It’s easy to be negative about the U.S. economy these days. Find a glint of silver, and folks come running to point out all of the dark clouds looming about. This, of course, is what we got last week when the monthly jobs report was released from the U.S. Department of Labor (DOL). Folks pooh-poohed the number of jobs and whining that they’re not enough or that it’s less than a bunch of economists thought that it might be. But you know what? Stuff ’em.
Given how poorly states like California and Illinois have funded the pension funds for their own employees, one would think that this would stop dead in its tracks any plan to have the government assist in managing private sector funds too. The spate of recent activity, however, suggests otherwise.
The financial world is plodding along like a drunken sailor avoiding debt collectors by keeping no cash in his wallet. It’s not the kind of calm that’s going to last or end well. But the storm will have to wait until after the Olympics.What a game! We’ve never watched ice hockey closely before. But watching […]
“When they come for my gun, they will have to pry it out of my cold, dead hands,” is a common refrain I often hear from the Neo-Cons when there is a threat, credible or otherwise, that the U.S. government is going to take their firearms.And, when I hear this crazy talk, I agree with […]
Last year was quite the year for Bitcoin. We’ve seen exponential growth in Bitcoin’s exchange rate and extensive coverage in the media. Another phenomenon we have witnessed is the proliferation of alternative cryptocurrencies, five of which we’ve provided below.What all of these cryptocurrencies have in common is that they rely on a decentralized network to […]
The nonpartisan Congressional Budget Office is acting in a bipartisan way to cover up the biggest single threat to the bipartisan political alliance that is stripping America of its wealth: the United States Congress.There is no question that the following policy is bipartisan. Democrats and Republicans in Congress are completely agreed that the following information […]
Amidst all the revelations about how the American people, many of whom are absolutely convinced they live in a free society, have their telephone calls, emails, website visits, and who knows what else under surveillance by their own government, let’s not forget the massive infringements on financial privacy that have gone on for decades.Consider, for […]
Image: ShutterstockBitInstant CEO Charlie Shrem, along with alleged co-conspirator Robert Faiella, was arrested by federal authorities last week for allegedly laundering more than $1 million worth of Bitcoins. This is a tiny amount compared to the largest drug-and-terrorism money laundering case ever. Yet when British bank HSBC was found guilty in 2012 of laundering billions, […]
The exercise had an awesome name, inspired by the movies: “Quantum Dawn 2.”On July 18, scads of U.S. banks, stock exchanges and government agencies took part in a digital fire drill — a practice run in the event all of Wall Street came under massive cyberattack.This isn’t the first time banks have come under an […]
The faces of the Detroit bankruptcy are the thousands of pensioners whose promised benefits are suddenly part of the restructure negotiation. When Motown filed for Chapter 9 last July, the city had $11.5 billion in unsecured liabilities. The vast majority of this was pension and health care benefits owed to retired city employees.The images of […]
So you’ve maneuvered the Obamacare website, plugged in your top-secret information and found out how much you are forced to pay to avoid a fine.And for some of you, it turns out you qualify for a government subsidy — making the premium sound like a bargain. But signing on that line to accept the government’s […]
The Largest Company in History:“The United States Corporation of Government (USCOG)”I follow global social and commercial networks, looking for entrepreneurial opportunities.Innovation surges when industry and government models change. Buggy whips. Landline phones. Railroads. The Soviet Union. Apartheid South Africa. All marked social and commercial innovation, both bad and good.We are witnessing a new form of […]
We’d like to give the banks in Australia some credit. They’ve finally gone and done it. They have caught up with 1960s technology. They’ve figured out how to use PIN numbers.How to only use PIN numbers, that is. They’re considering scrapping signatures on credit cards to cut down on fraud. Apparently, having to verify your […]
We put in a good-citizen call to the SEC the other day.“There’s a massive scheme to manipulate stock prices,” we told the friendly agent.“I have to tell you that your call is being monitored so that we can better serve the public,” he replied.“Oh, don’t worry about that. The NSA is tapping our call anyway.”“Are […]
Bitcoins are largely considered digital currency (or “crypto currency”) so you’d expect it to be treated like currency on a retail web site. But the Internal Revenue Service might not think so.
