Tag Archives: finances

Romanian banks have it too easy

Those of you familiar with US banks may be displeased to learn that in Romania, banks will charge you to deposit money and to withdraw money. It’s also customary for them to charge you monthly fees just to keep your account open, and will charge you additional fees for a bank statement, and for internet banking. Pretty much everything that can carry a fee will carry a fee.

Somehow, in a country renowned for its IT workforce, the banking systems in use are terrible. Bank clerks will often complain their systems are slow, or are out of order. If you use any Romanian internet banking system, and you’ve been used to the ones in the US, you’ll be pulling out your hair. It’s like stepping back in time to the early 1990s — there’s no thought whatsoever put into a proper user interface, into making names and options user-friendly, and the total lack of various options for managing your account is mind-boggling. One wonders if the people who coded those systems ever bothered to look over the fence to see what other, more enlightened countries were doing.

But at least the banks are good at handling things in person, right? Wrong. You’ll find long lines at pretty much any bank you visit. And if you find a bank whose personnel is friendly and happy to assist you, by golly, stick with it, because they’re few and far between.

What about ATMs? They often break down. If they don’t break down, you’ll likely find you can’t withdraw money because there’s some technical issue on the backend, blah, blah, blah. And if they’re working, you’d better make sure some thief hasn’t installed a skimmer. The banks might as well equip each ATM with a 1990-style “Under construction” animated GIF, because that’s what it feels like to use them.

On top of all that, you’ll be hard-pressed to find them offering fixed-rate mortgages. They all offer ARMs (adjustable-rate mortgages) at sinister rates, which fluctuate up and down (mostly up) as they see fit, so they can gouge and gorge from their customers’ wallets. During the recent financial crisis, it wasn’t uncommon for some people’s monthly mortgage rates to double. When you realize how low the average monthly income is in Romania, I find it unconscionable that banks will subject their customers to 100-200% increases in their mortgage payments. And yet, you’ll find some of the highest salaries in Romania paid in the banking sector. I guess it pays to be a banker…

The Romanian government recently stepped in to “encourage” banks to offer lower interest rates on refinanced mortgages, but to my understanding, they’re still ARMs, so it’s likely that down the road, customers will get gouged again.

I’d love to see some real competition in the Romanian banking sector. I’d love to see some decent banks step in and treat their customers the right way. I’d love to see less fees, and I’d love to see a bank offer a proper internet banking system, like the one my favorite US bank (USAA) offers.

Let's recap where we are economically

A video compilation of various Peter Schiff TV appearances (2002-2009) is available on YouTube. The quality isn’t that great, but the message is pure gold. He’s been saying since 2002 that the US economy would collapse, and he gave solid reasons why it would collapse every time. His messages got more pointed with each appearance, they made sense, and yet he was ridiculed over and over for his opinions by so-called pundits on various TV networks. Ben Stein once said to him: “Sub-prime is a tiny, tiny blip.” I bet he’d like to eat his words now…

In 2004, I wrote an article where I said some of the same things Peter Schiff was saying — namely, that an economy financed by debt would not go on forever, and that we might be headed for another Great Depression. Back in 2004, the real estate market hadn’t even hit its peak, so I based my observations on common sense. I have no education in finance, but I can spot a turd no matter what it’s called.

I wrote then that the slowing US economy was being falsely propped up by the war spending in Iraq, but that wouldn’t last. You see, the government operated under a false assumption. The thought that what pulled us out of the Great Depression — the ramped up spending for WWII — would do it again in modern times. They were wrong. As I also wrote then, the WWII spending paid off: the world wanted American products after the war — they were hungry for them, and the manufacturing economy, which had been making weapons, shifted into making lots of things for export, like cars and clothes and other badly needed things in war-torn countries. Back then, we had a manufacturing economy, and there was real demand for our products.

