Dr Boyce Watkins, Tom Joyner Talk Money

Dr. Boyce Watkins

www.BoyceWatkins.com

Hey peeps,

Tom Joyner and I are going to talk Personal Finance and Money on 10/13 at 6:30 AM EST. I was also invited to discuss the liquidity crisis on Rev. Jackson's show. I've been doing most of my commentary on NPR and non-black media, so I was very happy to have the chance to discuss the Black perspective on this important issue. In fact, the article below addresses something that I feel has been missed: How this crisis impacts Black America.

If you want to join our money group to receive regular commentary on money and finance, please click here.

Valencia Roner, a very talented radio show host, did a thought-provoking show with me on the liquidity crisis. You can listen to the interview by clicking here.

The Liquidity Crisis of 2008: What Black People Should Do Now

By Dr. Boyce Watkins

www.BoyceWatkins.com

Most of you have been watching politicians shuck and jive in predictable ways to try and manage the even more predictable liquidity crisis that has terrorized our financial markets. As a supporter of Senator Barack Obama, I am hopeful that this will serve as the final signal to America that a Harvard graduate with extensive Economics training might be a better choice than a mediocre student who claims to know nothing about the economy. I won’t even mention Sarah Palin, who now makes George Bush the runner-up in the “Unfit to Manage a Burger King” contest. I am not big on Obama-mania, but I tend to be big on common sense. It is also telling that many Americans would sacrifice our nation’s future in order to avoid the discomfort of seeing a Black man in the White House. OK, let me shut up before I say what I REALLY think.

This is not about the pale one called Palin or John McCain’s Black Extermination Plan for criminal justice. It is about USOBA. USOBA doesn’t stand for the “United States of Obama”, rather, it stands for the “United States of Black America”. This is about finding ways to manage, contextualize and internalize this crisis so we can figure out what to do right now. Neither McCain nor Obama is going to take care of you and your family, since politicians tend to take care of themselves (note Treasury Secretary Henry Paulson’s prior affiliation with Goldman Sachs will likely drive his desire to save his Wall Street buddies). The truth is that we are all Presidents of our own households, and as President, your job is to shield your household from the impact of FICA - The Financial Ignorance Crisis of America. Here are some quick thoughts:

1) The government bail-out doesn’t necessarily mean you should bail-out of the Stock Market: If you are invested in the Stock Market, I would strongly consider staying there, especially if you are under the age of 50. In fact, you might want to buy more stocks. Warren Buffett (a man who is sometimes wrong) had it absolutely right when he said that you should “be greedy when everyone else is cautious and cautious when everyone else is greedy.” Drops in the Stock Market can be the best times to invest because the historical data clearly shows that when the US Stock Market declines, it eventually comes back up. Personally, I plan to use this market decline as an opportunity to expand my portfolio. But I am not going to try and pick individual companies: I am going to buy into a diversified mutual fund that spreads my money around the entire global economy.

2) Paying off credit card debt is one of the best investments you can make: Which would you prefer? To possibly earn 10% interest in an investment in the Stock Market or to DEFINITELY save 18% per year on that high interest credit card in your purse? Remember that money SAVED is money EARNED. Get rid of the bulk of your high interest debt before you even consider investing in the Stock Market or anywhere else.

3) Change the game: With all of Barack Obama’s speeches about how Black men need to learn personal responsibility, he may have wanted to save that speech for the rest of America. The typical American consumer has been incredibly irresponsible with spending, saving, borrowing and investing habits over the past 20 years. I grow sick of seeing one article after another attempting to argue that African Americans have a monopoly on irresponsible financial behavior. Don’t believe the hype – ALL OF AMERICA has a problem with financial choices. The goal is not for you to emulate the behavior of the rest of America….it is to set a new standard. Black people can be quite good at saving money. Many of our grandmothers could support a household with two nickels and a hot dog bun. Perhaps we can tap into our natural survival instincts to get us through this mess.

4) This crisis might be the tip of the iceberg: I agree with my respected colleague Paul Krugman at Princeton, who is the only other commentator I’ve heard mention that recent financial problems may be nothing more than a symptom of more serious fundamental issues in the US economy. All I could say when I heard that was “Amen”. Without going into much detail, I can say that it is time to remember that old saying “Learn to save your money, so your money can save you.”

5) Don’t be “scuuuurred” (translation for the uppity among us: “Don’t be afraid”): This is NOT the end of the world. The financial systems are not going to melt down. This is not likely going to be the start of any kind of Great Depression. Truth be told, the Black community has been in a Great Depression for about 400 years! We have survived worse, and just because the economy struggles, that doesn’t mean you have to struggle along with it. Remember that our greatest challenges are usually our greatest opportunities for growth. Learn from this experience, grow from it, and we will continue to move forward.

Your financial liberation is part of your social and spiritual liberation. Let’s use the shake-up as an opportunity to shake ourselves off the plantation. I’m tired of someone else owning me.

Dr. Boyce Watkins is a Finance Professor at Syracuse University and author of the forthcoming book “Black American Money”. For more information, please visit www.BoyceWatkins.com.

The Real Causes of the Financial Crisis

By Dr. Boyce Watkins

www.BoyceWatkins.com

I am no fan of President Bush. I made fun of the silly man long before it was popular to do so. However, in this case, I have to be one of the first to stand up and say that you can’t put all the blame for this financial crisis on his back. The War in Iraq? Yes. Hurricane Katrina? Absolutely. Damn near everything else? Sure, why not? But this financial mess should not, as our leading presidential candidates want you to believe, be slapped on the political tomb of Mr. Bush. That doesn’t mean he didn’t play a role, but Bush was more of a supporting actor in this horror story, not the star.

The horror story to which I am referring is that little news event surrounding a $700 Billion dollar bailout being sponsored by the Office Underwriting Corporate Hedonism (OUCH), also known as the Federal Reserve. Now, this is a different brand of corporate welfare, as taxpayer dollars are not being given away. At worst, taxpayer resources are being put at risk, as the Federal Reserve is making huge capital allocations to some of the nation’s most troubled financial institutions. As a lender of last resort, the Fed is responsible for investing money where the rest of us certainly would not.

To put it in layman’s terms, this is like using your savings account to loan money to an uncle who was fired for drinking on the job. Sure, he has been responsible in the past, and will likely be re-employed, but his recent behavior leaves you a little concerned. In the same light, taxpayer dollars in a financial crisis are like little soldiers being deployed to provide stability to the deadliest parts of the world. Many soldiers will come back home, while quite a few are going to be killed. Depletion of our government capital is quite likely in this scenario, for solving a global liquidity crisis with available reserves can be like using a kitchen sponge to soak up the ocean.

With that said, let’s discuss what this crisis is really all about. We must first understand the nature of our financial institutions. Banks and other entities providing credit to the consumer are a lot like drug dealers (both legal and illegal drug dealers are included in this example). Drug dealers give you something that you definitely want and even think you need. The drug (cash) is powerful, makes your problems go away and has a long-term consequence if you abuse it. That’s where the government steps in. The role of government is to regulate our financial drug dealers to ensure that they are not encouraging substance abuse from the users (American consumers), and to also ensure that consumers are relatively well-educated about the consequences of using the drugs (that’s where terms like “predatory lending” come from).

In order to make the economy appear strong, our financial drug dealers were allowed to run wild. Loans were being made to people who could not afford to pay them, causing the prices of homes to be bid out of control (it’s easier to bid a higher price on a home when your banker loans you all the money you need). Ultimately, consequences were felt when millions of Americans suddenly realized that they could not repay the amounts listed on the dotted line. This situation is not much different from what we are now seeing in the pharmaceutical industry, in which drug companies are using ads to encourage patients to walk into the doctor’s office and ask for whatever drug they saw on TV the night before (you hear that Rush Limbaugh?).

Now, before you go and burn down the nearest bank in your neighborhood, realize that it takes two to Tango. As Bill Cosby (perhaps naively) believes, “making good decisions makes everything ok.” We must remember that if all people made good decisions, drug dealers would have no customers. The truth of the matter is that in spite of the fact that our institutions and governmental authorities have failed us, one of the greatest culprits in this mess is the financial greed and myopia of the American consumer. We as Americans are among the most gluttonous and short-sighted consumers in the world. We borrow money to go on vacation without thinking twice, we don’t save for retirement, and we tend to do P Diddy/Paris Hilton imitations on every shopping trip. Money is our drug and we all rejoiced when there were more drug dealers in our neighborhoods.

