It’s all greek < How the US owns the Greek crisis

It’s worth remembering that while people criticize Greece and their socialist aka “communist” government for overspending and debt, while they’ve not been in great shape since the late 1990’s, all the US Media coverage conveniently omits the fact that is was the illegal activities of the too-big to fail US Banks, and the fraudulent bundling of worthless US mortgages… that caused the 2008 crisis that took Greece down.

The NPR reporting of this is woefully inadequate, the LA Times at least mentions it.

Two small deposits

I’ve often commented on my absolute disdain for the US Banking system. I’ve been poking around with what I can do to remove some of the barrier to the time delay and inefficiency in the system.

I used my online banking system to add the bank details of a friend. I did it by adding it as an “external account”, providing the ABA routing number and the account number. It informed me that two small deposits would be made into the account, and once I had the details to come back and confirm.

I emailed my friend and said I’d done it and why, and asked to be notified when they arrived and what they were. Once notified, I confirmed with my online bank and immediately did an online funds transfer of $100, it arrived overnight. Next day, I initiated a transfer from my friends account of $50, again, it arrived overnight. I then did another transfer of $50, no problem.

So, while there is no way for me to do any formal set-up or account management, without a single signature, and as far as we can see, no way for my friend to stop me crediting, or more importantly debiting from their account. I’m hopeful that a call to the bank could stop it, surely?

For the record, we bank at completely different banks. Yep, the US Banking system truly sucks, 3rd world at best of function and performance. Out of this world on profits though…

Banking like it’s 1985

Every time I deal with my UK bank, I’m reminded how utterly useless, inefficient, and expensive the US Banking system is. I just paid my UK credit card from my UK bank and got this response

The payment has been accepted by the beneficiary’s bank who advise that it will be credited by the next working day.

Yes, I paid it on Saturday from FirstDirect, a subsiduary of HSBC. The payment was sent direct to MBNA Limited(UK) bank, who accepted it and will credit it to my account on Monday.

Old%20Bank[1]I then went and paid my US CapitalOne credit card from my US bank, Austin Texas based Amplify FCU.  The payment process will not be started until banking hours Monday(8am Central), and not received until Wednesday, and if I’m lucky, credited on Thursday…

Yes, I know if I was lucky enough to have a banking account with the same Bank as my credit card company banks with, the payment would be within 24-hours, but that’s just coincidence, not design.

In other news, I set up one of those funky external account transfers this week to a friends account. You know one of those where they make two small deposits, and if you have access to the account, you confirm the amounts to your banking system. After that, you have credit and debit authority on your friends account. Keep banking weird.

A U.S. federal law of 1996 required the federal government to make electronic payments such as direct deposit available by 1999. Shame the rest of the US, ACH backed banking system has caught up yet.

Check’s in the mail

Another frustrating, and wasted effort trying to deal with my FCU over online/electronic payments. I tried to set up an online payment to pay my Attorneys. They gave me all their banks details and double checked they could receive online payments. I went online entered my Attorneys details, it asked for the account number but not the ABA Routing number.

I asked online via chat and then in person while at a branch doing a wire transfer today, both reps from the bank confirmed that when I made a payment, the payment would generate a check; the check could be mailed either to the bank, or to the attorneys office depending on what address I used.

I got back on chat, to keep a record, and ask the agent, Shannon about Bill Payer. She insisted it was a dept of the bank rather than a 3rd party service, gave me a number to contact them along with a 5466 extension. I repeatedly asked for the name of the person who owned the relationship with Bill Payer, she insisted it was a dept and I call them. I called, the extension I was given wasn’t valid. I called the FCU, spoke to Cindy. Asked the same question, she said that extension was internal use only; said it was a 3rd party provider and gave me a 1-888 number to call.

I called, it turns out at least after a long validation that it is indeed a dept. of the bank, or at least that’s what the woman who answered said. She was unable to actually help with a list, frankly either because of my accent, or for some other reason, she kept saying OK sir when I asked questions. Finally I specifically asked if she was an FCU employee, she said she was. When I asked what service the FCU used for their Bill Payer service, she didn’t seem to understand the question, and said I see, OK Sir. I asked again, saying is it checkfree or similar because the FCU wasn’t listed on their website.

