In Scrooge McDuck’s first **named** appearance in a cartoon (his first actual appearance was in Spirit of ‘43) he teaches Huey, Dewey and Louie about the economy, from the origins of the types of the currency to taxes to inflation, budgeting and investing.

It’s good stuff. Great primer on finance for all ages.

Available in HD.

(I notice in 1967, Scrooge’s budgeting pie didn’t include health care… hmmmm.)

Nick

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from the NY Daily News: graffiti on the walls boarding up St. John's Hospital

New York City’s hospitals, already strained and overcrowded, are experiencing a spree of closings, felled by the economic crisis. St. John’s Queens Hospital and Mary Immaculate Hospital have gone bankrupt and boarded up the entrances.  This leaves Queens-dwellers with few options, and those few options in an awful overcrowding situation.

“It’s a real failure of government to set priorities and manage them properly,” Gioia said. “They throw up their hands when the money runs out and say, ‘What can we do?’ That’s not good enough.”

Mayor Bloomberg called the closures “sad” and said the city has to do more with less in these tough economic times.

“Having said that, there is no reason for us to … walk away from our basic functions of government,” he said, adding that the Fire Department will dispatch more ambulances in Queens and for other hospitals to fill the void.

Carlos Quiles, a nurse who lost his job at St. John’s, said the next best option for care in Queens is Elmhurst Hospital Center, which is already filled to capacity.

“I can’t understand the wisdom behind closing the hospitals,” he said. “The politicians clearly have no understanding of the ramifications.”

Source: NY Daily News: Councilman Eric Gioia rips hospital closings in Queens

That nurse is right, the politicians don’t get it. They’re not envisioning the overcrowding and wait times this will cause. I’ve never heard of a hospital here that isn’t packed, we’re already seeing ER wait times in excess of 8 hours in some of the city-run hospitals, and you suddenly remove nearly a thousand beds from the equation?? That’s really not gonna be pretty.

In Manhattan, Cabrini Medical Center had to close. There’s been lots of talk about that here in the hospital I live in, because we’ve taken in some of Cabrini’s refugee respiratory therapists. The gossip now is about which hospital is next in line at the guillotine (some say Maimonides Hospital in Brooklyn won’t make it) and whether any of the doctors and nurses in my home hospital will be safe. “I don’t know if we’re safe,” my doctor said, sighing.

Nick

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Cartoon by John Darkow, The Columbia Daily Tribune, Missouri

Americans are fed up with banks double dipping off them, pulling down billions in bailouts from taxpayers, while also squeezing us with increased fees and interest.

The backlash is now being expressed in Congress:

BAILED OUT BANKS

U.S. banks that issue credit cards have received more than $120 billion in taxpayer funds since October, money the government has asked them to use to expand lending.

But with U.S. credit card defaults at record highs, lenders are trying to protect themselves by tightening credit limits and closing accounts, actions that have infuriated lawmakers and consumers, and even triggered an inquiry by the New York state attorney general.

U.S. lawmakers also angry that the same banks, such as Bank of America, Citi and Chase, with big credit card operations, charge excessive interest rates and fees while getting bailouts from taxpayers who use the cards.

Source: Reuters: U.S. lawmakers consider credit card reform proposals.

How far should Congress go?

Nick

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Here’s my take:

A big part of this whole Wall Street collapse are something called “adjustable-rate mortgages” (ARMs).  Especially problematic are ARMs that “balloon” in cost two or three years down the line.  These mortgage companies sold this crap using the first few years’ “teaser rates” of 1% or 2% interest to lure in lots of new customers, many of whom didn’t read the fine print and didn’t see the 10% (or higher) price hike coming.  When so many borrowers couldn’t pay the ballooning interest, the house of cards fell down, taking the financial sector (and the world economy) down with it.

