Ten days ago I said that investing one’s money takes confidence. It seems I was more accurate on that point than ever, as August 2010 turns out to be the worst August since 2001, and that was days before what happened to the World Trade Center.

The Dow dropped 4.3% in August, including dipping under the magic 10,000 number a few times. It’s ending the month around 10,014, but there are big questions as to whether it’s going to stay there. Negative job reports on unemployment, housing reports, and the slow growth of the economy has many of these high powered brokers and their companies scared, and it’s probably scaring the regular investor as well. The Federal Reserve has changed its forecast of recovery and reduced expectation, and there’s even been some talk about lowering interest rates even further, although I not only don’t think that will happen, but I’m not sure it should happen.

Frankly, I’m wondering what’s about to happen as kids get ready to go back to school. Often a time when the retail market gets a nice little boost, it’s possible that things will be drastically different this year, which could continue the slide of the market if retail stores don’t hit traditional numbers that are often expected by early October. Many communities around the country have reduced the number of teachers and canceled programs of study, so those students won’t need supplies or books for those classes. Here in New York, they’ve eliminated the no-tax on clothing, thus parents may not be shelling out as much money as they have in the past for clothes, or looking for more discount clothes, and my bet is that New York won’t be alone. Oh yeah, there are also fewer kids, so more schools are being closed as well.

I haven’t read about their being a rush to get college students laptops for school this season, and if the iPad can handle a lot of what students need (I don’t know the iPad all that well) then traditional computing will be in trouble, as it’s been predicted to occur by technology researcher Gartner.

It certainly doesn’t have the feel of a confidently growing economy, does it?

If ever there was an obvious headline, the one above is it. The housing industry is in trouble, and it doesn’t look like there’s going to be a fix any time soon.

So what’s going on? We’ll start with the news that existing home sales are at their lowest level in 15 years, down 27% over this same period last year, which was a horrible year in the first place. The $8,000 tax credit ended in April and many conservatives were happy, saying the government shouldn’t have had it in the first place, and look where we are now. Home sales can’t keep up with foreclosures, and those homes that are being bought are going for around 25% less than what they were worth because of it.

The Midwest and Southwest are struggling the most. Home sales out that way are down 33%, and bank closures aren’t helping. Neither is Arizona’s crusade against immigrant workers, one which I’m sure legislators out that way thought would help its legal citizens find work, but instead has created a backlash against the state and an interesting exodus of some of its long time citizens, leaving homes that have no buyers.

Already mentioned was foreclosures, and it’s been determined that at the present time 1 out of every 10 homes is close to being foreclosed upon. Actually, that figure is down a tenth of a percentage point from the end of April, which is nothing to smile about. Arizona and Nevada continue to have high foreclosure rates; how long can it continue to be at a high rate, since it has to slow down at some point by pure attrition?

And, interesting enough, the average home size for new homes is on the decline as well, dropping about 150 square feet over the past year. That doesn’t sound like a lot, but the trend had been towards larger, more spacious homes and now consumers are looking for ways to save money, and are not only cutting down on the size of homes but on some of the luxuries as well.

What are the two main problems with housing? Unemployment and banks. What are the two main ways to fix the problem? Employment and banks. Mortgage rates are at their lowest level in, well, decades, yet banks aren’t approving enough people to take advantage of it. Sure, banks have had to tighten up their processes, and that makes sense, but they’re taking longer to make decisions, and sometimes time is of the essence. There are still banks that are behind on figuring out loan modifications, and that was supposed to have been completed a couple of months ago. As for unemployment… well, we just might be stuck on that one, as federal money is being spread a bit thin, and communities are loathe to try something potentially drastic to help get things moving in a positive direction.

If you have a home to sell right now; don’t. If you’re looking for a home right now; do it!

There have been a few times on this blog when I have stated that my belief is that most of the jobs that were let go in 2008 and 2009 we’re never coming back. I’ve had that confirmed by a news story last week where interviews were done with many CEOs on the subject. However, it seems that most of those jobs aren’t coming back for a different reason than what I had believed.

When this group of CEOs was interviewed, it seems that they were actually willing to think about hiring back workers except for one thing. They don’t believe that the economy is going to turn around for at least another few years, and they also don’t believe that the shoppers are going to come back and start purchasing the way they have in the past.

As strange as it seems, they might not be too far off the mark on that one. The economy has grown at a lethargic rate this entire year, and consumer spending has been relatively flat. There are so many industries that in the past had enjoyed great growth and revenue that suddenly are tanking beyond belief. Many specialty stores have gone out of business. Many casino cities such as Las Vegas and Atlantic City have shown drastic reductions in visitors. The housing industry is in shambles for most of the country. And the travel industry has taken it on the chin as well, especially southern coastal cities this year as a result of the oil spill. For what it’s worth, even traditionally fiscally strong businesses such as Wal-Mart have struggled, which wasn’t predicted because of their low prices.

This begs the question as to what we really need to stimulate the economy? It’s somewhat ridiculous to tell people to get out and spend their money when many people are just getting by making sure they can pay their bills. With the national average sitting at 9.5% as it pertains to the unemployment rate, and with no real remedy in sight, most people are holding onto their money just in case they lose their jobs. More of them are worried that there are no other jobs to go to if they’re suddenly unemployed, and they’re correct to have that assumption.

