Monthly Archives: August 2012

Well it’s that time again. Spending time at the beach trying to stay cool, getting the kiddies ready for school, football, and…oh yeah…..watching gas prices jump over $.40 cents per gallon in less than a month!!!!!

It’s a tale as old as time…..or at least the last decade anyway.  You know what I’m talking about. Since the early part of the 21st century, Big Oil has been playing a little game of cat and mouse with consumers. Increase the price of gas until the consumers start complaining, then lower the price down a notch or two until the consumer stops complaining. Sit quietly for a couple of months and start the process all over again. It looks a little like this:  $2.95 per gallon, 3 months later $3.90 per gallon, consumers start to complain, lower price to $3.35 per gallon. “Yay! We aren’t paying $3.90 per gallon anymore!”  But the price is still higher than when it all began. Then 3 months later when the consumer has forgotten all about the greedy Big Oil’s price increase, the process starts all over again.

This process has been going on since 2000. Have you forgotten that gas prices in 1999 were less than $1.50 per gallon?! The price of gas in 1980 was averaging $1.00 per gallon and over time, it rarely increased. From 1980 to 1999 it only increased by around $.50 cents per gallon. An increase of 50%. From 2000 to 2012 it has increased by $3.35 per gallon. An increase of 223%  !!!

So what happened?  That depends on who you talk to. Big Oil wants us to believe that inventory is down due to recent problems at several U.S. refineries. Including several fires. Wars in oil rich countries are another common story. But it seems to me that these “problems” always arise when gas prices are at their lowest. Why is it that when gas prices are peaking, just when the consumer begins to complain, you never see a refinery fire or closure due to maintenance? Okay, fine, it’s probably just the consiperacy theorist in me.

But one fact remains, each year, over the last decade, Big Oil has generated bigger, record breaking profits. In the first quarter of 2011, Big Oil posted profits of over 36 billion dollars! That’s in one quarter alone! This was an increase of 41% over the first quarter of 2010 and an increase of 161% over the first quarter of 2009. And on and on it goes.

But who gets this money? Well, believe it or not, we do. You and I. That’s right. Almost 70% of profits goes back to the investors. That means our Pensions, 401k and IRA accounts grow larger thanks in part to Big Oil profits.  Here are some interesting facts regarding Big Oil stock:

  • Nearly 21 percent of oil and natural gas shares are in mutual funds, held by 52.3 million American households with a median annual income of $80,000 in 2011.
  • Nearly 18 percent of industry shares are held through IRAs, with 48.6 million households owning one or more IRAs. Of those IRA holders, 80 percent had annual incomes of $70,000 or less in 2010.
  • More than 31 percent of industry shares are owned by public or private pension plans, including 401(k)s (not including IRAs). The funds manage assets for more than 60 million households, with an average account value of less than $55,000.

So when I look at that way, it makes me want to grab my daughters pom-poms and start cheering, “Go Big Oil….B…I….G…..O….I….L……..goooooooooo Big Oil !  YAY!  BIG OIL!”  Okay, maybe not. Besides, I do not look particularly good in a cheerleaders outfit. Just ask my wife.

But regardless, I do enjoy watching my portfolio grow.  But is it enough?

As the price of gas increases it affects many other things besides my fuel budget. The price of goods increases. Food and electronics don’t just appear on the store shelf, they have to be driven by truck, big gas guzzling trucks. So to make up for their costs, the costs of the transported goods increases. Want to fly back East to visit a friend or relative? Expect higher airfare due in part to their increased fuel expenses. You can also expect increases at the U.S.P.S., FedEx,  and UPS. Until teleportation has been perfected, our packages and mail must be driven and/or flown to it’s destination. It’s funny how the price increase of one thing can affect the price of so many others.

So what do we do? Stop traveling? Work from home? Buy a motorcycle? Sure. Good luck with that. But rest assured that when gas prices top $5.00 per gallon, and we protest loud enough, gas prices will indeed fall. And for a couple of months we can breathe a sigh of relief because we are only paying $4.90 per gallon rather than the previous $5.35. But if the next 10 years plays out like the previous 10 years, then I guess we should expect to pay around $15.00 per gallon. “Yay! Big Oil!”

For more information about bankruptcy and how we can help solve your debt problems, please visit:  http://www.cantpay.com

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I remember as a child in school, reading about the “Great Depression”. I particularly remember a black and white photo of a farmer and his children running through their farm as a huge sand storm blew through. The “Great Depression” was an interesting subject for me in school and I always wondered if it would happen again.

I am not an economist, but it sure appears as those days may indeed be upon us. It’s appears that I am not alone in my thinking. David Rosenberg, Gluskin Sheff’s chief economist, recently made the statement “We are living in a modern-day depression.”  What would make him say that? Well, for one thing, the Federal Reserve once again cut it’s growth forecast. This time for the second half of 2012 and 2013. This raises the concern about the potential for a “double-dip” recession.  And though technically it’s a recession, the effects would be similar to that of another Great Depression.

