Tag Archives: credit

What’s it like to share your SSN with 50 people?

What’s it like to share your SSN with 50 people? Follow a victim’s struggle

By Bob Sullivan

Jonathan Barnett is also Jose Cruz. And Jesus Ramirez. And Pilar Terrones, Pilar Sanchez, Esmeralda Gonzalez and dozens of other people, at least according to the nation’s identity system.

Barnett unintentionally shares his Social Security number with all those people – and probably many more – yet his credit report and Social Security earnings records are completely clean. That seeming contradiction is a big part of his harrowing identity nightmare.

Barnett’s predilection for assiduous recordkeeping offers a rare glimpse into the deeply flawed identity system used by the nation’s creditors and employers. It relies on the secrecy of SSNs. But Barnett’s number is hardly a secret; it’s the fraud connected to his identity that remains off limits, even to the victim.

“It’s like I have a ghost out there,” he said. “Lots of ghosts.”

The canary in Barnett’s identity coal mine was an innocent-looking email from Wells Fargo Bank. It arrived in August, soon after he opened an account there, offering savings tips.

But the email was addressed to someone named “Pilar Sanchez.”

Then he received another, and another – all sent from Wells Fargo to his email account, but addressed to Sanchez.

Barnett, a 27-year-old who lives and works near Austin, Texas, called the bank. An operator told him it was probably a simple error, perhaps a typo, and that he shouldn’t worry. But he knew better.

For years, Barnett had a sense something might be wrong with his identity records. But each time he obtained his credit report or his Social Security statement, his identity was “clean.” This time, however, he was determined to get to the bottom of the problem.

He started doing research and found out, through various news stories, that a certain kind of identity theft can allow imposters to “share” victims’ SSNs without blemishing their credit reports. So he became more assertive with creditors and changed the way he quizzed them.

“I started calling and asking if they had any accounts under my Social Security Number, without giving my name,” he said. “And if the person I got wouldn’t do it, I just called back and tried again.”

Using this method, he got “hits” – confirmation of multiple accounts under a single SSN — from his own creditors. Credit accounts at Lowe’s and Home Depot were among the first he discovered. Emboldened, he began cold-calling every major creditor — cell phone issuers like Verizon, banks like Bank of America — and asking about his SSN.

He discovered his identity was being used at nearly every creditor he could think of.

“The approach I took was just calling up and saying I had an account and asking them to look it up, because if I didn’t say that, they wouldn’t help me at all. … I just started calling random companies, and my SSN seemed like it was everywhere,” he said. It was if he could throw a dart at any U.S. company, and he’d find his SSN at use there. “It was pretty awful.”

Worse yet, none of these creditors would give him any details about the accounts — ironically citing privacy concerns. He knew his SSN was being used, but he didn’t know by whom, when the account was opened or if it was active. So he switched strategies again.

“I’d give them my SSN only, and then just wait, and they might say, ‘OK, you are Jose Cruz?’ And I’d write that down. Or they’d say, ‘You’re in California?’ And I’d write that down,” he said.

Using this investigative technique, he started to build a vague picture of what was happening, but there were many, many blanks to fill in.

“What shocks me is the unwillingness to cooperate with victim,” he said. “It’s baffling that I’ve never know about it until now.”

Barnett had already done all the basics, such as placing fraud alerts on his credit reports and checking his annual Social Security earnings statement. Again, zilch. So he started making phone calls. He called the FBI, which told him to file a report with his local police department. He called the Treasury Department’s inspector general. He called the Office of the Comptroller of the Currency, which told him to file a report online. He filed something at the Internet Computer Crime Complaint Center, but was told not much could be done because the imposters were not using his name.

He had his first real “hit” when talking to his credit union, which was forthcoming about results it found looking up his SSN on a system that tracks individuals who attempt to pass bad checks.

“They were more than happy to talk with me about … what they thought was going on,”
he said.

Undocumented workers need to provide Social Security numbers when they begin a new job. Often, they provide stolen or invented SSNs. Because employers often don’t check the accuracy of the numbers, the technique is effective. When a particular SSN is used successfully in obtaining work permission, it is often shared with others. Some who use the SSN at work go on to use it for obtaining credit cards, loans, government benefits and so on. If imposters use their own names — or invented names — on those applications, none of the usual identity theft protections will be triggered, and the rogue accounts are not reported on the standard consumer credit report. Instead, the credit bureaus create what are sometimes called “sub-files” to indicate that multiple identities are associated with that SSN. Consumers are generally only able to obtain information about their own sub-file, attributed to their correct name.

It’s unclear how common sub-files are, but identity protection service ID Analytics provided insight into this critical question last year. After studying more than a billion applications for credit, it revealed that 40 million SSNs have multiple names connected to them. While many of these can be attributed to innocent typographical errors or legitimate name changes, others indicate fraud. About 2 million U.S. adults have three or more SSNs associated with their names, said Stephen Coggeshall, head of research at ID Analytics.

How many Jonathon Barnetts are out there? It’s not as rare as you might expect. More than 140,000 SSNs are associated with five or more people, and 27,000 are connected to 10 or more people, according to ID Analytics.

Despite widespread acknowledgment of the problem, Barnett has spent the past four months running into one wall after another when trying to get details about how his identity was compromised and the status of those fraudulent accounts.

