Credit Scores are a Sham: They are no longer that important

I am really tired of this whole credit score crap.

Your credit score only matters when you are going to borrow big money. And if you do qualify, then the lender will charge you whatever they damn well please. Basically, if you own property and have a credit card, you do not need to worry about your credit score, ever. Suze Orman is delusional.

Second, they way banks have stopped making loans, you probably could not get a loan anyway, so again, your credit score does not matter. Montgomery Burns and Warren Buffet would have trouble getting a loan right now.

Now, truth be told, lenders do look at credit scores, but income and cash flow are more crucial to loan repayment. Banks do not give a significantly better rate to people with better credit scores anymore. Instead, banks look at the credit score to justify how many extra fees, insurance premiums, and pre-payments they can squeeze out of you.

Your credit score does not affect you credit card rate either. Credit cards charge everyone 27% regardless of credit score. They have never waived a $39 fee because of a credit score. It has always been more important to generate income and cash than worry about a credit score. I paid my credit card late all the time and they never reported me. They were making too much money.

Now some of this stuff is personal. I got in to an argument with someone who was concerned about trying to preserve their credit score. And their mortgage was under water. I also had a run in with a collection agency who threaten to ruin my credit by reporting me to the credit agency. I laughed and told them I would pay off the debt on my terms, over several months and then have it removed. It addition I would add a comment that I was harassed and threaten by PCR, the collections agency.


So, what can you do....

1. When borrowing, shop around for a better rate. There are community loan programs and internet sites. Watch the application fees, they are also a sham. Only pay if their is a good chance of getting the loan.
2. Credit report issues can be corrected. If you have the income, then pay off the debts. Income and cash are more important than a credit score. I have been so crapped only by my credit card company that I paid of the balance.
3. If there are blemishes on you credit report, and you have the cash, you can pay them off. Plus you can write a reason for the debt in you credit report that must be reviewed by the bank or lending officer.
4. Pay cash and save some money. I pay cash or use my debit card a lot. I have also started to save some small amounts of money. We are returning to the days of hard credit, savings and investments.

So, the credit score really doesn't mean that much any more. Lenders will charge what they damn well please. The score is really just a big fraud put on the middle class to squeeze more money from them.

By the way, nothing personal against Suze Orman. I love her meassage of female financial empowerment, but she is still delusional.

Foreclosures and Bank Profits

I have been reading a lot about sub price load market, the number of underwater mortgages and the attempts to stop foreclosures. Banks are using about every trick in the book to maintain profitability in the mortgage markets despite foreclosures.

Jobs in the State of the Union

Job proposals in the state of the Union


The president gave his State of the Union Address on Wednesday. In the address he announced several specific job creation proposals. He spoke for a little longer than an hour and mentioned the word "job" or "jobs" 29 times.

In the state of the union address the president proposed the following methods:

1) An additional stimulus plan
2) extended unemployment benefits
3) Small business incentives such as:
a)Increased small business lending by community banks by $30 Billion.
b)Tax credit for new hiring
c)Eliminate capital gains taxes on small business investment
4) Tax incentives to invest in new plants and equipment for large businesses
4) Infrastructure project like high speed rail and clean energy facilities
5) Home energy efficiency grants

The president admitted there was jobs deficit of 7 million jobs.

He also announced a national export initiative to double US exports over the next 5 years. It will help farmers and small businesses export as well and better align export controls with US security interests.

The best job related quote was "That is why jobs must be our number one focus in 2010, and that is why I am calling for a new jobs bill tonight."

Summary

We are all learning how complicated creating good jobs really is. We are also getting a great lesson in economics and how the world really works. For many decades the US and it's middle class workers have been insulated from the global and domestic economic reality.

Jobs are a both and input to and a by product of the production process. Good permanent jobs are difficult to produce through direct government actions. Instead the president and congress, have many indirect methods such as subsidies, taxes and investments to affect the economic. One of the effects is job creation.

Job creation is really the long term issue of our generation.