Are there any real solutions to this mess? I’ve offered my suggestions, as have others I’m sure, but someone’s going to have to do something either bold or drastic to get things moving forward. I’m afraid that someone is going to involve the government. And the government being in the state of flux it’s in right now, I don’t think we have a prayer.

Right now, interest rates on home mortgages are at the lowest level in decades, if not ever. If you can get it, going for a lower interest rate might be the most beneficial thing you can do to help you get over some financial humps and get things done.

A real life story came up yesterday while my wife and I were at a regional farmer’s market. There’s one lady there who makes the best chocolate chip cookies, and we always buy from her. She had an extra big smile and started telling my wife her story about being approved for refinancing her mortgage.

She went for a 15-year mortgage, where the interest rate was 3.75%. I don’t know how the rest of this actually worked because I thought it would be rude to ask, but she was granted the new mortgage, it earned her enough money so that she was able to pay for a new roof for the home and some other improvements she’d been wanting to do, and her monthly payments actually went down $350 a month.

I’m not sure where she started from, but I’m assuming she must have had a much higher interest rate than the 5.75% my wife and I have after we took advantage of what at the time were lower interest rates than what we’d bought our house at. We ended up reducing our payments about $200 at the time, but didn’t get the other money bonus this lady did. Then again, we’d only had the house 2 years at the time, so there was no real equity built up either.

At the very least if you have some equity in your home and an interest rate higher than 7%, it’s worth exploring your options to see if there are both money and some savings to be had.

I’m not the best investor in the world; we’ll get that out of the way now. And when you look at what’s been happening to the market lately, where the smallest bit of bad news seems to send the markets tumbling, it doesn’t give you the warm and fuzzy feeling of confidence.

And yet, according to financial experts, investing over the long haul is one of the safest ways for you to not only make money but to help save your money. How is this possible, you may ask? Here’s the quick down and dirty of it all.

First, you get into a money market type of account, where your investments are spread out among a lot of companies. What this does is protect your investment if one company starts to tank, and gives the person handling your account time to switch you to someone else more stable.

Second, say you started out with $500 in your account, and for the next 35 months you put $100 a month into your account. And then say that ever other month the market increased 1%, and on the opposite months the market fell 1%. At the end of 3 years you’d have made $18 and change; that’s not very good, but at least you made money.

Then say that you started out with the same money and added the same amount monthly. Investors say the market makes money at a 10 year rate of around 2.5%; I don’t know if they all agree to this but an investment guru gave me this one so I’m using it for now. Then say I do the exact same thing as I did above, only instead of the 1% increase every other month it’s 2.5%, and yet I still have that 1% decrease. At the end of 3 years you’d have made $565 and change; that’s a little better.

But the market doesn’t really work like that, up and down from month to month. It works in stages. For every six months up you’ll have six months down, yet you’ll still come out to that 2.5% gain after 10 years. We’ll do it a little worse than that. We’ll increase 2.5% for six months, then decrease 1% for six, just to be below that figure. You’ll still have made $447 and change.

The thing is, these are low figures overall. Your money market is probably going to return a higher amount than that 2.5% over time, even with the down times because they’ll drop the bad stocks and move to better ones. What happened in 2009 is more of a fluke than the norm, as it usually doesn’t drop almost 50% of its worth in a year. So, with more stability in the stock market, your money will normally increase faster than it will lose money.

However, it takes a lot of courage to invest long term and not touch any of the money until you absolutely have to. And you also have to be smart when you do decide to invest, making sure you’re not hearing about things such as what happened last year and not getting your money out or moved around in some fashion. I heard the news, wasn’t paying attention, and lost more than 60% of my portfolio at around the same time the company my broker was working for changed how my account would be handled, and he was suddenly not there, which I didn’t know. I removed my funds, but I was a little late on it all.

So, if you have the courage and confidence to leave your money alone for the long haul, and can continue popping at least something into it, you could turn out all right, as long as you pay attention to what’s going on in the world.

Wells Fargo is a multiple offender. Therefore, it came as no surprise to anyone that they lost their court challenge against having to pay a fine for excessive overdraft fees they imposed on their customers.

A California judge determined that they have to pay back $203 million in what the judge determined was a tricky “bookkeeping device” that allowed them to multiply the number of times Wells Fargo could hit its consumers for a fee, even if there was only one breach such as a single overdraft. The judge concluded that sometimes Wells was hitting customers for as many as 10 times for one oversight; that’s just not right.

And what does Wells Fargo do? They’ve stated that they’re going to appeal the case, even though, in my opinion, they’ve gotten off easy because the fees they overcharged consumers was determined to be more than $1.7 billion. In essence, they didn’t even get hit with 20% of what’s now deemed criminal action against its customers and they’re whining that the judge got it wrong. We heard this same type of thing when they were accused of improper handling of minority mortgages.