“When I call, the data in their records is obviously false. Anyone can see it. I can tell by the tone in the (operator’s) voices that they want to tell me more, but they are hesitant because they’d been instructed not to,” he said. “I found that when I called the California state tax office. I asked them, and the woman told me, ‘Yes, it was very common.’ So common they just issued a different number (to the imposter). I was told not to worry about it if I hadn’t received a letter from them. That just worries me more.”

Barnett later turned to a company named Identity Guard and paid to get a report detailing potential compromises. For the first time he got a sense of the depth of his problems.

Nearly 50 names were connected to his SSN.

“I really gulped when I saw that list,” he said.

Identity Guard says it uses data from a long list of providers to create a database that goes far beyond what consumers get when they obtain a credit report. Public records, such as dog licenses or legal filings, billing applications and payday loans are also included in its database. The firm declined to provide additional detail during an interview.

If I had to take a guess, I’d say most of this is employment fraud,” said Tim Rohrbaugh, vice president of information security at Intersections Inc., which operates Identity Guard. “If you look at the surnames, that’s what would appear to me.” Because the SSN is not used for financial identity theft, such as opening a credit card and not paying the bill, the compromise often isn’t discovered for years, he said.

The credit industry sometimes refers to this as creation of a “synthetic identity,” because the SSN and name combination don’t actually represent a real person, but merely an entry in a database.

“It stays at a low level so, so the SSN is usable over and over to get a job, or to open utilities. … But it can be just as damaging as credit-based stuff,
” Rohrbaugh said.

As Barnett worked his way through the Identity Guard “hit list,” the news got progressively worse.

In September, he found two active bank accounts at Chase; both have been closed by the bank. He found three active AT&T accounts, since closed, and a fourth attempt to open an account. In October, he found a Capital One checking account, an attempted account opening at Bank of America and a federal tax return filed in February using his SSN.

Identity Theft?

Perhaps most unnerving of all, he found a Verizon account closed back in 2002. He has no idea when it was opened. The discovery means the secret life of his SSN has a long history.

He then recalled an incident when he was in college in 2004, when Bank of America sent him a debit card with someone else’s picture on it.

“They told me it was just a mistake. I was naive about it at the time,”
he said.

Two weeks ago, Barnett contacted msnbc.com and asked for help. At msnbc.com’s request, ID Analytics ran his information through its database and found 17 active users of his SSN. Again, because of privacy rules, ID Analytics cannot share the information directly with the victim. But the company shared it with the nonprofit Identity Theft Resource Center, which maintains confidentiality agreements with the credit industry. That agency is now calling special contacts within fraud departments at the various creditors and helping close the offending accounts.

The nonprofit agency confirmed it is working to help Barnett, but said it was unable to divulge details about his imposters. Karen Barney, program director at the Identity Theft Resource Center, did say the agency has since found abuse of Barnett’s SSN dating back as far as 1995.

Barnett feels like he’s finally getting on top of some of the identity abuse he’s discovered. This week, he also heard from his local police department, which said officers had passed along two potential suspects’ names he’d discovered to local police in other jurisdictions. Such leads are precious — he wants identity criminals to be prosecuted so they won’t continue to abuse his SSN, and so he might ultimately get to the bottom of the problem.

But it’s just a start.

“I could do a lot more if I had names and addresses of all the imposters,
” he said. “I feel a little conflicted. I feel good now that I am finding places that can verify the information is stolen. It’s still disconcerting — not only the ID theft, but I’m still hitting walls with companies that have the information.”

Want to share your story as an ID Theft victim? Leave it in comments below or e-mail

Barnett’s father worked in finance, and he was raised to pay close attention to his credit report, his credit card interest rates and anything else connected to his financial life. Many companies he’s dealt with during his ordeal have assured him that he’s suffering no harm; no unpaid bills have surfaced on his credit report, for example. But he’s suspicious of that, and he’s convinced that an unexpected delay in his mortgage application during 2010 can be attributed to his identity problems.

Still, after spending several months obsessing over the problem, he’s come to terms with it.

“It really wasn’t until last couple of weeks that I started taking it in stride. I did let it get to me for a while,”
he said. “Now, sometimes, it’s almost like a game for me to call these companies and get more details out of them.”

No one knows how many imposters have his SSN, and no one can really stop others from using his SSN on an application in the future. But better fraud-fighting tools would render a stolen SSN useless to would-be imposters.

“I know a lot of people are working on this problem, but it’s still here. And it begs the question as to why it’s all possible,” he said.

RED TAPE WRESTLING TIPS

SSN-only ID Theft is particularly vexing; it’s almost always discovered by accident, as in this case. Victims might be tempted to request a change of SSN, but the Identity Theft Resource Center strongly recommends against this strategy. The consequences of dropping an old SSN — losing a lifetime of credit history, along with college records, employment history, and so on – are more severe than fighting fraudulent accounts, Barney says. Also, creditors almost always end up linking the new and the old SSN anyway, so the potential benefits of changing are quickly lost. A new SSN only makes sense for very young victims who have no established history, she said.

SOURCE

The Top 100 Statistics About The Collapse Of The Economy That Every American Voter Should Know

The Top 100 Statistics About The Collapse Of The Economy That Every American Voter Should Know

Courtesy of The Economic Collapse Blog

The U.S. economy is dying and most American voters have no idea why it is happening. Unfortunately, the mainstream media and most of our politicians are not telling the truth about the collapse of the economy. This generation was handed the keys to the greatest economic machine that the world has ever seen, and we have completely wrecked it. Decades of incredibly foolish decisions have left us drowning in an ocean of corruption, greed and bad debt. Thousands of businesses and millions of jobs have left the country and poverty is exploding from coast to coast. We are literally becoming a joke to the rest of the world. It is absolutely imperative that we educate America about what is happening. Until the American people truly understand the problems that we are facing, they will not be willing to implement the solutions that are necessary.