History unfortunately does not repeat itself. In 2004, things were different. The US had no American products to export (unless you count weapons of war). It had moved most of its manufacturing overseas, leaving little to make at home. It was going into massive debt to finance a war that would (among other doubtful goals) stimulate a slowing economy, yet, from the get-go, they were not building American goodwill overseas in order to stimulate demand for American products. Even if they had done that, there were no American products to export, since we did not have a manufacturing economy any more.

A quick aside: some were saying a while back that the US is in the information services business — you know, IT, expertise, analysis, consulting, research, etc. — white collar stuff. I don’t buy it. For one thing, not everyone in the US can hold a white collar job. There are a finite number of people out of the US population (percentage-wise) that can do those jobs, and there are a finite number of such jobs available. To make things worse, information products lose their market value fast in times of economic hardship: when you need money to buy bread, you aren’t going to worry about knowledge; your stomach comes first. Also in the “things get worse” department, India and China are only two of the countries that can steal a large number of our information jobs as more of their people are educated. Don’t forget how many Indians work for Microsoft and other tech companies, and how many Chinese are involved in research. Unfortunately real products that fulfill real, tangible needs are still the king, because they are always in demand if they’re quality goods.

Okay, back to the war. It took people’s minds off the economy until the real estate market ramped up, and when that bubble burst, the whole ugly truth came to life. We had no economy to speak of, it was all propped up by debt, and all that debt was crashing down on us, as some, including myself, predicted. In my article from 2004, I said the following:

… unless we get someone in the White House who is willing to address the problem of debt head-on, I think our country is headed for certain disaster.

Fast forward to 2008. At the end of September of that year, I laid down my thoughts about the impending economic crisis. I was saying pretty much the same things I said now, except I approached the problem from a different angle. You see, we hadn’t yet elected Obama. Later that year, my wife and I, along with many other people, voted for him, because he was better than the alternative, and we hoped he’d do some good.

While the jury is out on that last part, and part of me says I should just sit back and wait to see what he does with his presidency, part of me goes back to the problem of debt and wonders if he’s tackled it head-on, like it needs to be handled. Unfortunately, he’s headed in the very opposite direction. He’s going to put our country into yet more debt in order to keep stimulating the economy. All this stimulating makes me wonder what status quo the government hopes to achieve. Just what state of the economy do we want to return to? Where do we want to go after we’ve spent all of that money? These words from Jim Kunstler say it best:

“… to what state of affairs do we expect to recover? If the answer is a return to an economy based on building ever more suburban sprawl, on credit card over-spending, on routine securitized debt shenanigans in banking, and on consistently lying to ourselves about what reality demands of us, then we are a mortally deluded nation.”

So, we’ve been going into more and more debt, for years and years, propping up a sick economy that has no more manufacturing backbone to stand on its own, and we’ve never taken our medicine. The US economy is like a sick man who’s hyped up on speed and other crap to keep from crashing into a bed and going through a proper recovery from a serious bout of the flu. It can’t go on forever. It has to at some point end. It doesn’t make sense otherwise. Like I said in an article from February of this year, there will be an ugly third act, where the fat lady will sing and the curtains will come down, and believe you me, it’s going to be a doozy.

Will it have to do with the severe de-valuing of the dollar and cause it to be replaced as the world reserve currency? Possibly, since some countries out there, like China and Russia, are already calling for a new global currency. I think there will be more unrest beyond the dollar debacle. And who knows, perhaps behind the scenes, that was the plan all along: bring on a crisis where bargains are to be had for those with the money to get them, and the sort of economic unrest that would make it easier to move certain pieces of the big puzzle into their place.

Our economy: a very distinctive photoplay

I found this photo of a truck advertising the Rialto Theatre on Shorpy. What perked my interest was the juxtaposition of the truck in front of the US Treasury Building. Although the photo was taken in 1925, it’s somehow applicable to our times.