Although I understand Wells Fargo figuring that they have to try to protect their reputation, I’m mystified that they’re trying to insult the intelligence of the American public and wasting the money of their depositors on something that everyone knows they did. They’re not alone; all large banks have had interesting ways of charging overdraft fees to their customers for years. That’s why there was legislation clamping down on the process in the first place, to protect those of us who every once in awhile calculate our finances incorrectly and thus get hit with a fee. And speaking of which, I hope everyone has gone to their banks and made a decision on how they want the banks to handle their overdraft protection process, as the deadline is near.

This is why I recommend moving your money to local banks you can trust, that will treat you properly, and that might be a bit more stable than these giants, who care more about protecting their reputations than doing right by you, the consumer.

I’m not someone who supports outsourcing most things to other countries. It’s not that I’m against other countries sharing the wealth, so to speak. My reasons are twofold.

One, I see many jobs performed in America going to other places, and I see how it’s hurt our economy. American companies create products elsewhere, then bring them back here to sell for the same money as before, but make bigger profits because they can pay foreign workers less.

Two, because the work isn’t any better than what Americans can do, and is sometimes more deficient and doesn’t fully follow the rules. Two things I can point to are Dell customer service and the medical billing company that threatened to post the private records of American citizens in a dispute with the American company that had contracted them to handle the billing. We may have HIPAA privacy laws in the United States, but there’s nothing the American government could have done to this Indian company.

With that said, I have to change my tune when it comes to having medical services done in other countries to save money. It’s hard to complain against an individual or company deciding that it makes sense to try to save money on major health care procedures for their employees. If a company can spend only $20,000 to send one of their employees to India or Mexico for a heart procedure that would cost $100,000 in the states at a minimum, while knowing that the medical facilities are high quality, then that’s a smart and intelligent move that frankly I can’t go against.

Last year I did research for an article concerning Mexico medical travel and that research showed that not only could patients save anywhere between 100% and 500% for medical procedures, including elective surgeries (laser eye surgery, plastic surgery, etc), but there were full medical packages at resort style hospital / hotels that fully integrated all the costs to save even more money.

The same goes for India, where the preponderance of very well American-trained physicians have set up extensive and specialized medical practices that offer nothing but the best as far as medical procedures are concerned. And the costs can be even less than doing them in Mexico, though getting there might cost a little bit more. But there are more physicians in India, so the concept of having to wait for quality paid medical care is nonexistent.

This is important news to know about as health care costs keep going up. Not only employers, but some insurance companies are realizing that they need to find ways to keep costs down since, at some point, there has to be a cap on the cost of insurance premiums. To see another perspective on this, check out this CNN Money story on the same subject.

People are selfish; let’s get that out of the way first. It’s a tough economic environment we’re dealing with these days. On the one hand unemployment is still sitting around 9.5% throughout the country. On the other, both state and federal governments are being accused of either spending too much money or looking to cut programs people like and don’t want touched.

Yesterday it was announced that the Pentagon was going to be closing one of their facilities in Virginia which was going to result in the loss of somewhere between 2,000 and 3,000 jobs. Their point was that they were trying to be more efficient in trying to help their budget by letting this particular project go. Within 24 hours politicians and local residents started to rail against the government saying that it wasn’t well thought out and that it would hurt the area as far as employment goes. In other words, what they believe is that the federal government should cut spending, just not in their area.

I live in New York State. Our government has had financial issues for the last couple of years because our states financial status is tied in with Wall Street. The governor of this state has come up with a lot of recommendations for both raising revenue and cutting expenses. As you can imagine, he has been vilified from both sides of the aisle and from both state and local politicians. What he hasn’t gotten are any other recommendations or proposals for how to handle many of these things. There have been a lot of groups which have come up with commercials against the governor or this or that, but not a single one offering a solution. It’s always easy to be a naysayer, but when someone needs real solutions people would rather keep their mouths shut and blame someone else.

California is another state that’s been in major financial distress. The governor of that state has been fighting with the state legislature for all types of changes with the idea of addressing some of the financial issues. It’s not a matter of who’s right and who’s wrong, but it is a matter that says someone has to do something to try to help the state. Raising tuition 55% at the same time that insurance companies want to raise their insurance rates as much as 90% doesn’t help anybody. California also wants to cut a lot of jobs, but of course nobody wants those jobs to be cut because everybody wants to use government assistance as much as possible.

Unfortunately, you can’t always have it both ways. There are things I wish that the government would address and either eliminate or add to. But I know that everything costs money, which means you either have to get rid of something else, add something else, or just stick with the status quo. Doing nothing is actually doing something, and it allows everybody to be mad. Governments walk a fine line when they allow this type of thing to happen, and I’m of the opinion that when you decided to run for an office so that you could become a leader for the people, you need to take that responsibility and do something that is going to affect positive change even if it going to hurt for the short term.

I’m not saying we don’t have the right to criticize the government, because I criticize it all the time. What I am saying is that constructive criticism is what’s needed, not knee-jerk reactions to things you want to protect at any cost.

It’s about time. In new legislation geared towards protection for people with credit card debt, the Federal Trade Commission (FTC) also added some protections for people from debt consolidation agencies.