The following are the top 100 statistics about the collapse of the economy that every American voter should know….

#100 A staggering 48.5% of all Americans live in a household that receives some form of government benefits. Back in 1983, that number was below 30 percent.

#99 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

#98 Since Barack Obama was sworn in, the share of the national debt per household has increased by $35,835.

#97 The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration.

#96 It is being projected that the U.S. national debt will hit 344% of GDP by the year 2050 if we continue on our current course.

#95 The Congressional Budget Office is projecting that U.S. government debt held by the public will reach a staggering 716 percent of GDP by the year 2080.

#94 In 2010, the U.S. government paid $413 billion in interest on the national debt. That is projected to at least double over the next decade.

#93 According to one new survey, one out of every three Americans would not be able to make a mortgage or rent payment next month if they suddenly lost their current job.

#92 State and local government debt has reached an all-time high of 22 percent of U.S. GDP.

#91 In 1980, government transfer payments accounted for just 11.7% of all income. Today, government transfer payments account for 18.4% of all income.

#90 U.S. households are now receiving more income from the U.S. government than they are paying to the government in taxes.

#89 According to a new study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent.

#88 If you can believe it, one out of every seven Americans has at least 10 credit cards.

#87 According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980. Today they account for approximately 16.3%.

#86 The cost of a health insurance policy for the average American family rose by a whopping 9 percent last year, and according to a report put out by the Kaiser Family Foundation and the Health Research and Educational Trust, the average family health insurance policy now costs over $15,000 a year.

#85 One study found that approximately 41 percent of working age Americans either have medical bill problems or are currently paying off medical debt.

#84 An all-time record 49.9 million Americans do not have any health insurance at all at this point, and the percentage of Americans covered by employer-based health plans has fallen for 11 years in a row.

#83 According to a report published in The American Journal of Medicine, medical bills are a major factor in more than 60 percent of the personal bankruptcies in the United States. Of those bankruptcies that were caused by medical bills, approximately 75 percent of them involved individuals that actually did have health insurance.

#82 Average yearly tuition at U.S. private universities is now up to $27,293.

#81 The cost of college tuition in the United States has gone up by over 900 percent since 1978.

#80 In America today, approximately two-thirds of all college students graduate with student loans.

#79 In 2010, the average college graduate had accumulated approximately $25,000 in student loan debt by graduation day.

#78 The total amount of student loan debt in the United States now exceeds the total amount of credit card debt in the United States.

#77 One-third of all college graduates end up taking jobs that don’t even require college degrees.

#76 In the United States today, there are more than 100,000 janitors that have college degrees.

#75 In the United States today, 317,000 waiters and waitresses have college degrees.

#74 In the United States today, approximately 365,000 cashiers have college degrees.

#73 It is being projected that for the first time ever, the OPEC nations are going to bring in over a trillion dollars from exporting oil this year. Their biggest customer is the United States.

#72 U.S. oil companies will bring in about $200 billion in pre-tax profits this year. They will also receive about $4.4 billion in specialized tax breaks from the U.S. government.

#71 The United States has had a negative trade balance every single year since 1976, and since that time the United States has run a total trade deficit of more than 7.5 trillion dollars with the rest of the world.

#70 The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

#69 The U.S. trade deficit with China is now 27 times larger than it was back in 1990.

#68 Today, the United States spends more than 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

#67 China has surpassed the United States and is now the largest PC market in the entire world.

#66 In 2002, the United States had a trade deficit in “advanced technology products” of $16 billion with the rest of the world. In 2010, that number skyrocketed to $82 billion.

#65 In 2010, the number one U.S. export to China was “scrap and trash”.

#64 Do you remember when the United States was the dominant manufacturer of automobiles and trucks on the globe? Well, in 2010 the U.S. ran a trade deficit in automobiles, trucks and parts of $110 billion.

#63 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

#62 If you can believe it, more than 42,000 manufacturing facilities in the United States have been closed down since 2001.

#61 Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.

#60 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs.

#59 According to Professor Alan Blinder of Princeton University, 40 million more U.S. jobs could be sent offshore over the next two decades.

#58 If you gathered together all of the workers that are “officially” unemployed in the United States today, they would constitute the 68th largest country in the world.

#57 There are fewer payroll jobs in the United States right now than there were back in 2000 even though we have added 30 million extra people to the population since then.

#56 Back in 1969, 95 percent of all men between the ages of 25 and 54 had a job. In July, only 81.2 percent of men in that age group had a job.

#55 Only 55.3% of all Americans between the ages of 18 and 29 were employed last year. That was the lowest level that we have seen since World War II.

#54 Today, there are 5.9 million Americans between the ages of 25 and 34 that are living with their parents.

#53 The economic downturn has been particularly tough on men. According to Census data, men are twice as likely to live with their parents as women are.

#52 According to one recent survey, only 14 percent of all Americans that are 28 or 29 years old are optimistic about their financial futures.

#51 Incredibly, less than 30 percent of all U.S. teens had a job this summer.

