For more than sixty years, the International Monetary Fund and the World Bank together with their partner regional development banks and export credit agencies, have used international finance capital to exercise control and restructure the societies of the South to serve the interests of global private corporations and the economic and geo-political agenda of the few powerful nations that control these institutions. The resulting effects on people's lives, on communities, on the environment, and on the economic as well as political structures in the South have been profound and over the years have generated numerous resistance struggles against these institutions.


Despite well-documented evidence and countless testimonies to the destruction, displacement and dispossession their policies and operations have caused, these institutions persist in legitimizing their role. In recent years they have declared themselves to be champions of "poverty reduction" and "good governance."


This year, 2006, we pledge to intensify our struggles against these institutions and raise the level of international coordination and concerted action. In particular, we commit to organizing different forms of mobilization and direct action in many countries across the globe during the week of the IMF and WB Annual Meetings, September 14-20, 2006. This will include various activities and actions in the vicinity of their meetings in Singapore.


WE CALL on all people's organizations, social movements, labor movements, women's movements, farmers groups, first peoples, religious and cultural groups, community organizations, NGOs, political forces, and all concerned citizens around the world to join us in mounting vigorous actions that will focus the world's attention on the destruction and human rights violations caused by the IMF and World Bank, the regional development banks, export credit agencies, and the neoliberal global system they enforce.


Our actions will identify issues and articulate demands that reflect the particular impacts of these institutions on each of our countries but will also be united on the following global demands:


1. Immediate and 100% cancellation of multilateral debts as part of the total cancellation of debts claimed from the South, without externally imposed conditionalities.


The inhuman and destructive consequences of debt domination which the international financial institutions play a major part in perpetuating are evidence against the outrageously deceitful claim of these institutions that they are working for "poverty reduction" and "financing for development."


Debt relief initiatives of international financial institutions have to date covered only a very small part of the debt claimed from the South. Worse, these initiatives come with conditions that undermine the sovereignty of people to determine their own path of development, have proven harmful to livelihoods and the environment, and keep South economies tied to the interests of global private profit.


Cancellation of only a small part of the debt may release some funds that can be used for basic services but does not free the South from debt bondage. Debt cancellation must be 100%.


And for immediate action, we highlight the especially urgent cases - most of Africa, Haiti, Nepal, Tsunami-hit countries and others recently devastated by natural calamities, countries ravaged by war, societies overwhelmed by HIV/AIDS, and others experiencing severe social, financial and economic crisis.


We reject the international financial institutions' "debt sustainability" framework. There is no level of debt that is "sustainable" in a global economic system that is founded on domination and exploitation of the peoples, economies and resources of the South. This framework is a means by which these institutions justify maintaining the "indebtedness" of Southern countries.


The insistence on their "debt sustainability framework" is also a refusal to address the more fundamental question of the illegitimacy of the debt claimed from the South. Peoples of the South should not be made to pay for illegitimate debts -- debts they have not benefited from, debts that financed projects that have caused displacement of communities and damage to the environment, debts wasted on corruption or failed projects, debts contracted through undemocratic and fraudulent means, debts with grossly unfair terms and harmful conditions, odious debts incurred by dictatorships, debt contracted in the context of exploitative international economic relations, debts for which peoples of the South have paid many times over.


Though the financial debts claimed from the South are of staggering amounts, totaling more than US$2.3 trillion dollars, the North in fact owes the peoples of the South a far, far greater debt. It is the historical, economic, social, and ecological debt accumulated over centuries of plunder and exploitation by North with the collaboration of Southern elites.


The IMF and the World Bank should bear the costs of writing off debts owed to them by using the World Bank's loan loss provisions (valued at US$3 billion as of June 30, 2005) and retained earnings (valued at US$27 billion as of June 30, 2005) and IMF gold stocks. With the market price of gold surpassing US$600 an ounce, the IMF's 103.4 million ounces of gold are worth more than US$60 billion, rather than the US$9 billion recorded on the IMF's books.


2. Open, transparent and participatory External Audit of the lending operations and related policies of the International Financial Institutions, beginning with the World Bank and IMF.


Debt campaigns, movements, people's organizations, and NGOs are now involved in preparing for and conducting country-level independent Citizens' Audits of Debts claimed from South countries as well as calling on South governments to conduct transparent, open and participatory Government Audits (e.g. Parliamentary) of these debts. These audits are aimed at examining the origins and causes of the debt problem, taking stock of effects and impacts, bringing to light the dubious and illegitimate character of the debts, identifying responsibility and accountability, and establishing and strengthening the basis for urgent changes in national policies on the debt and related issues.


