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A Who’s Who List of Who Isn’t Paying Income Tax – Sit Down Before Reading

Many people simply do not believe that it is possible for corporations inside the United States to make billions of dollars in profits each year and not pay a dime in income taxes. After seeing these numbers, is there anyone out there that is still willing to claim that our tax system is “fair”?…

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The federal income tax is a bad joke and it needs to be abolished.  All over the nation, hard working American families are being absolutely crushed by oppressive levels of taxation, and our politicians are constantly coming up with new ways to extract money from all of us every single year.  Meanwhile, many ultra-wealthy Americans and many of the most profitable corporations in the country pay little to nothing in taxes.  In fact, as you will see below, there are dozens of very prominent corporations that make billions of dollars in profits and yet don’t pay a dime in taxes.  Tax avoidance has become a multi-billion dollar industry in the United States.  Those that have the resources to “play the game” use shell companies, offshore tax havens and the thousands of loopholes in our tax code to minimize their tax burdens as much as possible.  Meanwhile, the rest of us get absolutely hammered.  This is fundamentally unfair.  The federal income tax system is irreversibly broken at this point, and it is time to abolish it.  If you think that the federal income tax system can be “fixed”, then you probably have never studied it.  Our tax code is nearly 4 million words long and it is absolutely riddled with thousands of loopholes that favor big corporations and the ultra-wealthy.  We should come up with a better, fairer way to fund the government.  The United States once prospered greatly without a federal income tax, and it could do so again.

Many people simply do not believe that it is possible for corporations inside the United States to make billions of dollars in profits each year and not pay a dime in income taxes.

Well, according to a report put out by Public Campaign, that is exactly what is happening.  Posted below are numbers that come directly from their report.  30 large corporations are listed, and 29 of them had a tax burden for 2008 through 2010 that was less than zero even though they all made enormous profits.  And all 30 of them spent more on lobbying than they did on taxes.

The numbers that you are about to see are for 2008, 2009 and 2010 combined.  For “taxes paid”, please note that for 29 of the corporations a negative number is given.  That means that the net tax liability for 2008 through 2010 was actually less than zero.

After seeing these numbers, is there anyone out there that is still willing to claim that our tax system is “fair”?…