#50 According to one study, between 1969 and 2009 the median wages earned by American men between the ages of 30 and 50 dropped by 27 percent after you account for inflation.

#49 Since the year 2000, we have lost approximately 10% of our middle class jobs. In the year 2000 there were about 72 million middle class jobs in the United States but today there are only about 65 million middle class jobs.

#48 In 1980, 52 percent of all jobs in the United States were middle income jobs. Today, only 42 percent of all jobs are middle income jobs.

#47 Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today, more than 40% of all jobs in the United States are low income jobs.

#46 According to Paul Osterman, a professor of economics at MIT, approximately 20 percent of all employed Americans are making $10.65 an hour or less.

#45 Half of all American workers now earn $505 or less per week.

#44 Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.

#43 New home sales in the United States are now down 80% from the peak in July 2005.

#42 The all-time record for fewest number of new homes sold in the United States was broken in 2009. Then it was broken again in 2010. It is on pace to be broken once again in 2011.

#41 At one point this year, U.S. home prices had fallen a whopping 33% from where they were at during the peak of the housing bubble.

#40 U.S. home values have fallen approximately 6 trillion dollars since the housing crisis first began.

#39 According to the U.S. Census Bureau, 18 percent of all homes in the state of Florida are sitting vacant. That figure is 63 percent larger than it was just ten years ago.

#38 Historically, the percentage of residential mortgages in foreclosure in the United States has tended to hover between 1 and 1.5 percent. Today, it is up around 4.5 percent.

#37 According to the Mortgage Bankers Association, at least 8 million Americans are currently at least one month behind on their mortgage payments.

#36 According to a Harris Interactive survey taken near the end of last year, 77 percent of all Americans are now living paycheck to paycheck. In 2007, the same survey found that only 43 percent of Americans were living paycheck to paycheck.

#35 Starting on January 1st, 2011 the Baby Boomers began to hit retirement age. From now on, every single day more than 10,000 Baby Boomers will reach the age of 65. That is going to keep happening every single day for the next 19 years.

#34 According to a new poll by Americans for Secure Retirement, 88 percent of all Americans are worried about “maintaining a comfortable standard of living in retirement”. Last year, that figure was at 73 percent.

#33 One out of every six elderly Americans now lives below the federal poverty line.

#32 In 1950, each retiree’s Social Security benefit was paid for by 16 U.S. workers. According to new data from the U.S. Bureau of Labor Statistics, there are now only 1.75 full-time private sector workers for each person that is receiving Social Security benefits in the United States.

#31 According to the Congressional Budget Office, the Social Security system paid out more in benefits than it received in payroll taxes in 2010. That was not supposed to happen until at least 2016.

#30 The U.S. government now says that the Medicare trust fund will run out five years faster than they were projecting just last year.

#29 According to one study, the 50 U.S. state governments are collectively 3.2 trillion dollars short of what they need to meet their pension obligations.

#28 A different study has shown that individual Americans are $6.6 trillion short of what they need to retire comfortably.

#27 Between 1991 and 2007 the number of Americans between the ages of 65 and 74 that filed for bankruptcy rose by a staggering 178 percent.

#26 According to a shocking AARP survey of Baby Boomers that are still in the workforce, 40 percent of them plan to work “until they drop”.

#25 Last year, 2.6 million more Americans dropped into poverty. That was the largest increase that we have seen since the U.S. government began keeping statistics on this back in 1959.

#24 Back in the year 2000, 11.3% of all Americans were living in poverty. Today, 15.1% of all Americans are living in poverty.

#23 More than 50 million Americans are now on Medicaid. Back in 1965, only one out of every 50 Americans was on Medicaid. Today, approximately one out of every 6 Americans is on Medicaid.

#22 More than 45 million Americans are now on food stamps.

#21 The number of Americans on food stamps has increased 74% since 2007.

#20 Approximately one-third of the entire population of the state of Alabama is now on food stamps.

#19 Right now, one out of every four American children is on food stamps.

#18 It is being projected that approximately 50 percent of all U.S. children will be on food stamps at some point in their lives before they reach the age of 18.

#17 The poverty rate for children living in the United States increased to 22% in 2010.

#16 There are 314 counties in the United States where at least 30% of the children are facing food insecurity.

#15 In Washington D.C., the “child food insecurity rate” is 32.3%.

#14 More than 20 million U.S. children rely on school meal programs to keep from going hungry.

#13 It is estimated that up to half a million children may currently be homeless in the United States.

#12 The number of Americans that are going to food pantries and soup kitchens has increased by 46% since 2006.

#11 According to a recent report from the AFL-CIO, the average CEO made 343 times more money than the average American did last year.

#10 The wealthiest 1% of all Americans now own more than a third of all the wealth in the United States.

#9 The poorest 50% of all Americans collectively own just 2.5% of all the wealth in the United States.

#8 The percentage of millionaires in Congress is more than 50 times higher than the percentage of millionaires in the general population.

#7 According to the Bureau of Labor Statistics, 16.6 million Americans were self-employed back in December 2006. Today, that number has shrunk to 14.5 million.

#6 According to one recent poll, 90 percent of the American people believe that economic conditions in the United States are “poor”. To put this in perspective, only 11 percent of Americans rated economic conditions in the U.S. as “poor” back in January of 1999.

#5 According to another recent poll, 80 percent of the American people believe that we are actually in a recession right now.