So, a wasted effort. It seems the only way I can pay a bill from one bank on Congress Ave in Austin, to another bank on Congress Ave in Austin, is either to write the check myself, or go online, put all the payee details into the FCU bill payer service, which then prints a check overnight; sends it the next day, that the post office gets that night; it gets delivered the next day(if you are lucky); the receiving bank then scans in the check and OCR’s it; and sends via the ACH for 7-day clearing… it’s like the 1990’s didn’t happen…

I really want to be wrong about this and have written to the FCU Vice President – Information Technology and Software Development. I’m afraid otherwise I need to go back to one of the big banks, which be a real shame.

Dust to Dust

Friedman wrote in this Sundays column in the NY Times “Over the years, I’ve seen an America that was respected, hated, feared and loved. But traveling around China and Singapore last week, I was confronted repeatedly with an attitude toward America that I’ve never heard before: “What’s up with you guys?””

Friedman was talking about the way the United States was/is perceived in the lead up to, and since the Government shutdown. It’s well worth a read.

However, in many ways were are increasingly being judged both through the political shenanigans, but also for the lack of progress we are making in almost any other walk of life. Yes, in many ways we are still massively ahead, investment in the country and it’s infrastructure, we are going backwards in real terms.

US Investment

US has hit its lowest level since demobilisation after the second world war because of Republican success in stymieing President Barack Obama’s push for more spending on infrastructure, science and education. Overall this has lead to problems with bridges, and increasingly roads here in Texas being turned back into gravel paths. This caught my eye while speed reading the Financial Times

Kirk Dale, the township supervisor of Marlette, Michigan, has first-hand experience of what it means to spend less on infrastructure. Thirty years ago, he felt his small town was on the rise when Cooper Road, a local residential street, was first paved. But today, Marlette cannot afford the maintenance and has joined a number of small communities that have pulverised their streets and gone back to gravel.
“You make a calculated, rational decision on which mile to do,” said Mr Dale, the township supervisor. “And then you look long-term down the line saying ‘Hey, even if we were to pave this, how are we going to repave this 10 or 15 years down the line?’

Makes for dramatic reading and sets the tone for how things are perceived, but I’ve never been to Marlette. Turns out google maps has been there, but never been on Cooper Rd, but the parts you can see show it’s not like it’s a main street. Check on out on streetview here. Also, I know someone who actually lived on a S Main St, and that wasn’t paved ever. Perhaps the FT team could have researched this a bit better?

Take this link, then click on satellite

Interestingly Google Satellite include this view of Cooper Rd, maybe this is an elaborate message from the heartland to god to save their road?

I digress, what the FT points out is that by comparison, not only is the US getting left behind, but that it is going backward. Why does this matter? Well back to Friedman, its not really how the US is doing that matters. The entire international finance system is based on a confidence trick. The investment in US Government bonds is based on the perception that the US is growing, doing the right things and can buy back or pay off those bonds. Much like a run on the stock market, once everyone gets scared that the US is going in the wrong direction, they run in the other direction.

The FT also notes and I agree

  • Construction projects have taken the early hit as budgets come under pressure, with state and local government building fewer schools and highways
  • Public investment is expected to fall further under almost everybody’s budget plan

The upcoming budget discussions will form a key bellwether for the USA, not only what the politicians say or don’t, but based on what’s in the budget. If they manage to substantially cut public expenditure again, the debt crisis will become more real as the value of US Government bonds will come under pressure.

Perhaps the Marlette field is reminding us of “The wicked borrow and do not repay, but the righteous give generously.” Psalm 37:21; on maybe Psalm 22:7 says the borrower is servant to the lender. Tea party anyone?

ACH – We got ya by the checks

The Planet Money podcast has a great summary of the topic I was frustrated and grumpy over about 15-months ago, the US Payments clearing system, known as the Automated Clearing House. which I discussed in a follow-up comment to this post.