General Electric
U.S. Profits: $10,460,000,000
Taxes Paid: ‐$4,737,000,000

PG&E Corp.
U.S. Profits: $4,855,000,000
Taxes Paid: ‐$1,027,000,000

Verizon Communications
U.S. Profits: $32,518,000,000
Taxes Paid: ‐$951,000,000

Wells Fargo
U.S. Profits: $49,370,000,000
Taxes Paid: ‐$681,000,000

American Electric Power
U.S. Profits: $5,899,000,000
Taxes Paid: ‐$545,000,000

Pepco Holdings
U.S. Profits: $882,000,000
Taxes Paid: ‐$508,000,000

Computer Sciences
U.S. Profits: $1,666,000,000
Taxes Paid: ‐$305,000,000

CenterPoint Energy
U.S. Profits: $1,931,000,000
Taxes Paid: ‐$284,000,000

NiSource
U.S. Profits: $1,385,000,000
Taxes Paid: ‐$227,000,000

Duke Energy
U.S. Profits: $5,475,000,000
Taxes Paid: ‐$216,000,000

Boeing
U.S. Profits: $9,735,000,000
Taxes Paid: ‐$178,000,000

NextEra Energy
U.S. Profits: $6,403,000,000
Taxes Paid: ‐$139,000,000

Consolidated Edison
U.S. Profits: $4,263,000,000
Taxes Paid: ‐$127,000,000

Paccar
U.S. Profits: $365,000,000
Taxes Paid: ‐$112,000,000

Integrys Energy Group
U.S. Profits: $818,000,000
Taxes Paid: ‐$92,000,000

Wisconsin Energy
U.S. Profits: $1,725,000,000
Taxes Paid: ‐$85,000,000

DuPont
U.S. Profits: $2,124,000,000
Taxes Paid: ‐$72,000,000

Baxter International
U.S. Profits: $926,000,000
Taxes Paid: ‐$66,000,000

Tenet Healthcare
U.S. Profits: $415,000,000
Taxes Paid: ‐$48,000,000

Ryder System
U.S. Profits: $627,000,000
Taxes Paid: ‐$46,000,000

El Paso
U.S. Profits: $4,105,000,000
Taxes Paid: ‐$41,000,000

Honeywell International
U.S. Profits: $4,903,000,000
Taxes Paid: ‐$34,000,000

CMS Energy
U.S. Profits: $1,292,000,000
Taxes Paid: ‐$29,000,000

Con-­way
U.S. Profits: $286,000,000
Taxes Paid: ‐$26,000,000

Navistar International
U.S. Profits: $896,000,000
Taxes Paid: ‐$18,000,000

DTE Energy
U.S. Profits: $2,551,000,000
Taxes Paid: ‐$17,000,000

Interpublic Group
U.S. Profits: $571,000,000
Taxes Paid: ‐$15,000,000

Mattel
U.S. Profits: $1,020,000,000
Taxes Paid: ‐$9,000,000

Corning
U.S. Profits: $1,977,000,000
Taxes Paid: ‐$4,000,000

FedEx
U.S. Profits: $4,247,000,000
Taxes Paid: $37,000,000 (a rate of less than 1%)

Total
U.S. Profits: $163,691,000,000
Taxes Paid: ‐$10,602,000,000

Just look at that combined total again.

Those 30 companies had combined profits of more than 163 billion dollars during those three years, and yet the combined net tax liability of those companies was negative 10.6 billion dollars.

I wish I could make my taxes look like that.

Another company that is making headlines because of their taxes these days is Facebook.

It turns out that Facebook made more than a billion dollars in 2012 but did not pay a single dime in federal or state income taxes.  The following is from a report that was just released by Citizens for Tax Justice

Earlier this month, the Facebook Inc. released its first “10-K” annual financial report since going public last year. Hidden in the report’s footnotes is an amazing admission: despite $1.1 billion in U.S. profits in 2012, Facebook did not pay even a dime in federal and state income taxes.

Instead, Facebook says it will receive net tax refundstotaling $429 million.

According to Businessweek, Facebook has an additional 2 billion dollars in tax credits that it will be able to use in future years…

Facebook says that it anticipates reducing its tax liability in the future by an additional $2.17 billion by using further net operating loss carry-forwards that it has banked.

And of course when it comes to abusing the tax system, the big Wall Street banks are some of the worst offenders.  The following is an excerpt from a report put out by the office of U.S. Senator Bernie Sanders

—–

Here are just a few examples of how the corporations and Wall Street banks these CEOs work for have significantly harmed our economy and the federal budget:

1. Bank of America CEO Brian Moynihan

Number of Offshore Tax Havens in 2010? 371.

In 2010, Bank of America operated 371 subsidiaries incorporated in offshore tax havens. 204 of these subsidiaries are incorporated in the Cayman Islands, which has a corporate tax rate of 0%.

Amount of federal income taxes Bank of America would have owed if offshore tax havens were eliminated? $2.5 billion.

Bank of America has stashed $18.5 billion in offshore tax havens to avoid paying U.S. income taxes. Bank of America would owe an estimated $2.5 billion in federal income taxes if its use of offshore tax avoidance was eliminated.

Amount of federal income taxes paid in 2010? Zero. $1.9 billion tax refund.

Bank of America received a $1.9 billion tax refund from the IRS in 2010, even though it made $4.4 billion in profits.

Taxpayer Bailout from the Federal Reserve and the Treasury Department? Over $1.3 trillion.

During the financial crisis, Bank of America received a total of more than $1.3 trillion in virtually zero interest loans from the Federal Reserve and a $45 billion bailout from the Treasury Department.

2. JP Morgan Chase CEO James Dimon

Number of Offshore Tax Havens in 2010? 83.

In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens.