#4 Our dollar is being systematically destroyed by the Federal Reserve. An item that cost $20.00 in 1970 will cost you $116.78 today. An item that cost $20.00 in 1913 will cost you $457.67 today.

#3 The Federal Reserve made $16.1 trillion in secret loans to their friends during the last financial crisis.

#2 The Federal Reserve is a perpetual debt machine. Today, the U.S. national debt is more than 4700 times larger than it was when the Federal Reserve was created back in 1913.

#1 According to a new CNN/ORC International Poll, 27 percent of all Americans have never even heard of Federal Reserve Chairman Ben Bernanke.

We need to educate America.

Please share this with as many people as you can. Time is running out for America, and 2012 is going to be an absolutely pivotal year in the history of this nation.

We are in the midst of a long-term economic decline that is rapidly accelerating. If dramatic changes are not made very quickly, we will soon witness a full-blown collapse of the economy.

Wake up as many people as you can.

We are running out of time.

SOURCE

U.S Loss of AAA Rating Could Unleash Financial Hell Across America

If The U.S. Government Loses Its AAA Rating It Could Potentially Unleash Financial Hell Across The United States

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Courtesy of The Economic Collapse Blog
For decades, the U.S. government has had a AAA rating. On the scales used by the big three credit rating agencies, that is the highest credit rating that a government can get. Moody’s scale actually uses lettering that is a little different from the other two big agencies (“Aaa” instead of “AAA”), but you get the point. Right now, the U.S. government is closer than ever to losing its AAA rating. The threat of a rating downgrade is going to continue to grow regardless of how the political theater that we are watching unfold in Washington D.C. plays out. The truth is that the federal government has accumulated a debt that is so vast that it will never be paid back. In fact, we are rapidly approaching the point when this debt will no longer be serviceable. If the credit rating of the U.S. government is not slashed right now, it will be soon enough. In fact, the truth is that the U.S. government is such a financial mess that it should have been done long ago. But whenever the United States does lose its AAA rating, we could potentially see financial hell unleashed because it will also mean that there will almost certainly be a wave of credit rating downgrades from coast to coast, according to https://thesoutherninstitute.com.

As I have written about previously, government debt becomes more painful the higher that interest rates go. When the big credit agencies downgrade the credit rating of a government, that is a signal to investors that they should ask for higher interest rates on debt issued by that government.

This does not always play out in practice (just look at Japan), but nations such as Greece, Portugal and Ireland sure are going through financial hell right now as they deal with reduced credit ratings and soaring interest rates.

Right now, the U.S. government is able to borrow gigantic quantities of money at ridiculously low interest rates. This is the primary reason why the debt disaster predicted by so many in the past has not arrived yet.

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If the credit rating of the U.S. government is downgraded, it could finally get investors all over the world to realize that the game is over and that they should be demanding much higher returns on debt issued by the U.S. government. The truth, as U.S. Representative Ron Paul put it recently, is that the U.S. government is already “insolvent” and at some point we are all going to have to face reality….

“Ultimately, the fundamentals show this country is bankrupt.”

So whether or not it happens right now, the truth is that at some point the credit rating of the U.S. government is going to go down and interest rates are going to go up.

Unfortunately, it appears that this might happen sooner rather than later.

Earlier this week, Moody’s Investors Service publicly announced that it would be reviewing our Aaa bond rating for a possible downgrade.

On Thursday, S&P actually went so far as to announce that there is a “50 percent chance” that it will downgrade the credit rating of the U.S. government within the next three months.

S&P has been warning of trouble for some time now. Back on April 18th, Standard & Poor’s altered its outlook on U.S. government debt from “stable” to “negative” and warned that a downgrade was likely at some point soon if nothing changed.

If the credit rating of the U.S. government gets slashed and if that results in higher interest costs on the national debt, that is going to make it much harder to balance the budget.

The U.S. government will take in somewhere around 2.2 or 2.3 trillion dollars this year. It will spend somewhere in the neighborhood of 3.5 or 3.6 trillion dollars this year.

Included in that spending is about 400 billion dollars that goes for interest on the national debt.

As I explained in a previous article, if our interest costs double or triple it is going to make it basically impossible to balance the budget under our current system.

If interest rates on U.S. government debt were to rise to moderate levels, we could soon be easily paying a trillion dollars a year just in interest on the national debt.

If interest rates on U.S. government debt were to rise to the levels that Greece, Portugal and Ireland are now facing, it would be beyond catastrophic.

But a reduced credit rating and higher interest rates would not just hurt the finances of the U.S. government.

Any financial institution that is linked to the U.S. government in any way would also probably be downgraded.

This fact was noted in the announcement put out by Moody’s this week….

In conjunction with this action, Moody’s has placed on review for possible downgrade the Aaa ratings of financial institutions directly linked to the government: Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks.

We have also placed on review for possible downgrade securities either guaranteed by, backed by collateral securities issued by, or otherwise directly linked to the government or the affected financial institutions.

Just think of the financial carnage that would cause.

Also, check out what one Bloomberg article had to say about the potential cascading effects of a credit rating downgrade for the U.S. government….

At least 7,000 top-rated municipal credits would have their ratings cut if the U.S. government loses its Aaa grade, Moody’s Investors Service said.

An “automatic” downgrade affecting $130 billion in municipal debt directly linked to the U.S. would occur if the federal level is reduced, Moody’s said yesterday in a report. Additionally, top-rated securities with no direct links to the national government will be reviewed for similar action.

