Masters of the Universe category archive

The rich are different from you and me.

The rich get richer, succeed or fail.

You and me, we get rewarded with “miles” we can’t use if we fly.*

Former fashion jewelry saleswoman Rebecca Gonzales and former Chief Executive Officer Ron Johnson have one thing in common: J.C. Penney Co. (JCP) no longer employs either.

The similarity ends there. Johnson, 54, got a compensation package worth 1,795 times the average wage and benefits of a U.S. department store worker when he was hired in November 2011, according to data compiled by Bloomberg. Gonzales’s hourly wage was $8.30 that year.

More differences at the link.

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*Some conditions, which make those miles worthless, may apply.

I remember when IRA’s were new. They were touted as a financial boon. It was in the time of high interest rates during the Arab fuel embargo. Million-dollar balances when I and my fellow 20-somethings reached retirement age were projected.

If you put aside umpty-ump dollars today, with company matching, you will have umpty-umpty-umpty-umpty-ump dollars when it’s time to retire.

It hasn’t quite turned out that way, has it?

Kavips explains why. A nugget:

You think? This is Wall $treet we’re talking about……

Read the rest, in which compound interest meets commissions, and commissions win.

If you or someone you know is considering “prepaid” shopping cards, beware the strings:

Prepaid cards are being marketed to the unbanked, the underbanked and quite simply those who don’t like dealing with banks. Wal-Mart stores, for example, recently advertised its Walmart MoneyCard in circulars as a way to “Save on your overdraft fees.” That card has a $3 issuance fee and other fees apply, too.

Some prepaid cards have upfront fees that range from $2.99 to $14.95 to activate the card. But many cards won’t charge such fees if you get the card online. In some cases, you may have to load a minimum of $20 or so to activate the card.

Much more at the link.

Thom debates a Glibertarian.

Banks continue to go “poof!”

Bank no more on

Douglas County Bank, Douglasville, Georgia
Parkway Bank, Lenor, North Carolina

Thom explains “negative externalities.”

Susan Blumner looks over the hedge and view the hogs inside:

Are they (hedge fund managers–ed.) worth it? They certainly think so. But the system is rigged. Even when hedge funds, which are basically big, sparsely regulated pools of investment capital, don’t do any better than market returns, their managers can walk away with the equivalent of a small nation’s GDP.

Take Steven Cohen of SAC Capital Advisors. Cohen’s 2012 pay was $1.4 billion. For this, he obtained a 13 percent return for investors. Sounds good, right? Except that the Standard & Poor’s 500 stock index shot up 16 percent last year when factoring in dividends. SAC investors paid a 50 percent performance fee to Cohen despite the lagging numbers.

Having no shame is one of the rules for success as a hedge fund manager.

Read the rest.

The theory that businesses will always do the right thing works out so well in Congressional hearings, does it not?

Almost missed this because of Boston fatigue (escaping TV newsies attempts to invent colorful and creative ways to say “We have no idea what’s going on” was quite tiring): the FDIC offed some banks Friday. These are all gone:

Chipola Community Bank, Marianna, Florida.
Heritage Bank of North Florida, Orange Park, Florida.
First Federal Bank, Lexington, Kentucky.

Via Bartcop.

. . . pay for being part of civilized society.

And it’s all quite legal.

The doors are locked.

But after saving for a down payment and building back his credit, the single father learned he still wouldn’t qualify for a new loan. After two years in the penalty box, underwriters said, he still had five more years to go.

To his surprise, his credit history showed a foreclosure, a “kiss of death” stemming from a strange credit quirk. Banks and credit bureaus have no special code to report a short sale.

Without the distinction, homeowners who won the bank’s approval for a short sale of their underwater home are seen as no different than years-long defaulters who ended in foreclosure.

One of the sights where I grew up was the Debtors Prison next to the local courthouse. It predated the Revolutionary War and was a fixture for elementary school field trips; there is one in both counties on the Eastern Shore (the one pictured is from the other county).

It was alway presented as a relic of the bad old days, when folks believed that jailing persons was a way to make them come up with money they didn’t have so they could pay their creditors.

All that is old is new again.

Benjamin I. Page and Larry M. Bartels explain:

Over the last two years, President Barack Obama and Congress have put the country on track to reduce projected federal budget deficits by nearly $4 trillion. Yet when that process began in early 2011 only about 12 percent of Americans in Gallup polls cited federal debt as the nation’s most important problem. Two to three times as many cited unemployment and jobs as the biggest challenge facing the country.

So why did policymakers focus so intently on the deficit issue? One reason may be that the small minority that saw the deficit as the nation’s priority had more clout than the majority that didn’t.

The have-nots outnumber the haves, but the haves are haves because what they have is clout.

Read the rest.

Via Bartcop.

The new paper trail, described by William D. Cohen at Bloomberg:

Wall Street professionals (and others) still don’t grasp that e-mails and text messages are no place for laying out schemes of wrongdoing, for sharing one’s doubts about the wisdom of selling a flawed product or for freaking out when a large bet on an obscure derivative goes awry.

Even though the U.S. public has had exactly zero satisfaction when it comes to holding Wall Street accountable for the financial crisis that started in 2007, some degree of solace can be found in the stream of embarrassing e-mails and documents that those with subpoena power have kindly made available to the rest of us in recent years.

Follow the bread crumbs through the forest with Mr. Cohen.

Read the rest.

Whenever I start to think I should retire this title, another master of the universe bites the dust:

Golden Canyon Bank, Golden Canyon, Arizona

is no more.

Have you noticed that the flashier the name, the more ephemeral the bank?

Afterthought:

We have our own bank drama going on in these parts, where it belongs: in criminal court.

Martin Hutchinson has lost faith in bankers.

In the past week, the detailed revelations from JP Morgan’s grilling in the US Senate have combined with the Cyprus rescue blunder to generate one inescapable conclusion: public or private sector, European or American, there isn’t a decent, competent banker among them. Truly almost 20 years of funny money and 30-40 years of misguided deregulation have drained the financial sector of the quiet competence it used to exhibit.

Follow the link to find out why.