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New York Fire Department must fix past hiring bias

If you have ever been in Bed-Stuy, Harlem or the Bronx and wondered who those big, older, out of place white guys are ?? Well now you know! They are firefighters. And they got their cushy jobs through discrimination. At least that's what a Brooklyn Judge says.

Last week, a Brooklyn federal judge, Nicholas Garaufis, found the Fire Department of New York had engaged in intentional discrimination. Last year, he has found that the FDNY used two employment test that resulted in disparate impact discrimination. This January, he found that the deparment practiced intentional discrimination.

Now that the complaint phase is completed, the remedy phase can begin. He has ordered the city to create a new exam and compensate hundreds of Blacks and Hispanics who took the exam between 1999 and 2007. Of the 11,000 firefighters, about 3% are Black and 4% are Hispanic.

Some of his suggested remedies is the priority hiring of Blacks and Hispanics at the same rate as whites to correct for past discrimination.

The original complaint is here.

The finding and remedy proposals are here.

Don't shop where you cannot work

One of the discussions I continually hear is that Black people should spend more money with other Black people. The principle sounds great, but is very difficult to do in practice. Blacks, by many standards are extremely integrated into the US economy. Black also own very few establishments. I generally follow the principal of "Don't shop where you cannot work". In other words, if no one working in the store looks like me, I try not to shop there.

US Black National Income

One of the discussions I continually hear is that Black people should spend more money with other Black people. The principle sounds great, but is very difficult to do in practice. Blacks, by many standards are extremely integrated into the US economy. Blacks also own very few establishments. I generally follow the principal of "Don't shop where you cannot work". In other words, if no one working in the store looks like me, I try not to shop there.

So, just what is the size of the US black economy. According to the Bureau of Labor Statistics (BLS, US Black National income is approximately $640 Billion dollars after taxes. The income comes from wages, investments and government transfer payments. The analysis is based on information from the Consumer Expenditure Survey which was released in October 2009 for data gather in 2008.

 Black "Family" Income continues to grow. The average income was recorded at $43,482 after taxes.

Weekly Unemployment Claims Rise for 2nd week in a row

The Department of Labor released it's weekly unemployment claims figure for the week ending January 16th, 2010. The claims figure rose by 36,000 from 446,000 to 482,000. It was the second weekly rise in unemployment claims.

The jump could be due to seasonal factors related to end of year business layoffs. But a continued uptrend is a worrisome sign of a continued recession.





The good news is the long term trend is slowly downward after a huge peek in March of 2009.

Black Income is $644 Billion Dollars in 2008

In the BLS's Consumer Expenditure Survey US National Black Income can be computer to be about $644 Billion after taxes. There are about 14,832,000 black consumers and the earn $43,482 after taxes.

Respect for Jesse Jacskon's Wall Street Project

I attended the Rainbow/Push Wall Street Project in midtown Manhattan yesterday. The projects goals are fantastic! The goals are to increase corporate dollars spent with minority suppliers, to influence the business and economic policy of the US, to educate corporations about diversity, to showcase black businesses and to educate black businesses and consumers.

However, the low attendance shows how difficult it is to tackle economic issues in the Black Community. I could have attended as part of the press contingent but it is more important to pay and support events like the Wall Street project. We must support our institutions. As far as I know, there is no other group devoted to economic opportunity for Blacks in the United States as its primary goal.

The only disappointment I had was the low attendance. The session I attended on social media marketing was very good. But there were 30 people in a room for 200. Below is a photo from the job fair. See what I mean. There were approximately 10 organizations in attendance at the job and only one private company. It was nice to see corporate purchasing officers from NY power Authority and MTA.

Free trade for China hurts all of US

Does any see a problem with all the Chinese exports floating around. I know in a perfect world free trade benefits all of us(thanks Ricardo), the world ain't perfect.
We should spread around our trade dollars in a more strategic way. We should buy from central and south american. We should buy from Mexico and the Caribean.

Manufacturing and jobs have a longer term value above the product that is made of the wage paid. The contribute to stable societies that are allies.

If anything we should give preferences to Mexico, Central and Latin America and the Caribean. At least those countries buy US products, vote with us at the UN and aren't military competitors.

