Category: business and finance

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“fiduciary rule” one step closer to the Fed’s Stealing your Retirement Savings

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“Saving for the future shouldn’t be a privilege for the wealthy, and Washington doesn’t need to put another roadblock between people and their financial goals. By ignoring the advice of the SEC and Congress, the DOL’s rule will increase the cost of retirement advice for lower- and middle-income Americans while creating a preferred class of rich investors. I will continue to fight for everyone’s right to get good financial advice because—unlike this administration—I believe in the people of New Jersey to make the best choices for their families and their futures.” Rep Scott Garrett

April 7,2016
the staff of the Ridgewood blog

Ridgewood NJ, Yesterday’s editorial (opening paragraphs below) point out that this set of rules is slanted to capture investment accounts with the goal of making small and medium sized savers invest in government run plans. Follow the money — those government run plans are going to lean toward investing in government paper with associated pitiful returns. That’s the conflict of interest that’s not being disclosed.

From the editorial…
President Obama’s regulators aren’t slowing down, alas. And on Wednesday they unveiled another part of their plan to push Americans out of private investment accounts and into government-run plans.

The Department of Labor says its so-called fiduciary rule will make financial advisers act in the best interests of clients. What Labor doesn’t say is that the rule carries such enormous potential legal liability and demands such a high standard of care that many advisers will shun non-affluent accounts. Middle-income investors may be forced to look elsewhere for financial advice even as Team Obama is enabling a raft of new government-run competitors for retirement savings. This is no coincidence.
Bu
Labor’s new rule will start biting in January as the President is leaving office. Under the rule, financial firms advising workers moving money out of company 401(k) plans into Individual Retirement Accounts will have to follow the new higher standards. But Labor has already proposed waivers from the federal Erisa law so new state-run retirement plans don’t have the same regulatory burden as private employers do.

This competitive advantage could be significant. Last month the board of California’s new “Secure Choice” retirement plan wrote to state legislators about their “exciting win” in Washington. They reported that employers enrolling workers in the new government-run plan “would have no liability or fiduciary duty for the plan.” Score! The California bureaucrats added that “we have been given the green light to auto-enroll workers into an Individual Retirement Account (IRA).”

Meanwhile, there are only losses for private competitors. The final rule Labor Secretary Tom Perez unveiled Wednesday is being marketed as less onerous than an earlier draft. Thus much of the financial industry is going to take a few weeks to decide on its response. But the main question is exactly how many billions of dollars in costs and lost opportunities will be visited upon investors. And how big the incentive will be to seek government options…

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The Correlation Between Credit Scores, Celebrities, Sports & More

creditcards

April 7 2016

the staff of the Ridgewood blog

Ridgewood Nj, the folks at WalletHub sent us some polling data on the correlations between credit scores and life style choices , here is what they found :

The free-credit-score website WalletHub today released its 2016 Credit Score Fun Facts, which are based on a nationally representative survey that revealed a number of crazy correlations between our credit standing and our likes, dislikes and lifestyles.
You can find a handful of highlights below:

  • Celebrities: 88% of people with excellent credit prefer Taylor Swift to Kanye West.
  • TV Hosts: Charlie Rose has the most fans with excellent credit (66%), while James Corden has the most fans with bad credit (41%).
  • Music: Pop music has the most fans with excellent credit (52%), and Hip-Hop has the most fans with bad credit (43%).
  • Sports: Hockey has the most fans with excellent credit (53%), and soccer has the most fans with bad credit (34%).
  • Pets: Dog lovers are more likely to have excellent credit than cat owners (46% vs. 40%).
  • Politics: John Kasich has the most supporters with excellent credit (60%) and Hillary Clinton has the most supporters with bad credit (26%).
  • Banking: USAA is the most trusted bank among people with excellent credit, and Capital One is the most trusted among those with bad credit.
  • Tech: iPhone users are the most likely to have excellent credit (56%), while Blackberry users are the most likely to have bad credit (46%).

For WalletHub’s complete list of Credit Score Fun Facts, please visit:
https://wallethub.com/blog/credit-score-fun-facts/20561/

And if you would like to get your free credit score, just sign up for WalletHub:
https://wallethub.com/free-credit-score/

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China jitters could trigger global market bloodbath, IMF warns

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Szu Ping Chan

4 APRIL 2016 • 2:55PM

Jitters over the health of the Chinese economy could trigger a bloodbath on financial markets if a hard landing materialises, the International Monetary Fund has warned.

The IMF said policy choices in the world’s second largest economy would also have “increasing implications for global financial stability” in the coming years as the country opens up its bond and equity markets.

