Archive for the ‘Finance’ Category

Nino Brown, C.P.A

In Finance, Humor on April 17, 2009 at 3:17 pm

During these brief months, I have had the distinct pleasure of experiencing this here recession from all angles. Whether it be personal, or from friends and families’ point of view, I think I can safely say that A) it sucks & B) it won’t last forever. But the most unique perspective I have heard thus far is that of your local street pharmacist. And by street pharmacist, I mean your friendly neighborhood hustler. And by hustler, I mean the reason Mexico is in turmoil currently. And by Mexico I mean, ah screw it, drug dealer. I got the inside scoop on how the down turn in the economy has effected their business and how the North American, Chrome Rimmed Hustler has averted extinction and adapted to his / her rapidly changing habitat. Lets watch.

It was interesting to find that one of the major consumers of the drug dealer’s thriving enterprise were upper middle class and affluent neighborhoods. Legend and stereotype has it that drug usage runs rampant in poor and underprivileged neighborhoods. Legend also has it that neighborhoods that are affluent / being gentrified have an overabundance of the primary resource necessary to stay afloat in this illicit business; MONEY!! The major difference between these affluent neighborhoods and their poverty stricken counterparts however is that they also possess the primary resource necessary to control the lawlessness that consumes poorer barrios; MONEY!! Think of it as a controlled chaos / organized confusion of sorts. The crack heads are most certainly still there but they are lined up, single file and they are not shooting up in the crack house but merely experimenting with recreational amphetamines at the Gerald & Tammy Foundation & Open House (G.T.F.O.H, and yes it means something else.)

It was hilarious to find out how Lehman Brothers shares had faired at market close from my subjects (they were concerned for my future financial stability since I was employed there, and theirs as well for consistent clientele manifested primarily in the “Good” part of town.) What was not hilarious however was how serious both my test subjects were about managing their finances. In order to fly under the radar when engaging in illegal activity, your accounting savvy must be second to none. If the Federal Reserve and its counterparts were half as adept as Bernie Madoff’s accountant, the streets would be literally littered with Lire as we speak. Both these guys actually gave some very sound advice, which I will now share with you:

1. I Don’t See Nothing Wrong With a Little Credit Balance on Your Bills.
Yes, a credit balance. There are certain months that you have extra cash and nothing to spend it on. Why not spend it on your light bill? Sounds crazy right? But look at it this way. Do you run out of gas before you refill the tank? Why not pay your bills ahead of schedule and have reserves for the months your commission check looks nervous or when holidays and emergencies arise (and they will?) A huge but undervalued tool in wealth building rests in expense management.

2. Buy in Bulk
. One of these guys had a love affair with Costco that only a ninety seven year old, coupon clipping, Titanic surviving, great grandmother could appreciate (salute that woman). I can only imagine this love affair with three hundred spools of Brawny paper towels was not just to save money, but also harbored an opportunity cost component (as in the time not spent in the mislabeled “Dried Foods” aisle could be better served on tasks of dire relevance.)

3. Save it When You Have It.
Of my two test subjects, one has since sold his extremely luxury vehicle and moved into more modest accommodations. The old school Republican of the two (and I mean that in a fiscally conservatively good way) has since cashed in one of his CD’s (certificates of deposit) at point of almost maturity (the fees were of no consequence), purchased, gutted and remodeled his new abode, complete with an island in the kitchen and now resides in a neighborhood with his clientele that I will one day be able to afford if I work really hard. I can’t believe my parents had the nerve to raise me right!

With that said, I have comprised a small but effective list of some ideas to help you in your time of need (if you’re smart then you realize that your time of need occurs way before your time of need occurs.)