Black Female Employment is 8% Higher than that of Black Males

It is no surpise to many of us, but Black Female's comprise 54% of the working
Black population. That's about 8% more than the 45% of Black males that are employed. In addition the gap has been widening as Black male employment dropped by about 2% and Black female employment rose by 1% over the decade.

Around the Web -- Weekly Round Up

NPR looks at diversity and hiring. They also discuss a discrimination settlement at Sodexho that had very little effect.

No growth in Black Employment this Decade

One of the saddest parts of the recession is that it has wiped out any growth in Black Employment this decade. In January 1999 there were approximately 14,835,000 Blacks working in the US. As of December 2009, there were 14,759,000 at net loss of -76,000 workers. The percent drop was 1/2 of 1 percent(-0.51%). By contrast, White employment increased by 2.7% and Hispanic employment by 47% during the same 10 years. Yeah, 47%!! Overall employment numbers for the entire country increased by about 5%.

So, even as the Black US population continued to grow the number of Blacks classified as not in the labor force surged 27% and the number of workers was fixed. The Black population of the US increased by 15% over the decade.

When I computed the 47% increase for Hispanics I was astounded. I have long thought that Hispanics and Blacks were competing for the same jobs and keep wages down, but I did not realize how bad it really was. Definitely got to write some pieces on that one.



Check the sad green line.

Smiling Black People on HR sites: Worst PR

I know it is all PR but I am so tried of smiling Black people on website where they barely hire any Blacks. The only reason they are smiling is because they were paid. Maybe have jobs or maybe they got a bonus or maybe they are just models. Or maybe they buy the products. But either way, they are being pimped by the companies to portray and image that does not exist.

Diversity Debate: Canned Answer (1)

Anytime the job situation gets tight, members of the privilage class start attacking affirmative action and lately, even diversity and employment anti-discrimination laws. The typical whine is that they want to hire the "best" person. Or they don't want someone (the government) tell them what to do.

So I have started to develop several standard answers to the question.

1) Best Employee

Just what does "best" really mean. Best for the job or best for the company. How do you know "Best" when you see it. Do you have a detailed and specific job description, role and educational background established. Do you have a checklist of of objective skills and attributes with weightings.

or do you know "Best" when you see it. How do then judge completely equal candidates such and entry level employees, business analyst or C programmers. How do you measure learning ability, creativity, focus and perseverance. How do you know the person won't leave.

2) Your an American Right. You believe in the constitution. You believe in what made this country great. Freedom, liberty, equality. That there are no kings. That no man is better than his fellow man. That everyone deserves and equal shot.


2a) Where did you ancestor come from ? Why did they leave ??
(no answer yet)

3) (This one is a little dangerous)
Does white privilage exist ?? What should we do about it ??

4) I made it myself, with out anyone's help, why can't they. Oh, really, you mean you had no help. You were born naked and worked ever since ?? Please.

5) Guilt

While most hiring managers try to be fair and objective, sometimes it can be very difficult between two equally qualified candidates. They may have different strengths, capacities and skills. They follow directions and complete their task on-time. I have only 30 minutes to decide. What do they do ?

Well, the answer is, the hiring manager will use subjective criteria. They try to fit the person into a personality "type". They try to compare them with people they know who have been successful in my organization. Or people they like. Or people they are comfortable with. The hiring manager brings their own history, feelings and personal biases into the interview room without even being aware.

So I would ask everyone to try to recall a situation in their lives when they were uncomfortable. Maybe when they excluded from a group or clique (high school, football team, lunch table at work) for no reason. Or when they were denied something through no fault of their own(someone cut the ticket line, a parking ticket with no sign). Or when they felt culturally out of place (foreign vacation, trip to NYC, wrong neighborhood). Try putting yourself in the other persons shoes. Try some empathy.

Smaller Civilian Labor Force

There are lots of ways to calculate the unemployment rate. There are U-3 and U-6. The government likes U-3 because it is rarely in the double digits. I like U-6 because it measure the lost potential in the economy. But both of these measure have flaws. One of the flaws is that both measures use the civilian labor force in the calculation.