The most sweeping part of the legislation is that debt consolidation companies can no longer collect money up front before they start helping you. Here’s a direct quote:

“At the FTC we strive every day to make sure America’s middle class families get straight deals for their dollars,” Chairman Jon Leibowitz said. “This rule will stop companies who offer consumers false promises of reducing credit card debts by half or more in exchange for large, up-front fees. Too many of these companies pick the last dollar out of consumers’ pockets – and far from leaving them better off, push them deeper into debt, even bankruptcy.”

Here’s how it’s always worked. Debt consolidation companies get you in, figure out you’re in trouble, and tell you they’re going to work it out for you. For a fee, they will “contact” all your creditors and get them to work with you on payment plans. You pay them a monthly fee, which helps build up the pool of money and they help you pay your bills.

What 99.7% (my calculation) do instead is collect your money and make nary a phone call. You start getting collection notices, phone calls, and threats of being sued. They’ll wait as long as 18 months before doing something. Then they call all of your creditors and work out a deal where they may pay 50% or less of your balance that’s owed to close the account. You end up getting a notice saying it was taken care of, but that the account was “closed by grantor”, which is a negative that sits on your credit report for 7 years. They end up saving you money long term, with your credit trashed, and they get a percentage of the savings, which they’ve been squirreling away. So, you’re out of debt, but you have no credit, and you got hit with a bill by the company on the front and back.

This legislation kicks in on October 27th; not sure why they picked such a strange date, but it’s better than never. There are some provisions that kick in on September 27th as well; once again, strange date. Actually, this information is all from their site, so it’s possible that one of these days is a typo. No matter, since we know it’s coming. Here are some specific rules they’ve indicated:

* require debt relief companies to make specific disclosures to consumers;

* prohibit them from making misrepresentations;

* extend the Telemarketing Sales Rule to cover calls consumers make to these firms in response to debt relief advertising

* the debt relief service successfully renegotiates, settles, reduces, or otherwise changes the terms of at least one of the consumer’s debts;

* there is a written settlement agreement, debt management plan, or other agreement between the consumer and the creditor, and the consumer has agreed to it;

* the consumer has made at least one payment to the creditor as a result of the agreement negotiated by the debt relief provider;

* the dedicated account is maintained at an insured financial institution;

* the consumer owns the funds (including any interest accrued);

* the consumer can withdraw the funds at any time without penalty;

* the provider does not own or control or have any affiliation with the company administering the account;

* the provider does not exchange any referral fees with the company administering the account.

Talk about an interesting dilemma. Everyone knows about the California housing industry, which of course also ties in with unemployment and the rest of the problems California is having with their finances. A big part of the housing industry’s problem is the high foreclosure rates that are still occurring, even as a portion of their housing market is starting to recover.

It turns out the foreclosure rate could be much higher than it is. Many people have stopped paying their mortgage because they just can’t afford the payments, or because the worth of their homes at this juncture doesn’t seem to make it worthwhile. By all rights, banks could foreclose upon those homes.

But a funny thing is happening. Banks aren’t foreclosing on all the homes that are out there. Some people haven’t made payments in more than 2 years, but haven’t heard much beyond the normal mailing of the bill. What’s going on?

Could be a number of things. One, the rate of foreclosures is so high that banks can’t keep up with them all. Two, banks are worried that by foreclosing on so many homes the values of those homes will tank like they did in Florida. Three, many banks are so far behind on loan modification processes that they don’t know what to do about people who had stopped paying yet were waiting to hear whether they qualified for those modifications. Four, the state has been working on legislation that may have already passed limiting foreclosures in some fashion. And five, the state just received $700 million from the federal government, which is mainly to help homeowners who haven’t been able to make their mortgage payments, and if banks foreclose on those people they lose out on any money that the homeowners they bounced might have received.

All of this makes for a very interesting mix, one that seems like it’s going to take at least another 2 years just to get back to even, whatever that turns out to be. California is a mess; let’s hope for their sake that housing pulls out of it before something else happens.

A recent story on CNN Money mentioned that states could face a $12 billion shortfall if Congress doesn’t pass a bill to help them out. Four states in particular will see shortfalls in money of more than $1 billion each.

While this is a scary figure, especially with the way the economy is working, it seems no one has attempted to explain why there’s such problems with Medicaid. I’m going to answer that question for you, or at least give you an idea of what states are up against, and I’m going to base it on New York, the state where I live.

First off, the problem certainly isn’t how medical entities are paid. To use the easiest term most people will understand, Medicaid pays on a fee schedule. This means they pay a certain amount for procedures and services. That’s pretty much how most insurance companies pay claims, just so you know. In Medicaid’s case, many payment amounts haven’t changed in more than 30 years. However, if you’re a hospital in New York, you must accept both Medicare and Medicaid patients, so hospitals end up losing a lot of money because of Medicaid.

About 15 years ago or more the state added a new feature where they threw in co-pay amounts that patients “had” to pay. That money was taken from the payments medical facilities received, since now they were supposed to get it from the patients. However, that came with a caveat; if a patient told you they couldn’t pay, you had to write it off and you couldn’t bill the patient for the balance. And you were supposed to ask them while they were in the hospital, or any other medical facility. The co-pay amount for the most part is only $3, but multiply that times a couple of million people who probably go for services more than once a year and it all adds up. Anyway, this part is just to show that states aren’t losing money because they’re paying out too much to hospitals or physicians.

