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Progressive heartthrob Senator Elizabeth Warren gushed, "If the Postal Service offered basic banking services -- nothing fancy, just basic bill paying, check cashing, and small-dollar loans -- then it could provide affordable financial services for underserved families, and . . . shore up its own financial footing." Singing from the same hymnal, The New Republic's David Dayen enthused that President Obama should step in, bypass Congress, order USPS to deliver financial services, and thereby create jobs.
If Warren and Dayen believe that this would be an attractive business, presumably they think that they or USPS management are savvier than bankers. If the profit opportunity here is so good, why does a government agency need to be involved? Perhaps Warren should tap her well-heeled network, launch Warren Bank, and make a killing by doing good.
The white paper laments that 27 percent of Americans have no emergency savings and, without a hint of irony, suggests the Postal Service could encourage savings. The personal savings rate fell from 13.1 percent in 1973 to a paltry 4.9 percent in 2013, not because Americans couldn't save at the local post office, but substantially because of financial repression -- government maintaining artificially low interest rates, holding down the cost of the national debt, and putatively bolstering an anemic economy. The Fed has kept the real federal-funds rate negative since 2008, punishing savers and causing systemic capital misallocation.
Postal-banking advocates argue that the un- and underbanked are a problem the Postal Service is uniquely qualified to address. Maybe it's a problem, though 21 percent of those who don't have a bank account, when polled, say they "don't need or want an account." The "underbanked" have bank accounts but are so deemed because they use financial services of which enlightened regulators don't approve.
The market for consumer financial services is vigorously competitive and innovative, where it's permitted to be. Government shouldn't deliver services better performed by the private sector. The USPS inspector general's identified opportunities -- unsecured consumer loans, general-purpose reloadable prepaid cards, bill payment, savings accounts, and check cashing -- are well served by private-sector firms. The white paper preposterously suggests that the Postal Service could profitably provide short-term loans to risky consumers at 9 percent of the cost of private-sector payday loans.
With 31,000 retail offices, the Postal Service has national distribution. That, however, is not a compelling reason to provide non-postal services. Nationwide, there are almost 100,000 retail bank branches and over 400,000 ATMs. Retailers with national footprints such as Walmart, Safeway, Walgreens, and 7-11 distribute financial services. Western Union, MoneyGram, and a host of non-bank financial-services providers blanket the country. And smartphones and PCs increasingly provide truly ubiquitous, 24/7 banking access.
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US 3rd quarter GDP surged an annualized 5%, the strongest quarterly growth since the US economy grew 6.9% in the 3rd quarter of 2003. With the exception of inventories, which had virtually no impact on growth, nearly every category in the report was revised significantly higher from earlier estimates. Most significantly, personal consumption expenditures were revised from an annualized increase of 2.2% to one of 3.2%, accounting for 2.2 percentage points of growth. Business fixed investment jumped an annualized 8.9%, accounting for about 1.10 percentage points of growth, while a smaller trade deficit and government expenditures accounted for 0.80 and 0.70 percentage points of growth, respectively.
On the surface, this is an exceptionally strong report, suggesting that the US economy is hitting on all cylinders and approaching the ever elusive escape velocity. While the report is indeed a strong one, there are a few underlying facts that bear illumination. First, much of the strength in personal consumption was due to an enormous upward revision in healthcare outlays, which alone added 0.52 percentage points to GDP growth. In other words, healthcare outlays accounted for just over 10% of GDP growth during the quarter, or nearly 25% of the total contribution from personal consumption. Furthermore, it accounted for 65% of the entire revision to personal consumption from the prior estimate. This has been a volatile input all year, with revisions from the initial first quarter estimate through the third estimate responsible for much of the decline in first quarter GDP. Given the volatility around this input, it likely wasnt nearly as weak as the 1st quarter estimate suggested nor as strong as the subsequent two quarters would suggest.
Second, over the course of the GDP releases for the 3rd quarter, disposable personal incomes have been revised lower and spending has been revised higher, resulting in lower personal savings. While personal consumption grew an annualized 3.2% during the quarter, disposable personal incomes grew just 2%. Spending growth that exceeds income growth simply isnt sustainable. In fact, the savings rate of 4.7% ties for the second lowest since the recovery began. Bear in mind that the savings rate has also been inflated in the last year or two by an accounting change implemented by the BEA in which pension vesting accrues to personal savings. While this makes much sense from an accounting standpoint, this is certainly not savings in the traditional sense since it cannot be accessed prior to retirement without penalties. Under the previous methodology, the saving rate would be significantly lower. This suggests most consumers still have a razor thin margin of error.
Third, the 4.4% jump in government outlays is by far the largest since they grew 7.5% in the 2nd quarter of 2009. The increase was largely the result of a 16% jump in defense spending, far and away the largest such increase since a 17.4% rise in the 2nd quarter of 2009. Its a rather safe bet that this wont be repeated in the immediate future. Fourth, the benefit from a declining trade deficit is also unlikely to be repeated as a stronger dollar and weak foreign economies put a crimp in exports relative to imports.
Third-quarter GDP was strong with nearly all significant variable, except inventories, positively contributing to growth. However, its also very likely that a number of the strongest contributors provided far less spark in nearly completed current quarter. Its unlikely that healthcare, defense sending, or trade will contribute nearly as strongly as they did during the 3rd quarter, with the latter two actually likely to detract from growth. Inventories, as is often the case, will be a wild card. So while the US economy has performed far better than most expected after the final release of 1st quarter GDP in June, dont expect a repeat of the 3rd quarters performance in the 4th quarter.