Hypnotic Brass Ensemble –
If good music is your sort of thing, you can find tons of places in the city for free entertainment. Start on 42 & 7th where this group of young musicians from Chicago perform free for passer bys. If you can’t afford to pick up a cd (the best 10 bucks you’ll spend in a while), then just circle the block until you have heard every single song, then go about your business. It’s feel good music. And don’t worry, when the Variety Summer Guide of free events come out, I will forward that along also.
If you are currently unemployed or just looking to transition, this website basically does a majority of the work for you. They place your resume in front of industry specific search engines (who knew there was more than 5) in addition to the majors (Monster, Yahoo, Hot Jobs, etc . . .) Now I know what your thinking; “Why should I spend money when I don’t have any? Simple. Buy in Bulk (see # 2 above). You are paid for your time invested so if you factor, then pro rate the amount of time spent rifling through jobs in front of individual search engines daily, the service pays for itself in one to 2 of your man hours. It’s a similar concept to sponsoring children, only you don’t have to give up the 39 cent cup of coffee Sally Struthers requested (39 cents for coffee? How old was that commercial anyway?)

IPodripFor all those who have an ipod and are looking for a way to retrieve files from your ipod and copy it back to your desktop, here’s a link to Ipodrip. This is a demo version but you can buy the full version. This doesn’t really save you money but it’s cool and Apple products are friggin’ expensive so here’s a freebie (don’t tell Steve Jobs I sent ‘cha.) And if you already knew about it then why didn’t you share?

There you have it. Everything you need to get through this recession (music and opportunity). And for all you young whippersnappers aspiring towards a life of crime, unless you enjoy paying your bills ahead of schedule, saving money, and purchasing tons of toilet paper, stay your ass in school!

What recession proof tips / hints do you have for your community (drug dealer inspired or not?)


Out on Bail

In Finance on October 14, 2008 at 10:31 am

What would you say if I told you I wanted to name my first 2 children Ball Sack and Ass Rash? Would you agree with said nomenclature? Think about it for a second. I’ll wait. Still not feeling those names? Thought so. There is absolutely nothing wrong with those names other than the negative connotations commonly associated with their usage. It doesn’t matter that my little Ball Sack may grow up to be President of Ball State University. Or that Ass Rash graduates from John Hopkins and eventually discovers the cure for the common Hernia. You would probably always have a problem when you heard their names and rightfully so. Now what would you say if I wanted to put forth an economic stimulus package and I called it a Bailout for Wall Street? Now who do you commonly associate with the word “bail” and “Wall Street”? Most likely, convicts and rich, greedy individuals. Now would you be in favor of said package? Think about it for a second. I’ll wait. Thought so.

Much has been made of this 700 Billion dollar bailout and I will try to explain the causes for it, as well as the benefits and disadvantages as best I understand it ( I already see you guys falling asleep but stay with me for a minute)*.

The Simplified Explanation – It works like this; Investment banks have incurred tremendous debt due to the depreciation of mortgage backed securities (tremendous debt is the understatement of the year). Investment banks gambled that the value of these securities tied to mortgages would appreciate over time, which is typical of the housing market and the basis for which most investments are made. Not a far fetched concept at all. Sub prime loans, which egregiously permitted banks and homeowners to profit from increasing property values, were then made available to high risk individuals who ultimately defaulted on these loans (this is where government deregulation that allowed these loaning practices to exist comes in). The rationale was that banks would profit when they received more money in fees from all these new loans and homeowners would benefit when they sold or refinanced at more favorable rates once the property appreciated. As mortgage after mortgage fell into foreclosure due to the inability of the homeowners to repay (caused by volatile adjustable lending rates), lending markets grew apprehensive. Lending qualifications grew more stringent to ensure new loans had an increased likely hood of being repaid. So basically, if your credit score currently doesn’t match Doogie Howser’s S.A.T score (math, not verbal), make your self comfortable in your momma’s basement ‘cause you aint going nowhere.

