Bankers are currently doing a heavy push on a product called a “Reverse Mortgage.” They are targeting seniors. You will see these products heavily advertised on Jeopardy and The Price is Right. Having already bled the working and middle class housing market, they are looking for new ways to feed.
If anyone you know has been approached about such a product, advise them to treat a reverse mortgage as a scam to be avoided like a beer fart. Avoid the person and institution promoting it. Technically speaking, the word “scam” does not apply, but these are among the most expensive financial products ever invented. They are designed to bleed the customer to death rather than merely slashing the throat.
If you or your parents or anyone you know are desirous of enjoying their estate while alive rather than leaving it to descendents, seek qualified advice from a non-banking financial person. There are other, less expensive ways to convert a house to cash while still living comfortably. A “life estate” comes to mind, and surely there are other, less expensive ways to go.
Piece of Mindful 
When in Rome, go Galt. The Randian way. Max out with a super-sized home improvement loan, and/or a 2nd mortgage from Bank of America, or Wells Fargo, and it’s off to South America or Thailand where livin’ is easy?
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Note: Use of the word “Max” automatically relegates comments to moderation bin.
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Seriously though, isn’t this reverse mortgage just remnant of the last bubble, or at least an element of the financial sector’s next big financial-services bubble? I finally found this after much searching through old stuff:
washingtonpost.com
Building a Better Capitalism
By Harold Meyerson
Thursday, March 12, 2009
So what kind of capitalism shall we craft? Now that the market fundamentalism to which we’ve adhered for the past 30 years has — by its own criterion of increasing shareholder value — totally failed? Now that Alan Greenspan has proclaimed himself “shocked” that “the self-interest of lending institutions to protect shareholders’ equity” proved to be an illusion?
Larry Summers, President Obama’s senior economic adviser, cautioned in an interview in Monday’s Financial Times against heeding “those who, just as in the 1930s, tried to learn the lesson that market capitalism didn’t work and needed to be replaced with an entirely different model.” But no one is suggesting an entirely new system. What we need — and what we can build — is a capitalism more attuned to our national concerns.
The Reagan-Thatcher model, which favored finance over domestic manufacturing, has collapsed. The decline of American manufacturing has saddled us not only with a seemingly permanent negative balance of trade but with a business community less and less concerned with America’s productive capacities. When manufacturing companies dominated what was still a national economy in the 1950s and ’60s, they favored and profited from improvements in America’s infrastructure and education. The interstate highway system and the G.I. Bill were good for General Motors and for the U.S.A. From 1875 to 1975, the level of schooling for the average American increased by seven years, creating a more educated workforce than any of our competitors’ had. Since 1975, however, it hasn’t increased at all. The mutually reinforcing rise of financialization and globalization broke the bond between American capitalism and America’s interests.
Manufacturing has become too global to permit the United States to revert to the level of manufacturing it had in the good old days of Keynes and Ike, but it would be a positive development if we had a capitalism that once again focused on making things rather than deals. In Germany, manufacturing still dominates finance, which is why Germany has been the world’s leader in exports. German capitalism didn’t succumb to the financialization that swept the United States and Britain in the 1980s, in part because its companies raise their capital, as ours used to, from retained earnings and banks rather than the markets. Company managers set long-term policies while market pressures for short-term profits are held in check. The focus on long-term performance over short-term gain is reinforced by Germany’s stakeholder, rather than shareholder, model of capitalism: Worker representatives sit on boards of directors, unionization remains high, income distribution is more equitable, social benefits are generous. Nonetheless, German companies are among the world’s most competitive in their financial viability and the quality of their products. Yes, Germany’s export-fueled economy is imperiled by the global collapse in consumption, but its form of capitalism has proved more sustainable than Wall Street’s.
So does Germany offer a model for the United States? Yes — up to a point. Certainly, U.S. ratios of production to consumption and wealth creation to debt creation have gotten dangerously out of whack. Certainly, the one driver and beneficiary of this epochal change — our financial sector — has to be scaled back and regulated (if not taken out and shot). Similarly, to create a business culture attuned more to investment than speculation, and with a preferential option for the United States, corporations should be made legally answerable not just to shareholders but also to stakeholders — their employees and community. That would require, among other things, changing the laws governing the composition of corporate boards.