So while Barack Obama and John McCain want to attack the clearly unqualified man in the White House over this mess, the truth is that we mostly have ourselves to blame. This crisis affects us all, and the corporate problems are nothing more than an aggregated manifestation of very bad individual decisions. Simultaneously, our legislators must be held accountable when ensuring that corporations are given incentives to engage in responsible lending. Perhaps a hybrid of the Cosby model is appropriate here: let’s get the drug dealers out of our neighborhoods, but let’s also make our neighborhoods a bad place to sell drugs.

Dr. Boyce Watkins is a Finance Professor at Syracuse University and author of the forthcoming book “Black American Money”. He does regular commentary on CNN, CBS and NBC. For more information, please visit www.BoyceWatkins.com.

Your Black Money: The Fed is Wrong About Companies

By Syreeta L. McNeal, CPA, JD


Should the United States federal government bailout companies like Freddie Mac, Fannie Mae, Lehman Brothers, Merrill Lynch, and American International Group (AIG) or should some level of responsibility be given to the executive leadership of these companies?

Every time I view the latest news on our federal government's bailout of these companies, I wonder what mess is our government covering up on how they failed to regulate unethical business practices.

It appears that the Enron, Worldcom and Arthur Andersen saga of 2000 is happening all over again. In response to this prior fiasco, the federal government passed The Sarbanes-Oxley Act of 2002. This legislation was intended to establish standards for all U. S. public companies' board, management, and public accounting firms. The caveat is that this legislation does not apply to privately held companies. The legislation established the Public Company Accounting Oversight Board (PCAOB) overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies.

As recent news reports show that Balance Sheet manipulation occurred with the growing list of companies seeking bailout from federal government, bankruptcy protection or for companies to acquire them to stave off financial ruin, it is time for the federal government to finally advocate emphasis on a company's Statement of Cash Flows as the basis for investment and financial strength for companies.

Most accountants know that analysis of a company's Statement of Cash Flows is the only way to ensure financial stability. However, most companies and investment analysts want to emphasize the amount of revenue generated on the company's Income Statement or the amount and value of assets they have listed on their Balance Sheet. Generally, a company's Income Statement and Balance Sheet is where manipulation can occur by key executives and in my opinion, these financial instruments do not truly show the financial strength of a companies operating business.

If the federal government really wants to protect the tax payers from having to bailout faltering company's manipulation the public's confidence, it is time for the federal government to start emphasizing to companies and Wall Street that the Statement of Cash Flows will be the basis of analysis for investment purposes. But, will the federal government do this? I am not betting on it, but hopefully advocating for it. As tax payers, we should too.

Source: http://en.wikipedia.org/wiki/Sarbanes-Oxley_Act


Legal Disclaimer: This site provides information about the law designed to keep readers informed of pertinent legal matters affecting the African-American community. But legal information is not the same as legal advice -- the application of law to an individual's specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer in your specific location if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.

Government Bailouts and Financial Irresponsibility

Dr. Boyce Watkins
www.BoyceWatkins.net

FYI to the fam: I am going to be on the Mike Gallagher Show Friday morning at 10:30 am EST. I don't know much about this guy, but apparently, he is one of the top 10 hosts in the country. The show likely comes on in your city (whatever station the conservatives appear on, I don't listen to them). Monday, I am going to do some commentary for The History Channel on Black Leadership. I'll keep you posted on when that is going to come out.

As I work with my Finance students (you are welcome to hang out with us on our blog at www.DrBoyceFinance.wordpress.com), the economy has been on my mind this week. So, I have shared some thoughts on Financial Leadership in the article below. As I've communicated in the past, strong Financial Leadership in the Black community is the most efficient way for us to fulfill Dr. King's dream. Equality will not come from Capitol Hill....it will come when we have Capital to pay the Bills.


Crash and Burn 101: A Finance Professor’s Take on Our Economy
By Dr. Boyce Watkins

www.BoyceWatkins.com

The United States is respected throughout the world for its powerful economy. We are also, unfortunately, becoming known for our arrogance and financial irresponsibility. During my tenure as a Visiting Scholar with the Center for European Economic Research, one of my colleagues could not understand why American consumers earn more than Germans and pay less in taxes, but have savings rates less than 20% of the average German citizen. Basically, there is a degree of irrational overconfidence and financial carelessness that comes from never having to experience a deep recession first hand. This explains why most baby boomers are not ready for retirement, and why young people spend and borrow like drunken sailors.

American consumers aren’t the only pilots in our crashing economic airplane. U.S. Monetary policy, headed by Federal Reserve Chairman Ben Bernanke, is both art and science, and the apparent success of Alan Greenspan has forced any subsequent Fed Chairman to become a Financial Da Vinci. The saddest part of the Greenspan era, however, is that his choices in the 1990s caused major “speculative bubbles” (inflated asset values in homes and stocks) that have started to burst at the end of this decade. Our leaders create and dictate policies that impact the choices of companies and consumers. Financial leadership has taken the American consumer on a frightening ride, and this is only the beginning.

The US economy saw its financial chickens coming home to roost in 2008, as the recent recession and market downturns have been predicted for years. These “financial chickens” included excessive spending by American consumers, mixed with irresponsible borrowing and lending on the part of both individuals and banks. Personal responsibility is thrown out the window when discussing wealthy and so-called “mainstream” Americans, as financial leaders are called upon to bail out the banks, the consumers and everyone else.

The government bailout package for 2008 has, thus far, included a massive spending bill, one that featured tax refunds and support to help consumers keep their homes, even if they were the causes of their own demise. Another set of “financial steroids” being employed have been the strong and consistent cuts of the Federal Funds rate by Federal Reserve Chairman Ben Bernanke. Bernanke has become known as “Bold Ben” by members of the media, who are consistently stunned by the Chairman’s massive and powerful attempts to control the economic downturn. The latest moves have included the $85 Billion dollar bailout of AIG, an insurance company that has apparently been deemed “too large to fail”. If only our government had the same compassion for the thousands of small businesses across America struggling to find capital to meet short-term financing needs.

Republicans, known for being fiscally responsible, have created budget deficits our country has never seen. Between the Iraq War and the 2008 recession, spending continues to go up, even when tax revenues are expected to go down. The ready availability of additional government borrowing to support our massive spending bills has our financial leaders behaving like teenagers in possession of a “really awesome” American Express card. Like the “blinged out” athlete who thinks his wallet will never be empty, our country may wake up to a grave financial nightmare.

Continuously cutting interest rates may provide additional stimulation to the economy, but the problem is that cutting interest rates, allowing the value of the dollar to slide and frivolous government spending is a recipe for serious, horrific and uncontrollable inflation. Inflation is a Pandora’s Box that doesn’t close nearly as easily as it opens. You think the economy is bad now, you haven’t seen how bad it can get in the face of stagflation (a declining economy with out of control inflation). It’s hard not to feel that “Bold Ben” and “Big Bad Bush” aren’t gambling with our children’s futures and current taxpayer resources.

Sometimes, when you party too hard, you are forced to deal with the hangover. Americans have been blessed with a financial celebration that has lasted over a decade. For the past 15 years, we drank straight out of the liquor bottle and danced with lamp shades on our heads: not saving effectively, spending like crazy and borrowing to cover our financial insanity. But rather than simply allowing the party to end and letting everyone sober up, our financial leadership has taken on the irresponsible behavioral norms of American consumers. Their excessive rate cuts and spending increases have kept us pumped up on Financial Dope in order to avoid the impending crash.

This is not solid financial leadership, and something has GOT to give. Hopefully our leaders will get it.



Dr. Boyce Watkins is a Finance Professor at Syracuse University and author of “Financial Lovemaking 101: Merging Assets with Your Partner in Ways that Feel Good.” He is a regular commentator in national media, including CNN, CBS, NBC, BET and ESPN. For more information, please visit www.BoyceWatkins.net or DrBoyceFinance.Wordpress.com.