But does it really compare to the early part of the 20th century? The barren wasteland of America’s farmlands? The breadlines?  The “Hey buddy, can you spare a dime?” days of yesteryear? I’m not sure. I wasn’t there. But I am here. And who knows how the history books will record this particular piece of history we currently live in? There is no denying the similarities between the two time periods.

Dust Bowls?                                                                                                                                                

 

 

 

 

 

 

 

 

 

 

 

 

Bread Lines?

    

Look familiar? Ouch!  Times always look and feel different when you are in the middle of it, rather than looking back on it from the outside, years later.

Did you know that in 2011, 1-in-7 people in the United States were living on food stamps? 1-in-7 !  46 million people!  Are you aware that between 2007 and 2010 the United States saw a drop of 40% in the median household wealth? And did you know that currently 30% of all mortgages in the United States are considered “under water”?  The official unemployment rate is currently 8.2% nationally, but real economists, including Rosenberg, put the number as closer to 14.8%!

 

So what’s the real difference, if any, from today’s problems and those of the depression era? Well, fortunately, we currently have government programs that are helping prop up it’s citizens.  Unemployment, food stamps, welfare. These programs were not available during the 20’s and 30’s, and many families were forced to sleep in parks and stand in food lines just to eat. But these programs can only go so far, and many programs are beginning to decrease or even stop their benefits.

But before you swan dive out a window like a 1929 stock broker, remember that there is hope. The Great Depression lasted from 1929 to 1939. 10 years. And if the current economy is on par, then we should only have a couple more years of this sluggish economy before it finally turns around.

John D. Rockefeller once said “These are days when many are discouraged. In the 93 years of my life, depressions have come and gone. Prosperity has always returned and will again.”  And so it shall.

The only real issue that concerns me is that one of the biggest reasons for the end of the Great Depression, was the advent of World War II. For some strange reason, nothing stimulates an economy better than a good war. So if I had a choice, I guess I would rather have to deal with a slow economy than deal with World War III. But that’s just me.

For more information about bankruptcy and how we can help solve your debt problems, please visit:  http://www.cantpay.com

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Okay, you have done everything known to man to stop the pending foreclosure of your property.  Or, perhaps, your home has been on the market for months and no one is making an offer that’s even close to the current amount you owe on the property.  Consider the Short Sale.  But consider it carefully. It is not as easy as it sounds and there may be consequences. Severe consequences.

For those of you that may not know what a Short Sale is, basically it is selling your house for less than what is owed on it.  Sounds too good to be true? Well, it is and it isn’t. Like anything, look into it, completely and carefully. The last thing you want to do is make a bad situation worse. Unless you’re into that sort of thing. But for those of us that want as little drama in our lives as possible, then I would suggest that before you sign anything, that you look into every aspect of the infamous (cue dramatic music)…….Short Sale.

There are many..many….real estate agents that would be glad to take your money. They will tell you anything you want to hear just to get you to sign on the dotted line. So do your research first.

Talk to an attorney.   As with any legal matter, always talk to an attorney. I’m not talking about Uncle Billy from Idaho, I’m talking about a real attorney that specializes in, or is at least very familiar with, Short Sales. Legal matters are complex and need the finesse of a legal professional.  Real-Estate agents are NOT attorneys (in most cases anyway).  And many attorneys may call themselves “Short Sale Specialist”.   But what does that really mean? In most cases it means nothing. Research them first. Attorneys must report to the State Bar Association. So you can start there. How long have they been practicing? Do they have any complaints or disciplinary actions. You can go to www.calbar.org and research any potential attorney that you desire. So, do the research!  Laws vary from state to state and a creditor may still be able to pursue you even after the short sale.  You may finally close escrow, and after many many months, finally be able to relax and forget about the hell you just went through, then suddenly you get a bill from the mortgage company attempting to collect the balance of the loan! Or just as bad, come tax season, the creditor sends you a 1099 Income form and now you have to report the balance as income on your tax returns!  Which brings me to the next bit of advice;

Talk to a tax professional.  Just as important as talking to an attorney over a legal matter, talk to a tax professional about potential tax ramifications of a short sale. What?  Tax liabilities? My real estate agent never mentioned tax liabilities! Well of course he didn’t. They don’t want to tell you the potential negatives of a short sale, they just want their commission.  But potential tax issues are a consideration when looking into a Short Sale.  A creditor that agrees to settle for less than what is owed, such as in the case of a Short Sale, may consider the balance of the debt as income and report it to the IRS via a 1099 form.  And depending on the balance of the loan, that reported amount could be huge! So before you turn your current situation into a potentially lethal tax situation, talk to a professional. Do the research!

