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Who Took The Service Out Of Customer Service

8/24/2013

1 Comment

 
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A picture is truly a 1000 words. I couldn't have said it better
MY LATEST RANT

I know most of us have at one time or another encountered an open mouth to where chin meets floor experience with lousy customer service personnel. Is it just me?  Am I a tad bit paranoid that these types of negative experiences have become all to common?

What Ever Happended To Becky From Missouri?
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I remember a time when you could call Sears customer service and speak to an articulate and anxious to please gentleman named Mike.
Mike was obviously educated by the way he enunciated his words. He was the boy next door who grew up to be a responsible and helpful person who
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cared enough about his job to insure that you the customer was happy toward the end of the call.

Mike was a problem solver too. Although

you may have had your doubts about Sears and their products when you initially called, he made sure that not only did you think that Sears, a staple in Americana retail was not only a great company but their customer service was even better.

I remember my father "Mr. Frugal" himself, say that even if it cost more at Sears he would gladly buy it there because with Sears you couldn't go wrong. He would go on to tell me that if there ever was a problem, they would resolve it without question because the customer was always right.

At one time, the customer was valued

Well over time I watched that notion of the customer is always right go right out the window. I also watched the anxiousness to please in an employee's attitude dissipate over time.

I watched people that were skilled in
conflict resolution fade into the sunset to be replaced by people who overwhelmingly don't value your patronage. I dare to say that many don't even value their job and don't mind conveying that notion to you. How many times have we heard the phrase, "they don't pay me enough to put up with this or take this sh*t"?

The drive to Atlantic City

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Last week was a really bad week for me. I mean really rough. Toward the end of the week all I wanted was to check into a nice hotel in Atlantic City. Relax on the beach, go for a swim, do a little shopping on the boardwalk while sampling from every eatery along the way, etc.

The moment I got a chance, I called Showboat and made my reservation. The woman I spoke to was very helpful. I told her the type of accommodations I wanted and she assured me that every need and whim would be met upon my arrival. I couldn't wait to get to that room; shower and then plunge myself into those 1000 plus thread count crisp sheets and over-sized fluffy pillows.

Over four hours later and finally on the road toward my weekend sanctuary, my anticipation for this overdue R&R was at an all-time high. A 75 mile drive to paradise was only around the corner. I anxiously paid close attention to the signs along the expressway. 30 miles to Atlantic City (AC)...20 miles to AC...10 miles to AC.

Yes, less than ten minutes until I can feel the triple head shower sprays massaging my tired and weary muscles; the fluffy pillows, crispy sheets....yessss. Then I received the call.
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A polite gentleman with a slight accent asked to speak to me. He informed me that the hotel was over booked and
although I confirmed the reservation, I did not have a room at the Showboat.

My near blissful demeanor was shattered.

I sank into my bucket seat and was near depression as he expressed his sincere apologizes about this occurrence and bid me good luck and good evening. I beseeched him for further assistance.

I asked him was there not anything he could do for a  valued customer such as myself? After all, I am less than 5 minutes from your hotel. He replied no, there was nothing he could do to resolve the situation but thanks for being  a loyal customer and we hope to assist you in the future. Huh?

I told him I needed assistance right now not later being that Atlantic City was booked solid due to various conventions, sports events and big name concerts. He assured me again in the most polite manner that there was nothing that could be done. I asked if he could let me speak to his supervisor, hoping that he/she could

possibly resolve this issue.

He told me there wasn't anyone that could resolve the issue since his department only handles hotel reservations. He again bid me farewell and apologized. I asked him again to get someone on the phone who could possibly help me since he was not able to do so. He again stated that he was the supervisor and there was nothing he could do for me.

Now my politeness began to wear off. I asked him what kind of hotel operation waits over  hours later when I'm less than 5 minutes away from the hotel to tell me I don't have a room?

I could see if they called me back within an hour even an hour and a half but over four hours...really?


That's when my fine feathered friend began to laugh. Why did he do that? 
I told him that I am glad he finds it so funny that I don't have a room. I wonder how funny it will be when I write my letter to Tom Arasi, President of Hospitality at Caesars
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Entertainment (pictured above) and include the time stamp of this call.

I asked him to tell me his name and he refused. I told him that someone will be able to figure it out from the time stamp, then I ended the call.


I went to the Showboat anyway
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When I arrived, I was greeted by Evan at the front desk. I explained my situation and he told me that reservations had booked the overflow of guests at the Trump Taj Mahal. He mentioned that the Taj would honor the Showboat rate.

I told Evan that the representative that I spoke to told me that there was nothing he could do for me. Evan re-affirmed that was the course of action and they would never leave a guess stranded. Evan pulled up my reservation and saw that was the course of action for everyone but ME. He was shocked to see that accommodations weren't made for me and said that he would have to get a manager involved to approve the reservation at the Taj.

A few short minutes later he returned to the front desk with my Taj reservation in hand and apologized for the situation and even suggested that I file a complaint because they can pull a call's audio.


Earlier in the day
Remember when I made my reservation? I neglected to tell you that I could only get one night at the Showboat. I wanted to stay for three days so I had to make another  reservation for the remaining two days.
I called up Choice reservations to check availability at my two favorite hotels near Atlantic City.
I spoke to a pleasant woman who identified herself as Sally. Now Sally had a very heavy accent. I could barely understand her.
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I asked her to repeat herself and speak slowly many times throughout the conversation and she was very accommodating and patient to do so.