It leads to the question are the measures too low ?? It looks like the answer is yes because the civilian labor force is growing at a slower rate than the US total population.

If the civilian labor force had grown at the same rate an additional 5.4 million people would be in the labor force. The size of the labor force has dropped by 2.3% compared to the overall population.



The chart illustrates the point. The total population grew by 14.6% but the labor force grew by only 10.7% and employment grew by only 5.0%. So the real question is what are these extra 5.4 million people doing, if they are not working ??

Don't shop where you cannot work

The "Don't shop where you cannot work" campaign has been around since the 1930's, but it is still true today. When you shop, make sure you look around to see if the employee population represents what you expect.

While I mourn the lost of small and family businesses, honestly, many of those businesses did not employ Blacks or Hispanics. If they did it was for window dressing. If you believe jobs are the key to success and some happiness, then companies like Wal-Mart and McDonald's should be supported.

BLS: Labor Force Characteristics by Race and Ethnicity

Once again the BLS has released a fantastic assemblage of facts around minorities in the labor force. The document is called Labor Force Characteristics by Race and Ethnicity. The full document can be read here and excerpts can be read here.

The document covers how hard the recession has affected Blacks and Hispanics/Latinos in the US. It also discusses the steep rise in Black and Hispanic unemployment. Black unemployment jump by 36% from Nov 2008 to Nov 2009 from 11.5 to 15.6% and the Hispanic rate moved from 8.8 to 12.7% a 44% increase. The two year increases are an astounding 84% for Black unemployment and 119% for Hispanic unemployment.

The report also highlights some of the factors which prevent Minority employment: lower levels of education, work in high unemployment occupations, location in cities with lower job opportunities, and workplace discrimination.

Jobs Summit Review: Too short for any meaningful dialogue

In my opinion, the jobs summit was simply too short for any meaningful dialogue on job creation. So, one has to assume is was a well intention political show. I would even suspect it was a back pocket contingency plan for when unemployment hit 10.0%.

Also the administrations job plan, which was announced later (December 8th) had several previously discussed components: Small Business lending, subsidies for new hires, infrastructure spending, and subsidies for home weatherization.

I also saw some incredible self-interest coming forward from almost every corporate "Business" leader. Many seems to view the effort as chance to directly lobby the president and cabinet. The selfish greed was almost disgusting.

The Labor leaders were much less self interested but talked in terms of generaility and slogans with out and real specifics.

The economists and acedemics rarely talked and give well known facts.

The administration officials expected the interest group behavior from the CEO's and handled it well. I believe it was a tact bargin by the White House to use the CEO's as cover in exchange for a trip to the White House and a 5 minute sound bite.

Only $7 Billion from the tax payer

One interesting note from the December 8th, 2009 press release on job creation: The release states that only $7B of taxpayer money was used to bail out the banks and $114B was raised through capital from the private sector. So, the 114B had to come from some where, like loans NOT made to small business, extracted in higher credit card fees and interest, or private capital not invested in other business. The banks errors hurts us either way.

White House Proposals for Jobs Creation

On December 8th, 2009, the White House press office followed a speech the President give at the Brooking's Institution, by releasing a summary of his job creation proposal. You can read the release here.

1. Increase subsidies to small businesses for capital investment, expense taking and hiring. Also eliminating fees for Small Business Administration loans.
2. Additional spending on infrastructure.
3. Subsidies in energy efficiency and "clean" energy. Also know as "Cash for Caulkers"

He proposed using the $200 billion Temporary Asset Relief Program re-payment to fund the additional measures.

In the final section of the press release called "A FISCALLY RESPONSIBLE APPROACH TO JOB CREATION THROUGH STEWARDSHIP OF TARP AND OVERALL FISCAL DISCIPLINE" he provides some political cover against Republican attacks on deficit spending. He restates the need to use the TARP money for job creation. He also points out that healthcare reform will help the long-term budget deficit.