Amount of federal income taxes JP Morgan Chase would have owed if offshore tax havens were eliminated? $4.9 billion

JP Morgan Chase has stashed $21.8 billion in offshore tax haven countries to avoid payng income taxes. If this practice was outlawed, it would have paid $4.9 billion in federal income taxes.

Taxpayer Bailout from the Federal Reserve and the Treasury Department? $416 billion

During the financial crisis, JP Morgan Chase received a total of more than $391 billion in virtually zero interest loans from the Federal Reserve and a $25 billion bailout from the Treasury Department, while Jamie DImon served as a director of the New York Federal Reserve.

3. Goldman Sachs CEO Lloyd Blankfein

Amount of federal income taxes paid in 2008? Zero. $278 million tax refund.

In 2008, Goldman Sachs received a $278 million refund from the IRS, even though it earned a profit of $2.3 billion that year.

Number of offshore tax havens in 2010? 39.

In 2010, Goldman Sachs operated 39 subsidiaries in offshore tax haven countries.

Amount of federal income taxes Goldman Sachs would have owed if offshore tax havens were eliminated? $3.32 billion.

Goldman Sachs has stashed $20.63 billion in offshore tax haven countries to avoid paying income taxes. If this practice was outlawed, it would have paid $3.32 billion in federal income taxes.

Taxpayer Bailout from the Federal Reserve and the Treasury Department? $824 billion.

During the financial crisis, Goldman Sachs received a total of $814 billion in virtually zero interest loans from the Federal Reserve and a $10 billion bailout from the Treasury Department.

—–

Are you starting to get the picture?

The big banks and the big corporations make billions, but they pay nothing or next to nothing.

The rest of us bust our rear ends to try to get ahead, and we get gougedby dozens of different taxes.

Over time, the percentage of the overall tax burden shouldered by corporations has gotten smaller and smaller.

Back in 1950, corporate taxes accounted for about 30 percent of all federal revenue.  In 2012, corporate taxes accounted for less than 7 percent of all federal revenue.

These days, large corporations have become absolute masters at avoiding taxes.  In fact, there are many international tax havens that are doing a booming business in setting up sham headquarters for U.S. corporations.  For example, the city of Zug, Switzerland only has a population of 26,000 people but it is the headquarters for 30,000 companies.

But corporations are not the only ones doing this kind of thing.

The ultra-wealthy have also mastered the art of legally not paying taxes.

As I mentioned in a previous article, it has been reported that the global elite have up to 32 TRILLION dollars stashed in offshore banks around the globe.

With that amount of money, you could pay off the entire U.S. national debt and still have enough money left over to buy every product and service produced in the United States during an entire year.

It is time to admit that our tax system is broken.

Congress has had decades to fix it, and yet the abuses just keep getting worse.

What we are doing is not working.

We need to abolish the income tax.

If you are still not convinced that the federal income tax is an abomination and that we need to abolish it, here are some more shocking facts about our tax system from one of my previous articles about taxes

1 – The U.S. tax code is now 3.8 million words long.  If you took all of William Shakespeare’s works and collected them together, the entire collection would only be about 900,000 words long.

2 – According to the National Taxpayers Union, U.S. taxpayers spendmore than 7.6 billion hours complying with federal tax requirements.  Imagine what our society would look like if all that time was spent on more economically profitable activities.

3 – 75 years ago, the instructions for Form 1040 were two pages long.  Today, they are 189 pages long.

4 – There have been 4,428 changes to the tax code over the last decade.  It is incredibly costly to change tax software, tax manuals and tax instruction booklets for all of those changes.

5 – According to the National Taxpayers Union, the IRS currently has1,999 different publications, forms, and instruction sheets that you can download from the IRS website.

6 – Our tax system has become so complicated that it is almost impossible to file your taxes correctly.  For example, back in 1998 Money Magazine had 46 different tax professionals complete a tax return for a hypothetical household.  All 46 of them came up with a different result.

7 – In 2009, PC World had five of the most popular tax preparation software websites prepare a tax return for a hypothetical household.  All five of them came up with a different result.