The “Are You Smarter Than a Fifth Grader” Explanation – Assume you asked your friend Larry the Loan Shark for 50 bucks to buy a comic book. You told him you could sell it for 100 and pay him back 75 and he is all for a profit so he agrees. Since every one has been going crazy over comic books lately, you are confident that you will make Larry’s money back plus a profit. To spread out (leverage) your debt responsibility so you don’t incur the full loss in the event you can’t sell the comic book, you decide to sell partial ownership of this comic book to your other boys, Moe and Curly. They agree provided they can sell off their ownership at any time. As time progresses, you and Larry notice that less and less people are capable of buying this comic book so the comic’s value becomes undetermined. Larry starts to worry that you will not be able to pay him back. He loses confidence in you and is now skeptical of loaning money to anyone else to buy comic books, or anything else for that matter (Larry also wants to break your legs). Moe and Curly also lose confidence in your ability to sell the comic and sell their ownership back to you. Now you have to bear the full burden of the comic book’s value, or lack thee of. Although it may have value in the future, no one knows for sure what that value is. In this scenario, you are the failing investment bank and Larry would be the credit loan industry. Moe and Curly would be investors in the stock market who are now screwed and scared to death of you and anyone like you (and also want to break your legs).

So what are the benefits of this bailout and will it work? The plan is to have government use tax payer’s monies to buy these mortgage backed securities from banks and once the housing market regains stability, the government will sell these securities back to banks at either a net profit or a minimal loss. According to our brain trusts on Capitol Hill, allowing the market to persist under current market conditions will cause a recession, tremendous job loss, and cripple the entire financial universe (“the sky is falling, the sky is falling!!”). No one currently knows the value of these securities which is what makes this all so risky but since the housing market is cyclical, one can assume it will work. Or can one?

There are so many things wrong with this scenario that I don’t even know where to begin. Let’s start with the fact that the monkeys who are trying reform the system, and will undoubtedly inject cronyism into the process of placing value on these assets (to my understanding, Goldman Sachs has already been commissioned to valuate and manage these assets) are the same no talent ass clowns who are partially responsible for this mess. Goldman Sachs and other investment banks lobbied the SEC to release them from rules put in place to minimize risk exposure and hold reserves. This is EXACTLY what caused investment banks to fail! Does the word irony mean anything to anyone on this planet!? This is about as rational as having a former Goldman Sachs CEO who used to earn 40 million in annual salary (less bonus of course) lobby for executive compensation reform. No one would stand for it right? The last 3 CEO’s of Goldman Sachs, along with Paulson, have all ended up in government positions, so as these guys play musical chairs between corporate America and government, we all grab our ankles, assume the position like Marsellus Wallace, and wonder how this could have ever happened. We may as well appoint Usama Bin Laden to oversee the construction of the new World Trade Center.

Another reason this bill may not work is because the current sell off of stocks is fear driven and no amount of government intervention can revive investor confidence. The market is correcting itself and really should be allowed to do so. Investment banks that were liquid and making money in non mortgage related sectors of their businesses have since lost value on the open market, merged with other banks, and even filed for bankruptcy, which really makes no sense. If you are in a dual income household and one person loses their job, you may have to tighten your belt but you don’t commit suicide. That is what we are doing now. Investor fears are the driving component of this and I believe it is partly due to the media (you knew it was coming). Everyone in the office has at least 3-4 different news sources from which we extrapolate data, and formulate our own ideas. We could all run our own network right now. Fears spread faster when you are whispering in the collective ears of 40 million people. When Jim “Mad Money” Cramer has to retract and apologize for a statement because it may spark a run on the market, it’s time to stop paying attention so intently and behaving irrationally.

All the rumors circulating currently are not 100% true. Banks have not stopped loaning to each other. They are however charging higher interest rates because they are extremely skeptical of repayment. Up until very recently (as in the past 2 days), the LIBOR rate, which measures and determines interest rates banks charge to each other worldwide (including mortgages) was not high at all. Banks were still loaning each other money. The trouble mainly resides in non bank financial markets. Commercial banks are still very liquid. This is blatantly apparent by the fact that every failing or troubled investment bank has merged or been taken over by commercial banks (Bear- JP, Merrill – Bank of America, Lehman – Barclays, etc).