I told Sally to check the availability of my favorite locations to see if either property could meet my needs. I even gave her the addresses of the properties. She pulled up the availability and told me the rate. I agreed and confirmed the non-refundable reservation with my credit card.

Sally with her broken English and heavy accent made me happy or so I thought. Let's fast-forward to checkout at the Taj. The Taj as usual was a wonderful experience. Michelle at the front desk was so pleasant

to deal with. She went above and beyond
the norm and gave me a very luxurious room with ocean view. Truly a pleasant end to a most stressful day.

Upon checkout, I thought that fiasco with the Showboat was behind me. I decided to go shopping at the outlets before I checked into my hotel which was located right outside Atlantic City.
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After shopping, I drove directly to my hotel where I was warmly greeted by the staff who have grown accustomed to my patronage over the years.

Fred happily looked up my reservation and for some reason did not see it on his system. He said maybe they booked you at another location. I stated they couldn't have because I specially asked for this location and guaranteed it with my Visa. I told him no matter just book my usual accommodations. He said he couldn't because he was booked solid until next week. Dammit!

I left hoping that perhaps Sally was confused and booked me into my second favorite hotel a little further down the road. So I drove over there.
I was warmly greeted by Dan who wore a yellow shirt accented with a bright green bow tie. This guy to the left isn't Dan but what are the odds of finding a picture
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of a guy in a yellow shirt with a green bow tie. He checked my confirmation number
and he too couldn't pull it up in his system.

Now I'm thinking what the heck was going
on here? Where could Sally have made this reservation? I went to the business center in the hotel and logged into my Choice account to see exactly where this reservation was.


Ahhhhhhhhhhhhhh!!!! Sally not only screwed up the reservation by not booking me into my preferred property. She booked me into a dump on the other side of ish kibble and charged my Visa on top of it all.

I couldn't believe it. Incompetence all over again

I had a meltdown. Fortunately Dan had just
two rooms left and I was able to secure the accommodations that I needed at a cheaper
rate just because of the inconvenience of it all.

The face and faces of
customer service have indeed changed
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Now I am not some xenophobe nor do I tolerate insensitive behavior to others. I do feel that 
at the expense of the consumer, companies have eliminated in-house customer relations with cheaper foreign call centers. I wonder if senior management really examines the data to see

if these measures are truly cost effective or
value-added.

Where there once were Americans who spoke English behind the registers at various stores

there are now less compensated even harder working foreigners with heavy accents.

I believe everyone should get a fare shake and

have equal opportunities to aspire. However,
I blame management's penny pinching on the
state of consumer relations and the direction
in which it is headed.

Quantity of call volumes don't equate to quality resolutions

If someone can't speak or understand the

language well enough or be understood by customers, then that person should not have a primary role interacting with customers. Likewise,
if an American born and bred right here can't speak articulately or possesses an unprofessional and unpleasant demeanor, they too should not be interacting with customers.

Whatever Sally's real name was doesn't matter. What should matter especially to Choice Hotels is that I will never use their reservation desk again. This unfortunately, was not the first time I was disappointed by them.

In my book, there is no third strike. You're just out. From this point forward, I will contact the hotel properties directly. I may pay a higher rate but I most likely will have a more qualitative result. If it weren't for the fact that I enjoyed the consistent level of service I received at my favorite hotels, I would definitely never patronize Choice Hotels again.

Sally wasn't an isolated incident. All week long I
was consistently disappointed and inconvenienced by incompetent or incapable customer service personnel. But nothing was worse than the experience I had with el Banco America.

Bank of America SUCKS!!!
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I will spare you the specifics of the situation. In summary, Bank of America allowed over ten grand to be siphoned out of my account by a third party which I am currently in arbitration against. In addition to that, the bank assessed tremendous
fees against my accounts.

Trying to get fees and such refunded back into my account was like pulling teeth with greased fingers.

I finally got the situation resolved after five months of battle.

In the interim, I was shuffled around their

customer service queues to only end of with
a heavily accented person who had no
comprehension of my issues or the
language I spoke.

Their only purpose was to basically log the
call and update the call record to boost queue
performance...not to help at all. That really disappointed me about Bank of America.

I never said that!
What really drives me nuts is when someone
calls me a liar to my face by telling me I did or

said something I didn't do or say.

This tends to happen to me quite  often. Many of
my friends have witnessed this and actually expect
it to happen at some point when they are with me. Maybe I begin to speak a foreign language or I become incoherent when asked questions by

service personnel. 

Tonight a friend and I walked into a fast food restaurant and placed an order. My friend tells

the young woman behind the register what she wanted and I added one simple item that I wanted. The woman repeated the order and she emphasized what I asked for. I said yes...a large blah blah. She rang up the total and after a short wait we were given our order.
Fortunately, we ate inside of the restaurant because when I opened my container it was not what I asked for. How could she have botched the order?
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She repeated it to us. My face was sullen and my friend began to tell me to take it easy because she knows this happens to me just about EVERY SINGLE TIME!!!

I go to the counter and I asked the young lady in

the sweetest voice I could muster to please fix the order. She then tells me that the item I received
was the item I asked for. I told her no...it wasn't.
I even allowed her to save face by saying that she must not have heard me (even though she repeated it back to me). She then tells me that she did hear me and she repeated it to me and I was given what I asked for.

I just kept quiet because it wasn't worth it. She

then tells me what I want will be an extra dollar.
I gave her a ten dollar bill and she gets this attitude like now I gotta go and make change. She gives me my change and takes the item to the rear of the store where the manager is and tells him that I wanted to exchange the item. He nods his head in approval.