What’s the problem then? The problem is in administering the program. It’s unwieldy and unmanageable, both because of the way the state runs it and because of the people who are on Medicaid, though for the second, probably not for the reasons you might expect.

In New York, every county has its own Medicaid program. The way Medicare is run is that the federal government contracts with different companies throughout the country to administer the program in certain states. Medicare is considered a federal program, whereas Medicaid is considered a state program. So, every county has to have people to staff those offices. And sometimes, there are multiple offices handling different aspects of each program. So, there’s a lot of duplication of bodies, which means money gets eaten up fairly quickly.

What the state has allowed are Medicaid HMOs, which seems like a good idea except for a problem I’m going to mention now, and a problem I’ll mention later. The “now” issue is that those insurance companies running Medicaid HMOs must have at least one competing insurance company in the state. Otherwise, subscribers don’t have to select a HMO at all, which almost renders them useless in some counties. The reason there aren’t many HMOs is because the money they’re given to try to handle claims is pretty low, and the best a HMO can hope for is that there’s a significant number of people they’re paid for that decide not to use any services. That doesn’t happen often, however.

Medicaid also funds programs through the Department of Social Services whenever they see a need for something extra special. For instance, in Wayne County, there’s a special program for migrant workers that travel into the area to help pick crops, yet don’t speak English. In Westchester County, there are special programs that pay for specific types of things such as psych services or chemotherapy, especially if you’re an undocumented worker. Payments still aren’t great, but it all takes a drain on the money available.

Now, let’s talk briefly about the subscribers. Something not generally known is that probably half of Medicaid subscribers are fairly transient; they move around all the time for whatever reason. And they don’t tell the DSS that they’ve moved, which is problematic in the first place, and then gets worse when they move to another county, because there’s no true state system where someone can just go in and update one system and have everything working great. Subscribers are told they need to go to the local office and do it all over again; that’s an ugly way to do things.

Subscribers are encouraged to sign up for Medicaid HMOs in those counties that have multiples, but they’re also told that they can drop it at any time and sign up with another one. That’s an ugly process as well, as it takes a lot of manpower hours switching people all the time. And when it comes to authorizing services, it can get uglier still.

There’s more detail I could get into, but I’ll stop here. This should be enough information to have a basic understanding of why Medicaid programs might be in trouble. What could states do? I’ll offer only this one bit of advice; standardize the process and have fewer outside offices, which will reduce the number of people needed to do everything, and potentially reduce the amount of paperwork. States have to be willing to move Medicaid services into the 21st century.

Last December I wrote on Intel being sued by the Federal Trade Commission based on the sweetheart deal Dell was getting for using their chips in Dell computers. The suit against Intel is about to commence, but it seems Dell did a proactive move and decided to settle with the Securities and Exchange Commission to the tune of $100 million in fines. The reason for this is because they reported all that extra money coming from Intel as revenue, which of course helped improve their bottom line for investors, and that’s a major no-no. How any of this affects Intel long term no one can say, but this is the kind of corporate ugliness that makes us not trust large companies.

In April, I wrote about black farmers finally getting a deal with the government to pay them for long standing abuses that pretty much wrecked their lives. The last remaining piece of legislation was to pass the bill to pay for it. In May, I wrote a follow up to that, saying that they still hadn’t been paid, and that if Congress didn’t get a move on that the deal would expire and open the government back up to multiple individual lawsuits.

It seems that the government missed another opportunity to provide funding for this lawsuit when the house passed a war supplemental bill last week. The provision was in there, but it was scrapped to get the bill passed. I hate calling anyone out, but it seems one party in particular, in the Senate, is really against paying any money to black farmers; they sometimes go by the moniker “party of no”. The Senate minority leader is saying all the right things, yet it remains locked up and the bill will probably die without ever being voted on. I thank Tim for bringing me up to speed on the issue, since it didn’t make the headlines.

Many states are trying to work their way out of what’s been deemed a housing industry crisis. To say that things have been bad across the country would be an understatement. In 2009, the top housing markets were those that weren’t in a freefall, including my home area of Syracuse, which was flat yet considered as the 2nd best in the country.

Whether or not you believe unemployment has improved (it hasn’t), things have definitely stabilized in a fashion. And in some states there are plenty of houses that are available for purchase. And yet, not including places like Chicago, which has rebounded fairly well, those homes aren’t being purchased, and home ownership isn’t growing, or at least not growing enough to overcome the bad times.

What’s the problem? In my opinion, it’s all in the hands of the banking industry. True, I blame the banking industry for causing the problem in the first place, and now I’m blaming them for keeping it down. There are many reasons I’m blaming them; let’s take a look.

1. Not giving up the loans. I understand that banks have had a hard go of it, but many of them have gone too far in the other direction and are looking to loan people money who don’t really need it. When rich people with credit scores over 800 can’t get home loans, you know that banks have become skittish on who they want to loan money to.