8 – The IRS spends $2.45 for every $100 that it collects in taxes.

9 – According to The Tax Foundation, the average American has to workuntil April 17th just to pay federal, state, and local taxes.  Back in 1900, “Tax Freedom Day” came on January 22nd.

10 – When the U.S. government first implemented a personal income tax back in 1913, the vast majority of the population paid a rate of just 1 percent, and the highest marginal tax rate was just 7 percent.

11 – Residents of New Jersey pay $1.64 in taxes for every $1.00 of federal spending that they get back.

12 – The United States is the only nation on the planet that tries to tax citizens on what they earn in foreign countries.

13 – According to Forbes, the 400 highest earning Americans pay an average federal income tax rate of just 18 percent.

14 – Warren Buffett had an effective tax rate of just 17.4 percent for 2010.

15 – The top 20 percent of all income earners in the United States payapproximately 86 percent of all federal income taxes.

16 – Sadly, as Bill Whittle has shown, you could take every single penny that every American earns above $250,000 and it would only fund about 38 percent of the federal budget.

Please share this article with as many people as you can.  We have now entered a time of the year when tens of millions of Americans will be filling out their tax returns, and the pain of going through that process will make people even more receptive than normal to the truth about how broken our system is.

So what do you think?

Do you think that it is fair for the ultra-wealthy and hugely profitable corporations to get away with paying zero taxes while you get hammered?

Do you believe that it is time to abolish the income tax?

Please feel free to post a comment with your thoughts below…

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Economy

How The Elite Dominate The World

Did you know that 8 men now have as much wealth as the poorest 3.6 billion people living on the planet combined?

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Throughout human history, those in the ruling class have found various ways to force those under them to work for their economic benefit.  But in our day and age, we are willingly enslaving ourselves.  The borrower is the servant of the lender, and there has never been more debt in our world than there is right now.  According to the Institute of International Finance, global debt has hit the 217 trillion dollar mark, although other estimates would put this number far higher.  Of course everyone knows that our planet is drowning in debt, but most people never stop to consider who owns all of this debt.  This unprecedented debt bubble represents that greatest transfer of wealth in human history, and those that are being enriched are the extremely wealthy elitists at the very, very top of the food chain.

Did you know that 8 men now have as much wealth as the poorest 3.6 billion people living on the planet combined?

Every year, the gap between the planet’s ultra-wealthy and the poor just becomes greater and greater.  This is something that I have written about frequently, and the “financialization” of the global economy is playing a major role in this trend.

The entire global financial system is based on debt, and this debt-based system endlessly funnels the wealth of the world to the very, very top of the pyramid.

It has been said that Albert Einstein once made the following statement

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”

Whether he actually made that statement or not, the reality of the matter is that it is quite true.  By getting all of the rest of us deep into debt, the elite can just sit back and slowly but surely become even wealthier over time.  Meanwhile, as the rest of us work endless hours to “pay our bills”, the truth is that we are spending our best years working to enrich someone else.

Much has been written about the men and women that control the world.  Whether you wish to call them “the elite”, “the establishment” or “the globalists”, the truth is that most of us understand who they are.  And how they control all of us is not some sort of giant conspiracy.  Ultimately, it is actually very simple.  Money is a form of social control, and by getting the rest of us into as much debt as possible they are able to get all of us to work for their economic benefit.

It starts at a very early age.  We greatly encourage our young people to go to college, and we tell them to not even worry about what it will cost.  We assure them that there will be great jobs available for them once they finish school and that they will have no problem paying off the student loans that they will accumulate.

Well, over the past 10 years student loan debt in the United States “has grown 250 percent” and is now sitting at an absolutely staggering grand total of 1.4 trillion dollars.  Millions of our young people are already entering the “real world” financially crippled, and many of them will literally spend decades paying off those debts.

But that is just the beginning.

In order to get around in our society, virtually all of us need at least one vehicle, and auto loans are very easy to get these days.  I remember when auto loans were only made for four or five years at the most, but in 2017 it is quite common to find loans on new vehicles that stretch out for six or seven years.

