The following is a quote from Gordon Gekko in the movie Wall Street (1987). Many lines worth remembering (to me) came from this movie.

(Link) View more Economics Sound Clips and Finance Sound Clips

What a great line…and it doesn’t just have to be insider trading on Wall Street.

True, the movie shows the downside to greed, money and Wall Street; but, with every dark cloud a silver lining can be found. That’s why I wrote Barking With The Big Dogs.

Barking With The Big Dogs is about finance, in particular a mortgage. The realization is most people cannot afford to pay cash for a home and going to the bank or mortgage company happens for a huge percent of the population.

As a result of so-called greed, fat cats, foreclosures, selling risky loans, debt, etc., the bank and borrowing money are viewed negatively by many people (from what I’ve read and heard) – and probably correct to some degree in my opinion as well. However, having the valuable commodity of information can level the playing field for the borrower.

Therefore, you should only go to the bank for one reason…to make money…otherwise, you might just want to stay out.

Barking With The Big Dogs will show you the same strategies the banks and mega institutions use everyday – and now you can use those same strategies yourself. Get a copy today!

Barking With The Big Dogs is now available.  Enter the Promo Code for a limited time only special.  Thanks.

Earlier in the day I was reading an article on Yahoo called, “Banks: The Final Death Of Free Checking?”

With financial reform coming to the aid of consumers (or so we are lead to believe everything is in our best interest), we may have seen the last days of free checking accounts.

Why eliminate the free accounts? It’s simple; banks are a business like any other and need to make money, not just be a service provider holding money until it’s time to pay for an Xbox or iPhone.

Through out my book, Barking With The Big Dogs, I mention what’s really consumer protection and what is disguised as consumer protection.

I explain in simple terms how banks use and make money not commonly discussed. So simple, I explained it to my daughter as I did in the short chapter “$49 Snow Cone” – and I talked about “free” checking accounts too.

In about two weeks, Barking With The Big Dogs will available in paperback and Kindle. Get a copy and avoid the $49 Snow Cone.

Make Money In 2011:  Your Home is the caption from an article in Yahoo finance.

There are a few problems with the article as opposed to the title – when you read the Action Plan: Owner, you are encouraged to save money, decrease cash flow and increase equity.

If you want to see how to make money on your home read “Barking With The Big Dogs“.

Paperback is due out on Amazon.com February 1 and will be available on Kindle as well.

I was reading an article on Yahoo titled “What Do Rising Interest Rates Mean for the Economy?”

I thought the title might give some insights we could all use as to the inner workings of the economic machine we have.  Unfortunately though, most of the article did not say much to about what interest rates really mean.

Yes, a good point was mentioned about the Fed funds and banks borrowing from each other in the short-term and other issues, such as housing, but when the real heart of the story unfolded, the obvious stuff we hear every day was really all the article mentioned.

For example, higher interest rates mean you pay more for your money.  No kidding, did I have to read this considering what I thought I was going to get from the title?

At the end of the article, the author states, “as the banks are able to increase the price they charge you for long-term money, they’re lowering the price they pay you for short-term cash.  Somehow, the banks always seem to win.”

As far as the ending commentary, yes the banks do always win; that’s why I decided to dig deeper into the banking and financial industry, especially as it relates to real estate, and wrote Barking With The Big Dogs in order to level the playing field.  I explain reasons why and how they raise rates.

On the contrary to the author’s comment about banks raising what they charge, the lenders do not do jack up rates on a whim as the article sounds.  Rather, interest rates, such as those on a mortgage, are based upon an index.

The index might be a Treasury, which is government borrowing, but the rates can be based upon CD rates too.

Banks may be paying less on savings rates and CDs, but the reason is really that too much money is sitting around.  Supply and demand.

As the index moves, meaning more (or less) demand, banks will raise rates to compete for cash; thus higher rates.  Provided the pool, or supply, of money isn’t continually being increased by keeping the printing press running around the clock, rising rates can actually be a good thing.  Why?

People and business generally borrow when times are good.  However, we did have stagflation with a bad economy and high rates because of the Carter years, and Obama and company are trying their best to bring back those days.

