Archive for August, 2022

Forget the $10,000, it’s Biden’s repayment plan that’s the killer.

August 31, 2022

Great analysis by William Gsldton  in today’s WSJ
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Galston writes:

A largely neglected dimension of Mr. Biden’s order changes to the program allowing borrowers to repay their loans as a percentage of their discretionary income over a fixed period (“income-directed repayment,” or IDR).

That provision might prove even more consequential (than the $10,000 loan forgiveness).

The president has:

  • Increased the amount of annual earnings not counted as discretionary income by about $30,000
  • Reduced monthly payments from 10% to 5% of what does count as discretionary income
  • For borrowers with original loan balances of $12,000 or less, Biden has reduced the repayment period from 20 years to 10
  • For borrowers whose payments are too small to cover interest as well as principal, the unpaid interest will no longer be added to the loan balance.
  • At the end of the 10 years, the loan balance is written off.

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The results will be dramatic.

The average starting salary for students with two years of community college is less than $35,000.

That means that loan payments will be based on only $5,000 of discretionary earnings.

So, the monthly payment is less than $25, including interest.

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So what?

“Through the back door, the president will come close to fulfilling his promise to make the first two years of community college free, and almost all borrowers in this category will be debt-free after 10 years.”

That may be a good thing, but…

The repayment plan applies to all students (current and future) with Federal loans,

Accordingly, the Penn-Wharton model suggests that this feature of the president’s program could cost as much as $450 billion over the next decade.

That’s more than the estimated cost of the $10,000 loan forgiveness … and raises the total cost of Biden’s program to a trillion dollars.

All with the stroke of a pen…

Ouch.

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Flashing back, Galston noted that his 1963 annual tuition at Cornell was $1,700 … and that students attending Ohio State were grousing about paying $375 annually.

Update: Taxing Biden’s election year loan forgiveness gambit…

August 30, 2022

When Biden’s plan was announced I calculated:

An average student loan holder will see their monthly student loan payment go down a whopping $55 … adding about 2 bucks-a-day to their disposable income … about a Starbucks frappe every week.

Enough to matter?

You decide.

For details see: Dumb and dumber looks even dumber when you dig into the details

I also asked a question that I hadn’t heard or read anywhere: What about the income tax implications?

You see, according to the IRS:

IF you have cancellation of debt income because your debt is canceled, forgiven, or discharged for less than the amount you must pay, the amount of the canceled debt is taxable and you must report the canceled debt on your tax return for the year the cancellation occurs.

So, at a 15% income tax rate (the lowest bracket), a Biden loan forgiveness recipient might be getting a $1,500 tax liability … for the 2022 tax year.

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A couple of loyal readers reminded me that:

Last year, the American Rescue Plan precluded any federal taxation of student-loan cancellation through 2025.

Nuts!

But, I was on the right track.

A WSJ op-ed advises that state lawmakers can tax the windfall.

New York, for one, is choosing to tax student-loan forgiveness. All in all, it appears 13 states are primed to follow NY’s lead on taxing debt relief.

  • Arkansas
  • Hawaii
  • Idaho
  • Kentucky
  • Massachusetts
  • Minnesota
  • Mississippi
  • Pennsylvania
  • South Carolina
  • Virginia
  • West Virginia
  • Wisconsin

The author points out that the above states “could mitigate some of Biden’s unfair stimulus by using the revenue (from taxing the forgiven loans) to give one-time tax rebates to residents who didn’t attend college or paid off their student loans.”

Not a full loaf, but better than nothing ….

Disney goes Angels & Demons… to boost revenues & profits

August 29, 2022

Disney says; “Annual passholders are amongst our most special guests”, but…
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Let’s flashback: About 20 years ago, Larry Selden & Geoffrey Colvin wrote a best-selling business book titled:

Angel Customers and Demon Customers: Discover Which is Which and Turbo-Charge Your Stock

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In a nutshell, the authors argued that:

One of the oldest myths in business is that every customer is a valuable customer.

Many businesses don’t realize that some of their customers are deeply unprofitable, and that simply doing business with them is costing them money.