She then prepares the item and instead of just

giving it to me and keeping her big trap shut she
had to have the last word AGAIN! She said that I never asked for this item because if I had, I would have had it in the first place.

This young fool may not know when to keep her mouth shut but I do. If I had said what I wanted to say, she would have probably broken down into tears, quit and never worked another day in the service industry again.

That fast food chain that employs assholes won't have to worry about me patronizing them again either. I don't think I should beg people to take my money or be subjected to intolerable conditions

in order to spend it.

Segregation
I never understood certain attitudes toward segregation. I can understand the protests against obvious oppression. The notion of separate but equal was total bullsh*t.

What I don't understand are protests against consumerism. I mean if you don't value me as a human being nor do you want my patronage, I'm

not about to march in front of your business and
try to make you let me join your club or buy your goods and make you rich.

The hell with that. I rather spend my money within my own community where I'm appreciated and help it to flourish.
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If you want to cater to a specific clientele that should be your prerogative.

The obvious fix
As we all know, sometimes companies and government agencies put certain types of people in customer relationship roles that definitely should not be there. Their purpose is to frustrate the person seeking information or resolution to a problem to a point where the person begins to
think their quest is futile.

Unfortunately, we as Americans tend to associate certain types of conflicts with racial stereotypes. Management shares this same negative ideology and places certain personality types in these customer relationship roles. 
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When we encounter these people that tend to turn a simple situation into the preclude for world war III, we are quick to blame the person who we interacted with. This is all strategic because the focus was taken off of your initial
problem and now is centered on a person who is insignificant in the entire spectrum of things.

You instinctively want to get payback so you dive head first into revenge mode to get that antagonist sanctioned or even worse fired. You forgot the fact that the core reason for your complaint was the crappy service you received or lousy product you purchased.

Management understands this and they love it.

This is how they boost their performance numbers. Even if your rant results in some poor schmuck losing their job, there are plenty more applicants just like her/him to fill the void; and at the end of
the day you further delayed resolution of your
issue. To bottom line it...these results can be
spread across quarterly reports.

Not every business values the customer like Trader Joe's


At Trader Joe's, every single person is smiling
while busting their ass. Have you ever stocked grocery shelves? I haven't but you see all that
heavy lifting and hustle and bustle that goes on.
Looks like very hard work to me.

They have to be the friendliest and most helpful employees on the planet. It doesn't matter which location or state, the up-beat environment and employee attitude are consistent.

That certainly isn't the environment at Target.
I witnessed this employee stocking shelves fail to value the customer. Although when asked, she would tell them where to find the product(s) but
she never turned her head to give them eye contact when she spoke; nor did she stop what she was doing to show the customer where aisle 7G was.

When an elderly gentlemen asked for her to show him where an item was, she refused and directed him to the pharmacist to show him. The elderly guy asked her for her name so he "could tell someone how helpful she had been". She abruptly replied with her name. That was the only time I saw her turn her head and give eye contact.

The pharmacist who is always busy as heck comes from behind the counter and gets the item which was less than two feet from the employee that was stocking the shelves. The pharmacist was not happy. You should have seen his face. I'm sure he said something to her manager as he should have.

The bottom-line is...
Businesses really need to get a handle on their customer relations agenda and listen to how their customers view value and make changes to their relationship management strategies.

WalMart listened. That's why they're the biggest corporation on the planet. Forget the fact they they don't pay their employees minimum wages in some areas or they sanction dolphin killing. Management was smart enough to listen to consumers and understand that price points were the primary concern for their customers.


Every business needs an edge in a competitive marketplace why not start with customer service.
Michael Dell understood that. Dell Computers makes crappy computers but their customer
service is full of Mikes.


1 Comment

Pulling Back The Curtain On Phony Government Statistics

7/12/2013

0 Comments

 
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A picture is truly a 1000 words I couldn't have said it better

Even the richest among
us are spending less and converting a large percentage of their holdings to cash, diamonds, art and gold.
MY LATEST RANT

The government along with the aid of the media has been blowing smoke up our kazu for the longest about how well the economy is doing. You turn on the tube and hear that consumer spending is up and the housing market is surging and unemployment is down, yeah...right.

Our economy is in the midst of a recession. Every investor with common sense can read the charts and see that. Consumer spending is down except when it comes to ultra-luxury retailers and Walmart. Chick-Fil-A has a promotion to give people free food if they don a cow costume. Now that's desperate for both Chick-Fil-A and their customers.

The recent gains in housing will be short lived and we should see that bubble start to deflate around mid 2nd quarter 2014. The article below suggests that the US debt is around $6.6 trillion. Based on the Fed's printing press strategy and the growing trend to destroy the Petro Dollar, I'd say the US debt is really around $16 trillion plus and growing.  Why the fools in Washington keep this facade up is beyond me.

Our guest contributor today needs no introduction, but I'll give him one anyway. John Williams, founder of Shadow Government Statistics (often referred to as "ShadowStats"), has been debunking federal government statistics for years. John adjusts government economic data to be more honest and realistic, and publishes the results on his website. Among other statistics, John has developed his own inflation, unemployment, and GDP measurements that aim to more accurately describe reality than the government's own numbers.