In the end though, what do rising rates and the economy mean?  I just mentioned it a moment ago.  Plus, you can simply look at your earnings in the bank statement as well – and I’ll explain in detailed, very easy to read and understand terms in Barking With The Big Dogs.

I was reading an e-mail regarding debt strategies for struggling businesses.  The question was part of a series.  Today’s topic describes the current situation for people wanting to stay in business, but cash flow is tough and the business is past due with creditors.

(The question is straight-forward and no other assumptions are implied.)  “What is your best option?”

Choices ranged from ignoring the creditor’s attempts to collect the money to telling them the truth about the situation and seeking cooperation.  Other possibilities included setting for a lump sum amount for pennies on the dollar to a payout over a couple of years time.  The final choice is to pay the full amount plus interest over a year, but ask for no payments for the first year.

As it turns out, the answer to the aforementioned question is the final option.  No payments for the first year and the rest paid out over the second year.  This option will be the most expensive, but makes financial since as described by the party producing the question.

My take from a struggling business would concur with the answer.  No payments protects immediate cash flow and limited resources while reducing some risk; and, the no payments choice allows the business the ability to continually try to make money over the course of time to stay in business and hopefully turn things around.

However, from a creditor’s viewpoint, I’m not going a full year without getting paid.  (Even though the question was around you or me as a struggling business and our options, look at the other side as if we are the ones dealing with struggling business as well.)  I want some type of monthly cash flow myself.  As a business, I’m not the bank.  Furthermore, working things out, but collecting some amount regularly might keep their doors open long enough to get my money back; or, at least I will settle for some monetary amount, but I won’t settle for a customer not being upfront.

If the business avoids my calls and doesn’t want to structure some type of agreement, one last thing I might do as a creditor if I do not get my money, I might just send them a 1099-Misc. and treat the amount they owe me as a GIFT!

Why would I send the business or person owing me money a 1099?  First, I’ve lost.  I’m out either the merchandise or my time for services and can’t recover the loss of profit or the cost.  Next, the 1099 is a revenue form filed with the IRS that shows income to the other party.  I might not get paid, but the party owing me the money will have to show the amount as income and pay the taxes (or adjusts their taxable income) to the IRS.  One or two of these 1099′s can earn the reputation that when doing business means honoring commitments by the customer, not just allowing people to walk away.  Go to the bank for financing.  Look at what happened to furniture stores, such as Lacks Furniture in Texas.  They got in trouble financing the furniture and are now out of business.

Getting back to the main answer though, the key is cash flow.

No payments increase cash flow, but what you do with the cash flow difference is very important too.  Speaking of the importance of cash flow, payments, etc. and although I’ve written Barking With The Big Dogs primarily around the house and a mortgage, the concepts apply to any business.  Many business examples will be demonstrated as well.  One such business is the bank itself and you can read the importance of payments and other business tactics and use them on a business or personal level.

The price for the GM IPO is set very high due to the demand for the stock. The money made from the IPO for issuing a bailout is a fair return for the taxpayers we are told. From other bailouts, such as in the banking industry, the government has made money for taxpayers as well.

However, will the taxpayers see a check in the mail? Probably not. With the government making so much money trading stocks, why is our debt continually rising?

If the government is making money buying and selling shares of companies; issuing and selling warrants (similar to options), then why are the people who make a living doing the very same actions as the Treasury does demonized for making money on Wall Street? In addition, more restrictions are placed on the activities of the citizens as well as increasing their taxes and fees; thus making it harder for people to make money. (Reason #1 why I’m not buying a GM.)

Wall Street, greedy businesses and executives are blamed for massive layoffs and unemployment; yet the new GM under government control, had big layoffs as well as closing dealerships.   These layoffs and closings have been seen as a positive though.

Isn’t Obama and company’s scenario regarding GM – get lean, efficient, etc. – ironic considering the massive spending, inefficiency of government  and its overall growth occurring in Washington today?

What about the people that lost everything when the government mandated bankruptcy occurred. Those shareholders’ stocks went to $0, yet are not getting nothing today. GM was out of bankruptcy in a month! (Reason #2 why I’m not buying a GM.)