It’s typical that the top 20 percent of customers are generating almost all of a company’s profit while the bottom 20 percent are actually destroying (stock) value.

Their prescription: Manage businesses as a customer portfolio.

  1. Determine which customers are profitable (angels) and which are not (demons)
  2. Cater to the most profitable customers — new & old — who buy more and pay more.
  3. For the low profit customers, raise your prices — from free to something … and from something to something higher.
  4. If customers are unprofitable after repricing, fire them

Sound reasonable doesn’t it?

Some companies (e.g. Best Buy) bought in to the concept.

See: Best Buy Decides Not All Are Welcome

How did that work out for Best Buy?

Well, just glance at the below chart showing Best Buy’s stock price.

Yeah, I know that correlation isn’t necessarily causation and that other things were going on (e.g. a financial crisis and a deterioration of BB’s in-store service.  Nonetheless, I think the relationship is both likely and instructive.

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OK,now let’s fast forward to today…

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What’s Disney’s new magic formula?

According to the WSJ: “Wringing every last dollar out of each visitor.”

Said more elegantly, “in a major strategic shift, the company is focused less on maximizing the quantity of visitors and more on increasing how much money each visitor spends, an approach the company refers to as yield management.”

First, Disney has raised prices pretty much across the board for park tickets & merchandise), and eliminated or started charging for other services (e.g. parking for some annual passholders) and features that used to be free (e.g. the Magic Bus from the airport).

Second, Disney is, in essence, branding its customers Angels or Demons.

Who are the Demons?

Annual pass holders (think: local residents).

Why?

Annual passholders tend to spend less than other visitors per visit.

A typical annual pass holder might ride only one ride during a visit, eat an ice cream cone and walk around for a few hours.

They take up capacity that might otherwise be used by out-of-state visitors (the Angels) who stay all day, eat multiple times in the restaurants, stayin the Disney hotels, and buy more merchandise.

Among the actions that Disney has taken:

  • Stopped selling new annual passes
  • Raised renewal prices for current annual pass holders
  • Blacked out more days when annual passholders aren’t welcome

Annual passholders are some of the Disney’s most loyal and ardent fans, and many are not happy.

Disney’s CEO shrugs off the tension caused by rising prices and other changes, especially for annual passholders as “the inevitable result of progress” and notes that “demand has not abated.”

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My take:

Disney execs may have read the 2003 book but, apparently, didn’t do more recent research on Angel & Demon zealots (e.g. Best Buy).

I’m all for raising prices when you can but, in my days as a marketer, I never found hacking off your brand loyalists to be an effective strategy.

I think Disney is forgetting that annua; passholders are the brand’s most effective marketing vehicles … proselytizing Disney virtues to friends and family … often inviting them to go to the park with them (at full price, of course).

When the loyalists go silent (or negative), short term results may spike, but are likely to turn around as quickly as Best Buy’s did.

WaPo: “Biden’s student loan plan is a regressive, expensive mistake”

August 26, 2022

OMG: For once, I agree with the Washington Post
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The reliably left-lurching Washington Post scorched Biden’s vote-grabbing student loan scheme in an editorial and op-ed.

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Editorial   Op-ed

Here are the highlights from the WaPo pieces with interspersed observations from an opinion piece in the left-leaning Daily Beast

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What crisis?

In court pleadings regarding Title 42 immigration policies, The Biden Administration declared the COVID pandemic to be over.

The Biden Administration has claimed that “inflation is zero” and that this is the healthiest U.S. economy ever.

In fact, the unemployment rate for people with bachelor’s degrees and higher is just 2%.

So, it’s hard to make the case that college graduates are still facing an unprecedented (financial) crisis.

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Is it fair?

Widely canceling student loan debt is regressive.

It takes money from the broader tax base, mostly made up of workers who did not go to college, to subsidize the education debt of people with (supposedly) valuable degrees.

It benefits a relatively small, affluent group of voters.

A minority of Americans have college degrees, they are higher earning and less-often unemployed than their fellow countrymen.

It takes the willingly acquired debt of some and makes it a liability of those who did not take it on … while offering nothing in mortgage relief, car loan relief, credit-card debt relief, or small-business loan relief.