Yesterday I saw someone ask, “since interest rates have been low, why would anyone sell ARMs instead of fixed-rate mortgages?”  The answer has to do with projected revenues.  That is, these companies sold lots of “balloon” ARMs (mortgages that increase years later) so that they could bundle them into securities, go to Wall Street and brag about their securities’ “projected revenue,” which is a big part of what determines prices.
“Look!  In ‘09, earnings on our securities will TRIPLE!!  BUY BUY BUY!!!”

A Dilbert cartoon from Dilbert.com

Selling “balloon ARMs” was motivated by greed, and the market’s insatiable appetite for these mortgage-backed securities after Greenspan lowered interest during the post-9/11 slump, and thus the return on safe Treasury Bills, to 2%.  An unintended consequence of that was that it drove investors to desperately seek out another safe investment (with better return than 2%).  Pension funds, 401k managers, mutual funds, banking chains, investment banks and even New York City’s MTA, FLOCKED to mortgage-backed securities.  Moody’s rated them AAA!!  STRONG BUY!!  And hey, if something goes wrong, the losses were insured with credit default swaps from AIG!!   Why worry?  BUY BUY BUY!  Sell even more mortgages and create more and more and more securities to sell!  People made a fortune doing this.

Problem is, the “adjusted” rates led to THIS, too many mortgages defaulting.

Around 24% of subprime ARMs were delinquent in 2006… it’s likely much worse now.  The securities held up by these mortgages collapsed, becoming the “toxic assets” that are now all over the news and causing the economy to tank.   EPIC FAIL.

Yes, the Treasury Department is going to help finance the purchase of these worthless assets (congratulations, American taxpayer!)  The plan is to pull them off Corporate America’s balance sheets to try and keep the financial sector afloat.

But I think we’ve let the greedy elite build this particular Tower of Babel so high (a lot like Yertle the Turtle) that it crashing down is completely unavoidable, and we’re essentially screwed, no matter what the government does or doesn’t do.

What goes up, must come down.

Nick

Later this week in the “Nick’s Crusade” blog: federal regulators missed an awful lot of chicanery; what happened?

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But what have you observed first hand? Is it bad where you are? How do you think the economic crisis will effect you? How do you think it will effect people with disabilities?  Will we be the first thrown under the bus, as was proposed in California?

Here’s what I’ve observed first-hand. In New York, one of the pillars of our economy is the financial sector, and it has collapsed.  The crisis has forced the state to cut services. A lot of people are upset about the state and city budget cuts; a protest at city hall 25,000-people-strong definitely made my girlfriend’s travel more interesting. At the hospital I currently live in, they are clamping down on expenses to ride out the cuts.  For fiscal year 08-09 there is a hiring freeze (which means when my favorite person on staff moved to Canada, they can’t replace her), they made it harder to get overtime, supply orders have been scaled back, the employee uniform stipend was cut to nearly nothing, and their customary free Thanksgiving turkeys were canceled (the latter two don’t bother me, as they never would’ve existed in Alabama anyway).  My doctor thinks that the South Campus ultimately won’t survive.  And the doctors and nurses are buzzing about the startling hospital closures in Queens and wondering who’s next.

Granted, I’ve not seen outside the hospital walls (and I’m eager to check out the city and report back) but so far, what I’ve seen first hand hasn’t been that bad.   Not compared to the effect of the devastating cuts that I saw first-hand in Alabama in the late ’90s and early ’00s, that actually caused deaths (when the economy was booming and services should have been increasing).   Is it bad where you are?

As odd as this sounds, I think there are possible upsides to global economic collapse.

The Upsides

With Wall Street cratering, many in the finance and related industries have left the city for higher ground, leading to an unprecedented situation: for once in Manhattan, apartment vacancies are up and rents are down.

Shopping habits have definitely shifted, the era of wanton excess being cool (that should’ve never happened) is finally behind us, and more businesses, desperate for customers, have stopped treating us like crap.  Nothing is devoid of upsides.

What have you witnessed first hand?

Nick

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O RLY??