2. Bank closings. So far, 102 banks have been closed in 2010; this is about 45 more banks than were closed at this point last year. Many more banks are projected to be closed this year. Many of the banks that have been closed are in states that are still having major problems with housing. As other banks are taking over, they’re being a lot more judgmental in who they’re going to give loans to.

3. Banks holding on to foreclosed homes. In some states that have had high foreclosure rates, banks are artificially trying to keep home prices up by keeping some homes off the market. Picking and choosing which homes they want to put on the market means there are many homes that someone might want that they can’t buy. Florida has many homes at low prices, and many of those homes are starting to be snapped up. It’s better for everyone if they can buy whatever home they want, even if the prices are lower, because it helps stimulate the entire industry. Banks, let up on the foreclosed properties.

4. Not processing loans quicker. The reason the federal government had to extend the time for people to finish qualifying for loan modifications is because banks could care less whether people qualify for it or not. They got called out for not processing more of these loans in a timely matter, but the truth is that it didn’t work in their favor, or at least they didn’t perceive that it did, so they didn’t have any reason to try.

That’s enough for the moment. To be somewhat fair, banks do have to change up their criteria a little bit. Some people who purchased homes before weren’t really qualified to buy those homes at the prices they got them for. Low interest rates don’t protect banks from people with risky credit, and that’s understood as well. However, as long as banks in areas with depressed housing markets won’t work with brokers and consumers to try to get them into homes, those markets will continue to suffer, which means the entire country will suffer along with them.

There was an interesting news story on CNN last week. Actually, it wasn’t quite news, more of a feature. It was called Confessions of Former Debt Collectors, and at least half of them stated that they knew that they were breaking the law with some of their collection practices. Yet they knew that they had to break those laws to keep up with the quotas set by the company’s they worked for to not only keep their jobs, but to earn monthly bonuses.

I had two takes on the story. One was “duh”, because I know how collection agencies work. I used to hire collection agencies for some of the hospitals I worked for in the past, and all of them would say that they would follow all the rules and never put the hospital in a bad light. Then we would have someone calling the CEO complaining about something someone said to them on the phone, and of course the CEO would call me and I’d have to figure out a way to deal with it.

Over the years, here and there I’ve had to deal with a collection call as well. Lucky for me, I know the rules of the Fair Debt Collection Practices Act, and would always make sure they knew I knew the rules up front so that they wouldn’t dare try any of that stuff on me. Of course, it also helps to ask them to hold, wait for about a minute, then tell them that you’re recording the conversation you’re having with them, whether you are or not. One, it’s a great tactic, and two, in some states if you were recording someone you have to tell them that (who remembers Linda Tripp?).

The other side of some of what these people had to say are the threats that they ended up getting from people who said they’d track them down and kill them. While I don’t ever condone that type of thing, it seems like these people wanted to violate what I call the rule of consequence; don’t do it if you’re not ready to deal with the consequences of your action.

Here’s the thing. Collection agencies are needed to help companies recover money from debtors who have refused to pay. However, most companies will write off that debt and collect insurance on it, so don’t feel totally sorry for them. Not only that, but they then sell the debt to someone else, which means they’re not getting any more money from it. Now, you can be sued, and it’s always best to try to set up some kind of payment arrangement because it looks better on your credit report. But no one has the right to be intimidated, lied to, or threatened to collect money that the original owner has already written off the books.

If you’re ever threatened, call your state’s attorney general and complain. You might even end up getting money from the collection agencies, but better yet, you help change the culture of the industry and force them to follow the rules set by the federal government… just like everyone else.

I haven’t kept up on this blog recently because I’ve been working on a live workshop I’m doing on July 22nd and August 19th. It will contain around 5 hours of material on social media marketing, and that takes a lot of time to put together and rehearse. If you’d like more information about it and live in the central New York area, check out this link. That guy to the right is me.

The reality in today’s world is that social media has made it important to be doing something online. Standard business practices such as putting a business in a brick and mortar location and waiting for people to come just isn’t going to continue getting it done unless your name is Starbucks. Small businesses that are thriving have learned that hooking into social media in some fashion is helping them to grow in ways they couldn’t have imagined even 5 years ago.

Don’t believe me? Think of it this way. Blogs have been around for a long time and they help get one’s message out. Facebook has been around about 4 years now for the masses, and it’s worth between $3 and $5 billion at least. They generate all sorts of cash from advertisers who want to reach people they believe are interested in what they have to sell. Facebook facilitates that by dipping into people’s profiles, breaking privacy or not, and using that information to help advertisers reach their core audience.

There’s a company called Four Square which allows people to say where they are at a given moment to let their friends, and pretty much everyone else, know where to hook up with them. Some small businesses will give patrons discounts for helping to spread the word about them, which works wonders with the younger set, and these businesses find that they don’t have to buy print advertising to get the word out because social media is doing it for them. By adding incentives to get the word out, they’re exhibiting a bit of ingenuity into their social media marketing efforts.

Look at Twitter. It started out as a communications medium for people to connect with others all around the world as long as they stayed under 140 characters. Now it’s a business empire in its own right, as businesses have learned how to monitor Twitter for customer service, get the word out on specials they’re running, and actually will communicate with their customers who might have something either negative or positive to say and just want to vent. I can honestly say that I’ve made money from Twitter via conversations and blog posts.

