This guest post is by grochef and entry in our non-fiction writing contest .
Caveat: I am not and do not provide investment advice. Each of us must decide what works best for ourselves and our situations. I will, however, share my thoughts and my actions.
The collapse of Lehman Brothers is seen as the beginning of our current economic malaise. While the official end of the Great Recession was in June 2009, many of us know very well that things have not improved and, in many ways, are getting much worse.
Two futures trading companies collapsed recently as their CEOs made off with millions of their customers’ dollars. In the case of MF Global, CEO Jon Corzine, former Governor and Senator from New Jersey and Goldman Sachs executive, made off with $1.6 billion (With a “B”) in customer funds. He is not in jail.
The European Union is slipping toward breakup, threatening the Euro (The second most traded currency in the world ), which was introduced only 14 years ago (January 1, 1999). Central Banks across the globe are engaged in currency wars, attempting to make their currency lower in value in order to attract other countries to purchase their goods and improve their slumping economies by increasing exports. Meanwhile, large, Too Big To Fail banks continue the same sorts of shenanigans that brought on the recession in the first place. Above the law and hungry for more power, the banks manipulate prices of stocks and commodities with their High Frequency Trading (HFT) supercomputers that can trade millions of shares every millisecond, making pennies on each trade and billions of dollars per year. We cannot compete with that.
Those same banks used predatory means to convince millions to buy houses that the bankers knew those people could not afford. And the bankers added to that scam by manipulating (fraud) the numbers on the mortgage documents to make it appear that those same people appeared to be making much more than they actually did. Those fraudulent mortgages were then bundled into groups of bad loans and sold as Collateralized Debt Obligations (CDO) – a fancy term for bundles of loans. Those toxic CDOs were then sold to various pension funds around the world as highly rated funds. The bankers knew that those CDOs were doomed to fail, so they bought insurance called Credit Default Swaps (CDS). So, first the banks sold the toxic CDOs for a profit, then when those CDOs went belly up, they cashed in again by collecting the insurance, resulting in the financial demise of AIG, Lehman Brothers and millions of pensioners and homeowners around the globe. The biggest culprits in all this destruction were Goldman Sachs and JP Morgan, the same corporate cesspools that have provided the past and current presidential and foreign governmental administrations with their “talent”.
Former employees of Goldman Sachs Group, Inc.: 
Lucas Papademos – Prime Minister of Greece
Mario Draghi – Governor of the European Central Bank (2011–present)
Mario Monti – Prime Minister of Italy and Minister of Economy and Finance since November 2011
Romano Prodi – Prime Minister of Italy (1996–1998, 2006–2008) and President of the European Commission (1999–2004)
Bradley Abelow – Former Chief of Staff and Treasurer of New Jersey under Jon Corzine, and President of MF Global, Inc.
Sergey Aleynikov – Programmer. Convicted in stealing code and serves 8 years in prison.
Joshua Bolten – Former White House Chief of Staff
Mark Carney – Governor of the Bank of Canada
Michael Cohrs – Member of Court and the Financial Policy Committee at the Bank of England
Jon Corzine – CEO of MF Global, Inc., former New Jersey Senator (2001-2006) Governor of New Jersey (2006–2010)
William C. Dudley – President of the Federal Reserve Bank of New York
Henry H. Fowler – Former United States Secretary of the Treasury (1965–1969)
Reuben Jeffery III – Under Secretary of State for Economic, Business, and Agricultural Affairs (2007– )
Neel Kashkari – Former Assistant Secretary of the Treasury for Financial Stability
Ashwin Navin – President and co-founder of BitTorrent, Inc.
Henry Paulson – Former United States Secretary of the Treasury (2006–2009)
Robert Rubin – Former United States Treasury Secretary, ex-Chairman of Citigroup
Massimo Tononi – Italian deputy treasury chief (2006–2008)
Malcolm Turnbull – Australian politician, former federal leader of the Liberal Party of Australia
George Herbert Walker IV – Managing director at Neuberger Berman and member of the Bush family
Robert Zoellick – United States Trade Representative (2001–2005), Deputy Secretary of State (2005–2006), World Bank President
I have been saving with credit unions for over two decades. The interest rates are fair and the customer service is extraordinary. I quit being used as a cash cow for banks when I began getting charged for having accounts in their coffers. Most importantly, Credit Unions DO NOT use our money to make bets. Banks had been limited to savings and loans until Clinton and the Republican congress deregulated banking in October 1999 by repealing the Glass-Steagall Act. Now, banks can use our savings to fund their gambling in derivatives. The ability to use and lose customer funds without any legal repercussions allows bankers to lose our money (See MF Global) and then get bailed out with our tax money. We lose two ways.
In order to protect your own money, I suggest that you do some thinking about what to do to make your money as safe as possible. Currently, interest rates on a typical savings account are below 1% APR. The Federal Reserve, not part of the U.S. federal government, but a privately held, for profit company, sets the interest rates that banks pay each other to borrow each other’s money. That rate is nearly 0%. Our savings interest rates are based upon those interbank rates. There is talk of making that rate negative. In other words, we will be paying the bank to use our money and paying them again to borrow! That is what is known as a lose-lose situation.
I will leave it at that. I hope that I have started your thoughts racing. Do some reading and research. It’s fun, easy and it may save your money and your life.
This contest will end on October 10 2012 – prizes include:
- First Place : $100 Cash.
- Second Place : $50 Cash.
- Third Place : $25 Cash.
Contest ends on October 10 2012.
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