The fund said emerging market economies such as China, India, Brazil and Russia had driven more than half of global growth over the past 15 years.

https://www.telegraph.co.uk/business/2016/04/04/china-jitters-could-trigger-global-market-bloodbath-imf-warns/

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Prosecutors open probes as world’s wealthy deny ‘Panama Papers’ links

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LONDON/PANAMA CITY | BY KYLIE MACLELLAN AND ELIDA MORENO

Governments across the world began investigating possible financial wrongdoing by the rich and powerful on Monday after a leak of four decades of documents from a Panamanian law firm that specialized in setting up offshore companies.

The “Panama Papers” revealed financial arrangements of politicians and public figures including friends of Russian President Vladimir Putin, relatives of the prime ministers of Britain, Iceland and Pakistan, and the president of Ukraine.

While holding money in offshore companies is not illegal, journalists who received the leaked documents said they could provide evidence of wealth hidden for tax evasion, money laundering, sanctions busting, drug deals or other crimes.

The law firm, Mossack Fonseca, which says it has set up more than 240,000 offshore companies for clients around the globe, denied any wrongdoing and called itself the victim of a campaign against privacy. Mossack Fonseca, in a statement posted on its website on Monday, said media reports had “misrepresented the nature of our work.”

“We routinely resign from client engagements when ongoing due diligence and updates to sanctions lists reveal that a beneficial owner of a company for which we provide services is compromised,” it said.

https://www.reuters.com/article/us-panama-tax-idUSKCN0X10C2

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Millennials are being dot.conned by cult-like tech companies

Soylent Green lg

By Kyle Smith

April 3, 2016 | 11:25am

Tech startups love millennials. Tasty, tasty millennials who get underpaid, overworked, churned up and turned into nourishment for venture capitalists. Millennials are the Soylent Green of the tech world.

As each batch gets mashed up, there’s a long line of new hires eager to be made into the next meal for the execs and their billionaire backers, as tech survivor Dan Lyons shows in a scathingly funny new book, “Disrupted: My Misadventure in the Start-Up Bubble” (Hachette Books).

Lyons became a strange kind of celebrity a decade ago when he began posting nutty but funny insights as “Fake Steve Jobs.” Today he’s a writer for HBO’s brilliant tech comedy “Silicon Valley,” but in between he blogged for a Boston tech company called HubSpot and wrote this book about it.

https://nypost.com/2016/04/03/millennials-are-being-dot-conned-by-cult-like-tech-companies/

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4 Business Lessons Drawn From Riots, Robberies And Mob Threats

Ridgewood-CBD_goingonutof-business_theridgewoodblog

March 30 ,2016

the staff of the Ridgewood blog

Ridgewood Nj , Business can lead to cutthroat competition – in more ways than one – but Tom Nix learned that the darkest moments also can lead to the greatest triumphs.

“It’s the worst experiences that sometimes teach us the most important lessons,” says Nix, a successful businessman and author of “Nixland: My Wild Ride in the Inner City Check Cashing Industry” (nixland.net).

The incredible rise of his multimillion-dollar enterprise, Nix Check Cashing, is a case in point. Nix encountered turbulent times in the inner city of Los Angeles as he built his company into a trusted institution among underserved communities.

He and his employees faced harrowing experiences, such as armed robberies and threats from the mob, which hoped to block some of his expansion plans.

The 1992 riots that erupted after a jury acquitted police officers in the beating of Rodney King proved especially distressing. Many businesses were looted or burned to the ground, and Nix scrambled to protect his check-cashing locations.

He was gratified to learn that loyal customers prevented some branches from being torched.

“We even had a gang member call us,” Nix says. “He said he had always been treated with respect at Nix, and his gang decided not to burn Nix because we were part of the community.”

Nix says his experiences taught him valuable lessons that relate both to business and life, such as:

• Take responsibility. This applies to everything that happens, including things you can’t control. Once when an economic downturn left him unable to pay bills, Nix contacted each creditor to explain his predicament and work out a plan. That upfront approach helped the business avoid bankruptcy.
• Never play the victim role or blame game. Avoid replaying misfortunes over and over in your mind. Accept setbacks gracefully and concentrate on getting back on track. In the 1990s, a business deal that went awry nearly forced Nix to sell his company, but he focused on solving the problem and persevered.
• Be courageous. The most debilitating human emotion is fear. Learn to keep it in perspective, minimize it when applicable and harness it to your benefit when need be. Nix says standing up to bullies as a child set the stage for standing up to the mob.
• Maintain integrity. Operating with fair play and compassion is important in building trust. “The way community members protected some of our branches during the riots was a reflection of this,” Nix says.