This is where it gets personal for me. Everyone really needs to quit bitching and moaning about the bail out being funded by taxes. Tax payers (as in all of you) have been paying taxes for years and had no idea or control over how your prior offerings were allocated. How come you are all of a sudden vigilant citizens who know what’s best for the economy? It is in fact your money and you do have every right to decide how it gets spent, except for one thing; you had no idea how it got spent before so please, shut the fuck up! Just remain socially comatose and allow your elected officials to continue to act as executors to your estate. The funds in your bank accounts, 401K’s and taxes paid are all managed by individuals you have never met before and you obviously didn’t have a fucking clue what they were doing with it. It is because of your indifference and gluttonous ways that we are all suffering. Is it any surprise that the fattest country in the galaxy is suffering from taking on more than it can carry? Please put down the 5, 5 dollar, 5 dollar foot long and pick up a friggin’ book already! We live on imaginary money and we are all fine with that. Whatever you make annually, you will probably incur at least 3 times the amount of debt, just because. This system is built on debt / credit. You want a degree and a house? That’s gonna cost ya. You wanna keep up with the Joneses? That’s gonna cost ya. Will you die without a house and a Benz truck? Probably not but who am I to tell you how to live? You have this “pursuit of happiness” spiel indoctrinated in you and you just so happen to define happiness the same way your neighbor does; with heated leather seats and dual sun roofs. Do you realize who sold you your American dream? Fannie MAE and Freddie MAC (reminiscent of how men will never be able to express their eternal love without dumping major cash in the DeBeers family’s pocket). I wonder why that is? Do we really have to collapse under our own weight before we start living below our means? Taking prior human behavior into account, the answer to that question is a resounding “Move to Canada while you still can!”

Government (as Governor Palin would say), you guys have got to be kidding me. You are really utilizing the current economic crisis caused by shitty legislation on your behalf as a platform for partisan agendas? You really took 2 days off for the Jewish holiday before amending the bill that you initially proposed, then voted down while your constituents lost billions daily? You really can’t figure out why the market has lost confidence in you and is non responsive to your attempts at correction (the Paulson Effect)? Are these actions not the moral equivalent of your behavior during Hurricane Katrina? Your congressional oversight committees are staging political theatre and making pompous statements to former investment banking CEO’s like “In case you haven’t figured out your role here today, you are the villain”. I’m sure in a few years I will see someone who sat on that committee running for office making claims like they “took on the greedy investment banks” in some hackneyed political ad. Over compensated CEO’s may be the proposed scapegoat for your theatrics but we the people are the only ones who will ultimately suffer. The CEO’s will be ok financially. What about the security guards, mail room employees, food service employees, and small business owners who also rely on corporate America for employment? Me personally, I have lost my bonus from prior years, my job in a few weeks potentially (thank you NAFTA), and the promotion I worked for all year and was scheduled to receive in a month. So if you are asking why I am so livid, there is your fucking answer! Thanks to all you assholes, “My dude, I’m a need a job” (no relation to the president of Iran)!

* I ask that no one make any financial decisions based on any information on this blog for I am not a Certified Financial Advisor and I probably don’t have a full grasp of this complex situation. Please consult a trained professional at Lehman, uh, I mean Bear, uh, I mean Merrill, on second thought, I may prove myself to be Adam Smith by the time all this is over (look him up, I don’t feel like explaining).

PS. All this was predicted by the very idiots it affected the most. Look at the sources in this article dated 2005.

P.P.S. What AIG execs are currently doing with their bailout funds.

Zero Credit and No Money Down? Approved!!