Your Black Money: China and the Advertising Enigma

I taught a Financial Theory course at the Shanghai University of Finance and Economics three summers ago. Some Americans perceive China as a horrible place, devoid of human rights, with a machine gun toting policeman standing over every man, woman and child. I found quite the opposite. In some ways, I was more liberated in China than I am anywhere else. My students were polite and less demanding than the externally cold (yet internally warm) Northeastern students I teach in the states, and every meal seemed to cost $2 dollars.

There was also another dimension of the complicated economic soul of this growing country: the dirty skies, the huge wealth disparity, and the fact that every river seemed to smell like a broken toilet on a really bad day. Finally, there’s the politics: I was told to not even say the word “Tibet” when applying for my visa, and I knew that issues in Africa were touchy as well.

Therein lies the multi-billion dollar contradiction that we call China. The Joker/Batman aspect of this country leads to both economic salivation and stomach churning nightmares for any corporate executive looking to take advantage of this growing and powerful market.
The problem with the Olympics in China is that major corporations (and even presidential candidates) can’t miss it. The action and growth are there, as the world scrambles to profit from what will be the largest middle class demographic in the world within just a few years. The Olympics is a “can’t miss” advertising event for several reasons.

First, the fragmentation of media reduces the opportunities to hit really large audiences. The audience for the Olympics during prime time is right up there with American idol, and it’s all yours for a mere $750,000 per 30 second spot (not quite lunch money, but you get the point).
Second, you don’t find an audience of this quality every day. Olympic viewers in the US tend to be wealthier and more highly educated than a typical television audience. With NBC committing to over 3,000 hours of coverage, you’ve got a lot of opportunities to hit your market.
Third, companies who advertise during the Olympics are considered to be innovative and ground breaking trend-setters, much better than their petty competition. Who doesn’t want to be ground breaking?

Sounds like a dream, right? Not so fast.

While every Batman has a Joker, China has not proven which one it actually is.
Sure the Olympics are already political. We can even turn our heads sideways and wonder “How does Iraq have a rowing team?” But the problem is that these Olympics and this country are a bit more political than most. In Finance, political risk is just as nasty as other types of risk when it comes to possibly losing your investment.

First, there is the situation in Tibet and that little human rights thing. While terrorism is always an issue at every Olympic gathering, you can’t help but wonder if you should stay home during this one. In fact, China has told many athletes to stay away, including star speed skater and activist Joey Cheek. There are a lot of people angry at China, including many in their home country. It is times like these when the Chinese government is glad to stomp on individual liberties.

Did I mention Darfur genocide? People are angry about China’s role in that too. The risk for corporate sponsors ranges from the obvious to the subtle. There is the obvious risk that terrorists can steal the spotlight, and at worst, kill some of your customers and employees. There is the subtle risk of those pesky protesters destroying the value of the Olympic brand and venue with which you’ve paid to be associated. Finally, there is the reality that corporations are the Achilles Heel for any controversial organization: the easiest way for a protestor to undermine a government or organization is to hold its corporate sponsors hostage for their desire to financially support an entity accused of being harmful to others.

At the end of “The Dark Knight”, the Joker explains how he and Batman really need each other. Similar to the popular film, the United States needs China. American corporations need China. Business needs to be in the front row of the billion dollar drama across the sea, and they can’t run away from the risk.

Dr. Boyce Watkins is a Finance Professor at Syracuse University. He does regular commentary in national media, including CNN, NBC, ABC and CBS. For more information, please visit www.BoyceWatkins.net.

A Bankrupt America - More Americans Broke than Ever

By: Leland C. Abraham, Esq.

While many politicians and talk show hosts debate whether America is in a “recession,” one thing is for certain, more people are filing for bankruptcy now than ever. The growing hysteria generated from the subprime mortgage crisis where companies like Bear Stearns, IndyMac, Freddie Mac and Fannie Mae are being bailed out or regulated by the federal government is of daily discussion by news media.

Growing unemployment and increased gas prices have taken a toll on individuals and corporations as well. However, individuals and corporations do have legal options to deal with their worsening financial situation related to inability to pay their mortgage payment or looming credit card debt. Bankruptcy is a method that allows individuals or corporations to satisfy debts when they do not have the financial resources to cure claims with creditors. This article is intended to give you an overview of Bankruptcy as well as the pros and cons if you choose to pursue this legal option.

Bankruptcy is a legal process through which people and businesses can obtain a fresh financial start when they are in such financial difficulty that they can not repay their debts as agreed. Bankruptcy is created by federal statute; hence, jurisdiction for bankruptcy is under the federal courts.

There are four (4) different forms of bankruptcy applicable to consumers or individuals. Chapter 11 bankruptcy is a form of bankruptcy given to corporate entities for restructuring their business. When businesses become insolvent, corporations will file Chapter 11 bankruptcy to satisfy debts with creditors while still continuing to exist as a corporate entity after the filing of bankruptcy. For example, Michael Vick and his associated legitimate business ventures filed for Chapter 11 bankruptcy protection recently.

Chapter 12 bankruptcy is used for agricultural purposes. This form of bankruptcy is used for farmers and fishermen. If there is a supply quota that the farmer or fisherman must meet and circumstances arise where he or she is not able to meet the quota for a specified amount of periods, he or she may file for Chapter 12 bankruptcy protection to satisfy those creditors whom they are not able to provide supply for.

Chapter 13 bankruptcy allows individual consumers to make monthly payments to save possession and ownership of real or personal property. Like Chapter 11 bankruptcy, Chapter 13 bankruptcy is a form of debt reorganization. People file for Chapter 13 bankruptcy when they either have a single asset with a lot of equity or a number of small assets that yield a high net value. Usually, individuals will file for Chapter 13 bankruptcy if they would like to save their home from foreclosure. The person would use Chapter 13 bankruptcy to reorganize their debts and the person would make a monthly payment plan to pay off the debt of the bankruptcy estate in three (3) to five (5) years. For example, if an individual had $50,000 worth of debt and an average interest rate of 50%, the bankruptcy would reorganize that person’s debt to where the person may owe $44,000 and have an interest rate of 40%. That person would be expected to pay off the new balance of the debt through a monthly plan payment for either a three (3) or five (5) year period.

Chapter 7 bankruptcy is the most common bankruptcy for individuals or corporations. This form of bankruptcy is for individuals or corporations who have accumulated so much debt that debt counseling or debt management is really not an option for them. The Chapter 7 bankruptcy serves as a debt liquidation in which all of the applicant’s debts are discharged and the applicant is given a “fresh start.” If a corporation files for Chapter 7 bankruptcy, they will no longer exist as an entity.

There are several qualifications for the Chapter 7 bankruptcy. One such qualification is the median income qualifications. All individuals who wish to file for Chapter 7 bankruptcy have to fall within an income range. This income range will vary by state, but it usually is around $37,000 for a household of one. There are incremental increases to this income qualification the more people are in the household.

Another qualification to the Chapter 7 bankruptcy is the residency requirement. Generally, an applicant for Chapter 7 bankruptcy must live in the state in which he or she files for at least six (6) months. Although this is the residency requirement to file for Chapter 7 bankruptcy, there is a separate residency requirement in order to qualify for the state’s exemption laws. An exemption allows a debtor to protect an asset from being included in the bankruptcy estate to be distributed by the Chapter 7 trustee to creditors.
Advantages and Disadvantages
There are advantages to filing for bankruptcy. First, debtors can obtain a financial fresh start after they receive a discharge. For example, a debtor who files a Chapter 7 bankruptcy will be able to be discharged from paying most credit card debts. Second, creditor’s collection efforts will stop as soon as an individual or corporate debtor files for bankruptcy protection under a Chapter 7 or Chapter 13. This is known as the automatic stay. If a creditor continues to try to collect on a debt after receiving notice of a bankruptcy filing by a debtor, the creditor may be cited for contempt of court and/or ordered to pay damages. Also, you cannot be fired from your job solely because you filed for bankruptcy. Furthermore, you can freeze your FICO credit score by filing for bankruptcy.
However, there are disadvantages to filing for bankruptcy. Bankruptcy filing will remain on your credit record for up to ten (10) years. This record may affect future finance opportunities. So, it would behoove any potential applicant to not obtain any new credit cards or high interest loans after filing for bankruptcy for some time. But, research has given mixed results to the time when people or corporations can obtain new finance opportunities even after filing for bankruptcy.
Alternatives to Bankruptcy Filing
Another option that an individual or corporation might pursue is to directly contact the creditor and see if they are wiling to allow a lower monthly payment or extend the time to remit payment to lower the payments. Also, you can consolidate your debts by taking out a big loan to pay off all smaller amounts of debts that you owe.