It makes suckers of everyone who recently paid off their college loans or decided not to acquire them in the first place.

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At what cost?

Secretary of Education Cordona told CNN that he didn’t know because: “The projections are still coming out.”

But based on think tank estimates, this Executive Action will cost the federal government somewhere between $400 billion and $600 billion, completely unpaid for.

These policies would nullify $305 billion of (dubious) deficit reduction from the Inflation Reduction Act.

According to  Jason Furman, formerly the top economic adviser to President Barack Obama:

“It will pour roughly half [a] trillion dollars of gasoline on the inflationary fire that is already burning,”

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Is the Executive Order legal?

It’s doubtful that the 1965 Higher Education Act grants the president the legal authority to take such a sweeping step.

And, as cited above, the Biden Administration itself has already pleaded in Title 42 court arguments that COVID is over.

So, it’s tenuous that the administration can claim that the Administration’s argument that the loan forgiveness is a “pandemic emergency”.

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What’s the bottom line?

According to the Washington Post:

“Mr. Biden’s student loan decision will not do enough to help the most vulnerable Americans. It will, however, provide a windfall for those who don’t need it (i.e. the wealthiest Americans and price-gouging universities) — with American taxpayers footing the bill.”

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Price gouging universities?

The WSJ cuts to the chase in Biden Bails Out the Price Gougers:

Of course Mr. Biden’s illegal plan to make taxpayers cover student-loan debts will in many cases shower benefits on borrowers who don’t need help.

But the biggest bailout is for the academic wokesters who get paid handsomely to supply products and services for which there is little or no market demand.

Take away the massive system of federal subsidies and there will always be students eager to pay for electrical engineering degrees from Georgia Tech—and private lenders happy to finance an education that is likely to generate earnings power for the borrower. The earnings power comes from the fact that the engineer can make stuff that people want and need.

What cannot exist without government intervention are expensive degrees in ideology and grievance and debt-fueled accumulations of nonmarketable skills.

As we’ve said before: dumb and dumber may have reached the inevitable: dumbest.

Even the Washington Post and the Daily Beast agree!

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P.S. It’s worth reading all of the above linked articles in their entirety

Econ 101: Biden’s Election Year Student Loan Forgiveness

August 24, 2022

Dumb and dumber looks even dumber when you dig into the details
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We’ll skip over the moral and legal points that have been widely reported (and summarily dismissed by Team Biden) … and go straight to the economics.

First, the macro look, as reported by left-leaning Wharton economists:

President Biden’s election-year plan to cancel student loan debt would cost the Treasury at least $329 billion and would mostly benefit wealthier taxpayers, according to a study released Tuesday.

The study showed that a majority of the relief would go to borrowers in the top 60% of earners.

Simplifying the argument, over $300 billion of student debt (held by about 40% of the U.S. population) would be transferred to the national debt which is owned by 100% of the population.

Economists call this a concentrated benefit and diffused cost.

That means that 60% of the population gets put on the hook for a debt that they didn’t sign up for.

Ouch

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Now, for the even more interesting micro look

My hunch: Many (most?) of the student loan holders probably envision that they’ll be getting another Biden-check in the mail … this one for $10,000.

Of course, that’s not the case.

Their loan balance will simply be transferred to the national debt.

So, what’s the pocketbook impact for the loan holders being bought off?

Let’s start with some defining parameters

  • The average outstanding student loan is about $40,000  Source
  • The average borrower takes 20 years to repay their student loan debt. Source
  • The most commonly used federal student loans have an interest rate close to 3% Source

OK, let’s plug those numbers into a basic P&I calculator (e.g. Excel’s PMT function).

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The bottom line: An average student loan holder will see their monthly student loan payment go down a whopping $55 … adding about 2 bucks-a-day to their disposable income … about a Starbucks frappe every week.

My hunch: Recipients of Biden’s election year juice will be a bit disappointed …

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And, here’s something that I haven’t heard or read anywhere: What about the income tax implications?