As more of these companies continue to pop up, I would expect that savvy investors will be scanning these companies for opportunities to get in on the ground floor, whether these companies go public or not.

Actually, it’s just a bit longer than a month. By August 15th, consumers are supposed to make a decision with their bank accounts as to whether they want overdraft protection or not. It’s something I originally wrote about in February, but since we’re close to the date I felt it was a good time to look at it again.

In that previous post, I laid out the two main scenarios for help in making a decision on whether to opt in or not. At that time, I wasn’t sure if it was inclusive of credit cards as well or just banks. Based on knowing that, at least for now, that it seems to only concern banks (unless I’ve just missed the inserts in my credit card bill), I’m thinking I’d like to clarify my stance just a little bit.

If this included all credit cards, I’d probably say that it’s not worth the cost to have it added to your credit card account. In my opinion, it’s better to not be able to buy something using your credit card than going over the limit. However, the rules have changed on that front, such that credit cards can’t hit you with extra fees for going over your balance in that particular pay period. They can stop you from going too far over the limit, but if you’re over by less than $50, you’re okay.

When it comes to your bank account, that’s another matter entirely. All of us have had a time in our lives when we’ve written checks without knowing that older checks have never cleared. Some people you pay won’t cash your check for six months. Sure, we should all be balancing our checkbooks monthly, but we don’t. So, it might not be such a bad idea to have that extra layer of protection.

It depends on how much your bank is going to hit you for each transaction, though. For instance, my bank is going to charge $22 per overdraft, while my wife’s bank will be charging $25 per. The upper limit per day for everyone is $100, which is a good thing, but in essence, if I have 4 checks hit that puts me over I only pay $88, whereas my wife will be at the max. That’s not much difference, and it’s making me think about leaning towards the protection. My wife decided she was going that route, and it’s already been set.

Everyone needs to know their buying habits, but knowing that it’s not always in your control could lead you to decide for the bank protection, instead of bouncing checks all over the place. I think it’s a wiser move than I believed it was in February.

Man, I hate being right. It seems that there’s a prediction that around 1.2 million people are about to fall off the extended unemployment benefit rolls, and with that goes the benefit they were getting on their COBRA insurance coverage.

I’ve talked about the fact that unemployment figures are usually skewed by the number of people who have made it through the entire system without finding a job, and thus suddenly don’t count against those very same unemployment numbers. If this many people suddenly drop off the rolls, the unemployment figure is going to start looking pretty good, but once again it won’t be telling the whole story.

Once again, it makes me and many others continue to ask the question where will jobs come from, and I just don’t see an answer in sight. Well, I do, but no one is listening to me on ideas on spurring the economy.

There was a story by U.S. News in December that talked about the best careers in 2010. These are areas where jobs or careers are either growing or have the potential to grow. The thing is, all of them require certain educational skill sets that some people aren’t qualified to obtain. Those who are or possibly might be able to attain those skills can look to these 5 main categories:

* Science & Technology

* Healthcare

* Education & Civic Work

* Business & Finance

* Creative & Service

In other words, people need to start thinking about what else they can do to replace what it is they’ve been doing. However, let’s be realistic. Science and technology will take some serious education if you don’t already have it. Same for business and finance. Most communities seem to be laying off teachers, and some states are laying off state employees as well. There are areas in healthcare where there are shortages, but some careers, such as being a certified nurse assistant, are physically grueling, so if you’re not young I wouldn’t recommend it. There’s also a long training curve for some of those positions.

To me, the most viable area are creative and service. Truthfully, there never seem to be enough electricians or plumbers, and both pay well. There’s certainly not enough people who know how to fix general items, and computer service, while kind of technical, is easier to learn than many other technical areas. If you’ve got an eye for design you might find pretty good paying jobs as an independent.

Still, it’s a scary world for those people about to lose governmental support. Those folks will have a long way to go before being ready to think about doing something on their own.

At the Group of 20 Summit in Toronto days ago, the countries participating left with one common goal; to reduce the deficits in each country while not promoting that people hold onto their money and to spend it instead.

It’s an interesting prospect, one that needs to be examined because of its unique scope. The economy has been jittery since 2008. Pretty much every country has suffered in some fashion. What many countries have done is throw money at the problem, which I don’t totally disagree with, but without a specific strategy for what they wanted to do, it hasn’t worked all that well.

At the same time, unemployment has been a big problem in many countries. Even though the United States would love to blame its problems all on companies that have taken jobs to other places and illegal immigration, the fact is that this was probably a long time in coming and that almost everyone had to know it was on its way. I had figured it was on its way back in 2001, and felt that many people had their heads in the sand instead of looking ahead and trying to brace for the future in some way.

Governments did what governments do; they created more money to try to help out. That often ends up destabilizing someone because it makes some currency worthless, or at least reduces what it’s worth in other countries. Who remembers that for awhile last year Canadian and American currency was worth the same thing? I remember when you used to get the equivalent of $1.64 for an American dollar; now you get $1.27.