In some cases, the government has made his job easy—John simply uses the government's own calculations from many years ago, before they were massaged, revised, and "improved" to the point that they're hardly recognizable. For others, he strips out distortions and adjusts the statistics to more truthfully describe the real world. For instance, I'd bet that your grocery bill would agree that ShadowStats' inflation rate of 9% is much closer to reality than the government's own calculation of 1.4%.

To whet your appetite, I grabbed two more of the more stunning stats from John's piece below:

  • The government reports its 2012 deficit as $1.1 trillion. If you calculate the deficit using generally accepted accounting principles, as publicly traded companies in the US are required to, the deficit would be $6.6 trillion.
  • So far in 2013, the Federal Reserve purchased 90.5% of the US government's net issuance of debt.
The below article is equal parts eye opening and sobering.

Market Shocks Ahead Should be Positive for Gold, Negative for the US Dollar
By John Williams, Founder, ShadowStats.com

Nothing is normal: not the economy, not the financial system, not the financial markets and not the political system. The financial system still remains in the throes and aftershocks of the 2008 panic. A number of underlying problems of that time, tied to the risks of a near-systemic collapse and the related, extreme economic downturn, were pushed into the future—not resolved—by the extraordinary liquidity and systemic-intervention actions taken by the Federal Reserve and federal government. Further panic is possible, and severe US dollar debasement and inflation remain inevitable.

Nonetheless, several major misperceptions appear to have developed in the last month or two concerning an end to the Federal Reserve's quantitative easing, the level of crisis posed by US fiscal imbalances, and an unfolding recovery in the US economy.

Contrary to currently hyped expectations in the popular financial media, chances are negligible for any serious, near-term reduction in the Federal Reserve's purchases of US Treasury securities. The Fed has locked itself into ongoing quantitative easing, with fair prospects of expanded, not reduced accommodation in the year ahead. Separately, the long-term solvency issues of the United States should return to the center of attention for the global financial markets by early September 2013. At present, prospects of the US government meaningfully addressing its extreme fiscal imbalances are nonexistent.

Exacerbating financial-system solvency concerns for the Fed and intensifying US fiscal instabilities, the US economy never recovered from its 2008 plunge, and now it is slowing anew. Increasing recognition of these factors, complicated by the potential of a domestic political scandal taking on Watergate-style status, promise difficult times ahead for the US dollar, with resulting domestic inflation problems and significant upside pressure on the prices of gold and silver.

Federal Reserve's Primary Function Is to Preserve Banking-System Solvency
Despite a Congressional mandate that the Federal Reserve pursue policies to foster sustainable US economic growth in an environment of contained inflation, those issues are secondary to the Federal Reserve's primary mission, which is to preserve the stability of the banking system. While Fed Chairman Ben Bernanke has acknowledged that there is little the Fed can do at present to boost economic activity, the weak economy remains the foil for banking-system difficulties, serving as justification for more easing by the Fed.

Accordingly, since the breaking of 2008 crisis, the Fed's accommodation, liquidity actions, and direct systemic interventions have been aimed at maintaining the stability and liquidity of the banking and financial-market systems. As bank bailouts became politically unpopular, the Fed increasingly used the weakness in the economy as political cover for its systemic-liquidity actions.

In response to critics of excessive accommodation, the US central bank recently put forth several rounds of jawboning on exiting quantitative easing, in an effort to quell inflation fears. Those efforts have been a factor in recent gold selling.

Comments from the June 19 Federal Open Market Committee meeting and Mr. Bernanke's subsequent press conference were clear but largely ignored by the markets. The shutdown of quantitative easing—specifically the bond buying of QE3—would not happen until such time as the economy had recovered in line with the relatively rosy economic projections of the Fed. As the stock market began to sell off in response to the Fed chairman's initial press-conference comments, he sputtered something along the lines of, "No, you don't understand me. If the economy is weaker, we'll have to increase the easing." The economy is going to be weaker; banking problems will persist, and the Fed will continue to ease.

Nonetheless, the consensus perception appears to be that QE3 will be gone by the middle of 2014, despite the stated economic preconditions. As will be discussed, though, intensifying economic deterioration should become obvious to the markets in the next several months, and that should help to shift perceptions. The harsh reality remains that the Fed is locked into its extraordinary easing by ongoing solvency issues in the banking system (only hinted at in Bernanke's post-FOMC press conference), and by the political cover provided by a weakening economy.

In the latest version of quantitative easing (QE3), the Fed has been buying US Treasury securities at a pace that is suggestive of fears that the US government otherwise might have some trouble in selling its debt. Through July 3, 2013 and since the expansion of QE3 at the beginning of 2013, the Fed's net purchases of Treasury securities has absorbed 90.5% of the coincident net issuance of gross federal debt. That circumstance is exacerbated somewhat by gross federal debt currently being contained at its official debt ceiling.

Still, in the pre-crisis environment of 2008, the St. Louis Fed's measure of the monetary base (bank reserves plus cash in circulation) was holding around $850 billion, with roughly $40 billion in bank reserves. As a result of intervening Fed actions, today's monetary base is around $3.2 trillion, with more than $2.0 trillion in bank reserves (primarily excess reserves). Under normal conditions, the money supply would expand based on the increase in bank reserves, but banks have not been lending normally into the regular flow of commerce, due largely to their impaired balance sheets.

While there has been no significant flow-through to the broad money supply from the expanded monetary base, there still appears to have been impact. As shown in the accompanying graph, there is some correlation between annual growth in the St. Louis Fed's monetary base estimate and annual growth in M3, as measured by the ShadowStats-Ongoing M3 Estimate. The correlations between the growth rates are 58.1% for M3, 39.9% for M2, and 36.7% for M1, all on a coincident basis versus growth in the monetary base. The June 2013 annual growth estimates are based on four weeks of data.