If interested in filing for bankruptcy, please consult your local bankruptcy attorney in your area. We have provided a link to the National Association of Consumer Bankruptcy Attorneys for you to consult on this webpage as well.Legal Disclaimer: This site provides information about the law designed to keep readers informed of pertinent legal matters affecting the African-American community. But legal information is not the same as legal advice -- the application of law to an individual's specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer in your specific location if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.

Black Money: Fed Cracks down on Predatory Lenders

WASHINGTON - To prevent a repeat of the current mortgage mess, U.S. Federal Reserve Chairman Ben Bernanke said Tuesday that the central bank will issue new rules next week aimed at protecting future homebuyers from dubious lending practices.

The new rules will crack down on a range of shady lending practices that has burned many of the nation’s riskiest “subprime” borrowers — those with spotty credit or low incomes — who were hardest hit by the housing and credit debacles.

The housing, credit and financial crises have bruised the economy. Growth has slowed and employers have cut jobs every month so far this year.

In prepared remarks to a mortgage-lending forum in Arlington, Va., Bernanke said that “it is unrealistic to hope” that financial crises can be entirely eliminated, while maintaining an innovative financial system. “Nonetheless, recent experience has illustrated once again that financial instability can have serious economic costs,” he said.

Meanwhile, the Federal Reserve is also considering giving squeezed Wall Street firms more time to draw emergency loans directly from the central bank to help them overcome credit problems, Bernanke said.

In an extraordinary action, the Fed in March agreed to let investment houses go to the Fed — on a temporary basis — for a quick, overnight source of cash. Those loan privileges, which are supposed to last through mid-September, are similar to those permanently afforded to commercial banks for years.

“We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end should the current unusual and exigent circumstances continue to prevail in dealer funding markets,” Bernanke said.

Black Money: Michael Vick the Millionaire is Now Broke

Michael Vick declares bankruptcy.

Vick filed Chapter 11 papers in U.S. Bankruptcy Court in Newport News on Monday. The seven largest creditors listed in the court papers are owed a total of about $12.8 million.

The suspended Atlanta Falcons quarterback hopes he "can, after the conclusion of the bankruptcy case, rebuild his life on a personal and spiritual level, resurrect his image as a public figure, and resolve matters with the NFL such that he can resume his career," according to the filings.

Vick is serving a 23-month prison sentence at the U.S. Penitentiary in Leavenworth, Kan., after pleading guilty last year to bankrolling a dogfighting ring. He was subsequently suspended indefinitely without pay and lost all his major sponsors, including Nike. He also faces state charges related to dogfighting.

The debt includes part of a signing bonus that the Falcons are seeking to recover.

After the plea on dogfighting charges, the Falcons tried to recover about $20 million in bonuses Vick earned from 2004 to 2007. But a federal judge held that Vick is entitled to keep all but $3.75 million of the money paid to him for playing football through the 2014 season.

Click to Read more.

black people,michael vick,bankruptcy,black athletes

To drill, or not to drill

By John Eidson

More drilling alone is not the answer to $4/gallon gasoline, but it could help prevent far higher prices down the road.

At every turn, radical environmentalism prevents any effort to increase domestic supplies of gasoline and other forms of energy:

* NO to drilling in ANWR

* NO to new offshore drilling leases

* NO to new refineries

* NO to developing oil shale reserves

* NO to developing tar sand reserves

* NO to coal-to-oil conversion

* NO to new hydroelectric plants

* NO to nuclear power

Everyone wants to protest the great outdoors, but Congressional support of environmental extremism is pushing our economy to the brink.

▪

More than two years have passed since CNNMoney.com reported plans for Chinese companies to drill off the coast of Cuba, yet Congress continues to block any effort to increase domestic production of oil and gas.

Democrats argue that American oil companies have not drilled on many of the offshore leases they already have. There is a good reason for that -- offshore drilling leases are not created equal. Oil companies are naturally reluctant to risk exploration of leases that may not be commercially viable.

The bottom line is foreign companies will soon be drawing reserves from the same offshore field that lies in U.S. waters off the coast of southern Florida. But instead of being developed by American companies, much of that oil will likely be sold to us at inflated prices by China and Cuba.

http://money.cnn.com/2006/05/09/news/economy/oil_cuba/index.htm

John Eidson is a white conservative who takes great pleasure in black success.

Black Money Tips: Ways to Get Rich

 

The smart way to get rich - MSN Money

Feel like taking a risk in hopes of hitting the jackpot on a rocket stock? #mediaarticle #articleBody #segment {HEIGHT: 1100px!Important}

Before you make the leap, you might want to get a grip on risk

Prices go up, prices go down, and you never know which way they're headed next. A lot of folks would say, well, that's risk. But really that's only half the picture. The other half is what you do in response.

After all, there's nothing wrong with risk itself. What's important is how you handle it. To know how to manage the risk-reward equation, you're first going to have to get a grip on what you're playing with -- and how much you can afford to lose.

It's pretty hard to talk about investment risk without falling into a lot of clichés about roller coasters and bungee jumping and being able to sleep at night. That imagery is entertaining but maybe not terribly helpful. Instead, let's start with the basics. We don't want to lose money, right?

"Obviously, negative return is risk," says Lee Schultheis, the CEO and chief investment strategist at AIP Mutual Funds in White Plains, N.Y.

Pros such as Schultheis use some pretty powerful computer-driven tools in their analysis of risk. Here are just a few of the concepts that are important to them:

• Standard deviation, much beloved of finance professors, measures how much the results of a process tend to vary. The higher the standard deviation, the more unpredictable the results.
• Correlation, used by those managing diversified portfolios, tells you how much two assets move together to reinforce -- or offset -- performance.
• Value at risk, often used by hedge funds, measures the likelihood that you will lose all of your money in any time period.

All three are mathematical concepts and require some comfort with statistics to calculate -- but not to understand. Each translates the uncertainties of risk into mathematical estimates of likelihood that offer a good basis for planning.

If you have an investment with a high standard deviation, close correlation to other investments or a high value at risk, you're taking on significantly more risk. If more than one of those factors is involved, watch out.

Let's say you're thinking about doubling up an investment in technology stocks. Results in that sector are going to be erratic to begin with.

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Black Money Tip: It is not Always Best to Buy a Home

 

This is an article explaining some reasons why you might not feel it necessary to purchase a home.  I agree.  What is also true is that there are convenience reasons that an individual may not want to buy: if you are only living in a city for a short period of time, don't want the hastle and expense (not to mention taxes) of home ownership, you have a business that is already giving you a good return or you have a great tax write-off elsewhere.  Owning a home is great, but it is more important to remember the importance of eventually owning SOMETHING.  It doesn't have to be a house. 

Real-estate agents have been pushing the virtues of homeownership since homes were invented. Or since real-estate agents were invented, anyway. Paying a mortgage, they insist, is a can't-miss investment (the tax breaks, the appreciation, the thrill of fixing your own roof!). Renting is for simpletons who don't like keeping their own money.

But does owning a home really trump renting? With the economy stumbling, house prices falling, and credit tightening, many housing experts are questioning the conventional wisdom. "Over the last decade, it may have been true," says W. Van Harlow, an economist at the Fidelity Research Institute. "Clearly, there are periods where [the housing market] will dominate. But give this market correction another 18 months, and it may not be true anymore."

Not so hot. The housing boom produced endless stories of homeowners getting twice what they paid for their homes. But "prices don't always go up," says Jay Butler, director of realty studies at Arizona State University. Even a boomtown like Phoenix has seen median rates of appreciation climb only 4.6 percent a year since 1981. According to a Fidelity study published this year, the return on a dollar invested in real estate in 1963 barely beat that of a low-risk treasury bill.

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black money,black wealth,black home ownership,african american money,african american wealth

Long Term Financial Consequences of Divorce

s you may already know, June is the most popular month in this country for weddings. So now that the marrying month is almost over, I thought it might be a good idea to turn the focus to - what else? - divorce!

