|August 26, 2009|
Time to sell the banks…
I was golfing with Michael Masterson and his brother-in-law Sunday.
Banks are failing at an alarming rate and they want your sympathy.
The New York Times wants you to believe that the bank failures are not because of highly-leveraged bets, toxic mortgages and a gamblers mentality.
For years banks were lulled into a sense of safety by low default rates.
To satisfy their irresponsible profit goals, banks lowered lending standards to boost their loan portfolio. They were abetted in this Ponzi scheme by real estate appraisers and economists who treated the hyper-inflation of property values as if they were real.
In Automatic Wealth, Michael Masterson said that a smart investor never bets on assets whose maintenance costs are greater than their net worth.
Buying real estate only makes sense, he argued, when the rental income is sufficient to pay for all the expenses.
Speaking of banks increasing risk to chase higher returns…
Wall Street has not been chastened by the Great Recession. It is encouraging some banks to start taking bigger risks.
Despite the bad service we've received, it's getting more expensive to be a bank customer lately.
Our Managing Editor Christian Hill learned the lesson recently. He let an old checking account linger. Eventually monthly fees drove the balance to a negative $2.15. This triggered $40 in fees from his bank, Wachovia.
You want a stimulus plan? How about keeping $50 billion in American's pockets to spend instead of the coffers of banks that got bailouts.
Banks are clearly trying to find any way they can to make more money. And it's not just the over-draft fees. All across the board the fees are increasing, from maintaining a checking account, to withdrawing money from another banks' ATMs. And it's only going to get worse.
Bernie Madoff has been smoking a pipe…
Another rumor is spreading about Bernie Madoff, America's most celebrated scam artist.
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