It’s hardly the soup kitchen for people at the very top.

The chairman of Lehman Brothers, Richard Fuld, still has his mansion in Greenwich, CT, his oceanfront estate on Jupiter Island in FL, and his Park Avenue co-op in Manhattan.

Many at Lehman blame Fuld for dallying while his investment bank went bust, taking risks with other people’s money while he cleared over $40 million in salary and stock in the last year alone.

Fuld could not be reached for comment by 20/20, but outside the Lehman offices this week, employees took glee in telling him off in pen on a portrait of Fuld.

“He made a lot of money and he lost a lot of money,” said Fox business news anchor Alexis Glick, “and he made dramatic mistakes, mistakes of the highest magnitude.”

Glick has been highly critical of Fuld, feeling the pain in a direct way. She has many friends at Lehman and her mother worked there for years.

“It’s just unbelievably shocking,” said Glick, speaking about the devastation felt by her family and friends. “So they’re crying, they’re sick, I mean guys have been telling me they’ve been throwing up because they just can’t stomach what has happened.”

Fuld isn’t the only top executive who remains well-off despite his firm’s collapse. Former Bear Stearns CEO Alan Schwartz collected more than $38 million in salary and bonuses in the last three years for which figures are available, though he and Lehman executives also saw their net worths drastically plummet as stock values crashed. Bear Stearns was on the brink of financial ruin when JP Morgan Chase bought it in March.

Full article: The Fall of the Gilded Age

IS BAILING OUT LEHMAN REALLY NECESSARY?

Shouldn’t we wait until their CEO had to sell one of his three luxury homes before bailing out Lehman?

It really seems like we’re rewarding these guys instead of letting them naturally get picked clean and displaced by smarter competitors.

Obviously we do need to do something to restore confidence in our banking system. I recently overheard nurses talking about pulling their money out of banks and hiding it at home (1930s-style) for fear it’d disappear in a bank collapse. That’s how serious the problem is getting. I’m not saying do nothing. I don’t have an issue with helping out banks like IndyMac or Washington Mutual, but bailing out rich Wall Street investment firms seems a whole ‘nother animal.

The $700 Billion financial “bail out” bill seems to be all about providing a soft, pillowy landing for stupid decision-makers at taxpayer expense. They keep their three luxury homes, and we pay the price for their idiocy.

And articles like this only highlight the unfairness:

7. Do the Wall Street executives get to keep their bonuses?
The Bush Administration says it needs to encourage executives to get their cooperation, and that clamping down on their pay would only hurt their willingness to get on board. Critics in both parties say the threat of the executives’ firms going belly-up should ensure their cooperation regardless of what restrictions are placed on their once golden parachutes. Mounting pressure from constituents on Main Street is likely to mean there will be some cap on compensation associated with the bailout. But corporate America usually finds a way around such limitations, and there are even legal questions about what kind of restrictions can be placed on the firms’ compensation structures.

Full article: 7 Questions About the $700 Billion Bailout

If this disaster really requires $700 BILLION worth of government intervention, who is paying for it? My first instinct when corporations harm us, is TRUST-BUSTING! And this meltdown is a screw up of unprecedented magnitude, with harm to the public of historic proportions.

Where are the CONSEQUENCES for bad, stupid leadership?

Can anyone tell me why, as part of this bill, the Treasury Department isn’t seizing CEO yachts and mansions to pay for this debacle? Why is demanding real consequences worse than paying nearly one trillion ourselves? We’d rather foot the bill in their stead? WHY??

If these idiotic decisions by Wall Street have no real consequences, and the dumbasses responsible keep their three estates and golden parachutes, no real lessons have been learned, we’re basically incentivizing even more stupidity down the line.

And now Congress has weighed in. They are saying:

I’m not saying do nothing. But clearly we have to do something different. The original Paulson plan isn’t going to fly. We can’t afford a cushy deal for the uber-rich.

Nick

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