The ShadowStats contention, again, remains that the Fed's easing activity has been aimed primarily at supporting banking-system solvency and liquidity, not at propping the economy. When the Fed boosts its easing but money growth slows, as seen at present, there is a suggestion of mounting financial stress within the banking system.

Further, underlying US economic reality is weak enough to challenge domestic banking stress tests. In this environment, the Fed most likely will have to continue to provide banking-system liquidity, while again, still taking political cover for its accommodation activity from the weakening economy.
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Renewed Fiscal Crisis by Early September
At present, the US Treasury is playing daily accounting games in order keep its borrowings—subject to the debt ceiling—from exceding the ceiling. The July 3, 2013 Daily Treasury Statement showed those borrowings to be just $25 million shy of the roughly $16,999.421 billion ceiling. The US Treasury estimates that the ability to play games will end, and the debt limit will have to be raised, sometime early in September 2013.

The long-postponed and unresolved budget-deficit conflicts within the Congress and with the White House are likely to surface anew at that time. What is being played out here is still part of the fiscal-crisis confrontation of July and August 2011, which almost collapsed the US dollar and brought about a downgrade in the sovereign credit rating of the United States. The issues never were resolved. They were put off until after the 2012 election, and other than for minimal sequestration, they remain in play, going into a post-Labor Day 2013 showdown.

The global markets, which broke into brief but extreme turmoil with the unresolved crisis in 2011, await a resolution. The markets have been patient with the US dollar through the ensuing sequestration, and continued postponements of serious negotiations that have accompanied successive displays of the political inability of the US government to address its long-range solvency issues. Further efforts at delay and/or obfuscation not only should invite an intensifying crisis of global confidence in the US dollar, but also will invite a further downgrade to the sovereign credit rating of the United States.

The crux of the dollar-debasement and ultimate, severe-inflation/hyperinflation issues indeed is this political inability of the United States to cover its long-range obligations, other than by printing the money it needs. Based on the US Treasury's financial accounting of the federal government using generally accepted accounting principles (GAAP), the GAAP-based federal budget deficit was $6.6 trillion in fiscal-year 2012 (year ended September 30). Well beyond the simple cash-based deficit of $1.1 trillion in fiscal 2012, the GAAP-based annual deficits have been in the range of $4 to $5 trillion for the six years leading up to 2012. The largest difference here is that the GAAP numbers include annual deterioration in the net present value of unfunded liabilities for programs such as Social Security and Medicare.

Those GAAP levels are not sustainable or containable. Beyond the likelihood that the economy is at the tipping point on taxes, where higher taxes actually would increase the deficit due to resulting slower economic growth, the government cannot raise taxes enough to cover the actual deficit in any given year. The annual shortfalls also are so large that every penny of government spending (including defense) could be cut to zero except for the social programs, and the fiscal circumstance still would be in deficit.

The options open to those running the government are limited in terms of new taxes and have to include significant spending cuts and restructurings of Social Security, Medicare, etc., so that those programs are solvent over the long haul. Such actions are a political impossibility at the moment. Given continued political contentiousness and the use of overly optimistic economic assumptions to help ten-year budget projections along, little but gimmicked numbers and further smoke and mirrors are likely to come out of pending negotiations or confrontations.

Economic Plunge and Recovery versus Plunge and Stagnation
The official version of recent economy activity is that a deep recession began in December 2007, hit bottom in June 2009, and that business activity has been in recovery since. That pattern is reflected in the accompany graph of headline, real (inflation-adjusted) gross domestic product (GDP). The economy regained its pre-recession high in fourth-quarter 2011 and has been expanding ever since. Unfortunately, no other major economic series has shown the full and expanded recovery suggested by GDP reporting. Those "errant" series include payroll employment, industrial production, consumer confidence, and housing starts, among others.
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Closer to common experience, there never was a recovery following the economic downturn that began in 2006 and collapsed into 2008 and 2009. What followed was a protracted period of business stagnation that began to turn down anew in second- and third-quarter 2012. The "recovery" seen in headline GDP reporting was a statistical illusion generated by the use of understated inflation in calculating the inflation-adjusted series.

During the last three decades, a number of methodological changes were made to inflation-estimation techniques that have had the effect of artificially reducing annual inflation rates. Of particular relevance to GDP estimation has been the introduction of hedonic quality adjustments, which adjust inflation rates for the effects of nebulous quality changes. These changes—ranging from new features with computers and washing machines to the use of colored pictures in college textbooks—cannot be measured directly, only estimated by econometric models, with the usual effect of reducing related inflation.

The lower the inflation rate that is used in adjusting a series, such as GDP, for inflation impact, the stronger will be the resulting inflation-adjusted growth. When the US first used this process in its GDP reporting, countries such as Japan and Germany did not follow. Hence, stronger relative US versus Japanese GDP growth at the time reflected the difference of use in inflation gimmicks, more so than actual differences in economic activity. The hedonic changes used in US GDP estimates never have been applied consistently and do not reflect common experience.

The following graph of corrected real GDP is adjusted for the removal of roughly two percentage points of aggregate, hedonically understated annual inflation. It shows a pattern of economic plunge and stagnation, as opposed to the official pattern of plunge and recovery.
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Not only do a number of large, consumer-oriented companies find that the "corrected" pattern of activity more closely resembles their business activity, but this same pattern also is reflected in underlying fundamentals that drive broad activity, such as household income.