With the new IPO of GM, the government will have less ownership, but still own over 1/3 of the company. Although less government ownership, the UAW (United Auto Workers union) was given over 17% of the company as part of the bailout in 2009; therefore, shareholders out – government and unions in. (Reason #3 why I’m not buying a GM.)

The big reason I do like GM and don’t want to totally bash the company is because from a business standpoint, GM is more lean and making changes, increasing exposure and looking exciting.

Furthermore, the real reason I like GM is the TV show Hawaii Five-O.

While watching the new TV hit show Hawaii Five-0, GM sponsorship through adverting is all over the TV.

I like watching McGarrett and Danno cruising in their Camaro or doing high speed chase scenes and will continue to watch the show, just not buying the cars any time soon. Maybe someday,but more more has to convince me otherwise.

I was listening to a commercial talking about reverse mortgages. We will probably continue to see and hear more about these loans since with the baby boomers and population are getting older and the market for the reverse mortgage grows.

What I found interesting on one radio slot was the statement about getting monthly income tax free. (Not quoting exactly, but if I recall the statement was very similar.) Tax free income from your home each month, really? I’m not sure if that is entirely true, but taking profits without selling the home may be more inline. And, definitely getting equity money out is true too.

Really though, are people getting income, or simply a monthly draw against the equity in the house in the form of a loan? A loan, not income. The balance has to be repaid at some point; either if the house is sold or the estate pays the balance, plus interest. Income does not have to be repaid.

The following paragraphs are excerpts from Barking With The Big Dogs…

“The reverse mortgage lets the owners get the money back out of the house without selling the home. Of course, many reasons, from living expenses to investment purposes, exist for wanting the money out of property and making the choices to access funds. ”

To continue from the chapter Refinancing By Design…

” A reverse mortgage is an adjustable rate mortgage the owner does not have to make payments on, or pay off, provided the owner lives in the house or until the surviving spouse dies. The heirs or estate will be responsible for the debt.

The bottom line for reverse mortgages is simple. If people use their mortgage and resources correctly to begin with, they may want and get a reverse mortgage, but will not need one.”

Believe half of what you see and none of what you hear is an old expression. Even older than the internet itself, because if memory serves me correctly, Al Gore – the “father” of the internet was not around when Ben Franklin made the statement.

Then again, I found the statement on the internet and wasn’t there either, but I remember the quote as a kid and we didn’t have the internet. Therefore, the statement, or one similar has been around a long time.

What made me think of famous quote happened the other day after I was giving an interview on the radio. The host made the comment asking what, and if, we can really believe “stuff” on the internet is true; thus questioning the validity of the most stories circulated throughout the internet and passed on in e-mail forwards. According to Ben Franklin, we shouldn’t believe anything on the radio since the messages coming through airwaves are spoken, thus heard.

While listening to the radio the other day, I caught a few seconds of Crown Financial Ministries talking about mortgages. The host stated mortgage requirements are getting lax again believes everyone should use a 20% down payment when getting the loan. Why 20%? He didn’t elaborate. I assume he is just repeating everything he has heard as well, because the answer was not detailed, just a quick opinion. Stating the obvious is an easy sell, and yes, talk shows are selling a product – the agenda. (Read Monkey Business in my book Barking With The Big Dogs and I’ll explain in detail. In addition, I’ll explain what is key about a 20% down payment – not just repeat what is typically spoken.)

Moving from the radio to the internet and speaking of e-mails, I get the Bleacher Report delivered via e-mail. One day while talking to a colleague of mine, he stated he didn’t like the Bleacher Report because it was a bunch of bloggers. “Bloggers are biased” he said. Okay, so are newspapers; otherwise, why would the newspaper endorse a candidate such as Bill White (candidate for Governor of Texas) as the Abilene Reporter News and their other affiliates did? They are biased for Bill White, not equally for Rick Perry. Furthermore, showing bias, I had a comment not published that was in direct response to a previous post on their website. Moreover, newspapers are aggregators of information just like the Bleacher Report. (An aggregator is a collection of items.)