Know your rights.  Just because a creditor comes after you for the deficiency (the difference between what you owe and what it was sold for) doesn’t mean you have to pay for it. You can negotiate with the creditor. The creditor understands the unlikelihood that they will collect the full balance of the loan. If you contact the creditor they are more than likely to accept any reasonable offer. And if they do not, then you may consider a Chapter 7 bankruptcy and discharge the liability. But before you jump right into bankruptcy, you may want to…

Talk to a Bankruptcy Attorney.  Enough said.  Moving on….

Stay current with the Association.    Your association is not concerned about the status of your mortgage. They are only concerned about their monthly dues. If you stop paying them, they will not magically go away. The fees will continue to accumulate and may actually kill your escrow. Someone must pay the almighty association, and a large pending association bill may keep potential buyers from your property.  Many real estate agents will actually shy away from a short sale where there are large back association dues.

Be Patient    The process of a short sale can be very lengthy. So be patient. “Keep Calm and Carry On” as they say.  In the worst case, the property forecloses and if the lenders come after you for any deficiency……….file bankruptcy.

For more information about bankruptcy and how we can help solve your debt problems, please visit:  http://www.cantpay.com

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According to “definition”, poverty is an annual income of a little over $11,000 for one person or $22,000 for a family of four. I am not sure where this number comes from, but it is currently the number that will officially call you impoverished. Seems like if this number was doubled it would still be poverty, but that’s just my opinion.

Well, according to a survery by the Associated Press, the number of American’s living in poverty is about to hit it’s highest levels since the 1960’s.  How did this happen? I don’t think it takes a whole lot of thinking to see what has been going on. It’s a tale as old as time…”The rich get richer and the poor get poorer”. 

But, I don’t want to discuss the reason for how we got here, quite honestly I was a little taken aback by discussions on how to “fix” the problem.

There has been a lot of complaining about the 1%. “I am the 99%!” and so on. Now with poverty at an all time high, the discussion of “sharing” the wealth is getting louder. Apparently addressing our financial inequality is the only solution to the economic mess. CEO’s and their big bad corporations keep getting richer but my income keeps shrinking! So I grab a Grande Frappachino from my local starbucks, get a sausage McMuffin from McDonalds and drive my giant, gas guzzling SUV to Wall Street and protest big corporate greed! Come on, Starbucks and Chevron, your stock is up, give me some money! Come on…….share!!!!!!

Okay….okay….calm down, I’m not necessarily defending big corporations. When I see the salaries of some of these CEO’s it knocks me out of my chair too. But I get up, wipe the tear from my eye, and I move on.

Telling the government to force these corporations to share the wealth sounds a little bit, to me anyway, like Socialism. Socialism?!  What? Not in my country you say? Well that’s exactly what these “99%” protester’s seem to want. And they may get it. As they say “Be careful what you wish for….you might get it”

Yes, it sucks to be poor. Especially if you have children to support. But to point at corporations and tell them to share the wealth? I’m not sure that is the answer. Sure, it would be nice for these big companies to increase the salaries of their employees. This would help the common workman to go out and spend more money, thus stimulating the economy. But don’t force it by calling for government reform!

Henry Ford may have had the right idea. He was famous for paying his employees well above the average salary for similar positions elsewhere. This way his employees could afford to buy his cars. It worked well for Ford then and may work well for America now. But that was his choice. Not the governments.

The way it sits currently, American corporations are earning higher profits than ever before, while paying their employees the lowest wages they have ever paid. In many cases, the employees are living below the poverty line.

So what are we to do?  At times it appears as though Democracy may have run it’s course. Maybe change wouldn’t be such a bad idea. But then again, Socialism didn’t work so well for the Soviets either. Perhaps a more middle of the ground concept would better serve our country. Or maybe we need something more extreme. Perhaps a Monarchy? Then I, as your ruler, could sit back, relax and count the money that I collected from my royal subjects. Ahhhh…..it’s good to be the king! Okay, that may not be the best way to go either. (unless you’re the king)

Too many times we act too quickly in response to a situation or event. As a child we are taught to count to ten when we are angry so that we can cool off before making a rash decision.  When we become adults we sometimes forget this useful bit of advice and immediately act out, at a time when our emotions are controlling us and we are not thinking clearly.  So when we hear that poverty is at an all time high, we start yelling socialistic concepts at Washington to rush some legislation through to force big corporations to share the wealth with no real consideration as to the potential consequences. In times like this we must slow down, cool off and think carefully before we pass yet another bad law into our system. If not, we will end up with something akin to the new “Health Care Reform” act. Oh yeah…..remember that beauty?  Stay tuned. I have a feeling there is more where that came from.

For more information about bankruptcy and how we can help solve your debt problems, please visit:  http://www.cantpay.com

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