Cash | The Habitation of Justice

Who owes who on Wall Street?

Lincoln Adams | September 25, 2008 @ 5:56 pm

I’m basically a schnook when it comes to money, not really understanding what went down on Wall Street other than the sensible fact that if you loan massive amounts of money to people with poor credit, bad things tend to happen.

My boy Casey though does a great job of writing a primer on how the banks screwed us over:

I recently used this example explaining things to a friend of mine. Just to warn you, this is a very simplistic view of how the banking and monetary systems work, but it’s basically the way it goes. Let’s say you have $100,000, your life savings. You go put it in the bank to earn some interest. The bank says they’ll pay you 3%. The next day, Jim Bob walks into the bank, and requests a loan for $100,000, to buy a house. Jim Bob has only mediocre credit. But the housing market has been so great, the bank gets greedy and says, “Hey! He may not be able to pay, but then we’ll just sell the house for a 25% profit! Everybody wins!” The bank tells Jim Bob he’ll have to pay 6% interest on the loan. He agrees, and the bank gives him your $100,000, and he goes and buys the house. Here’s the current situation. Jim Bob pays 6% annually on the loan. The bank pays you 3% on your deposit. The bank gets the difference, 3%, as profit. That’s how they make their money.

Now, Jim Bob was stupid, and got a variable rate mortgage…so as interest rates go back up, his payments begin to go up too. Jim Bob can’t seem to get enough money to pay his bills, so he defaults on his loan. The bank repossesses his home. Poor Jim Bob. But wait… the bank now has lost the income it was getting from Jim Bob, but they still have to pay you 3% on your money. They try to sell the house, in order to get your money back, but the real estate prices have dropped, instead of rising, so they can’t get your full $100,000 back. They can only get $80,000. In the meantime, you’ve been watching the news, and decide that you don’t want to keep your money in the bank, because you’re scared it will go under . . . and you’ve got a little over the $100,000 FDIC limit in there now, so you better move quick. The bank only has $80,000 of your money left, so they have to take $20,000 of their own money (or borrow it from another bank) in order to pay you all they owe you. Imagine this happening nationwide, and you have what happened last Wednesday night. The economic system freezes up . . . people won’t lend money to the banks, because they’re concerned about them collapsing, and the banks don’t have enough cash to pay out to their depositors.

Go read the rest.

Tags: bank, banking, banks, cash, credit, FDIC, home, housing, housing market, interest, monetary systems, money, mortgage, people, primer, Wall Street
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How I Won By Losing: learning to be independent by depending on God alone

Lincoln Adams | September 5, 2007 @ 8:00 am

Tonight’s chat with a dear friend of mine reminded me of a lesson I learned a few years ago, when I went ape nuts clicking every blue link I could find at iWon.com in a bid to become independently wealthy and attract me some hot gold digging babes. I was on a mission to win something, ANYTHING from iWon’s site, so I could pay my bills, quit my job, and at long last tell my boss to go blow it out his own arse.

I also signed up for these gaming sites too in the hopes that I would become some kind of gaming master and win hundreds of dollars in cash prizes. Instead, I would win $1.50… then lose $2.00, win $4.00, then lose $5.00, and on and on.

For three weeks I was at it, playing games, click click clicking, playing some more games, then click click clicking, then play iWon’s slot machine, then click click clickity click click clicking, until my fingers started to sprain. By the end of the third week I was a few dollars in the hole and my fingers looked liked they belonged to the Elephant Man. I wasn’t getting anywhere. As usual, luck was never a lady with me, and in the end I finally gave up.

The next day I went to work, and as I was signing in, somebody handed me an envelope.

“What’s this?” I asked.

“That’s your raffle prize.”

“My…. what??”

“Every year we raffle off the profits from the soda machines, and everyone is automatically entered. You were one of the winners, so that’s your share. 25 bucks.”

I just stood there, blown away by having finally won something, and especially at the timing of it all. I had spent the last three weeks trying to win every prize imaginable at iWon, and failing miserably at that, and now came this, a $25 prize for a raffle I never even knew existed. I still have that envelope by the way, with the money still inside.

There’s an old joke where a man prays to God to win the lottery and the Lord tells him to go buy a lottery ticket first. In my case even that part had already been taken care of. It was a sobering lesson straight from heaven, and one I had sadly forgotten over the years. As much as I’d like to believe God to rain His blessings on my life without requiring any effort on my part except to receive it, I still strive in my own strength to create my own success, and no matter how many times I fail, that lesson never seems to fully sink in for me. It’s been especially true these past few weeks, as I try to cram as much knowledge as I can find into my poor little brain so I can utilize it all to make money off the Internet, whether through my blog or elsewhere. There’s so much information to sift through, so little time to digest it all, and not enough brainpower on my part to take what I know and transform myself into the self sufficient man that I’ve always longed to be.

And yet I seem to leave no room for God in any of this. I’m trying to do it all on my own strength, relying on the world’s wisdom and philosophies, when instead I should be casting these burdens on Him, and trusting Him to once again provide that envelope of blessings when I truly need it. That’s something no professional blogger or Internet mogul will ever tell you either. But it’s the secret to real success, real peace and freedom from worry, learning that it really is all under His control. If I succeed in this new mission I’ve made for myself, it will not be because of my talents or skills or luck, but only, and ONLY, because God is gracious in His blessings towards me.

By the way, I do intend to use the prize money I won someday… specifically for when I finally meet the girl of my dreams.