“Treating people fairly and supporting community programs paid off.”

Good times may be more enjoyable, but challenging times provide more opportunity for growth, he says.
“Realize that bad people, tough times and mistakes are your teachers,” Nix says. “Always ask yourself, ‘What do I need to do to capitalize on these events?’ ”

About Tom Nix

Tom Nix, author of the memoir “Nixland” (Nixland.net), is a pioneer of the check-cashing industry. He built Nix Check Cashing into a multimillion-dollar operation before selling it in 2007. Recently, Nix has turned to public speaking and writing with the goal of helping people overcome obstacles and have similar success.

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Carl’s Jr. CEO wants to try automated restaurant where customers ‘never see a person’

robot forbidden planet

POSTED 4:57 PM, MARCH 17, 2016, BY KFOR-TV & K. QUERRY

NEW YORK – A CEO of a fast-food company is causing a stir on social media after claiming that he wants to create a fully automated restaurant.

“We could have a restaurant that’s focused on all-natural products and is much like an Eatsa, where you order on a kiosk, you pay with a credit or debit card, your order pops up, and you never see a person,” Carl’s Jr. CEO Andy Puzder told Business Insider.

Puzder says the automated restaurant would be cheaper since he wouldn’t have to worry about rising minimum wage.

https://kfor.com/2016/03/17/carls-jr-ceo-wants-to-try-automated-restaurant-where-customers-never-see-a-person/

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Obamanomics: Why Aren’t More Americans Working?

crisi-america-1929-I-want-a-job

MAR 4, 2016 5:30 PM EST
By Justin Fox

According to today’s employment report, 59.8 percent of Americans ages 16 and older had jobs in February. That’s the highest employment-to-population ratio in years, and the rate of increase is clearly on the rise.

Look back some more years, though, and the story is different. The recent gains are real, but by the standards of the past few decades, a 59.8 percent employment-to-population ratio isn’t impressive.

Let this be another lesson in how the presentation of information shapes our understanding of it. The second chart paints a gloomy picture — the picture that Donald Trump may be referring to when he says the true unemployment rate is 40 percent or higher. A 59.8 percent employment-to-population ratio means that 40.2 percent of American civilians 16 and over don’t have jobs. That percentage includes high-school students, 100-year-olds and lots of other people who don’t want or need jobs, so the true unemployment rate clearlyisn’t 40 percent. Still, in April 2000 the employment-to-population ratio peaked at 64.7 percent. Now it’s significantly lower. What’s going on?

The answer that I keep gravitating to is that despite the 4.9 percent unemployment rate, the job market is still pretty weak, and probably malfunctioning in some way. This isn’t the only possible answer. In 2014, for example, two economists at the Federal Reserve Bank of New York divided people responding to the Census Bureau’s Current Population Survey (from which the unemployment rate and the charts in this article are derived) into 280 cohorts defined by “birth, sex, race/ethnicity, and educational attainment.” They determined that most of the decline in the employment-to-population ratio since 2000 could be explained by the changing makeup of the population.

But demographics aren’t destiny. The employment-to-population ratios by age group, for example, have changed a lot since 1990. First, the women:

 

https://www.bloombergview.com/articles/2016-03-04/why-aren-t-more-americans-working

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How Fiduciary Rule May Censor Financial Broadcasters Like Dave Ramsey

dave ramsey ridgewood blog

John Berlau

Popular financial radio show host Dave Ramsey caused a firestorm on Twitter last week when he weighed in against the “fiduciary rule”—the controversial pending Department of Labor regulation that would impose new restrictions on a vast swath of financial professionals who handle IRAs and 401(k) accounts. Yet, Ramsey was only echoing concerns about the costs of the rule already expressed by Members of Congress from both parties.

Ramsey Tweeted, “this Obama rule will kill the Middle Class and below ability to access personal advice.” A war of Tweets then broke out between opponents of the rule, and supporters, the latter of which includes fee-based investment advisers expected to benefit from the new costs the rule will shower on their broker competitors.

