Cryptocurrencies: Time for a Look Under the Engine

The Psychology of Cryptocurrency Investing

I, from time to time, give investment thoughts and perspectives (not recommendations) with an eye towards better understanding the psychology involved.  Since Bitcoin and Ether are the next big thing I thought I would spend a little time on them, trying to put it in perspective.

Bitcoin and Ether are both coins, but they are not tangible. They are instead digital and as such are both more secure and safe (if you take necessary precautions), and they cannot be controlled by centralized power brokers the way countries can control their own currency. Bitcoin has been around the longest, and while it suffered a long drought in it’s early days, it is now getting wide acceptance, especially internationally. People from Japan, Korea, China, and other countries are enamored with it, and it has been on a roll. Bitcoins are also becoming more widely accepted at the retail level.

Ether costs a lot less per coin, but it has been rising (and falling) even faster than Bitcoin. While it has not been around long (2015) it is more useful than bitcoin, because software can be developed with it that makes the new economy sing. I will leave a discussion of blockchains to a later article.

People who are buying digital currency are usually buying them either because they understand the ideas behind it, or because they have heard someone say how much money they made in the past few months. For many, it is more of a gamble than an investment. If you try to catch a wave (buy low and sell high) you will likely suffer the same fate others do in the stock market getting it wrong more often than not. It is best to buy for the long run, planning to hold your coins for several years, adding to it on a regular basis, say once a month or once a quarter.

If you want to speculate, so you can begin to make big money (it would still require a fair amount of knowledge), you would do best to diversify – either by owning a fund that invests in a variety of alternative currencies (altcoins) or by buying  (for very small amounts) several start ups. These currency equivalents of the IPO (Initial Public Offerings in stocks) are ICO’s (Initial Coin Offerings). You can buy in at the start of companies or projects, all of whom are on the cutting edge of the new economy. If you do some research, your odds may be quite good that one or more of these ICO’s will reward you handsomely for your diligence, again only if you hold them for long enough to wait out the variance.

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New Mental Health Procedure Codes- Reimbursement Cuts

The mental health procedure codes used by insurance companies are being revised, and will be reimbursed at a different rate. While some codes stay the same, one of the changes that will lead to a cut in pay for most therapists, and a cut in service for most mental health patients, is the code for outpatient psychotherapy.

The old code of 90806 was used by most therapists and was reimbursed for the typical 50 or 55 minute therapy session. However the way the new codes are set up, if a 50 minute session is preauthorized (and that is the way blue cross and many other insurers do it), then you are expected to round down to 45 minutes, and that session is equivalent to the old 90804, paid at a much lower rate of reimbursement.

This is a hidden pay cut and service cut, for therapists and clients respectively. If therapist usually takes the whole hour (adding time at the end for record keeping), then the new rules will try to force them to do 45 minute session, (or donate the time) seeing three patients over a little over two hours, if they plan to make as much or more money as in the previous system, when they saw two patients in that time.

So far the actual reimbursement rates have yet to be published although they were due in November. Hopefully that will include an increase, but the projection is for a cut in reimbursement, when both are taken into account. I still make less from an insurance company now than I did in the 1980’s, and that is one reason many of my colleagues do not fool with insurance.

 

Published in: on November 28, 2012 at 5:23 pm  Comments (1)  
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Banking Settlement Is Baloney

Five Banks who were caught destroying the American Dream of home ownership are getting a slap on the wrist and wished well.  The  banking settlement reached between five major banks and some States Attorney Generals is pathetic pandering. It’s another example of how the 1% make out like bandits, even when they are caught red-handed.

Some state Attorney Generals refused to sign on, because it was far too weak.

In the settlement terms, the five biggest banks involved will pay approximately $2000 to everyone whose home went imto foreclosure when the banks had run amuck.  That won’t seem like much to the homeowners who lost huge multiples of that, to the same banks.

