Follow Me To The New Website

I have updated my website and will no longer be using this blogger format. This will be the last post on this site.

Here is the address of the new blog:
http://www.thefinancialphysician.com/blog/

Also we are now archiving both the National XM Radio show and the WOBM AM 1160 show in the Radio section of the website.

Here is the link:
http://thefinancialphysician.com/scatigna-radioshow.htm

So come on over to the new site and make sure you bookmark the new blog and radio archive page.

Also make sure you register in the members section it's free and gives you access to excerpts from my book as well as other stuff (to be determined)

Banks To Insure The FDIC?

The FDIC is supposed to insure the banks, not the banks insuring FDIC. This is a very strange turn of events.-Lou

Broke FDIC May Borrow Money From BANKS

Bill Seeks 3% Social Security COLA for 2010

Good news for our seniors who are struggling to make ends meet with CDs paying 1% (if they are lucky to have money to put in CDs). I hope the bill passes.-Lou

New Bill Introduced in Congress Would Give 37 Million Seniors an Estimated $415 More in Social Security Payments Next Year

Emergency COLA Bill Would Boost 2010 COLA from Zero to Three Percent

WASHINGTON--(Business Wire)--A new bill introduced in the U.S. House of Representatives would give the average beneficiary an additional $415.20 in Social Security payments in 2010, a boost of $34.60 per month. Without such intervention, the Congressional Budget Office (CBO) forecasts that seniors will see no increase in next year`s checks.

The Emergency COLA Bill (H.R. 3557), encouraged and promoted by TSCL from the beginning, was introduced earlier this week by Rep. Walter Jones (R-NC). The bill would provide a COLA for 2010 equal to the average of the COLA over thepast ten years. That average is roughly three percent. In June, The Senior Citizens League (TSCL) became the first national group tocall for an Emergency COLA for 2010. In addition to Rep. Jones` bill, VermontSen. Bernie Sanders announced plans to introduce an Emergency COLA bill,possibly later this month.

"Our nation`s seniors will no doubt be grateful to Rep. Jones for introducing legislation that will help them keep up with inflation," said Daniel O`Connell,TSCL chairman. "But the work has just begun - we need every senior citizen to immediately contact their entire Congressional delegation and encourage them to pass the Emergency COLA Bill."

Almost 70 percent of beneficiaries depend on Social Security for 50 percent or more of their income. Social Security is the sole source of income for 15 percent of beneficiaries. "I am extremely disappointed that our nation's seniors are being refused a modest Social Security COLA in 2010," said Rep. Jones.

"As seniors struggle topay their mounting bills, Congress needs to reign in unnecessary spending and instead focus on actual needs, like ensuring that our seniors are granted the COLA they need to help make ends meet." Since automatic Cost of Living Adjustments went into effect in 1975, seniors have never before failed to get an increase. Without an Emergency COLA, millions of seniors will receive cuts due to the soaring costs of prescription drug plans, which many beneficiaries have automatically deducted from Social Security checks.

Visit www.SeniorsLeague.org for more information.

Treasury Bond sales A Ponzi Scheme?

From Washingtonsblog.com

Are U.S. Treasury Bond Sales a Ponzi Scheme?

I have heard at least 5 different theories by very smart people about how
U.S. treasury bond sales are being faked.

I do not have either the background or the inside knowledge to be able to
comment on whether any of them are true.

(1) PhD professor of economics Michel Chossudovsky - who is a very savvy
observer of international dynamics - claims in an interesting 8-minute
video:

In a bitter irony, the recipients of the bailout under TARP and Obama's
proposed $750 billion aid to financial institutions are the creditors of the
federal government. The Wall Street banks are the brokers and underwriters of
the US public debt, although they hold only a portion of the debt, they transact
and trade in US dollar denominated public debt instruments Worldwide.

They act as creditors of the US State. They evaluate the creditworthiness
of the US government, they rank the public debt through Moody's and Standard and
Poor. They control the US Treasury, the Federal Reserve Board and the US
Congress. They oversee and dictate fiscal and monetary policy, ensuring that the
State acts in their interest...

While the Federal Reserve can create money "out of thin air", the
multibillion outlays of the Treasury (including the Bush and Obama bank
bailouts) will require the emission of public debt in the form of Treasury Bills
and government bonds. Part of these T-Bills will of course also be held by the
Fed.

