Snap, Crackle, and Popular Culture

I got an email this morning from one of my banks (Bank Atlantic), asking me to befriend it on Facebook. While I don’t have Facebook, I can assure you that I am not friendly towards banks. This started to bother me… Why would Bank Atlantic want to be my friend? How does a bank have any friends at all? What would Bank Atlantic say if it knew that I did most of my banking at Bank of America?

All of these questions deserve no merit because what has happened is that institutions (for example banks) have begun attempting to recapture that nostalgic image of ye old neighborhood bank. This is the sort of image where the tellers know you by name, and they know you because they did banking with your dad- he is still a customer. This is manipulation.

Unfortunately times are not like that anymore, and under this phony veil of close-knit-intimate-banking is nothing more than a force that is really trying to take advantage of people who have been taken advantage of too much. Neighborhood banks have died out in part because they cannot compete with global banks that have dominated electronic banking. There is no such thing as a “banker” anymore, and behind the counters are automatons. Take a deposit, give money- transfer funds. Limited discretion. Your friendly banker has been replaced with some schmuck in a suit, who probably just made it beyond 9^th grade algebra. He knows how to read reports, therefore he is the man for the job- he is otherwise known as the “branch manager.”

On the phone are “representatives” who can read computer screens and scripts. Banking is no longer personal.

Policy, Policy, Policy. That is the dogma of the bank. “No ma’am, I cannot waive your overdraft fee- that is the policy of the bank.” “But ma’am, I’m not going to tell you again- you agreed to this when you signed up…” [Insert unsophisticated account holder next to institionalized bank's intimidation tactic here]

This is the sort of bewildering story I was told by a friend of mine who insists that she is always right. This time I have to give her credit because she was right (we’ll kinda).

“Banks are out to get you (the consumer)” she explained to me. “Take overdraft fees for example: If you have a certain amount of funds in your bank account and there are four charges that are about to ‘hit,’ the bank will take the one charge which will cause your account to overdraw and then apply the rest of the charges in order to assess multiple overdraft fees.”

For example:

If you have $100 and there are subsequent charges which are going to “hit”- $34.00, $59.00, and $100.01- the bank will first apply the charge for $100.01- which causes your account to go into the negative by .01 (overdraft fee number 1). Then the bank will apply the $34.00 and $59.00 charges (overdraft fee number 2, and 3). This is deceptive because the bank is now getting three overdraft fees and could have avoided two of them by applying the lesser amounts to the initial positive balance in the bank account (which would have left a nominal surplus), and then applying the largest charge to overdraft the account only once.

“Its not right!” she exclaimed. “I heard from a former banking executive that I could opt-out of the overdraft program.” “This would just cause my card to be declined in POS purchases if there are insufficient funds. “But, [REDACTED], some people might find it attractive not to be declined in a point of sale transaction and would rather pay the $35.00 fee later.” I said. Furthermore I added, “they might think that a $35.00 fee is worth not being publicly embarrassed.” “Yea, but most people don’t even know they have the option to opt-out” she explained.

So, I did my research and while Regulation E (the guidelines for electronic banking) was amended to allow consumers to opt out of bank overdraft provisions, they do not take effect until July and August of 2010.

See: http://blogs.consumerreports.org/money/2009/11/federal-reserve-debit-card-overdraft-rules-expensive-overdraft-fees-opt-in-permission.html

And See: http://www.federalreserve.gov/newsevents/press/bcreg/20091112a.htm

Despite all of this, the best way to avoid overdrafts is to keep track of your account. Certainly it is not the banks fault for the consumer’s irresponsible spending, but there is a sense of culpability when the bank is taking money (unnecessarily) from the pockets of people who cant afford the pants they are wearing.

I’m listening to Raid the Radio by General Elektriks. You should listen to them. You would like them even though I have no clue who you are or what you like.

As I listen to this song it makes me think about subtle revolutions (subtle revolutions?). I guess that would be a slow-evolving revolution, which further makes me think of Google.

Google is releasing it’s Chrome operating system this Friday. I would be happy for this but I’m concerned. My concerns are summed up in one point with three subparts….

Google is subversive socialism. Inherent in googology is the notion that everything is free. This is a problem because Google is one of the only company’s who can actually afford to make everything free, and as a result, Google poses a genuine threat to service providers who offer similar substitutes at a premium.

Google Socialist Point # 1 – Socialism takes money (literally).

This is interesting because it appears as though only a capitalistic culture, such as ours, has actually made it possible for this to happen. Thus, it costs a lot of money to have something that closely resembles socialism. And who said money couldn’t buy happiness?