The total amount of auto loan debt in the United States has now surpassed a trillion dollars, and this very dangerous bubble just continues to grow.

If you want to own a home, that is going to mean even more debt.  In the old days, mortgages were commonly 10 years in length, but now 30 years is the standard.

By the way, do you know where the term “mortgage” originally comes from?

If you go all the way back to the Latin, it actually means “death pledge”.

And now that most mortgages are for 30 years, many will continue making payments until they literally drop dead.

Sadly, most Americans don’t even realize how much they are enriching those that are holding their mortgages.  For example, if you have a 30 year mortgage on a $300,000 home at 3.92 percent, you will end up making total payments of $510,640.

Credit card debt is even more insidious.  Interest rates on credit card debt are often in the high double digits, and some consumers actually end up paying back several times as much as they originally borrowed.

According to the Federal Reserve, total credit card debt in the United States has also now surpassed the trillion dollar mark, and we are about to enter the time of year when Americans use their credit cards the most frequently.

Overall, U.S. consumers are now nearly 13 trillion dollars in debt.

As borrowers, we are servants of the lenders, and most of us don’t even consciously understand what has been done to us.

In Part I, I have focused on individual debt obligations, but tomorrow in Part II I am going to talk about how the elite use government debt to corporately enslave us.  All over the planet, national governments are drowning in debt, and this didn’t happen by accident.  The elite love to get governments into debt because it is a way to systematically transfer tremendous amounts of wealth from our pockets to their pockets.  This year alone, the U.S. government will pay somewhere around half a trillion dollars just in interest on the national debt.  That represents a whole lot of tax dollars that we aren’t getting any benefit from, and those on the receiving end are just becoming wealthier and wealthier.

In Part II we will also talk about how our debt-based system is literally designed to create a government debt spiral.  Once you understand this, the way that you view potential solutions completely changes.  If we ever want to get government debt “under control”, we have got to do away with this current system that was intended to enslave us by those that created it.

We spend so much time on the symptoms, but if we ever want permanent solutions we need to start addressing the root causes of our problems.  Debt is a tool of enslavement, and the fact that humanity is now more than 200 trillion dollars in debt should deeply alarm all of us.

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Economy

Look Out Tesla, Apple’s On Your Six!

Shares of Apple moved lower after the company unveiled its newest models of the iPhone.

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I’ve got a confession to make… I’m a horrible dad.

You see, this week, I sent my 13-year old daughter to school without her iPhone.

I know, I know. That’s considered cruel and unusual punishment these days.

But when it was time to get in the car for school, Rebekah was checking her Instagram feed instead of getting ready to go. So I took her phone for the day.

According to Rebekah, that’s a big problem for a middle-schooler. “How am I supposed to communicate with my friends?!” (Heaven forbid she actually talks to them in person.)

As you can probably tell from my sarcasm, I think Rebekah’s perspective is a little off when it comes to her iPhone. Similarly, I think Apple’s investors also have a skewed perspective when it comes to the new iPhone models and the company’s long-term direction.

Fortunately, that skewed perspective sets up a great opportunity for income investors…

Apple’s Multi-Generational Iconic Brand

Shares of Apple moved lower after the company unveiled its newest models of the iPhone.

Apple’s iPhone 8 — along with the 10-year anniversary model “X” (pronounced “iPhone ten”) failed to inspire investors. Essentially, there weren’t enough surprise features for customers to get excited about.

I’m not sure I disagree with them…

You won’t find me standing in line to pay $1,000 for the newest iPhone. Honestly, the iPhone 5 or 6 has all the features I could ever really want in a phone. My kids have older models of the iPhone and they work perfectly fine for keeping in touch with each other and snapping pictures of little brother snuggling with the kittens.

But just because Apple got a cold reception to its latest products doesn’t mean the company is in trouble. Far from it!

You see, Apple will still sell plenty of its newest phones — and rack up billions in cash from these sales — for two reasons.

One: The iPhone is still a status symbol for young and old alike.