Politicians — elected officials — are street smart rather than book smart.If you care about influencing government policy it helps to know how they think.Forbes contributor Nathan Lewis argues that:“Too much is done today on the oral tradition. That is, literally, what it is. In this post-Gutenberg age, we have some better alternatives.“Thus, we need […]
Bitcoin has been making headlines for months now. Extreme price fluctuations have sparked a vigorous debate: Is it a currency or a scam? Is Bitcoin viable in the long-term, or are we witnessing a bubble waiting to burst?The answers to these questions are simple: Yes, Bitcoin is a currency, but we cannot know if it […]
The Silk Road was an undercover website where you could buy or sell illegal goods — drugs mainly. I believe passports were changing hands for about $6,000, and I understand weapons were also sold, but that was ceased in response to the spate of shootings in the U.S. over the summer. The essence of the […]
The market has selected different things as money throughout history. Some of these items have served as money in isolated places for specific periods of time — for instance, cigarettes in prisoner-of-war camps. Cigarettes continue to be a currency in prisons if allowed, but if not, according to Wikipedia, “postage stamps have become a more […]
[Ed. Note: This article originally published on Jan. 24, 2013]Stocks up. Gold down. Bitcoin… waaay up.The S&P 500 busted through the 1,500 mark this morning. Stocks haven’t been this expensive since 2007… right before they got a whole lot cheaper… for a whole lot longer. Gold, meanwhile, dipped a tad. This, despite central bankers of […]
Now, this is sheer entertainment. The Chicago branch of the Federal Reserve has addressed the great monetary question of our day. A researcher has taken a detailed look at the prospects for market-based crypto-currency, with a special focus on Bitcoin. It concludes that Bitcoin is not a viable replacement for the dollar. The report includes […]
The standard version of how money came to be goes like this: First, there was barter. (A handful of nails for a pint of ale!) Then, along came various forms of money. An evolutionary derby eventually crowned gold and silver as the supreme money. And finally, credit (or debt) was born. This is the apex […]
2013 represents another turning point in the demise of the American Empire. If you view it in economic (rather than ethical or moral) terms, the high water mark of Empire was probably in the late 1990s.But the Internet bubble and bust marked an important turning point. It coincided with the birth of the euro, a […]
It was a wild ride last week in the world of the Deep Web, that section of the Internet that requires special tools to access. The feds took down the site called Silk Road and claim to have arrested its founder and administrator. The news streams were filled with lurid tales of derring-do in this […]
My community in the Deep South prides itself on friendship, community feeling, and an overall happy spirit. So it was a bit strange for all of this to be utterly smashed and obliterated in the course of a few calamitous weeks in which friend turned against friend, colleagues became antagonists and enemies, and families were […]
A new assessment of state pension obligations suggests the problem is even worse than it already appears.How much worse?EMPTY COOKIE JAR: Pension liabilities are worse than many states’ official figures indicate.Using a more conservative method of accounting for financial gains in the marketplace, there is a $4.1 trillion gap between assets and liabilities — known […]
I dreamed I saw Bernard von NotHaus, alive as you or me.Said I, “But Bernard, you’ve been jailed two years.”“I never was,” said he.Bernard has been the called the Rosa Parks of the alternative money movement. More than 10 years ago, he had this idea that he would make his own money — not the […]
Change is inevitable. Conditions are never frozen in time. As the clock and calendar move forward, people and organizations must adapt to different circumstances. Human thought and creativity is constantly exploring ways to make our lives better. The fruits of technology change our expectations and our demands.
The market is spectacular at adapting to people’s wants and desires. The government, and entities protected by government, not so much. Government attempts to stop time and progress.
Even in a business like banking, heavily protected and subsidized by government and regulation, competition and consumer tastes force changes to a business that, while hated by many, is patronized by the majority of Americans.
