Over the weekend, the Federal Reserve bailed out JPMorgan Chase .
No, that is not a typo. On Monday, JPMorgan’s stock closed up 10 percent in a down market, increasing the bank’s market capitalization by more than $12 billion. Even assuming that JPMorgan ultimately has to pay more for Bear than its $2-per-share-offer — a big assumption — the market’s initial view is that this takeover of an imploding Wall Street firm was a wealth transfer to JPMorgan’s shareholders of this amount.
Where did this transfer come from? Well, it came from the Federal Reserve and from Bear.
Everyone deciding to eat in, stick to the coffee they made at home, and not taking taxis, tends to have a negative effect on those industries.
It may be good advice for an individual, but its horrible advice for everyone to follow.
For an economy to work, the money must flow. The problem is when it gets jammed up with a few people who aren’t spreading it around, or siphoned off by things like bullshit fees.
But who would expect a bank of all things to understand that? /s
As an aside, I had a car loan through Chase once. It was the dealership’s doing, and like a fool I didn’t fight it.
Never. Fucking. Again.
Fuck them into oblivion, and while we are at it fuck Wells Fargo and BOA.
Kind of beside the point, especially since Dimon isn’t one to have left money on the table when his more desperate competitors were clawing at it any more than he is one who’ll give his own customers a break on fees, overdrafts, and APRs.
And even if everyone did all that, most people would still be struggling to make ends meet, because those “frivolous” expenses are a fucking drop in the bucket in relation to widespread wage stagnation, perpetual nickle-&-diming, price gouging, huge tax breaks for wealthy corps and the general relentless greed of unchecked capitalism.
You: why is my balance so low?
Bank account: regressive taxes
Bank account: sky-rocketing education costs
Bank account: housing bubble creating devastating rents
Bank account: wage stagnation
Bank account: gig economy means and no time to eat the food already in the fridge
You: I guess well never know
Bank accountL seriously?
Excellent quote. It’s a shame that so much time has passed since those words were said, and here we are. Still. “We the people” need to stop hitting the snooze button on income inequality.
Would it not be better if they spent more money on wholesome things like oranges and wholemeal bread or if they even, like the writer of the letter to the New Statesman, saved on fuel and ate their carrots raw? Yes, it would, but the point is that no ordinary human being is ever going to do such a thing. The ordinary human being would sooner starve than live on brown bread and raw carrots. And the peculiar evil is this, that the less money you have, the less inclined you feel to spend it on wholesome food. A millionaire may enjoy breakfasting off orange juice and Ryvita biscuits; an unemployed man doesn’t. Here the tendency of which I spoke at the end of the last chapter comes into play. When you are unemployed, which is to say when you are underfed, harassed, bored, and miserable, you don’t want to eat dull wholesome food. You want something a little bit ‘tasty’. There is always some cheaply pleasant thing to tempt you.
Substitute iPhones or other things the poor don’t “deserve” for the tasty food.
Elizabeth Warren states that she’s been in meetings (or was it congressional testimony?) where the banksters have stated that if those predatory fees were reduced or eliminated, their profits would seriously suffer. That’s where they make a lot of their gravy.
I’ve been at credit unions for almost my entire financial life. Once, as a treasurer of a club, I inherited a Chase account. I could. not. believe. all the fee traps that were set. That’s what they are: traps. Too much money; too little money, too many transactions, not enough transactions. Seriously, it was a freakin mine field of razor blades designed to make you bleed from a hundred cuts. Needless to say, I found a nice, local credit union that offered business accounts, and I was pleased to close our Chase account. Fück chase, wells fargo, bank of america, all of them. Execs should have gone to prison. Period.
The term “bailout” suggests that the government just gave a bag of money to Chase with no strings attached. In fact, JPMorgan Chase repaid the $25 (not $12) billion loan with interest: the government made a profit of $1.7 billion. https://projects.propublica.org/bailout/list/state/NY
Since it worked out so well for the taxpayers, imagine how much more money we would have made if the banks had been nationalised. I kid, because somehow that would be “soshalism” where loaning money to the distressed banks with no conditions on how the funds would be applied was somehow … not.