In addition to bolstering industry, we should take a cue from Scandinavia’s social capitalism, which is less manufacturing-centered than the German model. The Scandinavians have upgraded the skills and wages of their workers in the retail and service sectors — the sectors that employ the majority of our own workforce. In consequence, fully employed impoverished workers, of which there are millions in the United States, do not exist in Scandinavia.
Making such changes here would require laws easing unionization (such as the Employee Free Choice Act, which was introduced this week in Congress) and policies that professionalize jobs in child care, elder care and private security. To be sure, this form of capitalism requires a larger public sector than we have had in recent years. But investing in more highly trained and paid teachers, nurses and child-care workers is more likely to produce sustained prosperity than investing in the asset bubbles to which Wall Street was so fatally attracted.
Would such changes reduce the dynamism of the American economy? Not necessarily, particularly since Wall Street often mistook dealmaking for dynamism. Indeed, since finance eclipsed manufacturing as our dominant sector, our rates of intergenerational mobility have fallen behind those in presumably less dynamic Europe.
Wall Street’s capitalism is dying in disgrace. It’s time for a better model.
meyersonh@washpost.com
View all comments that have been posted about this article.
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Building a better capitalist system would have to include a gold standard.
Quote from Greenspan in ’67 before he was corrupted.
“Under a gold standard, the amount of credit that an economy can support is determined by the economy’s tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government’s promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which — through a complex series of steps — the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy’s books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
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Swede I figured you to be too sophisticated to fall in for that gold standard hucksterism, you let me down.
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You’re right. Strayed off the reservation.
The State is my Shepherd, I shall not want.
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I see you guys are paying some pretty poor actors to purvey your propaganda these days.
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You want real.
I got real.
“All paper currencies are toilet paper, the dollar is simply two ply.” – Thomas Caplin
“All the perplexities, confusion and distress in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from the downright ignorance of the nature of coin and circulation.” – John Adams in a letter to Thomas Jefferson
“We are in danger of being overwhelmed with irredeemable paper, mere paper, representing not gold nor silver; no sir, representing nothing but broken promises, bad faith, bankrupt corporations, cheated creditors and a ruined people.” – Daniel Webster, speech in the American Senate, 1833
“Money is a new form of slavery, and is distinguishable from the old simply by the fact that it is impersonal, there is no human relation between master and slave.” – Leo Tolstoy
“Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked: ‘Account overdrawn.'” – Ayn Rand
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My favorite Mencken Quote.
“The government consists of a gang of men exactly like you and me. They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office. Their principal device to that end is to search out groups who pant and pine for something they can’t get and to promise to give it to them. Nine times out of ten that promise is worth nothing. The tenth time is made good by looting A to satisfy B. In other words, government is a broker in pillage, and every election is sort of an advance auction sale of stolen goods. ~ H.L. Mencken
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Big Swede,
The heaviest “pant and pine” sounds come from K Street and Wall Street from what I can tell. That is where the bulk of the “stolen goods” are to be found. Not a penny has been recovered and returned to rightful owners. So why single out those with no real power, and real needs, instead? I don’t get that huge blind spot in the orthodoxy.
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You didn’t hear the news Steve?
Fiscal Cliff averted.
Unemployment checks in the mail.
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Swede-
Gold is a shiny rock with imaginary value. I’m not surprised that you’re attracted to shiny things, but in the real world it’s not at all different from attaching imaginary value to paper.
The dollar is doing pretty well, BTW.
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At a 9% “real” inflation rate?
http://www.shadowstats.com/alternate_data/inflation-charts
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Your world view appears to be a compendium of snapshot images.
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The same could be said of the US, our justification that there are terrorists among us, complete bullshit. In Cuba the threat is real, as American agents continually work to undermine the place using sabotage, murder, and the embargo. The government is forced to monitor everything going on and often arrests real saboteurs, but often enough innocent people are caught in the net. Cuba is crawling with intrigue, the Florida Mafia that Castro deported leading the charge. they want their casinos back.
This is the American playbook, Swedey – to strangle a place, sabotage it, terrorize it, and then when the government reacts, scream about human rights abuses. This is what is currently going on in Syria, but the Russians are not playing. or that reason, you’ll be happy to know that The Russians are the bad guys in the world again.
Thus endeth the lesson.
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As long as we’re posting mega-clips, Swedie, here’s some Michael Hudson for you from today’s Counterpunch:
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Hudson sure can weave some hell of a tale. He does have an achilles heel tho.