Bankers are not known for innovation. For example, In the wake of the 2008 financial crisis, ex-Fed Chair Paul Volcker famously quipped, “the most important financial innovation that I have seen the past 20 years is the automatic teller machine (ATM). That really helps people and prevents visits to the bank and is a real convenience.”
As ATMs evolved, open 24 hours a day, 365 days a year (the situation in Cyprus notwithstanding), these machines became the only bank many people ever need to visit. No employees required. Additionally, in October 1994 online banking was born in the U.S. and over time more and more customers began to do their banking using clicks instead of visiting sticks-and-bricks. Now customers can do their banking on their mobile phones.
Over the years banks have provided customers plenty of alternatives to showing up at a branch and interacting with live bankers. PNC Bank estimates the bank saves $3.88 per transaction if a living, breathing teller isn’t involved in a simple transaction. You help banks prosper when you deposit a check by snapping a picture of it with your mobile phone.
However, during banking’s go-go years bankers still raced to expand their physical branch networks. The number of bank branches doubled during the past thirty years. After the building boom, there were just shy of 100,000 bank branches in the U.S. by June 2009. Bank failures and consolidations had trimmed that number down to 93,000 as of last year.
However, transactions done online now account for 53 percent of all banking transactions. Only 14 percent are completed during in-branch visits. This shift in consumer preference now make a third of all bank branches unprofitable.
In a white paper entitled “The Bank Wears Prada” AlixPartners points out that as fewer customers visit bank branches, the real estate itself become less productive and “often cannot cover the operational cost and related credit structure.”
A bank’s average sales are only half that of a large retail chain on a square meter basis, according AlixPartners. “The return on the branch property assets is now often significantly lower than that which could be realized by the best available user, an argument that, taken to its logical extreme, suggests that the premises should be re-let or partially sublet.”
The market is saying that there are too many bank branches, and for that reason, AlixPartners expects the number to drop further to 80,000 over the coming decade.
Similar to banking, technology has had its way with the postal service. Phones, cell phones, faxes, emails, texts, pdfs, not to mention FedEx and UPS has driven the USPS first class mail volume down 28 percent over the past decade. This despite the postal service having a monopoly on the delivery of first class mail that for many deliveries is underpriced.
The U.S. Postal Service operates 31,272 retail locations and 417 processing centers while on the verge of losing, assuming U.S. Postal Service (USPS) CFO and EVP Joseph Corbett is right, $14 billion a year for each of the next five years.
One would assume that the first thing to go at the USPS is more than a few of their redundant or unprofitable locations. In fact 3,700 locations were targeted for closure under the Retail Access Optimization Initiative (RAOI). Thanks to the nationwide protest against post office closings, the RAOI never was implemented. Then a moratorium on closings went into effect from December 2011 to May 2012.
As hard as it is to believe, abcnews.com reports, “One in four post offices bring in, on average, a mere $52 in revenue per day and serves about four people. A full quarter of the 31,000 post offices operated by USPS operate at a loss” and 13,000 offices have less than one hour of work to be done on the average day.”
Economics and customer service do not hold sway in the short term future of the post office, just politics. So, rather than close locations, one of the plans to save money and keep the USPS going is to decrease service by cutting out Saturday delivery.
However, union members have aggressively organized and gather at rallies mindlessly chanting things like “six day is the only way” and protesting any job cutbacks. These protest speeches don’t talk about “customer service” but instead “jobs.” If the unions have their way Saturday delivery will live on just as the formerly targeted 3,700 branch sites remain open.
Protecting jobs is the name of the game. The postal monopoly creates inefficiencies and reinforces them with its focus on job preservation. Because of the government’s backstop and political pressure it operates under, the USPS has an incentive not to take advantage of faster, more efficient technologies to transport mail. Go to a rural post office and it is as if time has stopped: No technology allowed. But career postal workers still have jobs.
AlixPartners explains, “The bank of the future must be able to develop its offerings beyond credit and finance….banks can use digital innovation as a key to their transformation from mere money brokers to entertainment and shopping solution providers.”
The AFL-CIO brass will not be organizing rallies to save bank teller jobs or keep bank branches open. Bankers must innovate or die. The USPS should do the same.