Jobs Summit Attendees: Press Release which includes the names of the attendees

Here is the link to the December 3rd, 2009 press release which lists the 130 attendees to the White House Summit on Jobs and Economic Growth. Here is a copy of the press release:

++++++++++++++++++++++++++++++++++++++++++++++++++++++++

President Obama, Vice President Biden and Secretary of Labor Solis will deliver remarks to open the Forum on Jobs and Economic Growth in the South Court Auditorium of the Eisenhower Executive Office Building today.

Following the opening session, senior administration officials will host discussions on job creation and expanding the economy. Each discussion will have print pools present; all six will be webcast on www.WhiteHouse.gov/live.

To close the forum, the President will reassemble participants in the South Court Auditorium to hold a discussion. Secretary of Commerce Gary Locke will also deliver remarks.

The approximately 130 attendees include small business owners, experts from green jobs sector, business leaders, academics, Mayors and representatives from nonprofits. A complete list of attendees, organized by breakout session participation, is below.

Creating Jobs Through the Rebuilding of America’s Infrastructure

Moderated by:

Transportation Secretary Ray LaHood
OMB Director Peter Orszag
Participants include:
Gerard Arpey, American Airlines
Mark Ayers, Building and Construction Trades Department, AFL-CIO
Chandra Brown, United Streetcar
Larry Cohen, Communications Workers of America
Frank Cownie, Mayor, Des Moines, IA
Peter Darbee, PG&E Corporation
Theresa Daytner, Daytner Construction Group
Dan Dimicco, Nucor Corporation
Angela Glover Blackwell, PolicyLink
Paula Hammond, Washington State Department of Transportation
Steve Heminger, Metropolitan Transportation Commission
Doug Holtz-Eakin, DHE Consulting
Reed Hundt, Coalition for the Green Bank
Robert Kuttner, American Prospect
Wick Moorman, Norfolk Southern
Rhonda Perry, Missouri Rural Crisis Center
Doug Pitcock, Williams Brothers Construction Company
Rob Puentes, Brookings Institution
Charles Whittington, Grammer Industries
Edward Wytkind, Transportation Trades Department, AFL-CIO
Mortimer Zuckerman, Boston Properties
Small Businesses and Entrepreneurs and the Engine of Job Growth

Moderated by:

Treasury Secretary Timothy Geithner
SBA Administrator Karen Mills
Participants include:

Diana Aviv, Independent Sector
David Barber, Barber Foods
Dorothy Bridges, City First Bank of DC, NA
Ben Burkett, Mississippi Association of Cooperatives
Ralph Everett, Joint Center for Political and Economic Studies
Zoar Fulwilder, Mavid Construction
Woody Hall, Diversapack
Ed Hill, International Brotherhood of Electrical Workers
William Hite, United Association of Plumbers and Pipefitters
David Ickert, Air Tractor, Inc.
Kara Kelley, Las Vegas Chamber of Commerce
Joni Marie O'Neill, Mission Viejo Florist, Inc.
Ed Pawlowski, Mayor of Allentown, PA
Rodney Rodrigue, Timewise Management Systems
Eric Schmidt, Google Inc.
Carl Schramm, Kauffman Foundation
Sheryl Schwartz, Blue Canopy Group, LLC
Angie Selden, Arise Virtual Solutions Inc.
Joseph Stiglitz, Columbia
Jesse Turner, Tri-State Bank, Memphis
Rose Wang, Binary Group
The Innovation Agenda and Green Jobs of the Future

Moderated by:

Energy Secretary Steven Chu
Carol Browner, Assistant to the President for Energy and Climate Change Policy
Participants include:

Ron Bloom, Senior Counselor to the President for Manufacturing Policy
Heather Zichal, Deputy Assistant to the President for Energy and Climate Change Policy
Frank Alix, Powerspan Corporation
Frank Blake, The Home Depot
Jan Blittersdorf, NRG Systems
Stephanie Burns, Dow Corning
Julian Castro, Mayor of San Antonio, TX
Wesley Clark, Growth Energy
Phaedra Ellis-Lamkins, Green for All
Tom Friedman, New York Times
Leo Gerard, United Steel Workers
Lynn Jurich, SunRun Solar
Lawrence Katz, Harvard
Scott Lang, Silver Spring Networks
David Lincoln, Element Partners
Andrew Liveris, Dow
Frank MacInnis, EMCOR
Terry O'Sullivan, Laborers International Union of North America
John Podesta, Center for American Progress
Jeff Sachs, Columbia
Ronald Saxton, Jeld-Wen
Tom Soto, Craton Equity Partners
Expanding Job Opportunities for America’s Workers Through Exports