But the nightmare would not end there. The truth is that the credit ratings of large numbers of state and local governments from coast to coast would likely be reviewed and downgraded as well. Right now, many state and local governments are scratching and clawing in a desperate attempt to survive financially, and a significant rise in interest costs would be enough to wipe many of them out.

The ripple effects of a U.S. government credit downgrade would be endless.

A lot of people argue that if the federal government ran a balanced budget from now on none of this would matter.

Unfortunately, that is not true.

At this point, a very high percentage of U.S. government debt is short-term debt. That means that gigantic amounts of debt must be “rolled over” each year in addition to any new debt that we take on. So even if interest rates rise significantly on just the existing debt that we have it is going to be a total nightmare.

And make no mistake, whether it happens now or later a collapse of U.S. government finances is coming.

David Murrin, the chief investment officer at Emergent Asset Management, recently told CNBC the following….

“It’s inevitable that the U.S. will default—it’s essentially an empire which is overextended and in decline—and that its financial system will go with it”

Right now it is being projected that the U.S. national debt will hit 344% of GDP by the year 2050 if we continue on our current course. We are on a runaway train that is heading straight for a brick wall.

Europe is also a complete financial wreck. The sovereign debt crisis over in the EU continues to grow worse by the day and there is no end in sight.

If the U.S. collapses, Europe is not strong enough to save it. If Europe collapses, the U.S. is not strong enough to save it.

We really are entering an unprecedented time in world history. We are on the verge of the first truly global financial disaster.

It is going to be interesting to see which major currency crashes and burns first. Some think that it will be the euro. Others think that it will be the dollar.

In any event, the reality is that the current global financial system is not sustainable. The folks that are in charge can try to keep things together for as long as possible, but at some point the dominoes are going to start to fall and the house of cards is going to crash.

We have entered a time when there is going to be financial crisis after financial crisis. Even if the EU and the U.S. government can somehow fix things for the moment, more problems are going to be just around the corner.

The world is dangerous. Are you prepared? Get a Safety Kit and Stay Safe Today!

The world has become incredibly unstable and the entire globe is going to be shaken. Most people cannot even conceive of the kind of financial hell that is coming our way as a nation.

Yes, it can be a bit sad to think about what is happening, but it is much better to be armed with the truth than to be totally clueless and totally unprepared.

SOURCE

Extreme Couponing: Desperate Economic Times Call For Desperate Measures

Extreme Couponing: Desperate Economic Times Call For Desperate Measures

Even in the midst of a horrific economic decline, there are tools that all of us can use to make the most of our limited resources. This includes doing some things that many of us never imagined that we would do. A couple of months ago I never would have imagined that I would be doing an article on coupons. But in these desperate economic times you have to look for any economic edge that you can get. Did you know that it is possible to get $500 worth of groceries for less than 10 dollars? I didn’t know that either until I started watching a show called “Extreme Couponing” on cable television. I was amazed as I watched person after person get over 95 percent off on their groceries. Personally, I have always thought that clipping coupons was a waste of time. Sure, you might save a few bucks, but I really didn’t think it was worth the time or the effort. Well, my opinion has changed. There are a growing number of people out there that are using coupons to provide all of the groceries that their families need almost for free. In an economic environment where incomes are going down but food prices continue to go up, “extreme couponing” is a financial weapon that virtually anyone can use.

Yes, not everyone can take it to the extent that many of these “extreme couponers” do. There are some women that spend 40, 50 or even 60 hours a week on their couponing. Most people cannot afford to do that.

But even if you just spend a couple of hours a week you can still save significant money. At a time when many family budgets are tighter than ever, saving 50 or 100 bucks at the grocery store can mean a world of difference.

Not only that, but “extreme couponing” is a great way to build up your stockpile of emergency food. Everyone should have enough food in their homes to feed their families for at least a year. Unfortunately, many people don’t have that kind of money. That is where “extreme couponing” comes in.

If you are willing to put a little hard work in, you can build a stockpile of emergency food for pennies on the dollar.

Extreme couponing is not complicated and thanks to the new TLC show it is becoming extremely popular. The following is how a recent article on MSNBC describes these “extreme couponers“….

Hard-core couponers are in it to win it — for free, if at all humanly possible. They plot their grocery-store trips with the precision of military commanders. They load up three or four shopping carts at a time. They test the mettle — and the congeniality — of cashiers by having them tally dozens of discounts on their behalf.

And what do they get in exchange? Hundreds of dollars’ worth of merchandise for as little as $5 to $10, the applause of onlookers — and a surge of adrenaline that can be downright addicting.

If you have never seen the show, you should check it out at least once. The following is a very brief preview of “Extreme Couponing”….

Yes, people are actually doing this. In fact, some of my readers are actually doing this.

On a recent article entitled “Inflation 2011: Honey – They Shrunk Our PayChecks” one of my regular readers named Maria shared that her and her circle of friends have adopted extreme couponing as a way to fight back against the bad economy….

In the last six months, I have seen a complete attitude adjustment in many of our friends and family. As a result, a resource sharing group has formed amongst us. We share work, ideas and tips on everything from budgeting to gardening. All of us have curtailed the “luxuries” like gym memberships, expensive clothing, latte’s and mochas from those expensive little stops on the way to work, dining at restaurants, first run movies at the theater, and a myriad of other little things.