We challenge the international financial institutions to subject themselves to similar independent audits of the loans they have released, their lending policies, processes and operations, and the terms and conditionalities that have accompanied these loans, and take stock of the effects and impacts. Such audits should look into the culpability and accountability of these international financial institutions, and asses what restitution and reparations must be made.


The international financial institutions have recently been stepping up efforts to portray themselves as champions of good governance, including the announcement of renewed efforts and strategies to fight corruption. We challenge these institutions to begin with themselves and examine how they have been involved in creating and exacerbating the problem of corruption. External, independent audits of their loans, lending operations and conditionalities should include this question. Further, corruption must be seen as a systemic problem that also involves the private sector, especially transnational corporations.


3. Stop the imposition of conditions and the promotion of neoliberal policies and projects.


Through the conditions attached to their loans and programs, the IMF and World Bank have succeeded in restructuring the global economy. The widespread use of "structural adjustment programs" from the early 1980s in countries with significant debt, poverty, and financial problems has forced most of the South countries' economic policies to ape those of the industrialized countries, regardless of how inappropriate those policies may have been for the countries' development needs. Because of the imposition of neo-liberal policies on countries desperate for access to credit, peoples across the South now confront economies oriented to export production rather than providing for local markets, devastated manufacturing sectors, a large percentage of economic actors in foreign hands, valuable public assets privatized, health and other social sectors crippled by decades of de-funding, environmental resources devastated by over-exploitation, small farms and businesses wiped out by denial of credit and subsidies, and massive unemployment.


Our struggle against debt domination is waged in large part to win freedom from the conditions that indebted governments are blackmailed into accepting. For the September 2006 actions we demand:


a. In this 50th anniversary year of the International Finance Corporation (IFC), the IFIs end the promotion of privatization of public services and the use of public resources to support private profits.


The IMF and especially the World Bank have been the main drivers in the global push for the privatization of basic services. They are joined by other financial institutions like regional development banks and export credit agencies.


The international financial institutions promote privatization of public services through policy conditions and policy advice, financing of projects that pave the way for privatization, providing technical assistance in the preparation of feasibility studies as well as the process of implementation, and even direct support for private companies taking over public utilities. The International Finance Corporation plays a major role in providing risk guarantees as well as equity assistance for these private companies, and facilitating government bail-outs of privatized utilities in distress.


The continued emphasis on privatizing basic services such as water provision - or, when no company is interested in purchasing the utility, arranging leases and service contracts - and the "commercialization" of even life-saving agencies such as those managing food reserves reflects a fixation on markets as the only organizing principle for economies even in the face of overwhelming contradictory evidence. Failure after failure of water privatizations in the South has not deterred the IFIs from their mission to wrest assets from public ownership.


Our message to the IFC and its multilateral partners is clear: no more public resources for support of private profit.


b. Stop IFI funding and involvement in environmentally destructive projects beginning with big dams, oil, gas and mining and implement the major recommendations of the Extractive Industries Review.


The international financial institutions are also presenting themselves as leading in the fight against climate change and environmental destruction. However, no amount of clever rhetoric about stronger commitments and new strategies can hide the fact that many projects designed, driven and supported by international financial institutions violate the already watered-down standards and safeguards avowed by these same institutions and cause massive environmental as well as social problems.


The World Bank is itself a major ecological debtor, having funded major projects such as hydro-electric dams, mines, pipelines and petroleum exploration and development projects which have displaced populations and wrought major environmental damage. The World Bank has refused to implement major recommendations of its own Extractive Industries Review including 1) the principle that communities faced with resource extraction projects must give free, prior and informed consent, 2) and the phase out of investment in hydrocarbon extraction projects.


The World Bank's attempt to claim leadership on the issue of climate change with the application of its development of carbon credit trading is another tragic example of market fundamentalism. Entrusting the precarious future of the world's climate to the World Bank's clever market solutions distracts the major actors from focusing on the over-consumption that threaten to doom the planet and all who live on it. Meanwhile, the World Bank Group, which claims leadership in developing alternative energy, devotes much greater resources to developing conventional energy sources. Indeed, the World Bank is the world's leading financer of projects producing greenhouse gases.


c. Immediately stop imposing conditions that exacerbate health crises like the AIDS pandemic and make restitution for past practices such as requiring user fees for public education and health care services.


IFI policies have aggravated health crises like the AIDS pandemic in a number of ways. Austerity measures have constrained health budgets, prevented the hiring of critically needed teachers and health care workers due to limits on spending for public sector employees, and kept people out of clinics and children away from schools by insisting on user fees. The macroeconomic policies the International Financial Institutions have imposed over the last 25 years - including fiscal austerity, high interest rates, unilateral trade liberalization and privatization of essential services - have led to lower growth rates and fewer improvements in social indicators than had occurred over the two decades between 1960 and 1980.