It’s as if someone got caught robbing your business of 50K and they got to keep $48,000 and as a penalty had to return only $2000 of what you lost.  Meanwhile your business goes under, and the banks make record profits stealing from you.

Or, it is as if a fat cat got drunk, and he crashed his BMW into your Volvo, crippling your daughter and then he had to pay 1% of her medical bills. However, since he could afford a  good lawyer, he can still keep their driver’s license, with a promise that next time maybe he wont drink so much when he drives.  Such a deterent.

Of course Bank of America, Citibank, JPMorgan, Ally, and Wells Fargo have also agreed to refinance some more loans, which might be a little to their disadvantage. However, the chances they will do that, are the same as their compliance on other matters to date- slim and none.  If they ignore the settlement, what will be the consequences? Who will know, other than the next homeowners who go under?

The state of California and Countrywide already had a much bigger settlement about the same illegal practices, but Bank of America, who acquired Countrywide, has ignored the previous agreement.  All 5 banks flagrantly ignored legislation aimed to fixing the problem when it was starting to boil over, and did they ever pay a penalty?

No!  So why would they worry about complying this time?  These settlements are merely a small fee of doing business- dirty business that is anti-American.

Remember none of these Robber Barons have done any jail time.  Robosigning is fraud and theft. It was at times like these (homes being lost to unscrupulous banks)  that Bonnie and Clyde captured the hearts of the American People, by robbing the banks that brought this country into the depression. 

Now the banks are at it again, teamed up with politicians from both parties. Where are the populists of both parties?  The little guy needs a voice, has anyone got one? Where is Teddy Roosevelt when we need him?

Black Friday and the Seedy Side of Shopping

Well we made it through Black Friday. The good news is that Americans went crazy buying things, a likely boost to our sluggish economy. The bad news is people went crazy buying things. Literally.

It was fairly common to find people stealing things out of other people’s shopping carts, a surefire way to express the holiday good cheer. And I am sure you saw the people stepping over the man who had fallen, and heard of the lady who used pepper spray instead of mistletoe to get her way.

It is easy to chock this up to the moral decline in america, or to the bad economy stressing everyone, but I can tell you who I blame, and you can follow the money! These stores, at great profit, delberately attempt to create a “rush” or panic and spend a good sum of money on insuring that people will act like the running of the bulls.

The stores could offer IOU’s that would allow customers a chance to pick up an out of stock item a week or two later, or better yet, they could stay open 24/7 — if its such an all-fire important event — and maybe stagger the sales every hour or two, (or when the blue light goes on).

Given our bad economy, these merchants (of death?) might even hire 5% or 10% more workers for the season, to help keep the shelves stocked, the stampede moving, and the cash registers ringing. Black Friday used to refer to the moment when businesses first went into black, after being in the red all year. Now it is when they first turn on shoppers and rend them.

Published in: on November 28, 2011 at 11:15 pm  Leave a Comment  
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Debt Default in America- A Financial Bonanza for Eric Cantor

Politicians are playing chicken with America’s reputation, and if they convince the world that the US is not credit worthy — by deliberately defaulting on our obligations — they will profit while the rest of us suffer. Eric Cantor has a personal profit motive, as well as a reprehensible political agenda.

Recently the Republican leadership walked out of the bipartisan debt talks chaired by Vice President Biden. Eric Cantor, GOP whip said he would not participate if the Republicans were required to bring to the table any discussion of revenues. And yesterday we heard from Republican House Speaker Boehner that the projected default date is not, in his view, a fixed date, but is an arbitrary date put forth by the Secretary of the Treasury.

If the August deadline comes and goes without progress, Mr. Cantor stands to make money while our economy tanks. In his own investments, the Majority Whip apparently has holdings in a fund that “shorts” the U.S. bond market. Mr. Cantor knows that if we welch on our debt this summer — for the first time in US History — the bond market will go off a cliff.

If that happens our economy – and the world’s as well – is likely to be devastated. But Mr. Cantor’s investments will make him a nice sum of money, in a manner more akin to being a vulture than a deal maker. This is a serious conflict of interest, and makes him uniquely unqualified to negotiate our country’s economic future.