The primary issues facing the economy are structural liquidity problems for the consumer, who generates more than 70% of GDP activity. Without real income growth, the consumer cannot sustain growth in real consumption, except for the possible use of short-lived credit expansion. Yet, credit availability has been limited. Without credit expansion (all growth in post-debt-crisis consumer credit outstanding remains in federally owned student loans), the consumer is unable to borrow in order to cover the shortfall in living standards.

The next graph shows median household income through May 2013, deflated by the CPI-U (data courtesy of Sentier Research). Monthly median household income plunged as the economy purportedly began its strong recovery in June 2009. Further, in the last two years, income has been bottom-bouncing near its cycle low, consistent with the "corrected" GDP series. The numbers here are based on monthly surveying by the US Census Bureau.

So long as consumer liquidity remains constrained, the economy has not and cannot recover. Accordingly, any near-term hype from an occasional "good" economic statistic most likely is no more than hype. Economic reality will continue to surprise on the downside, and that is a negative for the US dollar, as well as for budget-deficit and Treasury-funding projections. The US economic weakness is long-term and structural, and increasing global recognition of that in the months ahead will contribute to eventual pummeling of the US dollar in the global markets.
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Other Factors Impacting the US Dollar, Inflation, and Precious Metals
Highlighted here have been several issues where recent shifts in market sentiment have neutralized or reversed the impact or otherwise had been significant, negative elements for the outlook of the US dollar, and supportive elements of the outlook for domestic inflation and the prices of gold and silver. Market sentiments should shift again, both as the economy shows an intensifying downturn and as the clock runs out on fiscal-crisis delaying tactics.

A new factor—not yet widely anticipated in the markets—is that still-developing political scandals tied to the Obama administration could threaten global perceptions of political stability in the United States, placing significant downside pressure on the value of the US currency. The popular press generally has been highly sympathetic to the political needs of the administration, so increasingly negative press in these areas suggests that recognition of the "scandals" has gained some momentum.

In the event that a Watergate-type circumstance evolves from the current hubbub of touted misdeeds, it could become a seriously negative factor for the US dollar. After Nixon floated the US dollar in March 1973, the Watergate scandal began to break open with Congressional hearings. Despite other turmoil of the time, including an Arab-Israeli war and an Arab oil embargo, the day-to-day developments in the Watergate scandal dominated day-to-day trading in the US currency.

When the US dollar again comes under heavy selling pressure, oil prices will spike anew, separate from the effects of political crises in the Middle East. The inflation, so driven, should reflect dollar weakness from Federal Reserve policies that Mr. Bernanke will find he cannot escape, and from dollar weakness reflecting the inability of the US government to address its long-term sovereign-solvency issues. Ongoing economic weakness will exacerbate the dollar-negative circumstances, intensifying the problems with Fed easing and US fiscal deterioration. The inflation will be driven by US dollar weakness, not by strong domestic demand for goods and services.

As fundamental dollar selling kicks in, full-fledged dollar dumping along with heavy sales of dollar-denominated paper assets are likely to unfold. Preceding, or coincident with that, the global reserve status of the US dollar should be challenged. As the rest of the world moves out of the dollar, domestic confidence in the US currency will falter as well, eventually fueling severe domestic inflation, and setting the early base of a likely hyperinflation. Such an environment is one for which physical gold and silver would serve as primary hedges against the ultimate debasement of, and loss of purchasing power in the US dollar.

Economist Walter J. "John" Williams publishes www.shadowstats.com. ShadowStats specializes in assessing the reliability of government economic data and in looking at alternative economic measures from the standpoint of common experience, net of heavily politicized methodological changes of recent decades (inflation, unemployment and GDP). Other analyses include estimates of ongoing money supply M3, which the Fed ceased publication in 2006, or less-commonly followed series such as the federal government's GAAP-based financial statements. Articles related to the accompanying comments on the understatement of official inflation and federal-deficit reality, and an article outlining risks of a US hyperinflation, are available to the public in the upper right-hand column of the ShadowStats home page.

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Trading Platform Brokers...

5/29/2013

7 Comments

 
Picture
A picture is truly a 1000 words I couldn't have said it better
MY LATEST RANT


I recently went on to Linkedin to see if there were any topics of interest I should participate in.  One of my groups that I joined discusses trade and private placement platforms, bank guarantees, high yield investments, etc.  I am always looking for new potential opportunities for investment particularly when it comes to a high yield investment like a trading platform.  It certainly makes my job easier when it comes to producing stellar results. Unfortunately, stellar results from a trading platform are very difficult to come by.

With all the negative press that these so called "private placement" groups attract, I'm surprised that a lot of people who are not wealthy or even sophisticated investors are even discussing the subject.  Everyone seems to know a guy or have a friend that participated in one of these fly-by-night investment pools and made a ton of money.  Seldom, do people have any specific or meaningful information about the particulars or some proof of performance. 

Occasionally, there is mention of a point guy. This guy is usually not an investment professional and is certainly not a wealthy man but somehow this private placement group has him pegged as their rep/unlicensed broker soliciting on their behalf. If you were to ask this point guy any questions, he could not give you any answers other than to tell you to fill out a customer information sheet (CIS) and he will submit it to the program principle(s) and at their discretion may contact you and provide details about the investment program. 