Rialto Theatre truck in front of US Treasury, 1925

Doesn’t it seem strangely non-coincidental that a photoplay/movie truck would find itself in front of the Treasury building, particularly when you consider what economic times we’re living in? I for one have been feeling like we’re watching a theater performance every time I turned on my TV in recent months. Politicians and government employees and suits from the Federal Reserve (which is separate from the US government) and CEOs have all paraded in front of the cameras and wept for the state of our economy when they themselves were at fault for its state. They’ve been crying crocodile tears and promising to make it all better, and we sat there mesmerized, hoping for a savior.

We had the drama of the economic downturn, then the drama of the election. The first act is over. Now we await the second act, which includes a bonus appearance from a fantastic pork-barrel stimulus plan guaranteed to make all the Washington hogs cry out for joy. I don’t want to spoil the plot, so I won’t tell you what I think of it, but it’ll involve a lot of work from the US Treasury building in the photo above. They’ll need to print a lot of Monopoly money to finance it all.

At any rate, this is what I think of the economic crisis. And this is what I think of the way companies are treating their employees nowadays. Finally, this is what I think of the problems car companies are having. Call me the guy from the nosebleed seats who thinks the show sucks and keeps throwing peanuts at the performers. Maybe I’ll get booted from the theatre, but at least I’ve spoken my piece.

Just remember, there will be a third act…

Photo used courtesy of Shorpy.

Condensed knowledge for 2007-09-19

A bit of a health theme to this edition of condensed knowledge:

  • A new CPR technique was discovered. It’s called OAC-CPR (Only rhythmic Abdominal Compression). As its name implies, you only press on the abdomen, eliminating the risk of broken ribs, mouth-to-mouth, and fatigue from pushing so hard. Definitely worth looking into this!
  • Prozac found in the drinking water in the UK. Apparently so many people are on the anti-depressant in England, that it can now be found, diluted, in the water supply, after having passed through their bodies, into the sewers, through the water treatment plants, etc. Although the “experts” are saying there’s no risk, I doubt it. I mean, this is a drug, found active, in the water supply!
  • WD40 turns out to be a great help for bad joints. Despite the precautions written on the cans, rubbing it into the skin was of tremendous help to a man suffering from joint pain. Not sure that I’d recommend this.
  • Aspartame is the behind the spike in suicides for teen and pre-teen girls. Apparently, it’s a powerful mood-changer — it causes depression. Something to think about the next time you buy your children something with Nutrasweet or Aspartame as the sweetener.
  • Exercising in traffic is bad for your heart. Now that’s something I’ve known was wrong for some time. It just didn’t make sense to me when I saw people running on the sidewalk, next to heavy traffic, breathing in all those noxious fumes. When I run, I want to breathe fresh, healthy air, not someone’s nasty car exhaust. I just couldn’t get why they’d put themselves through something that unhealthy. It turns out the particulates from vehicle emissions decrease our blood’s ability to clot, and restrict the amount of blood that reaches the heart immediately upon exposure.
  • Mobile phones are as dangerous as smoking. So reads a recent headline… People have gone back and forth on the safety of mobile phones for years. Now the EU has finally decided to pick a side and take action. The article’s in Romanian, but what it says is that governments are starting to take mitigating action, first by warning people of the risks, and then by looking at ways to minimize exposure to WiFi radiation. They’re recommending that people go back to using wired Internet connections instead of wireless ones.

Now for some funny stuff:

And some economic discussion:

  • Greenspan on Iraq war, oil link. He confirms what I’ve thought and said for some time. In his talk with Matt Lauer, he touches on the housing bubble and the fiscal irresponsibility of the current administration, but he has no compliments for the Democrats, either. Last, but no least, he says the dollar may be replaced by the euro as the reserve currency of choice.
  • Transparent Investing: what your broker doesn’t want you to know. Here’s a site that offers a purportedly frank discussion of index investing. Definitely worth a look.