Loans can have strings attached, too, and not just about payment terms – try to borrow $10k+ from the bank as a non-millionaire and they’re going to ask you exactly what you’re going to use it for. Unless, of course, you’re a too-big-to-fail bank that preferred to apply those funds to bonuses for greedy incompetents who tanked the global economy (which the banksters promptly did) instead of to issuing commercial paper to SMEs to help revive the economy (which they remained reluctant to do, even under their strings-heavy terms).
What, on top of the 3.7 billion dollar tax break and the 25 billion dollar bailout they already got?
Especially after their financial institution failed to be sufficiently careful with the money in their care and required tens of billions of US taxpayer dollars to be bailed out. I mean, they might have just cut to the Chase and told people not to buy coffee because that money was needed to pay off their future bad financial choices.
And who get direct taxpayer cash infusions when they fuck up, too.
I kind of like this editorial take on both the tweet and the backlash:
It doesn’t let Chase off the hook. But it makes some good points such as “Clearly, anyone who tells you the key to riches is eliminating spendy coffee is misleading you, but cutting out small, inexpensive luxuries may be the best insurance against a catastrophic financial event.”
There’s nothing wrong with the advice in and of itself, especially if you’re trying to escape crushing debt or trying to build an emergency fund. There’s a lot wrong with anyone using it to say “this is why you’re constantly broke, dummy” (or “this is how you’ll get wealthy”, which a lot of FIRE people preach), whether or not the source is a hypocrite that’s actively contributing to the problem.
Fingers crossed they will next time, provided we all survive.
I’ll be reading it a bit later, however from the tag line “ignore the source, listen to the message,” I would say that the source is every bit as important as the message, if not more.
This isn’t a friendly neighborhood financial advisor looking out for your best interests. It’s a mouthpiece for a corporate monolith that has the overwhelming drive to take “moar!” and ideally give back nothing.
Reading the article now. This gave me an unrealistic-never-going-to-happen idea:
To make matters worse and unfair, the less money you have, the less margin you have for error. We all make financial mistakes from time to time, but the richer you are, the more you can afford to make them. The less money you have, the better you have to be with money. The risks are greater since low income people tend to have less comprehensive health insurance, cars more prone to breaking down, and lower incomes. It’s not only harder for them to save, they need more savings. And it’s not only low income people: 40% of American adults would have to take out debt or sell something to cover $400 in unexpected expenses, according to the Federal Reserve.
My stupid idea was, how about at certain wealth thresholds you lose access to things.
Make $200k a year, any car you drive has to be at least 5 years old. Add a year for every $10k/yr above $200k. with the cutoff being 20 years old. On the other side of the financial spectrum, give a free new car to anyone earning under $200k/yr. and they can trade it in every three years for a new model.
Make $1m/yr? No more healthcare for you. You pay out-of-pocket. Everyone who makes under $1m/yr gets full coverage, $0 deductible, no lifetime cap, no exclusions.
$1.5m/yr, all of your food now costs 20x the normal price. Under $1.5m, all food costs half as much.
$2m/yr, you have to pay an additional monthly rent (not taxes, rent) equal to 1/100 of your yearly income to the local governments where any of your properties are located, and that money is earmarked to exclusively to fund housing for the poor with the goal of nobody ever having to sleep on the streets again if they don’t want to.
If it’s worth it to a person to be a wealth accumulator, then they lose their rights to financial safety nets (which they wouldn’t need anyway because if they lose everything, they will get what the poorest of us get and still be able to live just fine).
Punishing people for circumstances outside of their control needs to stop being seen as some kind of virtue.
That reminds me of a passage from the discworld novel sourcery.
The Serif of Al-Kali, the richest man on the disc watches as his palace is magically disassembled and put back together as a Wizarding tower. And faced with the loss he says
“I know it was a lot, but it’s all I had!”
Also, what you just described is the nightmare description of communism rich american plutocrats have their nannies tell their children as bedtime stories.