The CIS packet that you will fill out contains information about you and possibly your family members, business profile, passport #, Drivers license #, etc.  All the juicy stuff any identiy theif would appreciate you providing. You then submit this packet to the mysterious dark robed point guy who you know nothing about. He in turn will submit the packet to his overlord masters who may get in touch with you if they decide to select you from the millions of applicants begging to invest in such an elite and very selective program. Uh, yeah...bringing me to the subject at hand - Daryl.

I gave Daryl the link to this page so I hope you are reading this my friend.  Daryl posted his ad on Linkedin.
_____________________________________________________________________________________________________________________

$250K Min PPP $250K Min PPP
CIS/KYC; Tearsheet (Most Banks are Aceepted); Passport copy; PPA
I do intake and will send to my associate who is a Platform Principal in a Big Trade.
He will place file wherever client will earn the most money in the shortest time.
Compliance takes 48-72 Hours and Principal Client will be contacted directly by Platform.
Admin Hold. Funds DO NOT Move

_____________________________________________________________________________________________________________________

Despite the spelling error(s), you click on the post and you can contact him and he will send out a CIS package.  So I requested that Daryl provide more specifics about the programs he was a representing/brokering and asked for proof of performance.  The chronological e-mails are below.

Daryl Crabtree <entrepreneurdaryl@gmail.com>:

Hello,
These private placement platforms are just what the name says
"private". They do not solicit or "proof up". I am an independent consultant. I
only do intake. I need CIS/KYC (attached); Tearsheet from bank; Passport
copy and PPA (attached) to submit to my associate who is a 100M Platform
Principal who will place file in whatever trade will earn client the
most money in the shortest time. If you are monetizing a Financial
Instrument such as a BG, include docs. Monetization can take 3-5 days after
Compliance and is 75%-80%. Compliance takes 48-72 Hours. Then Principal
Client will be contacted by the Platform to discuss particulars.I can tell you that
historical returns for the "Smaller" trades can be 60% monthly and for
Larger platforms historically can return 100% weekly. That is a
estimation and the Platform and the Principal Client will discuss profits and
details after Compliance. Thank you.

<dmahoney> wrote:

Daryl,
Thank you for the quick response. Yes, I realize what they are. I have
invested in them and currently do invest in them. I am not filling out
a compliance package at this point. You as a broker should have trade
desk proof about what you're pushing. There are a lot of snakes and I tend
to encounter many of them. I run a small hedge fund that invests 10% of our
funds under management in platforms but I like very distinct programs
and I want to see as much proof of performance as I can. I cannot fill out
the CIS without this.

This is private info in the hands of strangers. No telling what could
happen. Surely you can understand that. I am always looking for good
solid programs that have complete transparency. There should not be any
hesitation in the program manager to provide info. I will be more than
happy to sign a confidentiality and non-disclosure agreement if
necessary.

If you on the other hand know individuals who want to reduce their
capital exposure or can't afford the minimum investment, I would be
willing to pool funds together. Let's make something happen here.

Enjoy the holiday.

Daryl Crabtree <entrepreneurdaryl@gmail.com>:

I am not a broker and am not pushing anything. The platform will not
provide proof at this point. There is no risk to the funds as they do
not move. The client must make the first move otherwise they would be
soliciting. This is done by submission of complete package. Unless a
submission is made first the platform cannot contact the client.

The word from the platform principal is Get the packages together.

<dmahoney> wrote:

Darly,
You are a broker if you do the soliciting on their behalf. Dude, cut
your losses now. Don't mess with any organization that isn't
transparent. They aren't real and if they are they would gladly
provide info for you. There are a lot of claims of non-depletion
accounts, etc. but I have found only ONE where that was the case.
That's why I always use an insurance wrap. I know how these work and
have been in arbitrage for years. I actually cover this specific
subject on my blog. Check it out...

http://www.millionairemakeradvisory.com/my-ppp-experiences.html

Do not fall for this crap or solicit something you know very little
about. You can be named in a lawsuit if something went wrong. There
are a lot of guys out there that weren't licensed investment
professionals that are hanging upside down from the rafters just look
at Joe Tufo's case. He pushed an unscrupulous organization. The
investors got ripped off and who did the investors have... Joe.  He
didn't do anything other than exactly what you are doing and the SEC
broke this guy in half.  He was a millionaire at one time and lost
EVERYTHING in his late 50's.


Daryl Crabtree <entrepreneurdaryl@gmail.com>:

My name is Daryl not Darly. I am not meaning to solicit you. I am not a
broker. I have lost nothing.

<dmahoney> wrote:

Sorry about the typing error. You have a message on Linkedin. If that
isn't a form of soliciting then why did I contact you?  Good luck with that
and you may want to shop for an attorney just incase one of your
non-solicitations results in an investor getting ripped. Whose head do you
think they will have on the chopping block?

Daryl Crabtree <entrepreneurdaryl@gmail.com>:
I do not know why you contacted me.
_____________________________________________________________________________________________________________________
OK, clearly Daryl is in over his head when it comes to this particular subject. I'm sure he is a nice guy trying to make a buck brokering these types of programs. There are a ton of people out there trying to broker anything just to make a few bucks. They don't know if it is a scam or not but as long as they can get a possible commission out of it, they're happy. To hell with their client if they get ripped-off.  These "brokers" don't seem to share a sense of responsibility for their clients. I just think that is bad business and for that, I think Daryl is being a schmuck to himself and his potential clients. They seem to not understand that there is a level of accountability that exists.