Get smart about money in 135 minutes

Two easy steps are involved with this:

  1. Take 90 minutes to watch Dave Ramsey’s video entitled “Dumping Debt“. It was posted to YouTube in 10-minute segments. Here they are: Part 1Part 2Part 3Part 4Part 5Part 6Part 7Part 8Part 9. This was possibly posted without Mr. Ramsey’s permission, so please consider purchasing the DVD from his web store. (via Get Rich Slowly)
  2. Take 45 minutes to watch Paul Grignon’s video entitled “Money as Debt” on Google Video. Trust me on this. You will be shocked. You will have your eyes opened, and then you’ll realize what makes the world go ’round. (Cristina, thanks for pointing this out to me!)

Since both of these resources were posted online at full length, and I’m not sure if they were posted with or without their authors’ permissions, you’d be smart to watch them now, while they’re still available. I do not endorse use of copyrighted materials without permission — and to be fair, I don’t know that’s the case here — but I did want to share this information with you. If the videos should become unavailable for some reason, then please consider purchasing them. They are worth your time and money.

Talk about screwing up

I get digest emails from the Economist every Thursday, on politics and business. Two things caught my eye in today’s edition.

  1. Chrysler appointed Robert Nardelli as its CEO. This is the same guy that left Home Depot after employee and investor dissatisfaction with his management and personal style, with a severance package worth about $210 million. So the guy pisses off people at Home Depot left and right, is run out of the company, but gets hundreds of millions in bye-bye pay… and then Chrysler hires him? Isn’t Chrysler supposed to be in trouble as a company? What do they see in him?
  2. Trump Entertainment Resorts reported a second quarter loss that was more than double that of last year’s. So they’ve been losing money all along, just like all of the other business ventures run by Trump, and yet their share price surged when they released their earnings report?! Are the investors sane?!

I’m going to rant a bit now, because I’ve wanted to say this for a long time. Donald Trump has to be one of the most overrated businessmen ever. On the whole, his career and life are an exercise in ridicule.

Take business: for years, he’s managed to do poorly in his ventures. He’s had a few successes, but on the whole, he’s run project after project into the ground. The ones that are still standing are so heavily in debt that they should be dead by rights. Yet investors continue to sink money into his ventures in spite of all evidence to the contrary. The guy cannot run a business in the black. He’ll run them all in the red, and he’ll pay himself tens of millions while his companies wither away.

Take life: he managed to get a TV show that was a hit with the general populace — that in itself was incomprehensible. He, the clueless, poorly performing CEO, dared to dole out business advice to others, and to act as a role model for other businessmen. If Trump is a model for American business and leadership, then God help us, because we’re headed for the crapper!

Take style: the man looks like he’s got a dead cat on his head. Over the years, he’s persisted with that cockamamie hairstyle to the chagrin of decent people everywhere.

Trump seems to be rubbing it in our faces: he’s ridiculing us. He may be saying something else, but his actions say, “Look, I’m going to thumb my nose at all of you. I’ve got you all eating out of my hand even though I can’t run a business to save my life.” In spite of this, people clamor to kiss his behind and stand in line to invest in his businesses. I don’t get it.

It seems to me that greedy losers do best in modern business, and Americans on the whole love to celebrate them. The two people I mentioned in this post are just a few of the guilty parties. But then, is that any wonder when almost every CEO has ridiculous compensation packages regardless of their job performance, and when companies (especially those that deal in non-physical assets) are stupidly overvalued? I think we’re headed for the crapper, and Trump and others like him are the icing on the cake that’s going to give us the runs.

The US has a negative bank balance of what?!

Stumbled onto this entry on Vinnie Lauria’s blog, listing the bank balances of various world countries. At the bottom of the list… the US of A. Our bank balance: $ -829,100,000,000. Say what?! Yes, according to the CIA, so it’s got to be true.

How about the US Budget? How’s that? Well, according to this chart, compiled with data from the Congressional Budget Office, our 8 years with GW Bush have been wreaking havoc on the budget.

Not really comforting news, is it? And we want to keep spending how much on the Iraq war, in order to bring “peace and stability”, and oh yes, let’s not forget, “democracy”, to that region? Isn’t it about time someone put a stop to our runaway spending?