Google derives revenues from advertising. Those monies are then used to acquire smaller companies, and then the services that those companies offered become free or extremely cheap. For example, Google’s acquisition of a babybell provider is now Google Voice. In Mount View California, Google offers free wifi to residents. Yet another service that Google offers is free scholarly research.

Although there is no crystallization of a threat to telco, ISP, and westlaw/lexisnexis providers, I can assure you that the threat is real (I’m about as much as an economist as the next guy) and because Google is able to improve those services (which people are used to paying for) for free, it is incentivizing people to switch.

Although I don’t think that Google can subsidize the world, I, on the other hand do think that the Google model will eventually become too adverse for its own good. Certainly competing with your own advertisers (those silly little companies which you derive revenue from), and then beating them at their own service, seems similar to a passenger gnawing at the wings of an airplane at 30,000 feet

Google Socialist Point # 2 – Socialism has no style, but is simple.

But, if Google is socialism, then socialism is bland and I mean bland like corduroy. Even Google’s icon is nothing more than a bleak pantone and this bleakness seems to bleed into every service that they offer. People like to see intense GUI’s (Graphical User Interfaces). When a free operating system (chrome), or email (gmail), or voice mail (google voice), etc… has no attractive user interface, people will probably be reluctant to take advantage of these services. Although the service and technology is there (and working), people like buttons that pop, crisp graphics, and fluid screens. But, in Google’s defense, it could be that these things are sacrificed in the name of two things- Simplicity and Functionality.

This leads me to my next point. People are dumb, and Google is simple. Or at least that is what one would think from using its services and that is why Google is a success. Certainly any design (or lack thereof) that Google uses (or doesn’t use) would tend to distract people from fully understanding how Google’s services work and operate. Though it is possible that people are greedy, and they want as much as they can get for free, maybe these beggars really are choosers. Fluid interfaces would make people believe that they are getting more for their (non)money.

Even Android, Google’s mobile OS is boring. And that sucks because people now have boring phones in a time when our expectations for the functionality and design of mobile phones is putting the most in the least.

Google Socialist Point # 3 – Inform and Connect (The People).

Another socialist coincidence is that Google seeks to connect people. I mean, really connect people. In fact, if they aren’t providing a large technological black hole to unlimited amounts of information, they are only connecting people. This too is strange because it seems like in order to have socialism, people need to have free access to information. Google not only does this, but it provides access to unlimited amounts of information from almost anywhere.

This causes people to become less self reliant, and more dependent upon Google. This is dangerous.

Well, we’re tired of hearing the same old song and while Google is like a new music, its boring. But, for now, it’s something that I can dance to.

The Brooklyn Bridge is not for sale (again), but Pabst Brewing Company is. With an asking price of $300,000,000.00 – Three Hundred Meeeeelllllion (evil laugh), you can own a part of beer history. In other words, everything your parents ever wanted from you is now available for a pledge that ranges from $5 to $250,000.00.

Two advertising companies are “crowd sourcing” the capital investment and this has been bewildering me for the past couple of hours. Here is why I am confused:

First, it appears to me that this is an ingenious scheme by two companies to use little or none of their own assets in order to acquire Pabst. Rather, they are relying on other people, “the community,” to give them money (pledges) so that they can acquire a beer giant and reap the profits. In exchange for your pledge, they will send you a beer and a certificate. This is the next thing that confuses me…

As per a certificate, I wonder what it says. Does it purport to give the pledgor an equitable or beneficial ownership interest in the future of the company in regards to the proportion of the pledge? If so, doesn’t this violate securities regulations? If not, is this considered a donation? If it is a donation is it deductable from my personal federal income tax statement?

Certainly if this was a guarantee, a debenture, or an issuance of stock, they would have to own the company first in order to issue these types of certificates. Secondly, if they are issuing certificates, they probably have to register according to SEC regulations. But, for argument’s sake, lets just say that you are purchasing the piece of mind knowing that “you are investing in beer” and simultaneously making someone else, a heck-uv-alot richer.

If this is the case, at least I should be able to deduct the amount of my pledge from my annual personal federal income tax, right? Well, not exactly. Usually, tax deductions in this form are for “charitable donations.” That is, donations made by or on behalf of the donor to an organization with a charitable purpose (e.g., scientific, cultural, educational, literary, artistic, religious value, etc.) It would be hard for me to believe that “save the beer” is a legitimate charitable purpose. HOWEVER, I think that a plausible argument could be made that the pledge was made on behalf of the historical value of Pabst, and as such it might fit into one of the categories enumerated above.

Ultimately, I think there are a panoply of issues which the website www.buyabeercompany.com does not address. Certainly the offer is ambiguous at best. But, for every scammer there is a sucker, hopefully not $300,000,000.00 worth though.