Verizon Dials Up Wrong Number

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The head honchos at Verizon Wireless must be living in the dark ages. In their infinite wisdom they decided to implement a two dollar charge for online and telephone bill payments. Yep, that’s right a two dollar charge for the privilege of paying your bill.

Needless to say Verizon customers did not jump up in ecstasy at the prospect of paying to pay their bill. Rather they started online petitions and flooded social media and Verizon offices with complaints.

Not only did Verizon customers complain, the move also sparked the Federal Communications Commission to look into the matter on behalf of the Verizon customers.

Guess what happened late Friday. You are right, Verizon issued the following statement. 

"Verizon Wireless has decided it will not institute the fee for online or telephone single payments that was announced earlier this week,"

Verizon Chief executive Dan Mead explained it this way. The company has decided that it would encourage customers to pay by other means thereby "eliminating the need to institute the fee at this time."

Does this man still have a job?

Given the severe backlash following Bank of America's announcement of a $5 monthly fee for US debit card users and subsequent reversal, why in hell would Verizon try a stunt like this?

Talk about dialing a wrong number.

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Boehner’s biggest boner

Image by Getty Images via @daylifeSpeaker of the house John Boehner may have just made the biggest political boner of all times. He and his tea party counterparts have seriously underestimate the disdain the American people have for congress. Does he not recognize the approval rating for congress is 11%.

He and his party voting to increase taxes on a 160,000,000 Americans is just political suicide.  Their refusal to pass the payroll tax cut citing they want a year’s extension not the two months contained in the Senate bill is plain and simple B.S. That spin will not be bought by the independent voters, which both parties desperately need to win the November elections.

The evidence is clear. The congress sent a payroll extension bill up to the senate, which contained nine poison pills designed specifically to make the senate reject it.  Here is a partial list of these poison pills:

If passed the State Department would have been prevented  from finishing its review of the Canada-to-Texas Keystone pipeline, and mandate its construction.

If passed the bill would let individual states bar people from collecting unemployment benefits unless they submit to drug testing.

The bill would strip the EPA of authority to regulate incinerators and boilers.

The bill removes $8 billion from the health care act.

89 Senators(including 80 % of the Republican senators) rejected the House plan and sent back a two months extension which Mr. Boehner’s tea party (read Eric Cantor) promptly rejected. In fact would not even let the Senate bill come to a vote. So Mr Boehner, or should I make this statement to Mr. Cantor as he seems to be the one in charge, we the people are not buying what you are selling.

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Investors spooked by U.S. Federal Reserve

Image via WikipediaInvestors are fleeing the stock market in favor of bonds, which they perceive to be a safer investment. The announcement by the Federal Reserve that they have developed a new strategy to get the U.S. economy growing seems to be a major contributor to this run for safety.

The Fed announced Wednesday that in hopes of reducing interest rates on long-term loans, it would shuffle $400 billion of its own holdings. In addition, the President of Strategic Energy & Economic Research, Michael Lynch, highlighted that this bleak outlook from the Fed combined with a rare public warning by the chief economist of the European Central Bank is a confirmation that the economy is not improving.

Investors appeared to take this as a sign that the economy was not about to recover anytime soon and that a recession may be closer now than at any point during the current recovery.

This caused oil and metal to dive sharply amid fears that demand for them would fall if the world does go into recession.

In spite of the lower interest rates investors spurned stocks in favor of bonds.

No doubt the polarization of U.S. politics also contributed to the stock market tumble, as it appears the Republicans are bent on bringing down President Obama even if this means a depression for the U.S.


On an unrelated matter, The Hoss sees some irony as during these turbulent times, we have millionaire NBA players and Billionaire owners unable to agree on a contract.There are many unemployed people willing to do any kind of work to feed their families, while these fat cats squabble over how to divide millions of dollars. The rich get richer and the poor, well they starve.

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FHFA: Will lawsuit benifit taxpayer?