Our latest discovery is the world of couponing. Anyone interested in dramatically cutting their household and grocery expenses should take a serious look at TheKrazyCouponLady.com and read their book, Pick Another Checkout Lane, Honey. I never understood how couponing could make a difference until I read this book. Our group now looks at coupons almost as a tax free source of income, because it is saving us hundreds of dollars a month…no exaggeration.

I admit, I am not as diligent as the others about using coupons, but even with my minimal efforts I saved 60% on my meat purchases last month. That was huge for my family of 6. Our home is out in the country near a rural community, and the only grocery store in town is Safeway. I never shopped there before, because it was too expensive. I drove into the big city once every three months to do our grocery shopping at the “discount” stores. Now, using coupons on sale items, I can shop at the local Safeway and save more money on food and gas.

Sadly, this extreme couponing phenomenon will not be around forever. As thousands more pile on to the bandwagon, it is inevitable that food producers and retailers will start changing the rules. So take advantage of extreme couponing while you can.

Look, I never imagined that I would be recommending that people should start clipping coupons. But when any of us are presented with solid evidence that we are wrong about something, we need to be willing to change.

Personally, I am not an expert on coupons.

Thankfully, there are some people out there that are, and they have shared their knowledge for free on the Internet. The following are some of the best extreme couponing sites around if you are interested in learning more….

*The Krazy Coupon Lady

*Tips From a Mom of 3

*Coupon Geek

*Saving with Shellie

*Couponing 101

*Jill Cataldo

*My Frugal Adventures

*How To Shop For Free With Kathy Spencer

*Clippin\' With Carrie

*Money Saving Mom

People are always urging me to write more about solutions. Well, extreme couponing is a solution. A lot of us men might not like the idea of “extreme couponing” because it may not seem like a very “manly” thing to do, but the truth is that it works. In these desperate economic times, you have got to do what you have got to do. Today, one out of every four American children is on food stamps. An increasing number of children are falling into poverty. If it takes clipping coupons in order to survive, then that is just what we are going to have to do.

As mentioned above, all of this exposure on television is going to mean that “extreme couponing” is not going to be around forever. When too many people start jumping on a boat it is inevitable that it is going to sink.

But while this tool still exists, why not use it?

In particular, this is a great way to build up your emergency food stockpile for a fraction of the cost.

So what do all of you think about extreme couponing? Do you think it is a good tool? Do you have other tools that you would suggest for saving money in this tough economy? Feel free to leave a comment with your thoughts below….

SOURCE

NEW $5 ATM FEE JUST THE LATEST CHECKING TRAP

CT by Bob Sullivan

“Total Checking.” “Value Checking.” “MyAccess Checking.” What do they all have in common? The word “free” is missing from the name.

You are likely painfully aware that big banks like Chase, Wells Fargo, and Bank of America have ended no-strings-attached free checking accounts. But if you had any questions about how restrictive — or expensive — those strings can be, consider Chase bank. Scarcely two years ago, we marveled at banks’ efforts to inch fees up to $3 per withdrawal. Chase bank is now test-piloting $5-per-withdrawal fees for non-customers in Illinois. That’s in addition to fees the consumers’ bank charges. Soon it may cost $10 to grab $20 in a pinch.

Once upon a time, consumers could expect to earn money by leaving their cash sitting in a bank. Today, consumers must worry about their bank slowly bleeding money out of the account. The change is happening swiftly. Chase says it’s converted around 8 million free accounts — many former customers of Washington Mutual — into “follow-our-rules-or-pay-up-to-$144-annually” accounts.

It costs banks about $300 apiece annually to offer checking accounts, according to a recent study by Bretton-Woods. They used to recoup these costs by helping themselves to some $30 billion worth of overdraft fees from consumers. But now that the cash cow has been largely eliminated by new consumer regulations, banks are trying out new techniques to recoup this lost revenue.

Just how far will banks be able to push fee-weary consumers? That’s unclear. Earlier this month, Bankrate.com released a survey showing 75 percent of consumers earning $75,000 or more would rather switch banks than pay higher fees. Overall, 64 percent of customers said they’d bolt.

That ire may not translate into action, however, and banks know it. A J.D. Power study released on March 1 found that, while consumers are switching banks at a slightly higher rate than in the past (8.7 percent last year, compared to 7.7 percent a year earlier), fees and interest rates have almost nothing to do with their choices. “Pricing” impacted only 4 percent of consumers, the study found.

This would not be a surprise to behavioral economists. Consumers almost never consider fees — particularly punitive fees like overdrafts or “your balance fell below $1,000” charges — when making purchase decisions. Nearly everyone suffers from what’s sometimes called “magical thinking” — as in, “I’ll never misbehave and get hit by that fee.”

It’s the shallow things that matter
So what do people consider when switching banks? Big, impressive buildings and billboards seemed to matter most, the survey found. Here’s the depressing quote from the JD Power press release:

“For customers evaluating and ultimately selecting a new bank, the most important factors driving their decision are advertising; branch convenience; products and services; promotional offers; and direct and indirect customer experience,” it said.

That means you can expect higher fees, more buildings and more kooky ads from banks.

There was one positive note in the J.D. Power research. There is evidence consumers do have their limits. About 17 percent of consumers who switched banks said high fees or low interest motivated the breakup.