But both Mr. Cantor and Speaker Boehner, appear to be following the lead of Mitch McConnell, leader of the Republicans in the Senate, who said his primary goal for this legislative term was to make Mr. Obama a one term president. Whatever happend to thier promise to create jobs? There must be more to governing than scoring points and padding your wallet.

The Republicans and Democrats are both to blame for much of the stalemate, with both sides dug in to their rhetorical excesses. But if the economy tanks, and goes into a double dip recession, the Republican party knows that their efforts will be rewarded at the ballot box, as the incumbents will get the blame, as is always the case.

Politically and financially, the Republicans stand to gain from trashing the economy. Let’s hope that enough of them can put their country and constituents above their own personal and political gain, and instead do the right thing. Surely there are some patriots still in both parties, it is time for them to step up.

Published in: on June 29, 2011 at 10:34 am  Leave a Comment  
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Deficit Reduction: Comparing Democrats and Republicans

Democrats and Republicans have very different approaches to deficit reduction, but neither are really up to a serious muster. Neither for example go anywhere near as close to a balanced budget as Clinton did, and both take more from the poor and middle class than is warranted.

Before I go any further, I want to refer you to a straightforward comparison of the two approaches to deficit reduction by Reuters. It is much easier on both plans than I would be if I were doing that analysis.

First, the overall savings need to be much bigger than the 4 trillion target. Lets go for 5 trillion instead. Now let’s do defense. Ryan cuts nothing. Obama cuts 600 billion, without getting out of Afghanistan.  However, if we took our troops home next year, we would save, at the current rate of 119 billion a year about 1.2 trillion over the next 10 years. If we add that to Obama’s version it is now 5.2 Billion, but I would take another 800 billion out of defense (again spread over 10 years, that’s more like removing a toe nail than using a scalpel. We are already at 6 billion, see how easy it would be?

But wait! I said that I don’t agree with either side cutting so much from the middle class and poor, so lets surgically remove those savings. What would I replace them with? If we closed the loopholes to big oil that would be 4 billion a year, or 40 billion over 10, but I would double that to 80 billion, by actually taxing them to the amount we currently subsidize them.

Let’s see what else could we do?  How about a requirement for drug companies to bid against one another, rather than their current sweetheart deal? The current system is price-fixing, the opposite of free enterprise, and it was brought to us by George W, and held over by the compromiser in chief Obama.

With that change alone I would think we would make Medicare close to solvent, and we could still afford to have teachers, firefighters and policemen. We just would have to give up huge windfalls for the drug companies….

Am I done? No. I would create a new level of taxes for anyone making over 2 million a year. Their top rate could be 39%, and there is no doubt they could pay it and still amas huge sums at the expense of the rest of us, because they would still own the US congress, lock, stock and barrel.

Published in: on April 29, 2011 at 2:09 pm  Leave a Comment  
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Delaying the Retirement Age

Protests in France against changing the retirement age, from 60 to 62 have so far not succeeded in derailing the legislation. Indeed the senate in France voted to move forward with these changes. Like America, France has a divided government, and while the conservatives do not have to deal with filibusters, the shutdowns of the street protests, organized by labor and other groups with more progressive leanings, put the U.S. Tea Party movement to shame.

The tea party riff-raff here can be impolite and their extremists make accusations that are alternatively wacky, dumb or bigoted, by they do not rally the working class. To think of these people as populist, when most of their money comes from billionaires, is the height of absurdity.

Their goals, for the most part, seem to be to win seats at the table, so they can be in charge. That is politics not populism. If the Republicans take over the US senate as well as the house, they will then be the  “government”  that the tea party has begun to protest, when Democrats run it.  Then there will be some real populists in the opposition, and progressive populists may make things a little less comfortable for the wall street banks. I wouldn’t be surprised to see marches against foreclosure,  and some real protests akin to the 60’s.