Fittingly, even before Ramsey came out against the rule, one of his critics called for using the rule against Ramsey, supposedly for providing advice said critic deemed harmful to savers. In an Octoberarticle in LifeHealthPro, an online trade journal for insurance agents and financial advisers, Michael Markey, an insurance agent and owner of Legacy Financial Network, called for Ramsey to “be regulated and to be held accountable” by the government for the opinions he gives to listeners. Markey hailed the Labor Department rule as ushering a new era in which “entertainers like Dave Ramsey can no longer evade the pursuit of regulatory oversight.”

https://www.forbes.com/sites/johnberlau/2016/03/04/how-fiduciary-rule-may-censor-financial-broadcasters-like-dave-ramsey/#1ccf2841e696

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Rep .Scott Garrett Sponsors Bills to Assure Due Process with the SEC and give Main Street businesses new tools to to Access Capital Markets

scott garrett

Happy 75th anniversary to M&M’s! I’m proud to represent such an iconic American candy that is made right in Hackettstown! Such a source of New Jersey pride.

Financial Services Committee Passes Two Garrett-Sponsored Bills  

Bills would enforce Constitutional rights and give Main Street businesses new tools to succeed
Mar 2, 2016

the staff of the Ridgewood blog

Ridgewood NJ,  Today the Financial Services Committee passed two bills introduced by Congressman Scott Garrett (NJ-05), Chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises. The bills were H.R. 4638, The Main Street Growth Act, and H.R. 3798, The Due Process Restoration Act.

“One of the biggest concerns I hear from my constituents that the executive branch has run wild and Congress needs to regain control to protect the Constitutional rights of all Americans. For that reason, I’m pleased that today the Financial Services Committee passed my bill to restore the due process rights of all Americans by allowing them to have their case before the SEC heard by a federal court. I’m also happy to announce that my bill to allow Main Street businesses to raise capital by accessing public markets passed the committee. Because if we want to revive America’s economy, we need to give Main Street businesses the tools they needs to innovate and succeed.”

H.R. 3798, The Due Process Restoration Act Would:

Provide a mandatory right of removal allowing the defendant to request that the case be moved to a district court
Grant a right of removal to defendants who are subject to a cease and desist order and monetary penalty that the commission is seeking
Raise the burden of proof for cases that remain in the ALJ to a higher “clear and convincing evidence” standard

The Main Street Growth Act Would:

Authorize the creation of “venture exchanges” which would be registered as a national securities exchange with the SEC and be specifically tailored to list the shares of emerging growth companies and companies that issue shares under the newly finalized “Reg A+”
Exempt venture exchanges from Regulation NMS, Regulation ATS, and would be exempt from extending unlisted trading privileges to companies that list on them;
Subject venture exchanges to all of the existing anti-fraud and investor protection statutes administered by the SEC
Permit all investors— not just Silicon Valley billionaires or the well-connected—to invest in companies that list on venture exchanges.

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Garrett Hits Back at SEC Official’s Defense of Commission’s Overuse of In-House Tribunals and callously disregard due process

Scott Garrett

Feb 2, 2016
the staff of the Ridgewood blog

Ridgewood NJ,  Rep. Scott Garrett (NJ-05), Chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, issued the following statement after a senior SEC enforcement official last week defended the Commission’s increased use of in-house administrative law judges.

“It’s extremely distressing to see a senior SEC enforcement official so callously disregard the Constitutional and due process concerns that have been raised over the SEC’s in-house tribunals.  The Commission is missing the point that this isn’t about how many cases are won or lost – it’s about protecting every American’s due process rights and their ability to have a fair trial.  The SEC has become more concerned about making headlines than executing an effective enforcement program, and these comments are reflective of that approach.”

Garrett continues to put pressure on the SEC unlike Garrett’s Democratic challenger Josh Gottheimer who is a big proponent of Dodd – Frank and the institutionalization of the “too big to fail ” policies for all financial institutions . Gottheimer would have the government continue to bail out poorly run banks and Wall Street firms .

Garrett is the author of the Due Process Restoration Act that would  rein-in the Securities and Exchange Commission’s controversial overuse of in-house administrative law judges and ensure that all Americans are given due process by allowing defendants the option of having their case heard before a federal court.

In the wake of the 2010 Dodd-Frank Act, which granted the SEC expanded administrative enforcement powers, the SEC started trying an increasing number of alleged wrongdoers before its in-house administrative panels rather than in the federal courts established by Article III of the Constitution.

The SEC has heard repeated criticism of these in-house panels from defendants who feel they weren’t given due process, former SEC judges who felt pressure to rule in favor of the Commission, and U.S. District Judges who find the panels unconstitutional.

The Commission announced that it will be giving more legal safeguards to defendants that come before its in-house administrative panels. Unfortunately, the SEC’s proposed changes fall well short of addressing many of these concerns and its enforcement practices continue to violate the separation of powers guaranteed by the Constitution.