The IFIs owe an enormous social debt to countries whose public services have been damaged by their policies. Their creditors are the women of South countries, who have had to step in to provide the health care, the food, the teaching, the water, and the other basic goods and services put out of reach by IFI policies. The World Bank and the IMF should pay for free primary education and primary health care as a form of reparations or restitution for the damage their policies have caused.

First World Consumer Debt or Third World Government Debt – Refrigerators For Consumers Versus Money For Despots

While here at Jubilee South we chiefly focus on the insidious effect that high debt levels have on economic development of third world countries, the debt crisis has hit closer to home also.  Individuals throughout the developed world are struggling under the burdens of both mortgage payments and high consumer debt.

The media has spent a lot of time discussing the causes and effects of the bursting of the housing bubble, but has spent less time exploring how these high levels of consumer debt came around.  The cause of this can be summarized easily however – excessive discretionary spending.

Even the most financially savvy citizen of consumption oriented economies can succumb to glowing reviews for the latest consumer products.  In fact, there are people who have racked up thousands of dollars in debt purchasing something as simple as a refrigerator for their kitchen remodeling project.

To people in the third world, this may seem inconceivable. What kind of refrigerator reviews can exist to justify someone spending thousands of American dollars to purchase said fridge freezer?  For those living in poverty, spending what is to them several years of income on a simple appliance like a refrigerator may seem madness – or even obscene!

In poor parts of the world, refrigerator reviews are not really a factor in peoples purchase decisions.  In fact, people who own any sort of refrigeration appliance at all are probably considered wealthy.  Free solutions like root cellars are more apt to be appropriate for people living on only one or two dollars a day.

The true insanity of third world debt is that the people who pay the price of having to repay the debt are the citizens of those nations living in poverty – instead of their governments spending on infrastructure, health care and education, money is funneled into making interest payments on loans taken out in the past.

Even worse, the proceeds of those loans often served only to fill the pockets of corrupt government officials.  Thus the poor are left paying the price for loans that they saw no benefit from.

In the West, however, the situation is reversed.  In our consumer based economies individuals can take out personal loans to finance the purchase of consumer goods – such as well reviewed refrigerators.  Then, in the future, if they find themselves unable to pay those loans off there is a well-defined process they can follow to declare bankruptcy.

So in essence, in the developed world individuals can benefit from loans, and have the option of not paying them back.  However, in poor parts of the world, governments will run up loans that do not benefit the average citizen – but those citizens indirectly have to deal with the requirement to pay them.  Does that sound fair to you?  I know it does not to me.

 

Debt, IMF

Security Guards: Income and Debt

Based on information from a leading internet salary comparative website, as of January 2012, security jobs average around $9 to $16 salary an hour, depending on the inherent hazard of the job, seniority, specialization as well as the state where the security guard is employed. Assuming a security guard has regular work that means a day’s salary is around $72 to $128 or $1,512 to $2,688 a month. It is important to note that the Federal minimum wage is set at $7.25 for security jobs. This may increase or decrease depending on the state but not by much (about $1 to $2). This means that a regularly employed security guard is still earning more than the minimum wage.

Minimum wage for a security guard is set in order to provide each worker with enough income for a sufficient standard of living. This means that for so long as a security guard lives within his or her means, getting into debt is not going to be a problem. And, a relatively comfortable lifestyle is still possible.

What constitutes “living within his or her means?” This does not mean a zero sum income and expense worksheet (income minus expenses equals zero). Rather this means spending a reasonable amount for necessities, utilities, shelter, food, clothing, medicine, etc. making sure to keep a specific amount, around 10% to 30% of the salary as savings or as an emergency fund every month.  Remember, security guard lack job security therefore it is important to save for a rainy day.

A 10% to 30% savings monthly is really not that much. That is why a security guard has to make sure to keep out of debt. This can be done by planning his or her finances properly, taking free financial freedom seminars and getting a part time job if possible. The key really is not to get into debt. However if debt is already a reality then it would be wise to communicate with the lender or creditor to come up with some sort of an arrangement. The best arrangement possible is one that allows payment on installment with little or no interest charged. This is better than avoiding and running away from the debt because on interest alone the debt may balloon to twice the amount within a year. If installment payment is not a possible option then seriously consider filing for bankruptcy, rather than be forced to pay on installment at unconscionable interest rates.

Debt , ,

Three Spending Habits That Lead To Debt

Debt isn’t something that just happens coincidentally or accidentally as you go about your daily living. There are certain spending habits that lead to debt. Recognizing these habits now could save a lot of money and stress later. If you want to stop creating more debt and pay off the debt you have, you must eliminate these bad habits.
Governmental agencies have started to advertise a QR Code that can be scanned and give users helpful information on debt management.