I can hear brokers rallying to hang me while screaming, "It's not our responsibility to protect the clients"!
Although, it is impossible to protect them from unknown factors but it is the obligation of the broker to empower the investor with as much knowledge of the investment so that they can make an educated decision. Unfortunately, I have found that a lot of folks don't share that view. That's why I ask questions. Maybe I will miss out on the investment opportunity of the century but at the end of the day I didn't lose anything. 


Guys like Daryl are being used by groups that prefer to remain in the shadows.  He thinks he's doing nothing wrong like our friend Joe Tufo mentioned earlier. Joe is a good man who actually believes that a man's word and a handshake are binding. He was destroyed and crucified across the internet. I researched his particular dilemma and realized that Joe was too trusting and allowed himself to be a tool.

TRUST IN NOTHING BUT GOD! (Will all atheists and agnostics please sit down!) Trusting in man leaves too much to be desired.  I have an uber-rich friend that cringes when I mention trade platforms.  I asked if he wanted to go in on a deal together to curb the investment risk and he went bananas stating that he lost $30 million dollars on that crap.  I think to myself...$30 million? Who invests that much money on a deal that he obviously didn't control. My friend is very smart and a self-made super rich guy. He got caught up in the hype of it all, so he fell for the okey-doke.


Do your research everyone.  If there is no transparency about the organization, forget about it!  If these organizations are so private and selective, why is it that they are often represented by guys who can't afford the program and have never invested in a platform.  How selective is that dynamic? 

There is no doubt that there are very selective and coveted investment opportunities that exist solely for the  rich.  I am aware of a few but you can best believe Joe Schmo isn't representing them.  Please be careful and don't fall for the hype and promises.

7 Comments

April 15th...I Hate You!

5/29/2013

0 Comments

 
Picture
A picture is truly a 1000 words. I couldn't have said it better.
MY LATEST RANT


April 15th….I hate you!

Everyone from financial analysts to members of the media had claimed to predict the impending decline of the market as a whole. April 15th, certainly was the beginning of the end for profiteers and would somehow be the catalyst for further volatility which may last until the first quarter of 2014.


I would be a liar to tell you that our clients including my own personal positions weren’t impacted by the market dropping several hundred points within a three day period. Ouch is an understatement.

In aggressive strategy portfolios like my own, I saw months of profits wither and die in an instant. Friday’s close enabled us to avoid what I presumed was eminent disaster by the skin of our teeth. Thank God for naked puts and covered calls!!!

The positions we were forced to hold were dividend paying stocks we wanted to own anyway which brings me to the subject topic...Hedging your strategy.

Everyone may have predicted that the end was near for profits in the market but no one had a specific date in mind. Everyone followed market sentiment and pulled capital out of the market in record droves. Techs, utilities, precious metals all took a big hit. Even the building sector which was being touted as resurging was harshly affected. What did investors think was going to happen with such a rapid departure of capital despite the Fed still pumping $85 billion monthly into the market? Yes, monthly. Very few if any saw April 15th coming at least not to the degree that it hit us.

Hedging our investment strategy helped us weather the storm. We are down but far from out and if it weren’t for the diversification of mixed sectors and the fact that they are all dividend payers we would not have made it through the tunnel yet alone seen light at the end of it.   

There is always an exception to the rule but for the most part, I prefer to hold only stocks that pay a dividend. Even when we buy or sell an option on a stock, I usually take those positions on securities that pay a dividend and that I am interested in owning anyway. When the dividend is paid, it improves the bottom-line on the securities you took a loss on and have to hold. You can always create another option to reduce your capital exposure.

Now a lot of you out there are probably saying to yourselves, “this Don Mahoney guy is nuts if he thinks I should be trading in options”. Most people don’t understand options including a lot of individuals who have already invested in them. Options like buying securities outright are to be executed wisely with as much information as possible. Some investors use options to hedge against the securities in their portfolio such as Coke, Walmart, Microsoft, etc. I refer to these as equity investments; meaning you have invested your capital into these securities and like most equity investments needs to be sold or borrowed against in order to convert back to cash.

For the most part I do not like owning securities unless they are dividend payers and are blue chip global dominating companies like Hershey Foods. Not all blue chips and global dominators meet my criteria for equity ownership. I like companies that have undervalued share prices and have little R&D overhead.

Intel is a great blue chip and world dominator company but I hate their continued R&D overhead that they are forced to perpetually spend because of the nature of their business. FAB plants are not cheap to build or to continually modernize. I just don’t understand the logic that some investors use to quantify owning Intel stock unless it is for the long term. Even then, there are other companies that pay way better dividends.

I tend to use options to hedge against the equities in the portfolio. You want a diverse portfolio made up of different sectors. I don’t like many ETFs but there are a few ETF sectors that I do like. Don’t just think NYSE, OTC, etc. Open your mind up and buy foreign securities. For the most part a lot of them are significantly undervalued and are outperforming American companies by a factor of three. Several Indian and Japanese companies are making great gains despite global market climates.

Understand options to further hedge your equity positions. Don’t be greedy and always go after the big premiums. Stop and think about the best way to reduce your exposure and minimize your risks in any given situation. Remember there are not only brokerage fees but contract fees and margin maintenance you have to pay especially if things don’t exactly go your way. When you execute an option take all of that in consideration and maybe cover the position with another “just in case” option chain.

Happy Investing!

                                                                                              ~D~
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