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Showdown over iPhone reignites the debate around privacy

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By Todd C. Frankel and Ellen Nakashima February 19 at 11:32 PM

The Justice Department calculated that it held a winning hand — the passcode-locked Apple iPhone of a terrorist — when it went to a federal court in Riverside, Calif.

Not only did the agency want Apple to build special software to help the FBI crack open the phone, but the government also knew the order would be made public.

After a mass killing that provoked national outrage, the government hoped to win support far outside the courtroom in its bid to gain access to encrypted phones in criminal and terrorism cases.

“They picked this case to increase the chances of getting public opinion on their side,” said a former federal prosecutor.

Now, a single iPhone has reignited a broad debate about government surveillance and the needs of law enforcement vs. the need for privacy. The showdown escalated Friday with the Justice Department accusing Apple of putting its “brand marketing” ahead of the law. The stakes have soared, well beyond the fate of any particular iPhone.

https://www.washingtonpost.com/business/economy/2016/02/19/cd99473e-d740-11e5-9823-02b905009f99_story.html

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More Americans than residents of Georgia draw income from gig economy

cell phones

BY TATIANA DARIE
BLOOMBERG NEWS |
WIRE SERVICE

It’s a job market revolution: an estimated 10.3 million Americans earned income through Web-based platforms like Uber and Airbnb between 2012 and 2015. That’s more people than reside in the entire state of Georgia and amounts to 6.5 percent of the total U.S. workforce.

So-called gig jobs, in which a person performs a task for another individual often through Web-based platforms, are often easier to land, and help generate additional income when regular earnings aren’t sufficient, according to a new study by the JPMorgan Chase Institute.

Participants in this economy are typically younger, with the 25 to 34 age group accounting for the largest part of the gig workforce. They are more likely to be male, live in the West and have an average median income of about $2,800 per month, according to the study.

The number of people earning income in the online economy over the three-year period of JPMorgan’s study increased 47-fold. Labor platforms, including ride-hailing service Uber, that connect customers with freelancers have grown more rapidly than capital platforms like Airbnb, which rent homes and assets or sell goods. Demand is also driving the growth as online service use becomes more common.

Now, “most people would know they can get their groceries picked up, they can get a ride from three or four different companies — things that only a year ago, only earlier adopters learned,” Diana Farrell, the institute’s founding president and chief executive officer, said in an interview. “It’s becoming more mainstream.”

https://www.northjersey.com/news/business/10-3-million-americans-worked-gig-jobs-1.1515503

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Welcome to the “Keynesian black hole”, Negative central bank interest rates

Black Hole

Mapped: Negative central bank interest rates now herald new danger for the world

Negative rates are becoming the “new abnormal” in a shaky world economy. With fresh panic hitting markets, are we finally hitting the limits of what monetary policy can achieve? Click on the countries to find out

The world’s tentative experiment with negative interest rates got off to an unremarkable start.

Sweden’s Riksbank – the world’s oldest central bank – became the first major monetary authority to cross the rubicon and take its main policy rate into the red exactly a year ago to the month (see map above).

The Riksbank’s move followed the likes of Switzerland and Denmark, who had turned negative in a bid to stimulate flagging inflation and halt the punishing appreciation of their currencies.

https://www.telegraph.co.uk/finance/economics/12149894/Mapped-Why-negative-interest-rates-herald-new-danger-for-the-world.html

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People Over 50 Carrying More Debt Than in the Past

piggyBank

The average 65-year-old borrower has 47% more mortgage debt than those in 2003

By
JOSH ZUMBRUN
Updated Feb. 12, 2016 4:17 p.m. ET

Older Americans are burdened with unprecedented debt loads as more and more baby boomers enter what are meant to be their retirement years owing far more on their houses, cars and even college loans than previous generations.

The average 65-year-old borrower has 47% more mortgage debt and 29% more auto debt than 65-year-olds had in 2003, after adjusting for inflation, according to data from the Federal Reserve Bank of New York released Friday.

Just over a decade ago, student debt was unheard-of among 65-year-olds. Today it is a growing debt category, though it remains smaller for them than autos, credit cards and mortgages. On top of that, there are far more people in this age group than a decade ago.

The result: The composition of U.S. household debt is vastly different than it was before the financial crisis, when many younger households took on large debts they could no longer afford when the bottom fell out of the economy.

The shift represents a “reallocation of debt from young [people], with historically weak repayment, to retirement-aged consumers, with historically strong repayment,” according to New York Fed economist Meta Brown in a presentation of the findings.

https://www.wsj.com/articles/new-york-fed-finds-large-increase-in-debts-held-by-those-over-age-50-1455289257