1. Spending more money than you make.

The logical part of you thinks it’s impossible to spend $1,200 each month when your paycheck is only $1,000. Spending more than you make is easier than you think. So easy, you might be doing it without necessarily realizing it. Dipping into savings, borrowing from others, and using credit are the primary ways of spending more money than you bring in. You can get away with doing this for a few weeks or months, but soon or later, your hole-digging spending habits will catch up with you. Before you know it, your savings is depleted, your credit cards are maxed out, and you can’t borrow any more money.

 

2. Spending money you don’t have.

Spending more money than you make is enabled by spending money you don’t have or money you are yet to earn. You spend money you don’t have by using credit cards and taking out loans. When you use these instruments to pay bills and make purchases, you’re creating debt. If you can’t repay the debt each month, it will continue to grow.

You can resolve this bad habit the same way you stop spending more money than you make – by reducing your expenses and relying only on your income to pay for your wants and needs.

 

3. Using debt to pay off debt.

When you use credit cards to pay off other cards and loans to pay off other loans you’re not paying off anything. You’re just shuffling your debt around and incurring more debt each time you do so. Balance transfers have transaction fees and most loans have some kind of down payment or origination fee. So when you use debt to pay off debt, you end up worse off than when you began.

Using debt to “pay off” debt might be beneficial if you can transfer a balance from a high interest rate credit card to one with a lower limit. However, you have to be careful that the balance transfer fee doesn’t negate the interest savings and that your post-promotional interest rate isn’t worse than your previous rate. Transferring a balance once or twice to take advantage of a great rate is different from continually transferring balances to dodge credit card payments.

Debt

The IMF – Not Fit For Purpose Anymore

The IMF and the World Bank were created in a very different world than we live in today.  The emerged in the chaos of 1944 when the world was still very at much at war.    The organisations were intended to promote some sort of economic stability and to encourage free trade and economic cooperation through financial support when required.

It’s role has developed and expanded over the years – especially during the 1980s when it took a much more active role in Global finance by bailing out many countries who were in financial turmoil and facing bankruptcy.    However it was to become much more than some simple lender of last resort, it in fact became the architect of economic policy for most of the countries that needed it’s services.

To obtain the crisis loans, countries had to adopt the stringent economic requirements and policies that the IMF stipulated as terms and conditions.  The power wielded by this huge Financial behemoth in shaping the economies of the world should not be understated.

The problem has been that economic policy run by a financially focused  organisation is not always the best way to run an economy.  One of the main issues is that the policies that the IMF impose (structural adjustment policies) have a single goal – to repay the loans by decreasing spending and reducing debt.

So in the name of debt repayment – countries will have to forsake their populations, cutting spending on things like health and education, throwing out eco friendly policies in exchange for strict austerity budgets.   As we can see with the Greeks in our current crisis, cutting spending for debt repayments leads to a rapidly shrinking economy – the people pay the price.  In the Third World countries the cost is even greater than for the Europeans, investments in health and education are already at much lower levels than the rest of the world.

The reality is that these debt repayment policies may seem logical to rich Western economies but all they do is increase the inequalities that already exist for the underdeveloped countries.  Shackled by huge debt repayments the policies increase poverty and leave various multinational companies free to exploit both the environment and the workers of these countries.

The IMF and World Bank may be what the world needed in the post conflict environment they were created in.  However many would argue that they are not fit for purpose for the world we live in today.

Debt, IMF , , , ,

The Fundamental Problem of Debt

Not all debt is bad, after all look at the roof over your head – the place you live is probably the result of you have taken on some debt.  How long would we have to save before we could have bought a house outright?  I’m sure my parents would have got kinda of tired of me hanging around their house into my forties.

If you look outside you might see a car, or a truck – perhaps in the corner of the room a nice flat screen TV.  All these may have been acquired by some debt.  How many companies would be in existence today without the ability to borrow money – the firms who employ thousands owe their existence to the ability to borrow money to expand.  There’s a whole lot of stuff in my life from my laptop which I happily sit and watch BBC Iplayer through a proxy to my lovely house and car – all would have been much more difficult to obtain without debt.

But unfortunately many of the poorest countries in the world are saddled with a different type of debt which is crippling their development and leaving their citizens in poverty.   Much of it wasn’t used to boost a countries economy, it didn’t establish infrastructure improvements or build schools or hospitals.  If this was the case the debt may have been serviced properly on the benefits accrued.  No, much of this third world debt was frittered or simply stolen by whichever tin pot ruler was in charge at the time.  The Western world threw money at countries thinking that would make things right.