According to the IRS:

IF you have cancellation of debt income because your debt is canceled, forgiven, or discharged for less than the amount you must pay, the amount of the canceled debt is taxable and you must report the canceled debt on your tax return for the year the cancellation occurs.

So, at a 15% income tax rate (the lowest bracket), a Biden loan forgiveness recipient might be getting a $1,500 tax liability … for the 2022 tax year.

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To recap:

  • The national debt will go up over $300 billion … wiping out the claimed debt reduction in the recent climate control bill (err, I meant “Inflation Reduction Act”)
  • A average student loan owner will pocket about $2 per day from reduced loan payments.
  • Those who get loan forgiveness may be subject to higher income taxes this year!
  • Everybody who paid off their student loans (like me) … or who worked — rather than borrowing — to pay for college (e.g. my wife) … or didn’t go to college (like about 1/2 the country) are stuck shouldering Biden’s largesse.

It’s called Bidenomics.

About Joe’s “Zero Inflation”…

August 24, 2022

Have you glanced at your electrical bill recently?

During Trump’s time in office, electricity prices were flat.

Not so under Biden’s …

In the past year alone, electricity prices have gone up 15.7%

In stats-speak, that’s a number statistically different from zero.

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Source: FRED and HFS analysis

Close coal-fueled electricity plants, stiff arm nuclear and that’s bound to happen. … especially with price of natural gas — the main electricity fuel — sky-rocketing.

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Source

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And, let’s not forget about gas prices!

Shocker: Public trust in the FBI nosedives…

August 18, 2022

… and that’s before the Trump raid.
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Gallup periodically asks Americans to assess how some federal agencies and departments are doing.

Specifically, respondents are asked whether a gov’t agency is doing an excellent, good, fair or poor job.

Across the board, agency ratings dropped between 2019 and 2021 (the latest Gallup survey) … with the CDC taking the biggest hit … down 29 percentage points … with only 40% thinking that the CDC was doing an excellent or good job.

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In general, Dems rate agencies higher than Republicans …  Independents report declining agency performance ratings

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On the headline point: “public trust” in the FBI fell 13 percentage points from 2019 to 2021 … with a minority (44%) thinking that the FBI was doing an excellent or good job.

  • 2 out of 3 Dems think that the FBI is doing a good job
  • 1 out of 4 GOPs think that the FBI is doing a good job
  • A minority of Independents think that the FBI is doing a good job

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Source: Gallup, visualized by Statista

Again, these results are before the FBI’s raid on Trump’s Mar-a Lago residence.

I’m going to go out on a limb and predict that the 2023 Gallup ratings for the FBI are going to be even lower … with Dems continuing to shout attaboys, the GOPs pointing to (highly) selective prosecutions (Trump – yes, Hilary – no, Hunter & Joe – no) … and Independents’ ratings continuing to slide.

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P.S. Also note the IRS’s low job ratings … about 1 out of 3 Americans think that the IRS is doing an excellent or good job.

The logical Biden move: Add 87,000 IRS agents to double the size of the department.

Yipes.

Has the FBI raid backfired politically?

August 16, 2022

Interesting poll results from the right-leaning (and often “right” as in “correct”) Trafalgar Group.

They surveyed over 1,000 people after the FBI raid.

There were 2 central questions asked…

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#1 Who do you believe is behind the FBI raid on President Trump’s private home?

  • Overall, there was an even split between “Trump’s political enemies” and “the fair judicial system”
  • A majority of Independents said that Trump’s political enemies were behind the raid.
  • Hispanics had, by far, the highest percentage of respondents who thought the raid was politically motivated.

One hypothesis for the last finding is that many (most?) Hispanics have roots to countries where similar political reprisals are common.

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#2 Does the FBI raid on President Trump increase your motivation to vote in the 2022 election?

  • Overall, 70% of the people said that they were more motivated to vote (in the mid-terms) than they were before the raid.
  • Predictably, a sky high number of Republicans (83.3%) said they were more motivated than before.
  • Over 70% of Independents said they were more motivated to vote.
  • Hispanics had the highest percentage of respondents who were more likely to vote than before the raid.