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After a holiday season full of merrymaking, so many of us vow that were going to exercise more in the coming year. I admire your ambition (and share it). But as we begin 2015, I hope youll be just as committed to becoming, and staying, financially fit.
Here are some tips to help.
1. Plan for trouble.
We all need an emergency fund because major negative life events always seem to pop up when we least expect them. The general rule of thumb is have six months of living expenses in a bank deposit account or money market fund where the money is readily available for those surprise expenses or to bridge the gap if an income earner in the family loses his or her job.
Every family should also have insurance to cover the cost of major events that might not be covered by an emergency fund. Health insurance, homeowners insurance, auto insurance and life insurance are vital and most families have these items covered. Depending on your personal situation, an umbrella liability policy might be a good idea. If your family has one primary income earner, consider a disability policy.
You might also consider specialty insurance, such as cancer insurance or accident insurance, depending on your situation.
2. Spend less and save more.
The US personal savings rate as a percentage of disposable income is currently about 5 percent. Thus, the odds a dollar of personal income was actually saved this year was 1 in 20. Current levels of saving are an improvement over the 2007 rate of 2.6 percent (1 in 38.7) but still a far cry from the 1971 height of 13.3 percent (1 in 7.5) -- and a faint whisper compared to Chinas savings rate of 50 percent (1 in 2).
What are the chances an adult has no savings at all? Approximately 30 percent of American adults have no savings.
3. Start saving now for your kids college.
If you plan to assist with the cost of your childs college education, there are several different options including a 529 Plan, an Education Savings Account or even a Roth IRA. Get informed about these options. If you want to help your children with the soaring costs of secondary education, you cant start too soon.
4. Easy on the plastic.
Credit cards are a wickedly tempting convenience in our busy and consumption-driven lifestyles, but when not used responsibly can quickly become detrimental to our financial health. Think about your credit card not so much as a form of payment but as the incurring of debt -- a debt that must be repaid when the bill arrives or the price of what you purchased just went up by the amount of interest youll pay.
5. Pass the sleep test.
If your investments are keeping you up at night, you need to make some changes. Wealth should enhance your life, not engender stress. If you are worrying about your investments, you likely need to ratchet down the risk in your portfolio. With less stress, youre going to be healthier and empowered to enjoy the fruits of your labor, your discipline and your dreams.
6. Be proactive.
Success in the financial aspects of our lives requires preparation, sacrifice and hard work. But that goes for all aspects of our lives, which are all interconnected. Seek out information on ways to stay healthy and take action to reduce your health risks. Kicking those unhealthy habits today and committing yourself to adopting healthy new ones can dramatically impact your future financial well-being. Control your own financial destiny by taking charge of your physical and mental condition.
7. Think long-term.
Again, this goes for our finances and our lifestyles. Our life expectancy continues to grow, for those in both good and poor health thanks to medical advances, and consequently we have more years after retirement than ever before. If you expect to live well into your 90s, thats probably three decades of the golden years that youll need to prepare for by properly saving and investing. A healthy person can typically work longer and more successfully than a sick person, translating into more assets to adequately sustain a long life and retirement.
Its worth pointing out that our increasing longevity also means more time for the power of compounding interest, offering us the opportunity to expand the financial legacy we leave to our children, grandchildren, other loved ones and our chosen philanthropic endeavors.
Money isnt everything, but money problems can sure feel close. Get ahead of bad habits, debt and stress this year by adopting a financial fitness regimen. It requires discipline and could come with some pain, but the payoff is worth it: peace of mind and moving closer to your dreams.
Phoebe Venable, chartered financial analyst, is President amp; COO of CapWealth Advisors LLC. Her column on women, families and building wealth appears each Saturday in The Tennessean.
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Alcorn, 17, detailed her desire to transition to a female on her blog, and the opposition she received from her family.
When I was 14, I learned what transgender meant and cried of happiness, Alcorn wrote. After 10 years of confusion I finally understood who I was.
I immediately told my mom, and she reacted extremely negatively, telling me that it was a phase, that I would never truly be a girl, that God doesnt make mistakes, that I am wrong.
If you are reading this, parents, please dont tell this to your kids. Even if you are Christian or are against transgender people dont ever say that to someone, especially your kid.
That wont do anything but make them hate them self. Thats exactly what it did to me.
Alcorn said her family took her to Christian therapists, pulled her out of school, and kept her off social media. They refused to allow her to start transitioning at the age of 16.
Either I live the rest of my life as a lonely man who wishes he were a woman or I live my life as a lonelier woman who hates herself, she wrote.
People say it gets better but that isnt true in my case. It gets worse. Each day I get worse.
The teen hoped that her suicide would help other transgender people and that she wanted her personal savings and money raised through the sale of her possessions to go to trans civil rights movements and support groups.
My death needs to mean something. My death needs to be counted in the number of transgender people who commit suicide this year, she said.
Leelahs story is utterly heartbreaking, Vicky Beeching told Christian Today. Its yet another wake-up call to the Church; a reminder that what is taught from Sunday pulpits about LGBT theology is literally a matter of life and death.
Beeching, a former worship leader whose coming out was widely documented in 2014, said many churches are shying away from having conversations about how be more welcoming to LGBT Christians.
Sexuality can be a controversial and sometimes awkward topic to discuss or preach on, she said. Stories like Leelahs ring an alarm bell, urgently demonstrating that the conversation needs to happen in every church, in every priest and pastors heart and mind, and it needs to happen now before further lives are lost.