I don't mean to be a downer about it, but the reality is, the divorce rate in America has hovered pretty close to the 50% mark for years now. And while there are lots of financial (not to mention emotional) complexities related to divorce, financial planners say one of the most common mistakes people make after getting un-hitched is simply failing to update the beneficiary forms on their retirement accounts.

And that can lead to all kinds of unintended financial consequences years, or even decades, down the road.

Here's why: if you get divorced, you'll probably make a point of updating your will to exclude your ex-spouse. But what you may not realize is that your will has no bearing whatsoever on who inherits any money sitting in your qualified retirement accounts - including an IRA, 401(k), 403(b) or traditional company pension plan - at the time of your death.

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black money,african american money,black love,black relationships

Dems Who Flipped On FISA Immunity See More Telecom Cash, By Chris Frates - CBS News

 

(The Politico)House Democrats who flipped their votes to support retroactive immunity for telecom companies in last week’s FISA bill took thousands of dollars more from phone companies than Democrats who consistently voted against legislation with an immunity provision, according to an analysis by MAPLight.org.

In March, the House passed an amendment that rejected retroactive immunity. But last week, 94 Democrats who supported the March amendment voted to support the compromise FISA legislation, which includes a provision that could let telecom companies that cooperated with the government’s warrantless electronic surveillance off the hook.

The 94 Democrats who changed their positions received on average $8,359 in contributions from Verizon, AT&T and Sprint from January, 2005, to March, 2008, according to the analysis by MAPLight, a nonpartisan organization that tracks the connection between campaign contributions and legislative outcomes.

Retroactive immunity could squash about 40 lawsuits pending against telecommunication companies that helped the government monitor the telecommunications traffic of Americans without warrants. The telecom industry has lobbied hard to insure that the provision is included in the Foreign Intelligence Surveillance Act update Congress is currently considering.

black money,african american money,fisa,barack obama,black politics

Black Money, Black Love, Black Families: Financially Fit Divorce?

I just saw an article today on "How to Leave Your Husband". The article focuses on how women can have a financially fit divorce. I find it amazing that we have gotten to the point that these are the kinds of articles that appear on the front pages of major media outlets. This speaks well to the state of love in America.

The article also seems to imply that beyond the 50% of all Americans who end up in divorce, there are many others who would be divorced if only they could find a way to get it done efficiently. Since when did the bliss of love make us so unhappy?

When I wrote Financial Lovemaking 101, one of the objectives I had in this book was to teach couples how to be jointly responsible when it comes to money. The truth of the matter is that being financially smart and responsible also increases your ability to be financially independent. Therefore, one might conclude that if you end up as one of the millions of Americans who chooses divorce, you might be able to erase your mistake without destroying your bank account.

I once counseled a couple that was nearing retirement. The couple had modest resources, but the wife was quite determined. Over a period of 10 years, she worked overtime and saved her butt off to pay off the family's credit card debt. She also looked into retirement plans on her job, putting thousands into a 401k plan to prepare for the family's golden years. Her husband had other plans. Without his wife's knowledge, he maxed out all the credit cards to start a business. He then withdrew all of the family funds from the retirement plan. The business failed, and his wife was in tears. She wanted to leave her husband, but she was financially drained. What's worse is that staying with her spouse would not have made her any more financially secure.

The reality is that money and love are linked in ways that we never envisioned on that first date. A person's beauty, body shape, and quality of sex become secondary to how well they pay the mortgage and put food on the table. Then, when we find that the love is gone and we want to move on, money becomes the barrier between freedom and misery. Planning ahead financially can be the way to plan your escape route, if that is what you choose to do.

The irony of it all, however, is that being financially intelligent and responsible reduces one major source of conflict in your marriage. It also allows you to make a stronger contribution to the overall well-being of your family. Therefore, by being financially intelligent and independent, you are more likely to have a successful marriage. Kind of paradoxical, don't you think?

I don't judge those who get divorced, never get married or are trying to get divorced. I only say that whatever you do, make sure you do it right. Your love depends on it, and so does your LIFE.

Black Money, Black Wealth: The Dangers of Debt Consolidation

Fred Harteis News Articles - Debts and debt consolidation strategies go together in the economy like peanut butter and jelly. You don't need a financial planner to comprehend the basic logic: Combining multiple payments into a single monthly check lowers interest rates and can positively impact your FICO score.

"It's easier to take on the 1,000-pound gorilla who comes to the front door as opposed to 20, 50-pound gorillas pouring in through separate doors and windows," says Boyce Watkins, author of "Financial Love-Making 101: Merge Assets With Your Partner in Ways That Feel Good," and a professor who teaches personal finance planning. "Psychologically, consolidation is very comforting."

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Higher Credit Card Limits: The Danger of it all

There was an article I saw on the dangers of higher credit card limits. During the housing boom, banks began increasing credit card limits in response to higher home equity values. Many people took the bait, as Americans dramatically increased their borrowing, using their homes as ATM machines.



Ed McMahon was no exception. Recently appearing on Larry King Live to ask for financial help, he discussed how his high income expectations led him to continuously borrow against the value of his home through the years and he eventually ended up in foreclosure.



Call me evil, but I didn't feel sorry for McMahon. There are millions of hard-working Americans with real jobs who had to fight through foreclosure without the luxury of begging for a bailout on Larry King Live. This is not to be insensitive to Ed's situation, but I think that his irresponsibility was reflective of not just many extravagant people in Hollywood, but also of many Americans who think that the financial sunshine will always be bright.



The lesson to learn from the article above is simple: set budgets, don't use extra credit card capacity to have things that you don't really need, be financially cautious. When thinking about money, keeping the worst case scenario in mind is a good financial policy to live by. Most of us can't go on Larry King's show to get a bailout.

College Athletes Should be Paid: A Finance Prof's Perspective

As a Finance Professor, I've never understood why college athletes and their families don't demand compensation for the billions they bring to their campuses.

Here is a link to an interview I did with a great website, www.bleacherreport.com on the topic. I also did some work on this issue with CNN, ESPN, CBS Sports, the LA Times and a few dozen media outlets across the country. I truly believe that young men and women should fight for what is right, for the NCAA is pillaging the black community.

Here's the article.

Ed McMahon Goes into Foreclosure

Add Ed McMahon from the Tonight Show to the list of celebs getting their homes forclosed upon. I saw this story in CNN Today and it led to a set of thoughts that I wanted to share quickly. These were the thoughts that led me to write Financial Lovemaking 101, since the mistakes of the McMahon family are not uncommon:

1) Making alot of money is the easiest way to trick yourself into thinking you have more than you really do.

2) Celebs are not as wealthy as you think. Many of them are trying to maintain a perception that others expect to see.

3) If you are in an industry that doesn't have much job security, you should go overboard to protect your financial security. Actors have incredibly poor job security, even the really good ones.

4) If you hit retirement age, you should be extra conservative with your spending. If you lose your money at that stage of life, it's hard to get it back.

5) Pay someone you trust to watch the person who is watching your money. Then watch the person you're paying to watch the other person.

Did that make sense?

The article is here, enjoy!

Getting ahead by cutting back

By John Eidson

The 1970s runaway best-seller The Millionaire Next Door laid out the results of an extensive study of how the rich in America become wealthy, and stay that way.

Contrary to popular misconception, most millionaires are not athletes, entertainers or corporate CEOs, nor did they inherit their fortunes. Most of the well-do-do don't live in mansions and don't drive luxury cars. More carry the credit cards of places like Sears and Target than those of exclusive upscale stores.

In short, most millionaires have used an incredibly simple strategy in amassing wealth: they spend less than they earn. Having learned how to get ahead by cutting back, they are living the ultimate American dream.

The good news is virtually anyone can join them, and it isn't necessary to be a doctor or other high income earner. According to no less an authority than Forbes magazine, the inescapable implication of The Millionaire Next Door is that ordinary people with nothing more than ordinary jobs can accumulate impressive nest eggs simply by learning to live beneath their means.

John Eidson is a white conservative who takes great pleasure in black success. In addition to postings on YourBlackMoney, he also occasionally posts on YourBlackPolitics.

