Mr. President: Train Afghan Police Forces in U.S.

This morning, Reuters reported out of Brussels, Belgium that President Obama plans to significantly increase the size of the Afghan police force.  The story was attributed to U.S. special representative for Afghanistan and Pakistan Richard Holbrooke.

The usual plan was described in the article which was to send over hundreds of U.S. specialists, etc., etc. to train the candidates in country.

I say, if there are police or army personnel to be trained let's bring them here to the U.S. for their training.  It is a safer, much more efficient method and we can rotate classes at a faster rate.  It would also give these individuals a picture of the U.S. and its people.  We would not have to deal with insurgent attacks and many other issues related to training personnel in country.

In addition, for a period of time, it will create jobs in areas once served by U.S. military training facilities that can be reopened and utilized.  Good for the Afghans, good for the U.S.

Mr. President, this is change for the better.  We should have done it with the Iraqi army, let's do it with the Afghans.

Please sir.

Copyright 2009 WBSeebeck

No Russian Presence in Cuba or Venezuela!

Let there be no mistake, if we don't stand on our heels and growl as Teddy Roosevelt's bear did back in the early 20th century, the Russians will establish air and later naval bases in Cuba and Venezuela.

The Russian government has already held joint naval operations in the Caribbean with these nations and just announced their intention to stage bombers in these two countries.  This is totally unacceptable to the United States.

We trust that President Obama will stand and publicly state that the presence of Russian offensive weapons in our hemisphere is unacceptable and a threat to the national security of the United States.

Those of us who lived through the Cuban missile crisis and other similar encounters with the Soviet Union and now Putin's Russia know that their intentions are not honorable.

Copyright 2009 WBSeebeck

Beware Oil Prices! Speculation May Be in Play Again!

Today, on CNBC, an analyst claimed that the oil market had "bottomed out" and that there was an increase in demand.  As a result, he believed that oil might quickly rise to $60.00 per barrel. If this CNBC guest analyst is to be believed, we are about to enter another period of dramatic increases in oil prices. If you read my February 11th article on oil, you would know two things: One, such increases are based on speculation rather than reality or demand and second, that any price over $50.00 per barrel will cause untold hardship on the American consumer and economy at a time when we can least handle it. 

Copyright 2009 WBSeebeck

If You Have A Credit Card: Beware the Ides of March!

Banks to Up Rates; Other Shoe to Drop?

While the government and the Congress have been propping up the banks with billions of dollars, the banks have not been spending all their time figuring out how to begin lending again, they have been using some of that money to contract rather than expand with drastic impact to consumers and the economy.

The banks have assigned just enough staff to create the illusion that they are lending, but in fact, they have been hiring hundreds of collection agents, reducing lines of credit, increasing rates for bank charges and in the credit card realm, dumping accounts that always pay on time in favor of accounts that they can push over the edge with more fees and increased debt in an effort to gain more income.

It is fast becoming known in the credit card world, that in March the banks will increase rates on millions of customers.  The annual percent rates (APR) will change and the consumer once again will take it on the chin, big time.

These predatory actions are helping to make it very clear that there is another shoe yet to drop in the banking industry and that is the credit card business.

With the collapse of the asset-backed securities marketplace, the banks took a big hit.  First, it was with mortgages and now it will be with credit cards.  Yes, just like with mortgages, since 1987, banks have been packaging credit card debt and receivables into what is called credit card asset-backed securities.

How Does it Work?

Over the past 12 months, we have come to know about how mortgages were turned into securities (mortgaged backed securities).  The same can pretty much be said for turning credit card debt and receivables into a security (credit card backed securities).

In the credit card model, the bank that issues the credit card bunches up groups of accounts or receivables usually into the form of a bond "backed" by these accounts or receivables and sells them to a trust.  In turn, the trust issues securities backed by those receivables.

Now, here is where I believe the process becomes risky.  The bank that issued the card and "sold" the account or receivables still services the account BUT, the assets that were "sold" have been removed from the bank's balance sheet.

Why is that important?

It's important because since the assets are no longer on the bank's balance sheet, the bank can reduce its capital requirements and seek new accounts to make for the ones "removed" from the balance sheet. Capital requirements are the reserves that banks must put aside by law to essentially protect the bank's business.  These funds can't be tampered with and must remain on deposit, just in case.

What happens next?

When you, as a credit cardholder pay your bill each month, that money goes into the trust. Those funds are used to pay those that have bought the Credit Card backed securities.

So what happens, if there is a slowdown in people paying on their balances?

Well, as you can imagine, the bank's are in trouble, not only because you owe them money on the balance they have lent you via the card, but also because they have already sold your debt/receivables and there is less money in the trust to pay the investors.  Also, when your balances increase, it means that the banks can't add as many new accounts and must maintain larger capital reserves.  Not good for them or you.

The Banks and Your Card

Banks want you to use your credit card because it creates more debt/receivables for the bank to use as noted above.  The banks do not like cardholders that pay their balances off in full each month because then the bank doesn't get to assess finance charges or to have reason to raise their APR rates.

When the growth of the banks portfolios of card users slows down, the bank looks for other ways to still get what it needs from the card accounts that remain in its portfolio.

One of the ways of doing that is by raising the basic Annual Percentage Rate they are charging on all accounts and then increase all kinds of fees across the board.  That is what I believe they will do in March. Further, I believe that the banks will also seek to close accounts that are not producing an ever-increasing amount of fees.  It will tell the customer that their basic rate is being raised and give them an opportunity to close their accounts and move elsewhere.

Not a pretty picture folks, but neither was it on March 15,  44 BC, when Julius Caesar went to the Senate.

Copyright 2009 WBSeebeck