US financial institutions oversee the US public debt. They are involved
in the sale of treasury bills and government bonds on financial markets in the
US and around the World. But they also hold part of the public debt. In this
regard, they are the creditors of the US government. Part of this increased
public debt required to rescue the banks will be financed or brokered by the
same financial institutions which are the object of the bank rescue plan.

We are dealing with a pernicious circular relationship. When the banks
pressured the Treasury to assist them in the form of a major bank rescue
operation, it was understood from the outset that the banks would in turn assist
the Treasury in financing the handouts of which they are the recipients.

To finance the bank bailout, the Treasury needs to run a massive budget
deficit, which in turn requires a staggering increase of the US public debt.

Congress To Stop Bank Robbery? (of us)

Congress doing something positive for a change? It's about time, these banks have been getting away with robbery.-Lou

Democrats Target Bank Overdraft Charges

Bailed-Out Firms Lean More Heavily on Fees

Washington Post Monday, September 21, 2009

A backlash is brewing on Capitol Hill against banks that charge large fees for overdrafts without asking or telling customers, the latest sign that the financial crisis is shifting the balance of power from banks toward borrowers.

Banks struggling to survive have become increasingly reliant on the fees, which could total $38.5 billion this year.

But congressional Democrats, who pushed through new restrictions on credit cards this spring, now are promising a crackdown on overdraft fees, using words like "criminal" and "rip-off" to describe the practice of letting people overspend and then charging them fees without warning. Most overdrafts are now incurred on debit card transactions.

Sen. Christopher J. Dodd (D-Conn.) plans to introduce legislation requiring banks to get permission from customers, rather than allowing overdrafts automatically. If customers decline and then try to overspend, the transaction would be rejected. A similar bill is pending in the House.
Dodd dismissed concerns about the impact on ailing banks.
"People out there are getting whacked," he said. "They should have the right to say, 'Deny me the transaction.' "

The attack on overdraft fees comes as Congress is considering a fundamental overhaul of financial regulation. The Obama administration has proposed the creation of a new agency empowered to write and enforce rules protecting consumers in financial transactions, removing that power from banking regulators. Dodd also favors the creation of a single agency to oversee the health of banks, consolidating a responsibility held by four agencies.

More...

Listen To This Week's Radio Shows

Listen to this past Sunday's "The Financial Physician" national radio program on XM Satellite radio. This link allows you to listen to the last 4 week's shows. I also have a link to Sunday's morning show on WOBM-AM 1160 in New Jersey

XM National Show Here

WOBM AM 1160 Show Here

Have a Garage Sale, Lose Your House

In effort to protect your financial health I give you the following warning. The government can now fine you as much as $15 million if you sell certain items at your garage sale. More government bullcrap-Lou

New Government Policy Imposes Strict Standards on Garage Sales Nationwide

FoxNews

Americans who slap $1 pricetags on their used possessions at garage sales or bazaar events risk being slapped with fines of up to $15 million, thanks to a new government campaign.

The "Resale Round-up," launched by the Consumer Product Safety Commission, enforces new limits on lead in children's products and makes it illegal to sell any items that don't meet those limits or have been recalled for any other reason.

The strict standards were set in the 2008 Consumer Product Safety Improvement Act after a series of high-profile recalls of Chinese-made toys.

The standards were originally interpreted to apply only to new products, but now the CPSC says they apply to used items as well.

"Those who resell recalled children's products are not only breaking the law, they are putting children's lives at risk,” said CPSC Chairman Inez Tenenbaum. "Resale stores should make safety their business and check for recalled products and hazards to children."

In order to comply, stores, flea markets, charities and individuals selling used goods — in person or online — are expected to consult the commission's

24-page Handbook for Resale Stores and Product Resellers (pdf) and its Web site for a breakdown of what they can't sell.
Violators caught selling anything on the enormous list face fines of up to $100,000 per infraction and up to $15 million for a related series of infractions.

CPSC spokesman Scott Wolfson says the fines are intended for large companies with serious infractions.

"CPSC is an agency that has used its penalty powers over its 30-year history against companies," Wolfson told FOXNews.com. "CPSC is not seeking to pursue penalties against individuals hosting a garage sale or yard sale, we are encouraging them to take the right steps to not resell recalled products."