Banks argue that it’s not fair to say free checking has disappeared. OK. Let’s just say NSA relationships with big banks are dead, replaced It’s by accounts wrapped in red tape. And remember, many of these rules can change at any time. So here’s five Red Tape Traps you’ll find along the way to a free checking account.


1) Soaring ATM fees
We’ve already mentioned Chase’s $5 experiment. Plenty of folks now pay $6 or $7 per withdrawal, when the ATM machine fee is added to their own bank’s fee. These fees are perhaps the best example of magical thinking at work. Most folks think they’ll be good about walking the extra block to access cash at their bank’s ATM. But when there’s a screaming kid in a stroller or an impatient date on the arm, you’re likely to just pay the fee. Even one so-called “foreign” ATM transaction with a $5 hit every month costs $60 annually. Be realistic: If your bank charges for such transactions, you should just budget $100 annually for ATM service. But a much better choice is to find a bank that doesn’t charge you. For those ATM emergencies, you’ll at least cut your ATM fees in half, and some banks — USAA Federal Savings Bank, for example — refund the ATM bank’s fees. There’s no law preventing you from getting a secondary checking account with a new institution that you use primarily for accessing cash on the fly. I recommend this kind of “allowance” account structure in Stop Getting Ripped Off.

A few other creative efforts can cut your ATM fees. Get cash back when you shop at grocery stores with your debit card, although that’s not my favorite way to use debit. Better yet: Find fee-free ATMs. They’re out there. The WaWa convenience store chain offers them, and it recently performed its one billionth fee-free cash withdrawal.

What it costs: Two “foreign” withdrawals per month — $120

2) Keeping your minimum balance
Most account holders are familiar with the idea that they might have to do something — maintain a minimum balance or direct deposit their paychecks — in order to keep some level of service.

But now, a single slip-up, such as a flurry of cashed checks that sink your balance to $998.43 for one afternoon, can be costly. With fees of $12 or more, the experience is not unlike getting hit with an overdraft. The same advice you followed to prevent overdrafts applies here. Some banks let you link your savings and checking accounts to make sure you don’t dip below that minimum. Sign up for text message alerts so you can get early notification of a dangerously low balance, and log on to online banking to check your balance often. Stagger your regular payments so they hit after your paychecks.

The biggest Red Tape Trap of all, however, is the dreaded movable minimum balance. Consumers who once enjoyed fee waivers for keeping $500 in an account can see that minimum raised to $750 or $1,000. It’s easy to miss a warning letter from the bank, and end up with one or two months of $12 fees. The clearest hint a balance change is coming is an account name change (see below).

What it costs: Two slip-ups — $24

3) Overdraft fee marketing
The voracious overdraft fee animal isn’t gone, it’s just been put back in its cage. Until recently, consumers could incur $35 overdraft fees by making small purchases with their debit cards. Today, those transactions are simply declined by the bank, or approved without the fee — unless the bank has received explicit opt-in permission from the account holder. Banks have driven hard to trick consumers into giving up this permission, which is inappropriate for the vast amount of consumers. They’ve given it pleasing sounding names like “courtesy pay,” “Buffer Zone,” or “debit card advance,” and plastered bank windows with pictures of smiling, attractive men and women who say they are relieved to have this peace of mind. If you’ve been tricked into signing up for overdraft protection, un-sign up immediately.

What it costs: Two overdrafts — $70

4) The name has changed
The surest sign a new fee or restriction is coming is a name change — either the name of your bank has changed because of an acquisition (like Washington Mutual becoming Chase) or the name of your account has been changed. Former Washington Mutual customers have seen their account names changed from “WaMu Free Checking” to “Chase Free Extra Checking” to “Chase Total Checking,” which is totally more expensive than free. Ironically, a Google search for Washington Mutual still sends consumers to a Web page at Chase.com with the title “WaMu.com, home of WaMu Free Checking, is now Chase.”

Chase customers can avoid checking fees through a variety of methods — maintaining a minimum daily balance, a high average balance, making at least one large direct deposit, or by paying a bunch of other fees.

The amounts required — at least one $500 deposit — aren’t Draconian, but the rules mean consumers have a lot of new things to keep track of. They will slip up, and pay. And of course, the rules can and will change. Beware the notice that you’ve just been upgraded to “Complete Awesome Checking” or “Value Asset Acquisition Checking.” You almost certainly are about to be hit with a new fee or rule.

What it costs: Two mistakes — $24

5) The hidden cost of no interest
Of course, requiring a minimum balance of $1,500 or so is itself a fee. That’s money you could park in a high-yielding money market account earning interest. Even a 1 percent interest rate would get you a smidge more than $15 on your $1,500, so that kind of minimum requirement amounts to a $15 annual fee.

What it costs: Missed interest — $15

TOTAL TRAP COST: $253 annually.

This entire column has been a not-so-subtle suggestion that you consider banking alternatives. Online banks like ING Direct offer higher interest and fewer fees. Credit unions and small banks still offer really free checking. In fact, BankRate.com just released a survey showing 38 of the 50 largest credit unions have free checking with no strings attached, and about half of them don’t even require a minimum balance. Their ATM fees are, on average, half of traditional bank fees and one-quarter of the large credit unions charge no ATM fees at all.

That means there’s no reason not to open a credit union account, even if it merely serves as a secondary checking account.

http://redtape.msnbc.com/2011/03/total-checking-value-checking-myaccess-checking-what-do-they-all-have-in-common-the-word-free-is-decidedly-missing-from-t.html?GT1=43001