The Bleacher Report collects and distributes sports stories from The Austin Statesman, The Dallas Morning News, ESPN, etc., and yes has bloggers too. The Abilene Reporter news collects stories from the Associated Press (AP) and has bloggers as well on their online site too. They post videos from other sources just as many websites do. So, what’s the difference? Nothing, just the agenda.

When reading the paper, checking out the latest story on the internet or listening to the radio, what we read and his is not always the complete truth, but it’s not all a bunch of lies either, and maybe , consists simply of partial truths.

The main thing when getting information from the internet as opposed to other sources is not to buy the hype – just about everyone, everywhere repeats what is commonly known and has their opinions about what is seen, read or heard thus tilting the information to fit some kind of agenda which promotes (either directly or indirectly) some business, whether the businesses are private sector companies or public agencies.

In my last post about Gold – Guaranteed, I mentioned I get quite a bit of windshield and radio time. This morning while driving to work, I was listening to the Bill Bennett show in which Ernest Istook was the guest host. I don’t have a problem with him, but he did mention the Fed printing money. In addition, while looking at at a past Washington Time’s article on buying bonds to spur the economy, the writer also mentioned the central bank printing money.

Here’s the thing though, and it may seem trivial, but both the show host and news writer either made misstatements or misprints, and I’ll explain in just a minute. I’m not hear to criticize either party, just simply to clarify and make a distinction. In reality the statements are probably close enough for government reporting and sounds good enough to the masses anyway.  In addition, a couple of important aspects are noted later as well.

However, to speak about the Fed and the misstatements, let’s talk about what it is and does looking at an excerpt from Barking With The Big Dogs…

“To begin though, what is the Federal Reserve? Is the “Fed” a government agency? Not exactly. Depending on which source you read, some people will say banks themselves set up and/or control the Federal Reserve. You can research President Woodrow Wilson and come up with your own conclusion. However, the Fed is setup as independent from both. The Fed has to operate within the laws and banks must oblige by the regulations set forth. The Fed does act in the interest of the banks, but for the economy as a whole as well. The Federal Reserve is more like the bank’s bank. In a nutshell, banks send excess money to the Federal Reserve to borrow from or lend to other banks when needed.

For banks to borrow from each other, the rate they receive is the Fed Funds rate. As described in summary by a former bank examiner, (who wishes to remain anonymous) and that I have had numerous conversations with, this individual said the “Fed funds rate” is a rate that banks lend and borrow amongst themselves. The rate is an overnight rate. Selling Fed funds is a method used for excess liquidity, but not long term. Banks would rather lend for longer terms rather than lending to other banks.

To continue with the examiner’s comments, he went on to say when banks look for sources of funds, they borrow from the Fed as a last resort, such as a liquidity issue. The only way the Fed will loan directly to a bank for a medium or long term is if the bank is in danger of closing its doors due to a liquidity crisis or some community catastrophe. A major event is the reason for the fed discount rate. The rate is also a longer-term loan, thus a higher rate. If a liquidity crisis becomes a system wide problem, then the U.S. Treasury enters the picture, not the Fed.

Then what is the U.S. Treasury and how does the Treasury fit into banking? The Treasury supervises the banking institutions. The Treasury manages the country’s money, or finances, collects taxes and pays the bills. The Treasury produces currency (dollars) and coins. The Treasury also advises on economic, tax and trade policy. (By the way, Congress, not the President, actually controls the money. The President makes requests.) The Treasury also enforces tax laws.

When the Federal Government needs more money, Congress raises taxes. To raise money, the government also borrows in the form of “Treasuries” – T-bills, notes, bonds and inflation protected securities. For more money, the Treasury prints more money. So how do these actions by the Treasury affect you and me?

Very simple, our taxes go up and the value of the dollar declines.” (Chapter 35 Interest Rates Aren’t Sexy)

Interest rates at the Fed are low because of supply. Borrowing is down and saving is up. Big businesses and banks are sitting on huge amounts of cash in deposits.

Having huge amounts of cash as well as the Treasury printing more money may keep borrowing rates low for a long time, and our investments in savings accounts and CD rates too!