But FOX News Legal Analyst Bob Massi says the law makes no distinction for families and small resellers.

"Most people having garage sales at this point don't have much anyway, so to have a fine levied against them is tantamount to harassment," Massi told FOXNews.com. "And if you or I asked 100 people about this, they would never even know the law exists."

More...

A Little Sunday Humor

A funny and entertaining video. Also sad but true.-Lou

45% Of Doctors To Quit If Healthcare Passes?

If true this would totally destroy the healthcare system. We would have to wait months for a doctor appointment. This is nuts.-Lou


45% Of Doctors Would Consider Quitting If Congress Passes Health Care Overhaul

Two of every three practicing physicians oppose the medical overhaul plan under consideration in Washington, and hundreds of thousands would think about shutting down their practices or retiring early if it were adopted, a new IBD/TIPP Poll has found.

The poll contradicts the claims of not only the White House, but also doctors' own lobby — the powerful American Medical Association — both of which suggest the medical profession is behind the proposed overhaul.
It also calls into question whether an overhaul is even doable; 72% of the doctors polled disagree with the administration's claim that the government can cover 47 million more people with better-quality care at lower cost.

The IBD/TIPP Poll was conducted by mail the past two weeks, with 1,376 practicing physicians chosen randomly throughout the country taking part. Responses are still coming in, and doctors' positions on related topics — including the impact of an overhaul on senior care, medical school applications and drug development — will be covered later in this series.

Major findings included:

• Two-thirds, or 65%, of doctors say they oppose the proposed government expansion plan. This contradicts the administration's claims that doctors are part of an "unprecedented coalition" supporting a medical overhaul.

It also differs with findings of a poll released Monday by National Public Radio that suggests a "majority of physicians want public and private insurance options," and clashes with media reports such as Tuesday's front-page story in the Los Angeles Times with the headline "Doctors Go For Obama's Reform."

Nowhere in the Times story does it say doctors as a whole back the overhaul. It says only that the AMA — the "association representing the nation's physicians" and what "many still regard as the country's premier lobbying force" — is "lobbying and advertising to win public support for President Obama's sweeping plan."

The AMA, in fact, represents approximately 18% of physicians and has been hit with a number of defections by members opposed to the AMA's support of Democrats' proposed health care overhaul.

More...

Hyper-Inflation Nation?

This is an interesting video series on inflation and hyper-inflation. How it happens and the likely chance it's coming here and soon.-Lou

Chart Of The Day

click on chart to enlarge

Why is the 30 day U.S. Treasury Bill yield plunging to 0%? Is there some economic or financial calamity around the corner? Why is smart money buying the safest securities when they yield nothing? Why are corporate insiders selling their stock like mad? Why is the U.S. dollar declining on almost a daily basis? Why is gold stubbornly holding above $1,000 ounce? But the stock market keeps going up, you say. Things must be fine you say. Something just isn't right. Stay tuned.-Lou

The Next Housing Wave

This next wave of the housing crisis will be much worse than the sub-prime problem. These mortgages were taken out on expensive homes so a default is more costly to bank or entity holding the mortgage. Also the dollar resets on the monthly payment will be much higher because the interest increase is against a large balance. The next leg down in the economy, financial institutions and financial markets is just around the corner. Disregard all the happy talk on financial TV.-Lou

"Option" mortgages to explode, officials warn

WASHINGTON (Reuters) - The federal government and states are girding themselves for the next foreclosure crisis in the country's housing downturn: payment option adjustable rate mortgages that are beginning to reset.

"Payment option ARMs are about to explode," Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama's administration to discuss ways to combat mortgage scams.

"That's the next round of potential foreclosures in our country," he said.
Option-ARMs are now considered among the riskiest offered during the recent housing boom and have left many borrowers owing more than their homes are worth. These "underwater" mortgages have been a driving force behind rising defaults and mounting foreclosures.

In Arizona, 128,000 of those mortgages will reset over the the next year and many have started to adjust this month, the state's attorney general, Terry Goddard, told Reuters after the meeting.

"It's the other shoe," he said. "I can't say it's waiting to drop. It's dropping now."

The mortgages differ from other ARMs by offering an option to pay only the interest each month or a low minimum payment that leads to a rising balance in the loan's principal.