There were little benefits to this debt but the repercussions of the repayments have left many countries stranded in a poverty that is impossible to escape.  There are the repayments of course and various conditions attached to the payments – further restricting  the opportunity to invest in their own country.

The basic problem is much of this debt – much of it from the 1970s was a complete failure – the projects usually achieved little or nothing.  We must let these countries have the chance to compete, the shackles of debts from Western inspired ideas should be removed to give them half a chance.

 

Debt ,

Spending Problems Affect Everybody

Spending problem is serious both on national level & on personal level. People who have crazy spending sprees not only affect their lives, but also the lives of the people directly related to them or people who are not related to them at all. Every debt that is not paid is going to add burden on society.

You spend excessive amounts of time shopping or thinking about shopping. You find yourself concerned and others worried about your personal spending patterns. You try to control yourself, but find that you are repeatedly unsuccessful. These urges to buy seem to control you, and you end up buying things you do not need and never use. You have no intention of purchasing items but find yourself buying them on impulse, later regretting these purchases and returning them soon after.

These are just some of the symptoms of a damaging spending problem. If you experience guilt, depression, a sense of lack of control, or excessive happiness after making a purchase, you need to consider that you are suffering from a spending passion. If shopping is your outlet to release anxiety, sadness, or anger, you must recognize that you are entering risky patterns. People who suffer from bipolar disorder are likely to have spending problems. For this reason people affected by bipolar disorder should be watched by a family member or a partner, otherwise their spending sprees can go reckless. If you suspect that you or your family member suffers from bipolar disorder, you should consider having a bipolar test by a mental health professional. Therapy is likely to control manic episodes, thus this can save the person from potential debt crisis. After you’ve taken care of this part consider whether your credit card accounts are over your spending limits. Notice whether you pay the full balance on your statements or if you pay just the minimum because it is all you can afford. Using credit cards instead of cash for everyday needs, such as groceries, is going to hinder your ability to rid yourself of debt.

If you hide bills or purchases from others, borrow money to pay basic bills, and find yourself accumulating more debt on revolving charge accounts than you can afford each month, train yourself to come out of these patterns and save money each month. Avoid using cash advances to pay bills and the embarrassment of cutting up a credit card and being denied purchases and credit will trouble you significantly less.

Debt

Capitalizing on a Market that has headed South

With economic uncertainly wreaking havoc on European and US markets it feels like the average consumer has few options when it comes to investing.  While surely the market will recover, few are willing to risk losing it all amid such turbulence.

Since most people with a 401K or other retirement vehicle are already heavily invested in stock and bond markets it could make sense to diversify by essentially betting against the market.  While an investment in gold or silver directly, or even via something like GLD could be a wise move, there are additional, lesser known options available to the average Joe, that could work.

One such option is FAZ, a trading inverse equity that is part of the Direxion Funds.  Since 2008 the exchange traded fund has sought out daily investment results, before fees/expenses, of 300% of the opposite of the performance of the Russell 100 Financial Services index.  Technically the fund creates what are essentially short positions via investments made in futures contracts, options on securities, indices and futures contracts, etc.  Essentially these financial instruments in combination provide the investor with both leveraged and unleveraged exposure to the index.    This is not the type of stock that is meant to be held long, but rather an excellent option at points in time where market uncertainty is driving stocks down, especially banks like Bank of America and JP Morgan.  Investors who pay close attention at the market open can even capitalize on day trading this stock, and theoretically could expect a return of 5% or 10% via intra day trading.

Not everyone has the time and market acumen to make an investment in FAZ work.  In tough times the age old adage “keep it simple” can offer some of the best relief.  The average consumer can seek out deals, cut coupons, and even reduce home expenses by making some smart choices.  For example, try remanufactured ink cartridges in your home printer and you could cut your office expenses in half!  Or seal up your windows and doors in the winter to make sure you are losing heat.  Taking enough small steps can actually have quite an impact on your disposable income.  But for anyone with a little time on their hands, and maybe a hankering to take a small risk, investing in GLD or FAZ could be worth a shot.

DISCLOSURE: The author holds a position in FAZ, but does not own GLD or Gold and Silver commodities.

Uncategorized

Not debt relief, but a minimal capital requirement among banks is the best solution to avoid a systematic banking crisis.

Since the credit crunch which started with the decline in the US real estate market that impacted worldwide financial institutions. This chain reaction of events resulted in a global financial crisis which have impacted not only the financial sector and US real estate market but has also influenced other sectors. These events have had an impact of economic growth of all companies and have lowered their future expectations for the coming years.