Moderated by:

Lawrence Summers, Director, National Economic Council
Fred Hochberg, Chairman, U.S. Export-Import Bank
Participants include:

Bill Aossey, Midamar Corporation
Greg Bentley, Bentley Systems
Ursula Burns, Xerox Corporation
Susan Collins, University of Michigan
James Hoffa, International Brotherhood of Teamsters
Bob Iger, Walt Disney Company
Farooq Kathwari, Ethan Allen
Paul Krugman, Princeton University
Larry Lindsey, The Lindsey Group
James McNerney, Boeing
Raul Pedraza, Magno International
Jeffrey Schott, Peterson Institute
Frederick Smith, Fed-Ex
John Surma, United States Steel Corporation
Encouraging Business Investment, Competitiveness and Job Creation

Moderated by:

Commerce Secretary Gary Locke
Christy Romer, Chair, Council of Economic Advisers
Participants include:

Jared Bernstein, Chief Economist and Economic Policy Adviser to the Vice President
Julius Genchowski, Chairman, Federal Communications Commission
Alan Blinder, Princeton University
Byron Auguste, McKinsey & Company
David Bing, Mayor of Detroit, MI
David Brennan, AstraZeneca
Anna Burger, Change To Win
William Bynum, Enterprise Corporation of the Delta Hope Community Credit Union
Christianna Connell, future-ink
Roger DeRose, Kessler Foundation
John Eagleton, Northstar Aerospace
Glenn Hutchins, Silver Lake
David Jones, Chrysalis Ventures
Fred Lampropoulos, Merit Medical
Debra Lee, BET
Arpana Mathur, American Enterprise Institute
William McComb, Liz Claiborne
Larry Mishel, Economic Policy Institute <
Surya Mohapatra, Quest Diagnostics Inc.
James O'Brien Ashland, Inc.
Don Peebles, The Peebles Corporation
Antonio Perez, Eastman Kodak Company
David Sandahl, Princeton Job Creation Forum
Robert Shapiro, New Democratic Network
Peter Solmssen, Siemens USA
Richard Trumka, AFL-CIO
Raul Valdes-Perez, Vivisimo, Inc
Jim Whitehurst, Red Hat
John Wilhelm, Unite Here
Strengthening Workers and Main Street

Moderated by:

Secretary of Labor Hilda Solis
Melody Barnes, Director, Domestic Policy Council Director
Participants include:

Ed Montgomery, Director of Recovery for Auto Communities and Workers
Ceci Rouse, Council of Economic Advisors
Dean Baker, Center for Economic and Policy Research
Burrell Ellis, County Executive, DeKalb County, GA
Rob Carmona, STRIVE/East Harlem Employment Service
Rev. Luis Cortes, Esperanza USA
Noel Cuellar, Primera Plastics
Ted Daywalt, Vetjobs.com
Ray DiPasquale, Community College of Rhode Island
Bob Greenstein, Center on Budget and Policy Priorities
Joe Hansen, United Food and Commercial Workers
Sal Iannuzzi, Monster Worldwide
Randy Johnson, Workforce Development, Inc.
Donna Klein, Corporate Voices for Working Families
Jamie Merisotis, Lumina Foundation
Ralph Moore, St. Frances Academy
Penny Pritzker, Pritzker Realty
Barry Rand, AARP
Bruce Reed, Democratic Leadership Council & Progressive Policy Institute
Robert Reich, Berkeley
Ken Rogers, Automation Alley
Matthew Segal, 80 Million Strong for Young American Jobs
Randall Stephenson, AT&T
Andy Stern, Service Employees International Union
Ashley Swearengin, Mayor of Fresno, CA
Andy Van Kleunen, Workforce Alliance
Randi Weingarten, American Federation of Teachers