Quote: You know, Congress and the President, in whatever year, are really a bane on the country. (H.L. Mencken said something to the effect that nobody is safe when Congress is in session.) The mechanism of the passage of bills is totally corrupted, and the assumption is always made that Congress or the President must do something, anything, lest the ship of state sail into dire straits. These people are professional interferers and our democracy is a representation not of the people and their interests but of lobbyists of all shapes and sizes vying like pigs at the trough for a piece of the federal pie.
The whole thing is supported by the corrupt practice of issuing money as debt. My only beef with Professor Hudson is that he clings to the liberal belief that if only the federal government were to due its proper job of regulating the markets and our lives, we could all sleep soundly at night. To my knowledge, he never strikes at the root of the debt-based monetary system. Has he read that famous essay by Frederic Bastiat entitled “The Law” in order to see how governments always pervert the law, and always, through their interference in the natural business transactions of people, screw the whole thing up.
Has he ever called for a return to a Constitutional money in which the federal government only affirms the authenticity of gold and silver coin and their assay? Every other interference is counterproductive, as is surely being proven as we speak. The people through their state and local governments’ protection of property rights are capable of routing out fraud in free banking and the marketplace. The federal government, simply put, makes things too complicated. Our blind faith in the centralization of all state functions in Washington, D.C. is leading us like lemmings off a cliff of our own making.
The politicos won’t be satisfied until they have destroyed the entire division of labor with their screwed up understanding of what really constitutes money.
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Shiny rocks. That’s all, dude.
It’s a religion.
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How’s that teacher pension fund doing Steve?
Oregon, wasn’t it?
http://www.opb.org/news/article/pers-pension-costs-dwarf-states-revenue-forecast/
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And the obvious solution is the gold standard. Why didn’t anyone think of that?
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Without looking, Swede, I would guess that his pension fund, like everyone’s, got hammered by the recession/depression caused by the bankers who are now pushing the reverse mortgages that started this thread.
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And how do you get revenge on the money changers?
Revisit Greenspan’s speech in my first comment.
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It wasn’t a speech. It is clipped from an article he wrote, later reprinted in a book by Ayn Rand, back in the 1960’s. He was a Rand disciple, and later stood atop the Fed as Congress deregulated the financial industry, allowing commercial bankers access to our private savings. The result, the real estate bubble, could easily be laid at the feet of Alan.
The problem was not absence of a gold standard, but rather as Greenspan came to realize, the inability of the banking industry to self-police. Gold is not magic – credit-based currency works just as well, but only needs government regulation to keep the crooks from gaming us as they did.
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Self regulation is the answer?
Come on Mark, are you really that schizophrenic?
Lets revisit Mencken. “The government consists of a gang of men exactly like you and me. They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office. Their principal device to that end is to search out groups who pant and pine for something they can’t get and to promise to give it to them. Nine times out of ten that promise is worth nothing. The tenth time is made good by looting A to satisfy B. In other words, government is a broker in pillage, and every election is sort of an advance auction sale of stolen goods.”
Let me see the Feds are running black ops in South America, running drugs in Afganny, covering up numerous conspiracies, etc, etc, etc but hey they’re going to to clean up the money changers.
From my 7th comment. “The whole thing is supported by the corrupt practice of issuing money as debt. My only beef with Professor Hudson is that he clings to the liberal belief that if only the federal government were to due its proper job of regulating the markets and our lives, we could all sleep soundly at night. To my knowledge, he never strikes at the root of the debt-based monetary system. Has he read that famous essay by Frederic Bastiat entitled “The Law” in order to see how governments always pervert the law, and always, through their interference in the natural business transactions of people, screw the whole thing up.”
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I’m more a pragmatist than an idealogue, as humans are infinitely corruptible, whether in government, business or religion. I advocate those things I do because they have worked in the past here, and are working in Europe depsite the corruption of their Central Bank.
Our government and military are run amok over the planet because there are no bounds on private corruption. We are an empire in decay.
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You guys and your heavy metal-based monetary policy. You probably support the minting of a platinum coin worth a trillion to finance the next round of deficit spending, too.
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Why stop at a one trillion coin. Let’s make it truly rare and unreplaceable. How about the Yellowstone 10 Trillion Coin?
Mined within the confines of the park.
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You occasionally make interesting comments, Swede. I’ll continue to be on the lookout for one.
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