Image by qthrul via FlickrHoss Cents Free Financial Money Magazine wonders if the FHFA lawsuit against the 17 banks will be beneficial to the tax payer or will the lawsuit jeopardize the already shaky financial situation in the United States?
If the FHFA is successful and recovers $25 to $30 billion dollars, the bailout of Fannie Mae and Freddie Mac will of course be reduced but at what cost? The banks will have to take some action to recover these losses. How many bank employees will be let go?  Will the banks cut back on loans? Will other private investors initiate similar lawsuits? How many of these unknowns will it take to create investor concern and what effect will this have on the stock market? Will this cause an increase in unemployment?
The Hoss does not have answers to these questions but does wonder what the management of Fannie Mae and Freddie Mac were doing when they acquired these mortgages. Do they not scrutinize mortgage securities before, during and after purchase? If not why not? 
Lawsuits of this magnitude usually take years before they are resolved, so the big winners will be the lawyers not the middle or low income tax payer. They will still be left trying to feed their family, pay their mortgage and send their kids to college.



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Bank Stocks Drop; FHFA Sues 17 Banks

Image by Getty Images via @daylifeBank stocks dropped late Friday as The Federal Housing Finance Agency (FHFA) sued 17 US and foreign banks claiming securities were sold to Fannie Mae and Freddie Mac based on documents that "contained misstatements and omissions of material facts concerning the quality of the underlying mortgage loans, the creditworthiness of the borrowers, and the practices used to originate such loans."

Shares of Bank of America fell more than 8.3 percent, JPMorgan Chase dropped 4.6 percent and Goldman fell 4.5 percent.

This FHFA action was preceded by the states attorneys general who sued the banks claiming faulty foreclosure actions. Next private investors jumped on the law suit band wagon claiming the mortgages they had purchased were misrepresented by the banks.

At this writing it is not known what specific damages the FHFA is seeking, only that it wants the sales cancelled and reimbursed for lost principal complete with interest payments and of course legal fees.

The FHFA claims that the securities were sold to Fannie Mae and Freddie Mac based on documents containing misstatements and omissions of material facts. i.e. the quality of the underlying mortgage loans, the creditworthiness of the borrowers, and the practices used to originate such loans.

Following is a list of the Banks named in the suit.

Ally Financial Inc. f/k/a GMAC, LLC
Bank of America Corporation
Barclays Bank PLC
Citigroup, Inc.
Countrywide Financial Corporation
Credit Suisse Holdings (USA), Inc.
Deutsche Bank AG
First Horizon National Corporation
General Electric Company
Goldman Sachs & Co.
HSBC North America Holdings, Inc.
JPMorgan Chase & Co.
Merrill Lynch & Co. / First Franklin Financial Corp.
Morgan Stanley
Nomura Holding America Inc.
The Royal Bank of Scotland Group PLC
Société Générale

The Hoss will have additional comments on this action taken by the FHFA in his next post.
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Michele Bachmann and God

Image via WikipediaMichele Bachmann is reversing direction faster than a yo-yo on a string. Last week Michele Bachmann implied that the recent natural disasters on the east coast (hurricane Irene and the earthquake) were a message to Washington Politicians. Following is her statement:

 "I don't know how much God has to do to get the attention of the politicians. We've had an earthquake; we've had a hurricane. He said, 'Are you going to start listening to me here?'"
"Listen to the American people, because the American people are roaring right now. They know government is on a morbid obesity diet and we've got to rein in the spending."

Well, naturally these statements received much negative attention and first she said she was only joking and now she claims it was just a metaphor.

So let’s say she gets elected President of the United States (Heaven Forbid) how will the citizens know when she is joking, or speaking metaphorically?  Will she advise the populace of all messages she receives directly from God?  Like her message from God to marry her husband.

How can the Republican Party possibly put forth this kind of candidate as one of the best available?
The Hoss's only comment is God help us all if she were ever elected president of the United States.

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Super Committee, Will It Succeed?

The Super Committee has been given the task of designing a bill to achieve $1.5 trillion or more in deficit reductions over the next 10 years.  They must submit a report by Thanksgiving. If they can reach agreement there will be an up or down vote in both chambers by Dec. 23, 2011. There will be no amendments, debate, hearings and best of all no filibuster.

The Super Committee can scrutinize the whole budget but The Hoss wonders if they will consider reducing the salaries, Medicare or pension benefits for Senators and Congressmen, or will they stick to the main big ticket items such as defense spending, Social Security, Medicare and Medicaid. What about increasing tax revenues, either by increasing taxes or eliminating tax loop holes?

Given that all six of the Republicans have indicated that tax increases are not on the table it is not clear whether or not one or two may be persuaded to increases revenues by eliminating or reducing home mortgage deduction, the deduction for employers who offer health care to their workers, or the retirement deduction. If so, a deal may be possible, as there should not be a problem in the Super committee members agreeing on cuts to Defense, Medicare and Medicaid.  Remember a simple majority is all that is needed to be able to bring a report which will be voted on.