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Black Love, Black Money, Black Relationships: When It's "Cheaper to Keep Her" in Your Black Marriage

Black love can be a wonderful thing, except for when it goes wrong. I am sure some of you have seen the typical “unhappy couple”. You know who they are: they may pretend that their marriage is wonderful on the outside, but there are a pile of scandalous secrets behind closed doors. The secrets may involve hidden bank accounts, secret gay lovers, or perhaps even some nasty abuse. Some even think they represent the best that black love has to offer, but every now and then, you get to witness tiny hints of an unfulfilled existence. You then realize that if there ever was a couple that needed to be divorced, it’s this one. So, you continue to witness their agony, wondering deep down why they don’t just call Dr. Kervorkian and have him put their marriage out of its misery. Actually, ending their marriage might end your own misery as well.

When you finally muster up the courage to ask your buddy why he doesn’t go ahead and pull out the marital machete, he gives you the words you’ve heard in so many bar room jokes, “it’s cheaper to keep her”. While these statements are stereotypically from men, you hear more and more women saying the same thing these days. You may also hear your friend tell you that he/she can’t afford to lose the financial support provided by their spouse. Either way, you feel sorry for the couple, because they’ve made one clear admission: “Whatever I have in my bank account is worth far more than my personal happiness.” That is what I would call bad Financial Lovemaking.

If our emotional fulfillment was suddenly converted into money, many of us would be bankrupt. However, there are many people in third world countries who are filthy rich with life satisfaction. This doesn’t understate the significance of their financial hurdles, but it does remind us that money, if not used as a tool to pursue happiness, can ultimately become a barrier to personal joy.

One of the trappings of a capitalist society is that we are taught that money is the ends, rather than the means. Money is a tool to enhance your life and your relationships, it should not be the reason you are in the relationship in the first place. That’s like buying a new car just so you can get the radio.

If I were given a choice between being dirt poor and happy vs. filthy rich and miserable, I would surely choose the dirt. You see, a person who endures unhappiness in order to protect his wealth is missing the point. The goal of money is to make you happy. So, using money as an excuse to not pursue happiness in your life is like saying “I am going to starve to death because I really want to stay in this restaurant.” If the restaurant isn’t feeding you, you might want to consider eating someplace else. That might be an example of good Financial Lovemaking, since part of the Financial Lovemaking process is getting comfortable with your own relationship with money.

I am not an advocate of divorce in black marriage, nor do I judge those who’ve made the decision to split. But I can say that if you have no ideological problems with divorce, and money is your only reason for not going through with it, it might make sense to reconsider your priorities. If happiness and money were put on a scale next to one another, love would be the 3,000 pound elephant and money would be the 2 ounce cricket. All choices in the black love and money balance should lead to short or long-term satisfaction, there really is no other way to say it.

Dr. Boyce Watkins is a Finance Professor at Syracuse University and author of “Financial Lovemaking 101: Merging assets with Your Partner in Ways that Feel Good.” For more information, please visit www.financiallovemaking.net.

Save 20%-30% on gasoline costs

When my wife and I bought our Honda Accord two years ago, we did a miles-per-gallon test on our first tank of gas. We got right at 21 mpg for city driving, exactly as advertised on the window sticker.

A few months back, we heard a tip on the radio about saving gasoline. According to the report, the typical driver can save 20%-30% on gasoline simply by changing the rate at which they accelerate and brake.

Old habits are hard to change, but change them we did. We are now getting nearly 25 mpg, almost 4 miles per gallon more than our car’s rating. That translates to roughly an extra 50 miles out of each tank of gas. At today’s gasoline prices, we’re saving nearly $500 a year.

A good way to drive more efficiently is to accelerate and brake as if there is a raw egg between your foot and the pedal, pretending that the egg will break if you press the pedal too aggressively.

John Eidson is a 64 year old white conservative who takes great pleasure in black success. In addition to postings on YourBlackMoney, he also posts occasionally on YourBlackPolitics.

What I learned from Bill O'Reilly about Money

by Dr. Boyce Watkins
www.BoyceWatkins.com

I learned something about the power of money last night. I received an email from one of our readers on Your Black World, who simply said, “Bill O’Reilly is coming after you again.” I took it in and got back to what I was doing. I expected O’Reilly to make another smear attack this week, since a good terrorist always hits the target multiple times.

O’Reilly Bin Laden’s latest target was my poor chancellor, Nancy Cantor. Sending one of his goons (some call them correspondents) to the campus, Dr. Cantor was asked why she is allowing “the good name of Syracuse University to be ruined by a ‘racist’ like Boyce Watkins.” Translation: to some, a “racist” is any black person who speaks up for black people. I accept that.

O’Reilly never really came at me directly, as I and some other black scholars have refused to appear on his show. I don’t fault the ones who choose to appear, but I don’t consider a platform legitimate just because it has a few viewers. Instead, he felt that going after my chancellor and the alumni of Syracuse University would be a more reliable tactic.

I couldn’t agree with O’Reilly more, perhaps the chimp is smarter than I thought.

Our campus is in the middle of a billion dollar fund raising campaign, and I am sure there are those who are sickened by the fact that one of the most visible faculty members on campus is the subject of racial controversy. Financial theory teaches us that risk management and minimization are critical to maximizing popularity and profitability. Controversy is risk, and too much risk hurts your ability to raise money. Oprah knows this all too well, as her political moves have diminished her show’s brand and base during the past year.

As Barack Obama’s experience reminds us, race is not a comfortable conversation, even when presented in the most diplomatic fashion possible. The backlash is far greater when you are direct and honest. What’s interesting is that O’Reilly couldn’t exactly cite why he was so obsessed with me, nor could he point to any strong evidence to support his “race baiter” assertions. The mere fact that he labeled me a “race monger” was enough to get his disciples up in arms. Bill O’Reilly should change his name to Bill Oprah-Reilly, as he has an amazing ability to manipulate his minions and their small, impressionable minds.

According to Bill O’Reilly, I am using the Presidential campaign to engage in “villainous pursuits” to promote a radical agenda. Being the good and noble American that he is, his goal is to ensure that “race hustlers” like myself don’t use their “hate-filled speech” to manipulate the results of the 2008 Presidential Election. Bill O’Reilly has become Martin Luther King Jr in his fight for truth, justice and political purity. God bless him.

My finance lesson this week came from watching Bill O’Reilly squirm. He was boiling mad at me, and even his fellow conservatives couldn’t quite figure out why (note the confusion on the face of the silly conservative radio show host, Laura Ingraham). The reason O’Reilly had become obsessed with me and my words is because of the dirty secret exposed by MSNBC host Keith Olbermann: A group with which I am affiliated, The Your Black World Coalition, has mobilized an intense email, phone and letter writing campaign to O’Reilly’s corporate sponsors, the FCC and the producers of the show. The ultimate objective is to hold O’Reilly’s corporate sponsors accountable for supporting a man who has consistently engaged in dirty tactics to defame Jeremiah Wright, Barack Obama and other respected individuals in the black community. While O’Reilly is certainly entitled to Freedom of Speech, I won’t have him unfairly assaulting and defaming my respected colleagues, and using my money to do it. While I give O’Reilly credit for being a good financial student, he must remember that I am ultimately the professor.

In reference to my many “lies” to smear O’Reilly, Keith Olbermann asked Bill one simple question: “If that’s what Watkins said, where are the lies?” In naming Bill O’Reilly “The Worst Person in the World” for his attacks on me and the chancellor, Olbermann quoted my reference to O’Reilly’s statement about wanting to have a “lynching party” on Michelle Obama. O’Reilly speaks of lynching the potential First Lady of the United States, and then has the nerve to call others racist and unpatriotic.

Given my training in finance, I learned one thing about living in a capitalist democracy: money makes people move. O’Reilly also understands this. Money makes good people do bad things and gives bad people an excuse to do good things. Money is the reason Fox News exists, and why this form of “capitalism gone wild” has destroyed the integrity of American journalism. Money is the reason that Barack Obama went from being a non-factor to becoming a target of The O’Reilly Factor and the reason that President Bush is sweating over the price of gas.

It is the ability to acquire resources, mobilize resources and take away resources that will change this election. This election will, in turn, change the world. Race matters, there’s no question about that. But money matters much more.