When the balance of the loan reaches a certain level or the mortgage hits a specific date, the borrower must begin making full payments to cover the new amount. The loan's interest rate also may have been fixed at a low level for the first few years with a so-called teaser rate, but then reset to a higher level.

Because the new monthly payments can be five or 10 times what borrowers are accustomed to paying, they "threaten a much greater hit to the consumer than the subprimes," Goddard said, referring to the mortgages often extended to less credit-worthy borrowers that fed the first wave of the financial crisis.

More...

FDIC Running On Empty

The FDIC better decide what they are going to do soon, the insurance fund is running on fumes. The $100 billion credit line with Treasury will need to be tapped. The real question: Is $100 billion enough?-Lou

FDIC to consider ways to replenish deposit fund

WASHINGTON (Reuters) - U.S. bank regulators are considering tapping a line of credit with the U.S. Treasury Department and may explore other lesser-known options to replenish the dwindling fund that safeguards bank deposits.

Federal Deposit Insurance Corp Chairman Sheila Bair said on Friday that the agency would meet at the end of the month to discuss options to rebuild the fund, which has been significantly drained by a sharp increase in bank failures.

"We are carefully considering all our options, including borrowing from Treasury," Bair said, referring to the agency's $500-billion line of credit with the Treasury Department. She was speaking at a global finance conference in Washington.

But regulators are still reluctant to tap the line of credit because they want to avoid temporarily using taxpayer money to clean up the banking mess, she said.

Bair said the FDIC also had lesser-known alternatives for replenishing the fund, such as prepayments of assessments on banks and issuing a note. She did not give further details on those options.

Other options include more special assessments on banks. The FDIC has already charged the industry one emergency fee of $5.6 billion this year, and is authorized to levy two more.

Bair said the FDIC would seek comment on these options before making a final decision.

So far this year, 92 U.S. banks have failed, compared with 25 during all of last year and only three in 2007. Those failures have whittled the balance of the insurance fund down to $10.4 billion from $45 billion a year ago. The FDIC is careful to note that it has $42 billion in reserves to handle failures over the next year.

"There are a few options available to the fund - none of them very palatable," said Brian Olasov, a managing director with McKenna, Long & Aldridge in Atlanta. He said the long-term solution to replenish the fund will be higher quarterly assessments.

MARK-TO-MARKET

Bair's comments touched on a range of topics, from her view that regulators should not have the option of extending "open-bank assistance" to troubled financial firms, to her concerns about accounting proposals that could imperil banks in times of stress.

She said she generally agrees with actions by the Financial Accounting Standards Board but is worried about a proposal to further extend "mark-to-market" accounting to bank loans.

"During periods of market stress, losses could be exacerbated," Bair said. "We don't need to deepen the crises."

FASB met last month to discuss whether to force companies to value nearly all financial instruments on their balance sheets, including loans, at market value, and to reflect them in earnings. Banks oppose such a change. FASB is expected to release a proposal in the first half of 2010

More...

A Watch that Watches Your Kid

Sounds like a great product to me, although I don't think I would have felt that way when I was 8. I wonder if this is a public company.-Lou

The satellite link that keeps watch on your children

Its vivid colour is clearly designed to appeal to youngsters. But this watch is really aimed at their parents.

For its key selling point is a satellite positioning system that locates the wearer to within ten feet.

The makers claim the GPS tracking device will offer anxious parents peace of mind.

But critics have said the 'tagging' is a step too far in the climate of paranoia over child safety.

The num8 watch, pictured above, costs £149.99 and can be securely fastened to a child's wrist, triggering an alert if forcibly removed.

Parents will be able to see their child's location on Google maps by texting 'wru' to a special number, or clicking 'where r you' on the secure website linked to the device. The street address and postcode will be displayed.
Safe zones can also be set up in which children can play. An alert will be sent to the parents if the child strays out of that area.

Steve Salmon, of makers Lok8u, said: 'Losing your child, if only for a brief moment, leads to a state of panic and makes parents feel powerless. The overriding aim of num8 is to give children their freedom and parents peace of mind.'

But Dr Michele Elliott, director of children's charity Kidscape, said: 'Is the world really that unsafe that parents need to track their children electronically?

Link