Meanwhile, unemployment hasn’t snapped back, but the government is trying to encourage people to spend their money. For at least 10% of the population in the United States eligible for a job, it’s not happening. For at least 40% of the working population, it’s not wise because they’ve taken jobs that are paying them less than jobs they had previously. That doesn’t leave a lot of people with extra money to spend unwisely. Even when the government was giving us money ala President Bush, most people used that money to pay bills rather than to spend frivolously.

My previous post about New York is basically true for the rest of the country. There’s less money to spend, less credit to use, fewer companies to spend the money on. Many specialty shops have closed and prices haven’t exactly dropped to encourage people to go out and find deals. Even Walmart struggled a little bit for awhile (heck, did they close all Sam’s Club’s?). And both state and federal governments are balking at spending money on programs that are needed because they say they’re worried about the deficits, everywhere except in their own regions.

The question stands; can these governments actually do what they hope to do? I tend to believe absolutely not; at least not right now. There are just too many negatives that everyone has to deal with, including unstable governments. It’s going to take a hero to step forward somewhere and be able to gain a true consensus. Unfortunately, there are too many people who think it’s all about them and not about the people, so it’s not going to get done.

The New York state budget is almost 3 months late. The state has financial issues, pretty much like all the other states, but it’s budget it tied into the stock market, and that’s not doing so well. Congress is split between both parties, and the majorities are slim. Nothing’s getting done; it’s politics as usual.

The governor of the state, David Patterson, is recommending some very interesting things that he’s determined are going to go through if there’s no budget, and some of them he’s hoping will go through anyway. Things like slashing Medicaid, which is the worst payer to begin with, adding things like a soda tax. The state has already increased the price of cigarettes to where it’s going to cost about $10 a pack, almost $11 a pack in NYC.

Now there are plenty of commercials attacking the governor and some of his plans. Every commercial makes him out to be a buffoon, and says people should write their congress-folks to complain about cutting this or adding that, saying it’s wrong.

You know what’s missing in every one of these commercials? What do any of them suggest the governor do instead? None of them have any inkling, which is why I ignore all of them. It’s not that all of them are wrong, just that all of them are misleading and childish.

Years ago I was working someplace and we had a consultant in. The guy was there for 3 days asking all sorts of questions. In the end, he came up with a 30 page report of all these problems. He found 64 issues; I knew about 63 of them. For each issue his recommendation was “put more people on this”. How’s that a recommendation? If I had all the people he recommended I wouldn’t have had the problem to begin with. Even the CFO looked at it and dismissed it as useless.

The problem with many folks who hate something is that they don’t have, or can’t think of, anything better to do. That was the problem with the health care debate earlier this year; whether you liked what the President and the democrats came up with, at least they came up with something, while the republicans just kept saying no. They said they had a health care plan; not only did they not have one, but they never intended to present one.

And that’s the problem in New York. I don’t like knowing that schools are going to have to fire teachers. I don’t like that our produce farmers are having difficulties because the budget isn’t passed. I don’t like that our government is on the verge of shutting down because we don’t have the money to pay all the workers. I certainly don’t like hearing that Medicaid is going to be slashed when it already only pays hospitals and providers $9 for a chest x-ray and things go down from there.

But what else can be done? There are things I don’t care about that someone else does. Neither one of us really wants only half of what we used to have, but if it’s me I’d compromise so that we’d both at least have something. In this case, everyone wants everything and doesn’t want to compromise, and some parties want more.

I’ve said elsewhere that California has basically condemned itself to poverty; New York isn’t far behind.

Very little surprises me anymore when it comes to seeing that minorities suffer the most on many financial levels. First it was hearing that blacks and Latinos are taking the worst hit on unemployment than anybody else. Then it was hearing that black farmers still haven’t gotten money from the government that the Justice Department says they deserve. Next on the list was hearing that Wells Fargo, along with many other banks, we’re giving minorities higher mortgage rates to purchase homes than anybody else.

So it comes as no surprise hearing that black and Latino homeowners have suffered more than non-minorities as it pertains to foreclosures. At least as its related to home loans between 2005 and 2008. For that group, it seems that 8% of the foreclosures were from minority homeowners, whereas none minority homeowners had their homes foreclosed upon at 4.5%. The reason this is an important figure is because it shows that even now, lenders are treating minority home owners differently than anybody else, hitting them with interest rates so much more above the norm that they are at the greatest risk of having their homes foreclosed upon. The study by the Center for Responsible Lending also stated that black and Latino communities will suffer the most in declining property values between 2009 and 2012, to the estimated tune of $373 billion.

Of course foreclosures hit everybody across the board, and the overwhelming number of foreclosures came from bad deals that occurred back in the 90s. However, knowing that this is still a common problem, and in listening to some pundits say that they believe all of this is the fault of Rep. Barney Frank of Massachusetts, who helped pass a law to equalize lending for minority applicants, it seems to indicate that lenders pretty much ignored the law in the first place, thus abdicating Rep. Frank of any responsibility for the present crisis.

What happens now? Who knows, since it seems foreclosures are still occurring, even at a lesser rate since so many homes have already been foreclosed upon, and there doesn’t seem to be an end in sight.