If the Super Committee fails to agree or if Congress rejects its recommendations, then  across-the-board cuts of $1.2 trillion, equally divided between defense and domestic programs would be implemented.. However, certain entitlement programs such as Social Security, Medicaid, veterans benefits, and other “essential” programs would be exempt. Something The Hoss believes the Republicans will find unacceptable. Therefore, The Hoss predicts a plan will be presented and passed.

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Super Committee Members

Image via WikipediaThe race has begun with a full field of 12 . Six Republicans and six Democrats (A.KA. the Super Committee) must cross the finish line by November 3rd 2011. Their task is to produce a plan to cut one-and-a-half trillion dollars from the deficit in 10 years.

The Super committee is and split equally among members of the House and Senate.
The nominees are:

Sen. Max Baucus (Montana): The chairman of the Senate Finance Committee: Democrat.

Sen. John Kerry (Massachusetts): You know the climate change guy. Democrat.

Sen. Patty Murray (Washington): Appropriations Committee; she also chairs the Democratic Senatorial Campaign Committee. Democrat.

Rep. Xavier Becerra (California): Member Ways and Means Committee: Democrat.

Rep. James Clyburn (South Carolina): assistant leader to House Minority Leader Nancy Pelosi. Democrat

Rep. Chris Van Hollen, Jr. (Maryland): On the Budget Committee Democrat.

Sen. Jon Kyl (Arizona): Chair of the National Republican Senatorial Committee: Republican Whip.

Sen. Rob. Portman (Ohio): A freshman, member of the Budget Committee. Republican

Sen. Pat Toomey (Pennsylvania): A freshman. Member of the Senate Budget Committee. Republican

Rep. Dave Camp (Michigan): Chairman of the Ways and Means Committee, Republican

Rep. Jeb Hensarling (Texas): Chair of the House Republican Conference and vice chair of the House Financial Services Committee. Republican

Rep. Fred Upton (Michigan): Chair of the House's Energy and Commerce Committee. Republican.

There you have the Super Committee. Do they have an impossible mission? Should we call in Tom Cruise to accept this mission? The Hoss, in his next post will point out where these Super Committee members stand with regards to areas to be cut and their position on tax or revenue increases.

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U.S. loses AAA credit rating

U.S. loses AAA credit rating. Standard & Poor’s was severely critical of the American political process in its press release announcing the lowering the US credit rating to AA+. Further, Standard and Poor’s put the U.S. on notice that the long term rating could be lowered to AA within two years if spending reductions are less than the agreed to amount, or new financial pressures result in higher general government debt.

Standard and Poor’s but the blame squarely on the dysfunctional American political system.
Here is part of their announcement:

“We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related Fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week
falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade. Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policy making uncertainty, consistent with our criteria…”

They also said, “The political brinksmanship of recent months highlights what we see as America's governance and policy making becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in
the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program
that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures…”

In other words its time for the Democrats and Republicans to act like adults and not children and produce a workable solution to the American debt problem. Here is the complete Standard and Poor's report.

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Investors Flee to Cash

Image by Getty Images via @daylifeAnd there off, no not the thoroughbreds, but the investors running down the track looking for financial security in cash and away from stocks. North American stock markets had one of their worst days in recent history. Even gold was not immune from this stampede away from equities and into cash.  

Volumes were high, for example the NYSE hit 7.5 billion shares, not quite double this year’s average volume of 4.12 billion, so this sell off could not be attributed to low volume. Rather the very real fear of a global financial crisis sparked this panic sell by investors.

It almost seemed as if worried investors were sitting on the back of a bucking bronco and the only way they could see of staying on the horse was to liquidate as quickly as possible. Some banks are actually considering charging customers for holding their cash.


The next few days will be very interesting in deed. Will buyers step in to pick up undervalued stocks? Will Friday’s job numbers spark a buying spree or will they create further turmoil?

Stay tuned and lets see where the finish line is and which investors steer the right course.

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The Debt Ceiling Deal

Image via WikipediaThe American political system was put to the test during the recent debt ceiling crisis. This crisis exposed to the entire world the willingness of some American Republicans (Tea Party) to bring the world to the brink of financial disaster by defaulting on government bonds and other government commitments in order to avoid eliminating the Bush tax cuts or any form of increased taxation for the rich which would have provided a balanced approach to deficit-reduction.