A recent survey from investment research firm Piper Jaffray found that 82% of U.S. teenagers expect their next phone be an iPhone. This was the highest percentage recorded since the company started its semi-annual survey.1

Older adults are not much different, with 79% stating that they want the latest edition of the iPhone.

Despite the lackluster reviews on Apple’s latest models, the newest iPhone is still one of the hottest status symbols in our ever-more materialistic society.

The second reason is that blue chip companies will still keep their employees outfitted with the latest technology.

My little brother works for one of the big four accounting firms. This week, I dropped by his house to watch some Monday Night Football, and found him showing off his new piece of hardware. It seems his firm has already issued the iPhone 8 to all its staff accountants.

As long as Apple remains the standard for consumer technology, you can bet that corporate America will continue to issue its products to employees. This is just one of the ways companies are vying for qualified employees — a resource that is growing more scarce by the day!

Apple’s “Next Big Thing”

If you’re an investor in Apple, you now find yourself in an enviable position of either having a “good” investment today, or possibly a “great” investment in the near future.

That’s because today, Apple is pulling in cash by the truckload thanks to its existing suite of products. At last count, Apple was sitting on $261.5 billion in cash, much of it will likely be freed up to pay to investors once congress passes a new tax plan.2

Apple’s cash balance grew by 13% year over year during the second quarter. And that rate of growth should accelerate in the third and fourth quarters of this year thanks to new sales of the iPhone 8 and iPhone X.

So just with today’s business the way it is, Apple is a “good” opportunity for income investors. (And that’s putting it modestly).

But what happens when Apple launches its “next big thing?”

And more importantly, what will that “next big thing” be??

I can tell you that Apple’s CEO Tim Cook isn’t content to sit back and sell iPhones until consumer tastes change. No, he’s got much bigger plans ahead.

In fact, Tim Cook has gone on the record stating that his company is focusing on autonomous systems… Which sounds a like self-driving cars and other equipment to me.

Think about the possibilities!

This summer, our own Davis Ruzicka wrote an intriguing article about what could happen if Apple bought Ford Motor (NYSE:F).

It’s not as farfetched as it might sound!

Can you imagine the buzz around the iCar or iTruck launch? Not to mention the cash that Apple will generate from blockbuster sales of the ultimate vehicle status symbol.

(Look out Tesla!)

Now I’m not suggesting you invest in Apple just because the company might step into the auto market. That’s a possibility but not something I would bet on.

But I do think the stock is an excellent investment right now, thanks to the company’s huge cash balance and reliable, growing dividend.

Just with its standard international business today, Apple is a solid investment. (And you’re getting a nice discount to buy shares thanks to the pullback following the release of the iPhone 8 and iPhone X.)

Looking forward, Apple could be a great investment if it comes out with a new blockbuster product that people want. And if and when that happens, shares will move sharply higher while Apple’s dividend grows at the same time.

So if you’re not already invested in AAPL, consider adding some shares to your retirement account today. At the very least, you’ll own a steady income generating investment. But I expect much more than that from Apple over the next few years.

Here’s to growing and protecting your wealth!

Zach Scheidt

Zach Scheidt
Editor, The Daily Edge
Twitter ❘ Facebook ❘ Email

1American teenagers, just like their parents, crave this status symbol more than ever, MarketWatch
2Apple cash pile hits new record of $261.5 billion, CNBC, Anita Balakrishnan

Ed. Note: One of the best ways to protect your wealth against a falling market is to lock in legally guaranteed income payments. This way, regardless of what the market does, and regardless of where the Fed sets rates, you can tell your company, “Forget you! Pay ME!!” Find out how to lock in these legally guaranteed payments here.

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Economy

The Craziest Mortgage Scheme I’ve Ever Seen

The Great Financial Crisis happened because Wall Street was financing homes for people who couldn’t afford them.

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The Great Financial Crisis happened because Wall Street was financing homes for people who couldn’t afford them.

