Bernie Sanders on Occupy Wall Street

Sanders discusses how the fed could have loaned money to small businesses and people who needed it instead of bailing out banks.

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Fewer Bank Branches

As we look at debit card fees, it seems that big banks like Bank of America and Citibank are scrambling for methods to drive profits. Having already laid off workers, yet paying massive salaries and benefits to board members, even after bailouts, it seems that few will feel sorry for their plight. 

What is so interesting is in this case there are so many better options. If you visit a site like Deposit Accounts, they give you a great listing of some of the options available to you for both checking and savings accounts. One of my personal favorites that has held strong for many years is Alliant Credit Union. 

One of the big changes that is great for consumers is there is rarely a need to actually visit a branch anymore. You can easily deposit checks and get help without appearing in person. For me, it was a little scary not being able to visit a branch, but now some of the internet banking sites are truly awesome and easy to use. For added security, sometimes it is better to have a 2-3 different banks, and what is nice is it is easy to tranfer money from one bank to another free (but check their terms). Ally bank has been known to be great with speedy and free transfers.

What I fear is coming soon is more layoffs to branch employees as consumers transition away from visting branches and do all their banking online. A behemoth like Bank of America or Chase may soon find their problems are magnified as people move away from branches for which BOA and Chase have massive investment.

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Whose Default is it?

As so many eyes have been on Greece, there are a couple of other default risks that people may have overlooked.

On Monday, S&P downgraded Belarus, and expressed concern they may not be able to make their payments. Already in May of this year (60% currency devaluation), Belarus experienced record inflation. They have been able to get some loans from China and some ex-Soviet states. 

It seems that Ukraine may be having trouble paying their debts, and a default may be eminent. A big warning sign is their treasury has stopped the flow of funds to the local level just so they can make their debt payment.

And for Greece having increased their debt by $63 billion in just 3 months, it seems apparent they are moving backwards, not forwards, making the likelihood of continuing loans from the EuroZone less likely. Most economists seem to agree there will be a default. Now it is a matter of how messy it will get and if it will bring the dreaded "contagion" where other EuroZone nations or banks are brought to the brink of default as well.

Volatile times. Interestingly, in France the Socialist Party won control of the legislature for the first time since 1958. We may be seeing the pendulum starting to swing the other way politically as governments face increasing pressure to regulate investors and decrease the volatility. And of course several countries like Spain and Italy have now banned short trading positions.

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Boom and Bust and Goldman Sachs

Here is a trader talking rather candidly about how the markets will crash and how Goldman Sachs (and others) rule the World. Previously, we talked about the deep involvement of Goldman Sachs in the Greek debt. And as Greek defaults (most now agree they will) I have feeling we will be hearing once again about Credit Default Swaps, and Goldman betting against their own investors through hedging. 

While I will not pretend to be a professional investor, my advice right now would be something like this...

Because we are in an unregulated boom and bust cycle, reminiscent of the times before the Great Depression, there are going to be a number of shocks to the system, and we will see a continuance of large swings in the markets. As I write today, the Dow Jones Industrial Average is at about 11,000. It crashed pretty hard last week, and if you bought stocks then, you could sell today and have made 5% or so in just a week's time. As Europe crashes, there will be additional shocks which are buying opportunites. Look for the Dow to drop below 10,500 or 10,000, and that is likely yet another opportunity. It also is quite possible we could see the Dow drop below 8,000, and that would be an even more excellent opportunity to invest in something like SCHB, a free ETF from Schwab.

So long as governments fail to get together and regulate, there will be a boom and bust cycle for some time. I don't like it, but I only write as an observer. These are dangerous times, and it is important to be watch and be aware of options. As the trader in the video predicts, there could be some massive losses of people's savings, and big firms like Goldman Sachs don't care. They are there to profit from opportunities, even if those opportunites are a result of manufactured fear or even purposeful manipulation of governments.

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Federal Debt and Tax Brackets

The below graph speaks for itself. As taxes decrease, federal debt increases. Some of the most stable times in our economy were when taxes were higher. What this chart misses is consumer debt which has also risen. So with taxes so low, both federal debt and consumer debt are at dangerously record levels.

 

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