Dr. Boyce Watkins is a Finance Professor at Syracuse University and author of “Financial Lovemaking 101: Merging Assets with Your Partner in Ways that Feel Good.” This book is one of the definitive guides to Love, Money and Relationships, cited in Essence Magazine, Black Enterprise and other outlets. For more information, please visit www.BoyceWatkins.com.

Black Money, Black Wealth, Black Liberation: What black people should do right now

I spoke this weekend at an Entrepreneurship boot camp for The Urban Philly Professional Network. The head of the organization created something I consider to be profound and promising. He regularly gathers the black entrepreneurs of Philadelphia for networking events, training and motivation for their endeavors. I am proud of him because he has shown a consistent commitment to two issues of critical importance in the black community: black people working together and black people engaging in the ownership of capital.

Black entrepreneurship is not just about money. It’s about LIBERATION. The easiest way for me to control another man is for him to know that I am the reason his kids get to eat every day. That man will do exactly what I tell him to do, when I tell him to do it, and how I tell him to do it. Historically, African-Americans have been consumers of products and sources of labor. We have rarely been in a position to own or control capital. This country’s empire of wealth was built without black participation, as our ancestors were unable to transfer assets to their children. We all know that. Slaves were a form of human capital from which our country’s foundation was created. Theft from the black community is in the trillions.

As a result of this legacy, nearly every inch of the financial capital base of American institutions is controlled by someone else: The media, corporate America, academic institutions, you name it. Fox News freely spouts racism because Rupert Murdock and others like him control media infrastructure. Universities earn over 1 billion dollars per year from the families of black athletes because HBCUs don’t have the capital base to compete for these players. Jeremiah Wright and Barack Obama end up with distorted images because they’ve attempted to repair their reputations by appealing to the same institutions that destroyed their images in the first place. There are few black alternatives to media and corporate America, so our messages, leadership, outcomes and incentives are typically beyond our control. The controller of capital is the controller of destiny, so the social implications of capital ownership are vast.

The legacy of disproportionate capital acquisition also breeds a mentality in those who are controlled by capital. Some might call it the slave mentality. It affects all of us, from truck drivers to college professors. The slave mentality says your sole objective for obtaining education or skill is to work for someone else. We seek to find a job, rather than create one. Even most black doctors, lawyers and college professors fall victim to this mentality, as this is the tradition for many people of color. Risk aversion in the black community is strong enough to choke a horse, and any dreams of “going at it on your own” are squashed by relatives who encourage you to take the high paying, “prestigious” position at IBM or Stanford University.

The problem with the slave/laborer mentality is that there is a huge social price being paid when one spends his/her entire life drinking from someone else’s fountain: You are not free to pursue social justice and the platform on which you stand can be taken out from under you at a second’s notice. When injustice occurs around you, you are trained to sit silently and hope for the best. You don’t dare rely on ideas like “academic freedom”, because capitalism usually trumps idealistic concepts like democracy and freedom of speech. You can speak freely as long as it is financially convenient for the organization that controls you.

When I met with the black entrepreneurs and business owners of Philadelphia, I reminded them of the significance of their contribution to Black America. Owning a business is not about making a dollar, it’s about providing a critical supplement to the work of Dr. Martin Luther King, Jr. Black Entrepreneurs aren’t just finding a source of income, they are building black institutions. I reminded them that General Motors wasn’t built in a year, and that they should be proud of the trees they’ve planted, even if they are smaller than the strong, sturdy oaks around them.
There was a time when a high ranking position in the British Empire paid a lot better than joining the American Revolution. Black Entrepreneurs are the financial Harriet Tubmans of the black community: liberating people in mind, spirit and resources.

Many of us are so “blinded by the bling” that we take our eyes off the prize. Even those with high incomes remain as vulnerable as Katrina victims, as one unfortunate event can lead you to financial ruin. High income without an understanding of wealth building, diversity of resources and long-term financial stability is a recipe for financial disaster.

An understanding of the strengths and weaknesses of capitalism is critical to any social movement in America. Socially responsible financial machinery can serve to empower and sustain movements toward justice and equality. Models of entrepreneurship should be taught to every black child in America. Children should understand the nature of revenue generation, cost minimization and how business models work. The path to liberation in a capitalist democracy goes straight through Financialville. Controlling capital means controlling lives, and it’s tough to be free without it.

Dr. Boyce Watkins is a Finance Professor at Syracuse University and founder of YourBlackWorld.com. He is also the author of Financial Lovemaking 101, the definitive guide on black love, black money and black relationships. For more information, please visit www.BoyceWatkins.com.

Bad Financial Leadership in a Really Bad Recession

by Dr. Boyce Watkins - BoyceWatkins.com

The United States is respected throughout the world for its powerful economy. We are also, unfortunately, known for our arrogance. U.S. Monetary policy, headed by Federal Reserve Chairman Ben Bernanke, is both art and science, and the success of Alan Greenspan has forced any subsequent Fed Chairman to become a Financial Da Vinci.

The 2008 recession provides just the right landscape for an allegedly great monetary artist to strut his stuff. The US economy saw its financial chickens coming home to roost, and the recession was a long time coming. These financial chickens included excessive spending by American consumers, mixed with irresponsible borrowing and lending on the part of both individuals and banks. Personal responsibility is thrown out the window when discussing wealthy and middle class Americans, as financial leaders are called upon to bail out the banks, the consumers and everyone else.

Two great weapons in the arsenal of the Federal Reserve are government spending and interest rate cuts. Higher government spending increases consumer demand for the goods and services we continue to buy but almost never need. Interest rate cuts reduce the cost of borrowing for everyone in the economy. This marginal decline in rates serves to stimulate investment by all Americans, since the cost of borrowed money is lowered.

The government bailout package for 2008 included a massive spending bill, one that featured tax refunds and support to help consumers keep their homes, even if they were the causes of their own demise. Another financial steroid being employed has been the strong and consistent cuts of the Federal Funds rate by Federal Reserve Chairman Ben Bernanke. Bernanke has become known as “Bold Ben” by the media, who are consistently stunned by the Chairman’s massive and powerful attempts to control the economic downturn.

The strong and bold financial leadership by our government has been applauded by some, and demonized by others.

Republicans, known for being fiscally responsible, have created budget deficits our country has never seen. Between the Iraq War and the 2008 recession, spending continues to go up, even when tax revenues are expected to go down. The ready availability of additional lending to support our massive spending bills has our financial leaders behaving like teenagers holding a “really awesome” American Express card.

Continuously cutting interest rates may provide additional stimulation to the economy, but the problem is that cutting interest rates, allowing the value of the dollar to slide and frivolous government spending is a recipe for serious, horrific and uncontrollable inflation. Inflation is like a Pandora’s Box: Once it’s out, it’s extremely difficult to reign it back in. It’s hard not to feel that “Bold Ben” and “Big Bad Bush” aren’t gambling with our children’s futures and current taxpayer resources.

Sometimes, when you party too hard, you are forced to deal with the hangover. Americans have been blessed with a financial celebration that has lasted over a decade. We danced with lamp shades on our heads: not saving effectively, spending like crazy and borrowing to cover our financial insanity. But rather than simply allowing the party to end and letting everyone sober up, our financial leadership has taken on the irresponsible behavioral norms of American consumers. Their excessive rate cuts and spending increases have kept us pumped up on Financial Dope in order to avoid the impending crash.

This is not solid financial leadership, and something has GOT to give.

Dr. Boyce Watkins is a Finance Professor at Syracuse University. He is also the author of "Financial Lovemaking 101", the definitive guide to black love, black money and black relationships. For more information, please visit www.BoyceWatkins.com

Dealing with Bill Collector Harrassment

By Dr. Boyce Watkins - Syracuse University


Bill Collectors really want their money, like the rest of us. Some of them seem to feel that it is O.K. to resort to flat out thuggish intimidation to get their money back. That might work on The Sopranos, but it shouldn't work in real life.

Part of the reason abusive bill collectors can have their way with the public is because many citizens do not know their rights. Bill collectors prey on the uninformed in a terrible way: they threaten to have them arrested, they harass their relatives, call all hours of the night, the list goes on and on.

