Four years ago, police started evicting Occupy Wall Street protesters from Zuccotti Park in New York City.
Justin Wedes remembers it well. It was one of several times he was arrested for protesting as an Occupy Wall Street leader.
“I think there’s a general sentiment, even amongst many on Wall Street, that our current political and economic system isn’t working,” says Wedes, who has now returned to his hometown of Detroit.
The Occupy tent cities are gone, but the movement has had a lingering effect on American politics — and even Wall Street itself.
Small, local businesses lack access to capital. Banks will place restrictions before giving loans, like asking for collateral, wanting to see years of revenues, or asking for personal covenants. And then venture and angel investors aren’t interested in the low-rate returns hairdressers, restaurants and furniture-makers can offer; they want “high growth.”
That is why small, local businesses generally stay as small, local businesses. But what if small businesses could reach over the top of those market failures to the general public and investors who are willing to suffer the relatively low returns on offer? That might open up options.
If you happened to have had a bad day during the Great Recession, the odds are you’re rebuilding your credit. If your credit score took a major hit, or if you’ve filed bankruptcy, it’s quite possible that you’ll get an offer in the mail from a company that wants to help you on your financial ‘comeback’. The company will tell you they “think a loan should be convenient and on your terms”, and they’ve “changed the way you borrow money”. Rocky Balboa’s face, strong and determined, is prominently displayed in the advertising copy.
You can start your comeback by filling out a simple application for a pre-approved $3,500 loan. This money will be deposited directly to your bank account. The rate may be steep in the beginning, but it will decrease as you show your ability to make payments. After all, there is a risk to providing you credit, but the company wants to help restore you as a respected member of the financial community.
The company dying to help you is RISE, a brand of Think Finance, who packages itself as an ‘emergency non-bank lender’. This is just double speak for a sophisticated form of predatory lending. The APR on their loans range from 36 to over 360%. A recent offer carried an interest rate of 199%. For the privilege of receiving $3,500, you’ll pay back $10,800 in payments of $289 made every two weeks. Instead of Rocky Balboa, their promotional icon should be Tony Soprano.
Our friend Adam Lomax appeared on ‘Mike The Focus Coach”s web show. Check it out!
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…the referee at the center of the most controversial call of the season so far is in fact a vice president for small-business banking at Bank of America in California.
IRS data suggests that, globally, U.S. nonfinancial companies hold at least three times more cash and other liquid assets than the Federal Reserve reports, idle money that could be creating jobs, funding dividends or even paying a stiff federal penalty tax for hoarding corporate cash.
Do the ‘Job Creators’ really need more cash? – Ed.
Posted in News and Views
Tagged banks, business, cash, Depression, economic crisis, economy, entrepreneurs, ethics, financial crisis, financial institutions, funding, jobs, money, Recession, small business
Typically, eminent domain has been used to clear property for infrastructure projects like highways, schools and sewage plants. In this case, supporters say, the public purpose is served because communities battered by foreclosures have seen tax rolls decimated and services gutted and have suffered economic blight.
While it’s the latest new thing to vilify public employees and their pensions, this little known and understood threat is doing just as much damage:
In 2002 a little-known but powerful state agency in California and Wall Street titans Morgan Stanley, Citigroup, and Ambac consummated one of the biggest deals to date involving … an “interest rate swap.” A year later the executive director of the Bay Area’s Metropolitan Transportation Commission, Steve Heminger, proudly described these historic deals to a visiting contingent of Atlanta policymakers as a model to be emulated.
Because of the economic collapse, and the decline of interest rates in 2008 to virtually zero, the MTA has been forced to pay the amazing sum of $658 million in net swap payments so far.
Lowering interest rates to zero isn’t Fed policy, it’s Wall Street policy – Ed.
Posted in News and Views
Tagged banks, business, CALPERS, credit default swaps, Depression, derivatives, economy, ethics, financial crisis, financial institutions, funding, Goldman Sachs, meltdown, morgan stanley, pension funds, people hate banks, Recession, They are all a bunch of bastards
When I (and others) book a job three months in advance, the contractor can hire more workers knowing when checks will be coming in. My visibility creates the contractors visibility. The predictability of revenue creates the opportunity for economic expansion and job creation.
The Federal Reserve is operating monetary policy using a simple formula:
Lower interest rates across all maturities ALWAYS increases economic growth.
My personal example proves this formula to be flawed. I think the formula is more complicated:
Lowering interest rates across all maturities has both positive and negative consequences. As interest rates approach zero, (with the prospect that they will remain so for years to come) the negative consequences outweigh any benefits.
The idea that lower interest rates are hurting savers is an old one. The question is, “How significant are the negative consequences of low interest rates?” The multi-decade efforts in Japan to reflate an economy with low interest rates is a shining example of policy that has not worked.
Read this article, you will have, in nutshell, exactly our economic situation. Read at least some of the comments. If you filter out the hyperbole of a few, the comments form a kind of crystal ball, with some sobering predictions.
Posted in News and Views
Tagged bailout, banks, Depression, financial institutions, meltdown, money, people hate banks, Recession, stimulus package, The Fed, They are all a bunch of bastards