Even though we are currently in a period of lower economic growth with more future uncertainty, in the past decade we have had multiple crises such as the Russian Ruble crisis of 1997 which resulted in the default of the Russian state and fall of Long Term Capital Management, which led a large shockwave across global financial markets.  But also the collapse of the Dot-com bubble around 2001 has led financial markets in distress after a few very prosperous years. The main problem in this case is that banks are strongly intertwined with companies (that borrow money) and the general population (depositors, investors and stakeholders). In simple and plain English it means that when the economy is hit, banks are also hit as the money they can make on the multiplication effect of lending money decreases as people are less eager to borrow money. So this reduces the cash flow of banks as they cannot lend as much money that generates the highest return and at the same time they are more strict in lending money as they tend to strongly investigate the creditworthiness of its lenders as a possible loss of money, due to bankruptcy can be detrimental to a bank’s tier 1 capital requirements.

If we take a trip around the world we find different examples of troubled banks causing a stronger spiraling down economy. In Asia, and to be specific in Japan, we have seen that most companies (conglomerates) are formed around a bank or group of banks which can help improve internal efficiency among companies and the bank(s) but form a risk when they all face the effects of a global downturn. In the US we have seen the case of Lehman Brothers and Bear Stearns who both fell from grace and at the same time hurting other global financial institutions as they are strongly interlinked with each other with mutual fund investments, bank holdings, debt obligation and share ownership. Even Dutch insurance companies, such as Aegon and ING, where strongly affected by the fall of Lehman Brothers. Additionally there were also cases of Dutch financial institutions that fell apart due to the global debt crisis, such as DSB bank, famously known for personal loans (in Dutch: persoonlijke lening ) and mortgages ( in Dutch called ‘hypotheken’ ), which it used to sell to the consumer market. Before its fall, DSB bank was estimated to be worth around 500 million euros.

An almost decade old paper by Mathias Drehman (2002): “Will an optimal deposit insurance always decrease the probability of systematic banking crisis” proposes the use of what we now define as a minimal capital requirement that banks need to maintain to avoid a possible systematic banking crisis. In plain English this means that banks need to keep enough money in their safe to avoid when another bank collapses a chain reaction can be somewhat avoided. Drehman (2002) explains that contagious bank runs can be avoided when the correlation of bank’s portfolio is not strongly correlated with a bank that is in financial distress (minimal capital requirement not in a bank’s safe). This minimum capital requirement we now know as Basel I and especially Basel II (the second of the Basel Accords) made by the Basel Committee on Banking Supervision.

Debt, IMF

Employment On The Rise But Salaries Still At Risk

The latest data on unemployment figures- currently on a downward trend at 8.5%- has prompted an upswing in polls for the Obama administration, and may improve his chances for re-election, according to the Financial Times.

While this change is indeed a positive one, it is worth taking a look at the factors behind this figure. The BLS website defines “employed” as a person over the age of sixteen who has a job, while “unemployed” is a person over sixteen who has done no profitable work in the past week and has actively been looking for a job within the last four weeks.

What this survey does not take into account are the under-employed (workers who have had their paid hours cut or cannot get enough hours in their current job), the chronically unemployed (those who have given up looking for work) and workers who have had their salary or benefits cut as a result of the troubled economy. These ‘unseen’ categories are just as significant to the millions of workers in the US today as the basic employment rate.

Workers in sectors that are generally considered “dispensable” are the worst hit by any recession; this is especially true of those in the financial and retail sectors, for example, who experience an increase in redundancies and salary reductions across the board. Qualified professionals in essential services such as healthcare do better, such as doctors, dentists, pathologists and ultrasound technicians. For example, the ultrasound technician salary has been largely unaffected in the years since 2008, with a steady increase in pay and benefits, and job openings on the rise. Unqualified individuals within that same sector, such as pharmacy technicians, may not be so lucky in terms of salary although the demand for their services remains high.

What this year will bring for those of us still in the workforce in terms of employment and pay rates remains to be seen. For the young ones just starting their qualifications or looking for jobs, a good bet is the strong healthcare industry or other essential services where the demand for workers is projected to remain high. If you are in a position to obtain a strong qualification in such a sector, so much the better; you are separating yourself from the masses of job seekers out there who would willingly step into your shoes. In today’s economy, a reliable salary and good benefits are well worth the extra effort.

Debt , , ,

The Elephant in the Room: Student Loan Debt

With the economic and consequential jobs crisis, two big things are happening:  first, people are returning to school for additional education or to change careers because they can’t find a job in their chosen field; and second, students are staying in school longer in an attempt to “wait out” the jobs crisis.

The question is:  is this really the answer?

Just like the indebted nations of our world cannot dig themselves out of debt by amassing more debt, can people really dig themselves out of the economic crisis by taking on even more student loan debt?  What happens if they stay in school longer, incurring even more debt, only to find that their job prospects once they graduate are the same?  If companies aren’t creating new jobs, staying in school longer and owing more debt won’t fix anything.