Except, they really didn’t get to the bottom of the problem. I wrote in a comment on their facebook page, here, but figured I’d post my comment here as well.

“I was excited to hear this and actually set aside time to do it via the podcast. Your description of the problems and the explanation of the ACH was right on the “money” but then you let it slip through your hands.

Yes, the US System has a scale issue compared to the UK. But does the US system have problems with credit cards? No. Which is a much, much larger scale. The difference is with credit cards the banks are lending us money, with bank payments they already have our money so it’s in their interest(pun intended) to make it hard for us.

You really dropped the ball when you got to the end of the piece and discussing local banks. It’s as if you accepted that local banks and financial institutions don’t have computerized records, they still pay people to write entries and process checks using ledgers.

Please consider doing a follow up show. I’d be happy to contribute, I have a ton of knowledge and background, I was part of the first online banking project, Pronto at Chemical Bank in the early 1980’s where even then we were complaining about the way the ACH was implemented. I went on to work at IBM, for whom I taught COBOL programming as part of a workshop in Atlanta for college graduates… I can also explain how COBOL is not really needed anymore and why that is to a degree another fallacy foisted on you/us by the banking industry as a reason they can’t change.” not worth the jingle

douchebag[1]If you’ve been following along my various blogs, you’ll know since moving to the US I’ve been totally focussed on getting my credit rating in shape. Despite showing up with a letter of referral from my UK bank in 2006 that I’d been a total rockstar managing the mortgage on a $1.2 million dollar home loan, I couldn’t get so much as a contract cellphone.

Credit ratings are everything. I didn’t have one. So I’ve tackled this over the past 7-years like a religious zealot. Monitoring it, bumping my rating up to 771/748/771 on my 3-Bureau report. Feeling good, Oh happy days I’m in the 10%. As part of that effort I paid off my mortgage, managed payments, used cards I didn’t didn’t need, and only once missed a payment and that was due to a processing error in what was supposed to be the set-up for an automated payment system by my FCU Amplify here in Austin.

Still, no matter. Turns out I’m considering another investment opportunity, and I got a call from Amplify about a Home Equity loan, or Line of Credit. I agreed, applied and sent in all the usual documents. I heard back today the interest rate was going to be almost 1.5% higher than we’d discussed, due to my credit rating being only “674”. How could that be I asked, and then pulled my 3-bureau score and sent it along.

Turns out that Amplify uses Equifax. When Equifax is asked for a commercial rating, it doesn’t use the one it gives your potential lenders, it uses something called the PLUS Score. Turns out this really isn’t the same score, and in my case it’s a whole 60 points off the real score. Seriously. It’s right here on the website. Right there it says “Your PLUS Score is a numerical representation of your credit risk on a scale very similar to those used by lenders.” Similar, not worth the calculation they did to make it up is more like it. Experian themselves use the same bogus PLUS Score. It doesn’t matter which of these services you sign up for, the result won’t be what they report to a lender. You have been warned.

Turns out, that most of the three credit score agencies do the same, yes Experian, Equifax and TransUnion all only provide fake credit ratings when you sign up for their online services. Is it any wonder why people spend so much time and effort gaming the system?

If you ended up here looking for help, I can’t. Robert Palmer has a great video on this.

Hate Mail

One thing I’ve grown to hate in my last 9-years in the USA, and increasingly in Austin as I’ve lived at the same address for 7-years, is the scam and fake mail that arrives at regular intervals.

There are those “official” looking envelopes that include seals, official government like crests and demand attention and immediate opening and often a response. I got a letter today from the Worth Finance Corp. They apparently have offices all over central Texas. They at least got my information from Transunion Credit, who pre-screened me.

Right at the top of the letter it says “It’s true, You are holding a real check for $800.00” and goes on empathise with me and my need to be ready for the “expenses the new school year can bring”. Which only goes to show they know absolutely nothing about me.

19895_10151794977230915_1445898368_nThe letter, with attached $800 check, helpfully included pictures of good looking kids. Inside the horror of the letter and the scam is revealed. You can borrow $800, at a staggering 81.26% interest rate.