One woman successfully sued a rogue bill collector after he called her repeatedly with threatening language. The woman, a senior citizen, was told by the man to "Stop with the sob stories and pay your god damn bill!"

The Federal Trace Commission states that complaints against bill collectors are rising, reaching the highest level they've seen in the past 3 years. Most of the complaints focus on vulgar language, trying to collect more than the amount of the true debt, and extra fees, such as court costs.

There are rights that can protect you from bad and malicious bill collectors. You want to keep these in mind as you work yourself out of debt:

1) There is something called "The Fair Debt Collection Practices Act". If you are not familiar with this document, get familiar with it. You can read it by clicking here.


2) A bill collector cannot contact you at work if your employer does not approve of the contact. Let the bill collector know that this is the case and they must legally stop contacting you at your job.

3) Bill collectors cannot call you before 8 am or after 9 pm. The only exception is if you give them permission to do so.

4) A bill collector can only contact your friends and family if they are trying to find a way to get in touch with you. However, some of them may do this in order to harass or embarrass you. If that is the case, you may want to tell your friends to tell the bill collector, "She does not live here and I do not know how to get in touch with her. Please don't call here anymore." Then, get the bill collector's information from your friend and reach out to them when you can.

5) You can get them to stop contacting you altogether by sending them a letter telling them to stop. You still must pay the debt, but they won't be calling you during dinner.

6) The bill collector can not curse at you or use foul language and they must tell the truth about how much you owe. They cannot threaten to sue unless they are serious about it, and they can't touch your 401k or IRA.

7) If they call you, you can demand that they send you a written notice of the amount you owe and who you owe the money to. If you do not believe that the debt is yours, you can write a letter to them stating that this is not your debt. They must then send you proof that the debt is actually yours.

If you feel that a debt collector has violated any of these rules, you can contact the Federal Trade Commission at www.ftc.gov. Remember that you are not powerless in this situation.

Dr. Boyce Watkins is a Finance Professor at Syracuse University and author of "Financial Lovemaking 101", the definitive guide to love, money and relationships. For more information, please visit www.financiallovemaking.net.

Dealing with the Recession the Right Way: How to be Great in 2008

By Dr. Boyce Watkins
www.BoyceWatkins.com

You may have heard from the “financial experts” on TV that the recession is coming. For lack of a better phrase, many of us might be tempted to say “no duh”. Hearing a rich person on TV tell you that hard times are on the way is like being knee deep in water and getting a rain alert from the weather man.

Most Americans knew the recession was here when they started losing their homes in the subprime lending crisis. Many others learned about the recession when they could not afford heat for their homes, health care for their families, or college tuition for their children. According to a recent Gallup poll, 50% of all Americans expect their standard of living to decline. We don’t need a Suzie Orman, Larry King or some random journalist to tell us that.

As a financial researcher, I saw the recession coming 2 years ago during my fellowship with the Center for European Economic Research. The data showed, quite clearly, that Americans were managing their money like a pack of drunken sailors. We were over spending, over borrowing, under saving and under investing. That combination is never good in the long-term. Financial chickens always come home to roost.

We weren’t exactly seeing a good example from the Federal government, who has taken the word “conservative” out of the term “Conservative Republican”. Spending on a war that cost entirely too much, we were borrowing in a manner that even scared people who don’t care about politics. If our government were a college student, he would be getting an angry phone call from his mother.

It is not my belief that we should worry about the government when it comes to getting through the recession. The highly publicized “stimulus package” is only designed to stimulate you to do more of what got you in this mess in the first place. Giving Americans money back in hopes that they will spend it is like getting the drug addict high again to avoid the hangover.

“Personally responsibility” is a phrase often used by conservatives toward the poor. But it is also the key phrase here, as many have demanded that the government bail out those of us who bought homes we could not afford, stopped saving for retirement, or took extra hits from the “credit card crack pipe”. All of us make mistakes, but it is important to learn from the mistakes to move forward in prosperity.

Here are some quick lessons we can learn from the current economic downturn. The recession “out there” in the broader economy has little to do what is going on in your own home. In fact, my grandmother used to say that growing up “The Great Depression was business as usual for black folk. We didn’t know there even was a depression in the first place and we never really saw it come to an end.”

1) Budget Budget Budget – Most Americans don’t keep a budget and it leaves us in a financial mess. Spending money without a budget is like driving your car without a map. At the end of the day, you don’t really get anywhere meaningful and just end up running out of gas.

2) Use government help as a stepping stone, never as a crutch – if the government sends you a tax refund, save it. They are also making it easier for those with more expensive homes to get 3% mortgages, subsidized by tax payer money. Subsidized mortgages are a much better use of tax payer resources than blowing it on Iraq. Look into these options and learn what opportunities are available for you.

3) Take stock of your financial life – Calculate your net worth, which is the market value of all your assets, minus the debt you owe. Being in debt is not a terrible thing, but not trying to get out of debt can be a problem. If you are a professional, take account of the amount in your retirement savings and find out if your company has options for retirement investing.

4) Kill a Credit Card Today – Find a credit card and slice that son of a bitch in half. Most of us have 4 or 5 of them, so just pick one and see if you can go on a cash budget. In fact, you may want to give yourself a cash allowance in order to control your frivolous spending. Credit cards really do seem like free money, which impacts the perception of our spending.

5) Declare a One Month Spending Freeze – For four straight weeks, try to only pay necessary bills. Don’t go to the mall, don’t go out to eat, don’t buy any new clothes, shoes, hair, or fur coats for your puppy. Take the extra income you will get from the freeze (calculated in your budget) and put that money into your retirement plan or brokerage account. If you don’t have one, get one right now.
Habits are created by a series of seemingly insignificant actions, all headed in the same direction. The depths of despair serve as incubators for our greatest achievements. Let’s be wealthy and great in 2008.

Is the Iraq War Worsening the Recession?

Americans recently expressed in an AP poll that rather than having a huge economic stimulus package to help with our nation's pending recession, they would rather stop waging an expensive war in Iraq.

Getting out of Iraq was tops in the list of remedies for economic problems, along with spending more on domestic programs and cutting tax rates. The most recent Congressional idea of giving rebates to the poor in hopes that they spend the money was at the bottom of the list.

The economic stimulus package has a cost of $168 Billion and will give rebates to taxpayers of between $600 and $1200. Only 19% of those polled stated that they planned to spend the money, as the government hopes they will do. Financial personality Suzie Orman, on Larry King Live, said that she hopes Americans will not spend the money.

Others tend to agree.

"Let's stop paying for this war," said Hilda Sanchez of Waterford, Calif. "There are a lot of people who are struggling. We can use the money to pay for medical care and help people who were put out of their homes."

Currently 65% of Democrats think the U.S. should leave Iraq, with only 18% of Republicans agreeing. 61% of all Americans think that the U.S. is already in the middle of a recession.

Dr. Boyce Watkins, Finance Professor at Syracuse University, says the recession was a long-time coming.

"When you consider that Americans have been spending their money like drunken sailors for the past few years, the recession was a long time coming," says Dr. Watkins, a regular CNN contributor. "The sub-prime lending crisis was a clear sign that many Americans are in financial trouble."

According to the National Priorities Project, a group that studies the Iraq War, the cost of the war has nearly reached a half trillion dollars. While American contractors have benefited financially, the average American has not. Millions of Americans have no health insurance and the public school system has been considered disgracefully inadequate.

The Federal Reserve has contributed to the economic stimulus package by aggressively lowering interest rates. Federal Reserve Chairman Ben Bernanke has been called "Bold Ben" by some who charge that he pushes too hard to reduce interest rates when the economy is struggling.

Some question whether the government's policies are good for consumers.

"What is good for the economy as a whole — spending a rebate — is not the best idea at an individual household level if you are buried in debt," said Greg McBride, senior financial analyst at Bankrate.com. "Issuing rebate checks to give a boost to consumer spending amounts to a Band-Aid over the much bigger problem of consumer debt burdens," he said.

Dr. Watkins also argues that in addition to the economic crisis set for the short-term, America should prepare itself for a pending retirement crisis.

"The perfect storm for a retirement crisis has been created," says Watkins, author of 'Financial Lovemaking 101'. "Americans are not saving, pension plans are disappearing, social security is dying, people are living longer and the cost of health care is rising. Something has got to give."