In Finance on September 18, 2008 at 2:26 pm

As I sit in my cubicle watching Rome crumble before me, I can’t help but feel like the captain of the Titanic. Amidst the current chaos that is the financial industry, a certain sense of calm envelops me as I watch my coworkers pray to Allah for some sort of reprieve. My peers justifiably have concerns for their future employment as rumors of our potential takeover / sell off spread like wild fire. All these unfounded rumors only fuel anxieties but folks enjoy torturing themselves and they are buying into everything they hear. By noon, we had been acquired by Goldman Sachs and the lights were turned out due to lack of capital. By close of business day, we had stopped trading and Bank of America was in the forefront of our takeover, although Wells Fargo was also a contender. I am sure by the time I arrive tomorrow, we would have been acquired by McDonalds and big Macs would have become our primary revenue stream. Pa da pa pa pa, I’m lovin’ it!

I currently work for an investment bank whose name cannot be revealed (rhymes with semen) for I have signed many non disclosure agreements and divulging information could result in termination (not that I am privy to any insider information anyway). Given current market conditions however, my termination, along with thousands more looks eminent. We, along with the rest of the country, have been sucked into the current real estate crisis and have paid for it handily. Bear Stearns was the first investment bank to collapse and the main indicator that our economy was rapidly approaching recession. Coupled with the troubles of the MAC & MAE families (Aunt Fanny, Uncle Freddie and little baby Indy), there seems to be no end in sight.

We live in the United States of Denial (USD) and a recession will never be publicly acknowledged until we are all naked wearing barrels and using ration tickets for meals. Acknowledging economic downturn may certainly exacerbate the issue but what are the benefits of not recognizing it exists? That course of action all but guarantees the problem will compound at an annual growth rate of 3 holy shits per day. Hindsight is 20/ 20 but I am certain steps could have been taken to avert the current predicament. Common sense could have seen the housing collapse approaching a mile away. When run down brownstones are being sold to low income families for 800 thousand per unit, one can reasonably deduce that a loan or two may go defunct. Far be it from me to tell banks who to loan money to but if Tyrone Biggums enters your establishment requesting a 450 thousand dollar home loan, assume he will not be capable of paying it back (and that a crack party is all but certain). Me thinks greed played a major role in all of this. As I am currently a corporate tool however, far be it from me to throw stones for corporate America keeps my cable on. Sidebar; It is interesting that the funds used to start this company 158 years ago came directly from cotton and the slave trade. Can’t help but wonder if karma is rearing its ugly head. Sidebar complete.

So why am I calm you ask? I could be unemployed in a few weeks in a shitty job market and my savings, or lack there of certainly will not sustain my existence through any extended periods of time (as in longer than 2 weeks). Part of me honestly doesn’t give a fuck. I have been unemployed before and I did not die nor get ill (I also didn’t have much sex but that’s what internet porn is for). As a matter of fact, I only seem to require a doctor when I have health insurance so I honestly wonder if I give into my inner hypochondriac simply because I am insured. More importantly, I have long been disassociating who I am from what I have and it is amazing what you consider important once you do so. My value is not defined monetarily and does not sway contingent on my account balances. I am who I am and I will continue to do so regardless of employment. Secondly, I have no children, pets, mortgages, car payments, credit cards or school loans. If I can’t pay for it cash, I truly don’t want it! That only leaves bills and they weren’t paid on time before anyway so what’s new?

I realize we all need money to survive . . . or do we? Money is a tool whose value is realized only when spent so is it really a necessity (I know you all think I’m crazy). The value of time far supersedes the value of money so as long as I have time, I will always have a valued commodity. When I run out of time, it really won’t matter anyway because I’ll be dead. Everything else will work itself out at that point. Wait. What? We’ve been acquired by Chuck from the mail room! Hazza!

UPDATE! We have since filed for chapter 11. The party is officially over. I have taken my belongings home and I am patiently awaiting unemployment. There is no coming back from this. Allah has forsaken me.

UPDATE 2! We’ve been acquired! I have a job (maybe). Allah is on my side!