a Man my worth is based on my ability to provide.  I am not making much money.  I am not a good provider.  I am not worthy of love.  I won't have a life partner.  All over a bunch of #$%*ing numbers on a piece of paper that don't really exist!  I have finally noticed that anytime I am not doing well financially or I perceive that I am not doing well I subconsciously sabotage the relationship I am in to make this flawed logic true.  Stay tuned while I attempt to heal, change the flawed logic that is making my love life so challenging.