Our  government in the US is broke, but not for the reasons the Tea Party harps on. It is because we did not heed Eisenhower’s warning about the military industrial complex, and have let defense contractors, banks, and insurance companies purchase unprecedented power, and neither political party has an interest in stopping them.

Bank of America Says Its Foreclosure Paperwork is in Order

Just like their amazingly effective mortgages, which made and burst the bubble. the big boys (known affectionately as TOO BIG TO FAIL), are at it again, only now it is with sketchy foreclosures.  Bank of America announced today that they were unfreezing the foreclosures that they had frozen, which had effectively allowed the effective stop of foreclosures. They had a freeze of their foreclosures, in order to review what was thought to be poorly documented paperwork. They did not, however, explain how they had determined that this mess had actually been vetted, and suddenly found to be in order. Other banks will likely soon  follow in this masquerade.

These are the same institutions that gave us the housing bubble. They gave us mortgages that were not worth the paper they were written on, and derivatives, which broke the mortgages up into tiny, indigestible, toxic pieces. Now these institutions cannot prove that they actually own the mortgages. Instead they rely on individuals to certify that the paperwork in order. Their assertions are often based on less than a minute’s time reviewing the documents, (robosigning) and that is not a way to prove you own something that may have been sold and resold dozens of times before you got it, if you ever actually got it.

Wait till the lawyers get a hold of this; they now have a method of how to stop foreclosure. A few lawsuits have already been filed, that led to the freeze originally. Now they are counting on the courts accepting that they have “standing,” (are the owners)  and to prove that, they are relying on an industry front that they set up, possibly with the sole intention of rubber stamping their (at best) sloppy and risky practices. If you are one of the large chunk of Americans who are attempting to learn how to stop foreclosure this may be something to look into.

And while we are on the topic of foreclosure, it’s worth connecting that to the huge increase in bankruptcies that are sweeping the US in the wake of its greatest recession. In the article How to File for Bankruptcy Without an Attorney I not only give suggestions on what to do if you need to file a pro se bankruptcy, but I also discuss how Chapter 7 and Chapter 13 bankruptcies are connected to avoiding foreclosure. 

The best method for portecting your home, if you can quailfy, is a Chapter 13 bankruptcy. It would be hard to file for bankruptcy without an attorney if you go that route, and with your house at stake, an attoney is certainly advisable. However you may well be able to roll the payments to the attorney into your 3-5 year reorganization, and that could allow you to stop foreclosure and keep your home.  However, if you can successfully file for bankruptcy without an attorney (using Chapter 7), the best you can expect is a delay in stopping a foreclosure of 3-5 months. Possibly if your home has a lot of equity, you may get some money back from a sale where you use a homestead exemption in that type of bankruptcy. You may not be able to stop foreclosure that way, but you could at least save some of your equity.

When Do You Need a Chapter 7 Bankruptcy Attorney?

If you have already decided to file for Bankruptcy, but you can’t decide whether you can scrape up the money to hire an attorney, this quick list may help. You should know, of course that the sage advice, is always to get an attorney. If, however, all of the following are true, then you would be especially well advised to not represent yourself:

1. You are planning to file any type of bankruptcy that is not a Chapter 7 type bankruptcy.

2. You do not know, and/or do not have the patience to find out, the difference between a Chapter 13 and a Chapter 7 bankruptcy.

3. You have significant money or stocks, or valuable cars, expensive furniture or antiques that you need to keep.

4. You own real estate with significant equity you would like to protect.

5. You plan to wear white socks and levis to the bankruptcy hearings.

6. You and your spouse are divorcing or in a dispute about what to do.

However, if you have no money, and only a few possessions of any value, and are willing to read a lot on the internet, buy a book or two to help you, and have some time to invest in the project, then maybe, just maybe you, can try to pull it off. Start with buying the best book on the topic, which you can find below. Also see How to File, which is a good place to start.

Published in: on October 15, 2010 at 5:54 pm  Leave a Comment  
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