Which means it will cost you a minimum of $396 in interest almost half of what you borrowed. If you pay everything on time, you’ll pay back $1194. This is total daylight robbery at a time when interest rates are at record lows. The worst you can do from the credit union I use is 9.5% and I consider that 3x what I’d pay, and certainly for much more than $800.

These letters are no more than scams and fishing trips to lure poor, uneducated , the elderly and needy people in America into into doing something they wouldn’t otherwise do. The sorts of information in these letters includes details which are in most civilised societies considered private, like the amount of the mortgage you have on your house; the status of your insurance etc. In many cases the types of information included is not only private, but would be subject to data protection laws in the UK, Germany, France etc. Not just because it is private information, but exactly to stop this sort of high pressure scam and selling which can frighten those who don’t know better.

I would call Transunion at 1-888 567-8688 but took the risk of doing it via the web – I’m also going to spend some time in the morning tracking down the CEO and send him/her a fake Cease and Desist letter with a fake crest on the envelope.

Labor day (don’t celebrate)

It’s fitting, or perhaps not, that as May 1st is supposed to be International Labor day, we are experiencing modern record lows in employment in the USA, protests over austerity in many European cities, I watched news from Madrid and Greece where the protests were attended by a mix of people and ages, and Italy where there were youth protests and direct action[2nd half, episode 4, HBO Services 4, Love&Rockets].

Meanwhile in Bangladesh, the collapse of the clothing factory is now officially “one of the worst industrial accidents in world history”, already has some 390 dead, with more bodies being dug out every day.

So, reading Thomas Friedmans latest Op.Ed in the NY Times last night while on my bike trainer. I couldn’t really gather my thoughts on the disconnect between Friedman and what was going on elsewhere. Felix Salmon on has done a complete dismantling of Friedmans 401k world, perhaps too literally, in his “The systemic plight of labor”.

The truth of course is a mixture of both. Friedmans metaphoric 401k OpEd is still problematical, where as Salmons response takes it too literal. Both are worth a read though, since they illustrate some of the polarization that is growing by the day.

to Tax or Not to Tax…. debt is the question

Sat watching the BBC News tonight, my heart rate raced a few beats higher as I watch the Chief Accountants from Apple, Google and Starbucks in the UK defend their accounting process which has meant they’ve largely avoided paying UK Corporation tax, and particularly the hapless public policy wonk from, Andrew Cecil.

I’m glad I’m not working at Google in the UK, who at least as far as their management seemed to be concerned, don’t “innovate” in the UK. oops. Interestingly I used to work with Nelson Mattos at IBM, I wonder what he thinks now?

Starbucks came in for some extra questioning since they were paying dividends to shareholders and telling them, their business in the UK was doing fine, while at the same time declaring a financial loss and using the tax scheme, appropriately to shelter their profits from that loss. The BBC News piece is here.

Margaret Hodge, who chairs the parliamentary committee, told the BBC that she thought it was right for customers to boycott the three companies.

As entertaining as this was, and at first watch/read I was inclined to agree with Margaret Hodge over a boycott. After 15-mins of reading revealed a much more open/shut case that the MP’s need to deal with, that effectively shows Ms. Hodge protestations to be little more than a magicians use of mis-direction.

It was Hodge’s peers in the Labor Government which she joined in 1994, that handed over the water industry to the private sector. Where was the rambunctious questioning, hand waving, pointing and questioning while the water industry was moving all it’s money overseas, and steadily doing a better job at avoiding tax?

Thames Water have paid shareholders handsomely, moved money offshore, and burdened their company with so much artificial debt that according to Moody’s, the credit rating agency, says they can no longer afford the debt aka investment needed to do the infrastructure projects like the new $4.1-billion Thames bypass tunnel, proposed to stop sewage draining into the River Thames.

As Will Hutton’s article in the Guardian sums it up the best, Thames Water – a private equity plaything that takes us for fools. Let’s see the politicians doing something about this, and avoiding asking the taxpayer to either underwrite, or bailout Thames Water before going after the “tech titans”, otherwise these hearings remind me of the barn door, shut after the horse has bolted.