Going to college for a new or additional degree is only beneficial if you are in a growing field.  Occupational therapy schools, for example, are finding themselves awash with new students because the occupational therapy field is booming.  However, taking on student loan debt for a degree in a declining field, such as manufacturing management, is unlikely to pay off in the future.  Before you take out a student loan, weigh your options carefully to decide whether or not the career field you’re entering will be around five or ten years from now.  If not, you may be stuck with student loan debt that you cannot repay.

Debt

Combine your loans and lower your debt

Many people these days got several different loans. Paul from Lån has been interviewing over a thousand people the last two years, with regards to where they take a loan and what type of loans they usually apply for. It turned out that in average a person had 2.4 loans and most of the times it was a loan with a very high interest level. A lot of these people could actually save a lot of money every year and lower their debt by taking a new low interest loan and combining their loans into one. As you can see here at Lån it is possible to find a rather cheap loan online where the chances of getting accepted are a lot higher than at the normal banks. The problem with many of these online banks listed at Lån is that it is much too easy to get accepted for many of those online loans and suddenly you find yourself pay of on 3-4 different loans which can easily put you in a debt which can be hard to get out of.
The people from Lån has posted several articles with tips on how to avoid getting into debt by taking the wrong types of loans and other issues you should be aware of if you plan on apply for one of the many online loans. However the best way to stay out of debt it to save up to buy the things you need instead of just borrowing the money every time and don’t buy things you don’t really need which is actually one of the most common problems. People see something nice which they usually can’t afford then borrows the money it at the bank and buys it, a week or two later that item isn’t even interesting anymore but they still have to pay the rates from the loan for many more months. At Lån they seem to think that the way to avoid this trend is to educate people better about the dangers of loans and learn to value money better. Especially younger people with credit cards seems to get into debt a lot easier than the older more experienced people.

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Handing Debt Down To Future Generations

What we are doing now is almost criminal. While this generation mindlessly racks up debt in staggering proportions, it is our kids and grand kids who will have to pay the price. Many blame our politicians for the mess we are in now. But ultimately it is we, the people, who have voted those politicians into office and let them get away with all the shenanigans they pull year after year.

Debt is something that has crept up on us ever since the introduction of credit cards. It is something that seems innocent and harmless enough at first which is why it is so enticing. Credit cards and debt allow you to have today what you want rather than wait until tomorrow for them when you can better afford them. It is a formula that too many people succumb to and over the years it has grown to be a national problem.

Parents don’t bother to teach kids the importance of saving anymore. We just think that Social Security will be there at the end to bail us out. But not learning to save means that you never learn how to buy stock and invest properly. A whole generation of people are without the the tools they need to financially succeed and build up enough money so they can retire comfortably. It is both sad and scary at the same time.

Going into debt is one thing but passing that debt onto future generations is just irresponsible and immoral. Our greed today will impact countless other lives down the road but it seems people just don’t care. Too many people seem unwilling to cut back so that the debt crises can get under control and this generation may go down in the history books in a very unfavorable light. Youngsters in their 20′s need to speak up now and perhaps that is part of what Occupy Wall Street is about.

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What Debt Relief Method Is Best For The Consumer?

It’s no secret that over the past few years the economy has been in the tubes.  People have been losing jobs, homes and pretty much the will to move on.  What makes matters even worse is that personal credit card debt amounts are at an all time high.  People ended up relying way too much on their credit cards during this terrible recession and are now trapped in a hole.  So which method of debt relief can best serve such people?

Over the years a popular method has been credit counseling.  This plan is aimed at a full repayment to the creditors however the benefit is getting lower interest rates and one monthly payment.  The one payment can help people with the headache of staying on top of the bills, and also helps to speed up the process of getting out of debt.  And getting a lower interest rate can obviously help to save some money.   The main issue with this plan however is that many times the payments to get on a plan like this are either the same or more than what people are used to paying for monthly minimum payments, therefore making it unfeasible for many.

Another option that has helped many people out during such rough times is debt settlement.  Debt settlement is a partial repayment of the actual balance owed.  On many settlement plans people have found themselves saving over half of what they currently owe and will be debt free in a very fast time frame.  The only real downside to this plan is that it will have a negative impact on ones credit report.  You must fall behind on your minimum payments for the creditors to have any desire to negotiate a settled payout for less.

No matter what you do make sure to do something.  Sitting around and hoping the problem will just disappear is not a sound game plan and will only put you and your family into further financial distress.  Contact some companies today and find out which plan will work for you.