The Deal,in summary form , over the next decade increases the debt ceiling by $900 billion along with spending cuts of $917 billion for a net $17 million. $1.5 trillion in further deficit reductions must be approved by Congress before December 23rd. These reductions are to come from a 12-member congressional committee, equally composed of Republicans and Democrats. However, there will be a similar-sized increase in the debt ceiling. If the committee fails to reach agreement or its proposal is rejected, $1.2 trillion in spending cuts will be triggered.

Let’s look at the reality, the likelihood of the committee of 12 Republicans and Democrats coming up with a deal that will be supported by both parties is almost nonexistent. The Republicans will remain adamant against any tax increases and the Democrats will protect their social programs such as Medicare and Medicaid. All that has really happened is a possible two year delay before the debt ceiling war is renewed. The American political system remains as partisan and dysfunctional as before this crisis began
.
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How To Solve The U.S. Debt Crisis

Image via WikipediaThe United States debt crisis continues along a path that could lead to not only financial ruin for the U.S.  But also create a world wide financial crisis. Already the PIIGS (Portugal, Ireland, Italy Greece and Spain) are in financial distress. The addition of the United States to this group could have severe consequences.
So what is the problem? The Republican Party and the Democratic Party are engaged in  a classic partisan gamemanship. The Republicans want to reduce the deficit by reducing spending and no tax increases. The Democrats prefer tax increases but are willing to reduce spending on many social issues in order to make a deal. The Republicans however, as previously stated in one of The Hoss’  earlier blogs, are the party of no. They, at least to this point in time, are not willing to compromise, no tax increase period. In other words the rich get richer and the poor get poorer.
The Hoss, during his research as come across a very interesting paper by Stephen R. Richardson which details the causes that led up to this crisis and provides a logical well thought out course of action that could ease the United States out of its current dilemma and eventual financial stability. Here is the link to this great paper How To Solve The U.S. Debt Crisis.


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Consequences of a US Default on Debt Payments

Image by cliff1066™ via FlickrWhat will be the Consequences of a US Default on Debt Payments?

The failure of Democrats and Republicans to resolve the US cash flow problem could result in serious consequences to all American’s and negatively effect world wide economics.

The US government will be unable to fulfill its financial obligations. Creditors (ie bond holders) would not receive payment resulting in a down grading of the US credit rating. Therefore, mortgage rates would rise, and home owners would see an increase in their monthly payments. People with car loans or any loan will have to find more funds to meet their commitments.

This may be difficult for those on military salaries, social security or unemployment as these payments from the government will, in all likelihood, be delayed.

In addition, money for infrastructure repairs and improvements and education may be reduced resulting in construction and educational job losses.

What about those on Medicare, will they be left to fend for themselves?

Stock markets will, in all probability, suffer serious declines. Those fortunate enough to have 401ks will see those decline in value, disrupting their future retirement plans.

No doubt the US dollar will decline in value. This would have a positive effect for export business but an increase in the cost of borrowing would offset any such benefit.

In short it is time for the politicians to stop playing at politics and start working together towards finding a solution to this very serious economic crisis.



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Speaker Boehner Won't Play Ball

The Hoss has been in the stable since Sept. 2010 due to heart problems. This is why there have been no postings to Hoss Cents Free Financial Money Magazine. The good news is the two stents placed in the old ticker seem to have resolved the Issue
.
Can anyone out there believe the nonsense going on in Washington D.C.? What is with these politicians? They seem more interested in running for re-election rather than running the country. The GOP lead by House Speaker Boehner decided to walk out on negotiations designed at cutting the US federal deficit. This reminds me of the little boy who comes to play a game, brings his own baseball and when things are not going the way he wants them to, he takes his ball and goes home. Childish is the word that best describes Speaker Boehner. Does he not realize the serious financial implications that could befall the American people if some sort of agreement is not reached?  At least President Obama is willing to negotiate and offer real comprises towards a solution to the US Financial problem.

Let’s hope that this financial mess is straightened out before America is trust into a default position. The ramifications of a US default will be felt world wide and could precipitate a world wide recession or even depression. Why? Because speaker Boehner took his ball and went home. Time for the GOP to grow up.


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