Leading up to the GFC, there was a voracious appetite from investors for “AAA”-rated mortgage debt. So lenders would make lots of loans to subprime borrowers and sell them to Wall Street. Wall Street would pool them together and one of the major ratings agencies (like Moody’s or Standard & Poor’s) would stamp the steaming pile of garbage with AAA.

AAA by Moody’s definition means the investment “should survive the equivalent of the U.S. Great Depression.” In other words, it’s rock solid.

The reasoning was that one subprime mortgage was risky. But if you bundled thousands together, you get AAA… Because they couldn’t all go bad at once. And, hey, you can’t lose money in real estate.

The rating agencies weren’t as dumb as they appeared, though… Investigations following the crisis showed lots of incriminating emails, like this one from a Standard & Poor’s exec:

“Lord help our fucking scam . . . this has to be the stupidest place I have worked at.”

Like everyone else, they played along because they wanted to make money.

To generate enough mortgages to meet demand, lenders would do anything…

– Sell a house for no money down

– Offer a teaser rate (which temporarily reduces monthly payments, then jumps to market rates)

– And even offer to pay part of your mortgage for a couple months (most small lenders could sell a loan to Wall Street in a month or two, erasing their liability. If the origination payment was more than cash out of pocket, they still came out ahead).

They called the worst of the subprime loans “NINJAs” as in “No income, No job, No assets.”

When they couldn’t actually write enough mortgages to meet demand, Wall Street got creative. They started bundling together bundles of mortgages, something called a CDO-Squared. Then they created synthetic CDOs, which were just derivatives of subprime mortgages and even other CDOs (essentially a way for people to gamble on the mortgage market without actual mortgages).

As we all know, it ended in disaster… because the people who took out the mortgages they couldn’t afford to buy overpriced homes stopped paying. And the CDOs, CDOs-squared and synthetic CDOs (which had been spread around the world) went bust.

Remember, it all started with selling people homes they couldn’t afford. Which brings me to today…

There’s a record high $1.4 trillion of student debt in the US. And millennials are struggling to pay off those balances.

The National Association of Realtors polled 2,000 millennials between the ages of 22-35 about student debt and homeownership… Only 20% of those surveyed owned a home… Of the 8 in 10 that didn’t own, 83% of them said student debt was the reason. And 84% said they’d have to delay a home purchase for years (seven years being the median response).

And that’s all bad for the home-selling business. Once again, the lenders are getting creative…

Miami-based homebuilder, Lennar Homes, recently announced it would pay a big chunk of a student loan for any borrower buying a home from them.

Through its subsidiary Eagle Home Mortgage, the company will make a payment to a buyer’s student loans of as much as 3% of the purchase price, up to $13,000.

Debt has become such a keystone of our society, that the only way we can afford something is to swap one type of debt they can’t afford with another type of debt.

A recent study by the Pew Charitable Trust showed 41% of US households have less than $2,000 in savings – a full one-third have zero savings (including 1 in 10 families with over $100,000 in income). Another study showed 70% of Americans have less than $1,000 in savings.

The point is, America is broke… A single, surprise expense like a flat tire or a doctor’s visit would wipe most people out.

And it’s only getting worse.

Back in August, I calculated the average household account at Bank of America (which has $592 billion in consumer deposits from 46 million households)… It’s only $12,870 per household… And that includes savings, investments, retirement… EVERYTHING.

Also keep in mind, that’s the average… So accountholders with huge balances skew the numbers higher.

It’s no wonder Americans have $1.021 trillion in credit card debt – the most in history.

Auto loans are also at a record high $1.2 trillion.

And let’s not forget the US government, which is in the hole more than $20 trillion. The US’ debt is now 104% of GDP… And total debt has grown 48% since 2010.

The liability side of the balance sheet keeps expanding. Meanwhile assets and productivity aren’t keeping up.

But people continue buying homes, cars, TVs and college educations by taking on more and more debt… And now, by swapping one type of debt for another.

Wealth is built on savings and production. Not on playing tricks with paper and going deeper into debt.

I can’t tell when this house of cards falls. But rest assured, it will come tumbling down.

Will you be ready when it does?

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