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A Partial Writedown Of the Debts Incurred By Countries Of The South Is Generous

If the debts are cancelled will the countries of the South immediately apply for new debts? I suspect the answer is ‘yes’. And what then? Will you be asking again in a few years for another write down of the debts? Probably! You can hardly expect banks to suffer a write down of their assets just because a country has borrowed more than it can afford to repay. To think it is to be very one-sided. After all, I have a business producing gifts with the customer’s coat of arms, if I want to buy more equipment to enlarge my business, I can’t turn to the bank in a couple of years and ask them to cancel the debt while I continue in business selling my coats of arms. Get real!

There are already moves to cancel a proportion of country’s debts, enough to bring the debts down to a manageable level so that repayments can be made without undue suffering by the respective country’s people. For me that is enough, and it is generous. At the end of the day it is the banks’ shareholders who have to shoulder the loss, and shareholders are mostly individuals who are saving for retirement; ordinary people who you have no right to ask to bear huge losses because of the bad management exercised by most leaders of Southern countries.

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Health Care Debt Crisis

Health care spending is one of the major issues many countries are facing today, many countries are already spending way more on health care than they can afford, unfortunately the problem is projected to get worse since health care costs are growing really fast and really steadily. Health care spending is a large part of the budget were many developed countries, and none of them really have an answer to how they’re going to handle their health care expenses in the not too far future. While there are many models around the world not of them is a projected good outcome, they’re all just still operating for the time being and that’s just it. The real problems are the medical costs which are going up in an insane rate and there is no real practical answer how to cut these costs.

There are many interconnected factors here; education costs for doctors are really high and before even starting working as a doctor they are already buried in outrageous debts that they have to pay off. In addition all the medical equipment is really expensive both to buy and maintain, there are many requirements and regulations that are necessary to meet in order for the medical petitioner to operate, including buying insurance policies for possible liabilities that can occur during treatments, surgeries etc. And the chain goes on. For the costs to go down every component of this chain needs to be changed completely, which is easy to say that it needs to be changed but practically impossible task to achieve. And this chain is also involved the entire pharmaceutical industry and the prices are regulations for medications. The most prescribed medication in many developed countries is cholesterol-lowering medication, and statins are the most widespread of them. The reason that these medications play a sensible role in health-care costs is because of the chronic conditions associated with them. Cholesterol problems are widespread especially in the United States, many suffer from high cholesterol because of the diet, lifestyle and genetic disposition. While changing diet and lifestyle habits usually helps to decrease cholesterol levels, the decree is usually not enough and many have to take medications to control the condition for years. Another chronic serious problem is diabetes. Diabetes lasts a lifetime and needs to be treated constantly. Many chronic conditions put a huge burden on the health care system and healthcare costs. While there is a trend of choosing healthier lifestyle and healthier diet is not exactly clear how much it will take the burden off of the system. It’s apparent that the problem is very complicated, however, it is also apparent that he needs to be dealt with because not addressing it and pushing it forward the way It is will lead to an inevitable collapse of the world economy and is likely to have grave consequences.

In addition to these complications there are also political gains and corporate gains that stand on the way of improvements. Partisan politics all around the world are really concerned with elections, power grabs, monetary gains and other types of self-gains and hardly are concerned about fixing the issues. Politicians are likely to offer benefits and other entitlements in order to be elected, while they realize that the programs won’t work and there are no funds to pay for them. Entitlements generally are easier given than taken away, and in the current state when there are so many unfunded entitlements it has become impossible to cut down without having civil unrests and revolutions, which is what is being experienced in Greece. Many already believe that the situation has gotten so bad that civil unrests are inevitable. As bad as it sounds that could actually be true, that said we need to prepare for the worst and hope for the best. Before anything can be fixed partisan politics need to end. Politicians are called politicians for a reason and quite frankly it is difficult to believe that they will stop being politicians and start being problem solvers and yet again we hope for the best.

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Wine and the IMF

Wine has certainly become one of the most traded commodities around.  There are major wine producing regions on nearly every continent.

North America has the United States led by California, Oregon, Washington and New York.  Canada is trying to gain a foothold on the world market as well.

South America has Argentina and Chile.

Europe is well known and has been the center of grape cultivation for generations.  France, Italy, Spain and Portugal create world class wines.  So does Germany although it is generally underappreciated.

South Africa has a strong wine program, a remnant of their colonial and unfortunate past.

Asia is only now becoming a player in the international wine scene, but the Chinese market is where everyone wants to go.

Australia has been thriving for some time.

My one complaint-how does the IMF decide tariffs and taxes since some of these regions have free trade agreements and others do not.  Hasn’t it hit them yet that it is weird that I can buy a wine from South Africa but can’t join a wine of the month club from California because I live in Pennsylvania.  Yes, even some states have oppressive shipping laws-let alone countries!

IMF