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A couple takeaways:

First, the FBI raid has generally increased motivation to vote … particularly, it appears to have stoked the fire under the GOP base.

Second, the raid seems to have accelerated a Hispanic shift towards the GOP.

Probably not the result that Team Biden was expecting.

 

Mission Accomplished: Joe says “Zero inflation in July”…

August 15, 2022

My wife (and I) disrespectfully disagree!
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Last week, Biden declared victory over inflation and headed off to Kiawah Island for some vacation (away from the hustle & bustle of Rehoboth Beach).

His inflation claim is based on the overall CPI being unchanged from June to July.

That’s true … but, shall we say, both premature and misleading.

First, it ignores the fact that the  “all items” price level is up 8.5% year-over-year … and 12.5% since Biden took office.

And, while gas prices fell in July, they’re still up 44% versus year ago.

Most telling, and most aggravating to my wife (& me), is what’s happening at the grocery store.

The “food at home” price index is up 13.1% versus last year … its June to July change was 1.4% … which annualizes to over 18%.

Biden’s focus on a 1 month change is statistically silly, but let’s play his numbers game and look at the grocery staples that most people buy (chart below).

Let’s look at some June to July price changes (when Biden says there was no inflation)

  • Potatoes went up 4.6% in July …  71.5% APR
  • Eggs (which have increased 38% since last year) went up 4.3% in July …  65.7% APR
  • Bread went up 2.8% in July …  39.3% APR
  • Baby Food went up 2.1% in July …  28.3% APR
  • Breakfast Cereal went up 2.0% in July …  26.8% APR

You get the picture…

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Source: FRED CPI

OK, that’s Biden’s way of looking at the numbers.

Let’s re-sort the chart by year-over-year price increases (which are statistically more representative.

A couple of “staple” examples.

  • Eggs are up 38% vs 2021 … and the trend is bad (based on the June to July increase)
  • Bread & potatoes have increased about 13.5% year-over-year … and their June to July increases were high.

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Sorry, Joe, this “inflation thing isn’t under control quite yet.

These items hit most families and the pain is both conspicuous and constant…

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P.S. Meats (total) are “only” up 7.2% since last year … and their annualized rate based on the June to July numbers is “only“ 5.9%.

So, you can’t pin it on “Big Meat” ….

Standardized tests “confirm the legitimacy of high GPAs”…

August 11, 2022

So says a pre-law prof at at “working class” university”.
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I’ve always been a fan of standardized testing, so a recent WSJ op-ed caught my eye.

The author was reacting to reports that “the American Bar Association, which accredits law schools, is considering a proposal to abandon its requirement that applicants take a “valid and reliable admissions test.”

His summary conclusion: bad idea.

For context, he points out that:

The Law School Admissions Council, which designs and administers the LSAT, has demonstrated through extensive research that “the LSAT is the single best predictor of law school success.”

That’s good, he argues because:

Objective measures of ability give working-class students a shot at going to a top law school.

How?

By leveling the playing fields between undergraduates attending “working class schools” and those fortunate enough to attend “good schools” (i.e. selective private universities) whose “brand identity” and its “halo effect” boosts applicants’ standing in the admissions process.

He argues that a “valid and reliable admissions test” allows working class students to demonstrate that they are as bright and capable of doing well in law school as students from privileged backgrounds.

In effect, the standardize tests confirm the legitimacy of GPAs … potentially boosting the standing of qualified applicants from lesser ranked schools … while filtering out lesser qualified applicants who accrue “face credibility” simply by attending brand name schools … or, schools that have succumbed to the grade inflation virus.

So, the author opines that the standardized tests can help law schools construct more qualified and more diverse student bodies.

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My take

While the article was focused on the LSAT and law schools, I think that its conclusions apply more generally.

It’s commonly agreed that grade inflation has been rampant in high schools and colleges … and that the trend accelerated during the pandemic.

Studies are consistently showing that teachers were tossing around high grades like penny candies during the pandemic … in part because of the challenge evaluating students in a remote learning environment … and, in part, to claim legitimacy for remote teaching.

The ranks of honor roll and straight-A students swelled during the pandemic.

Standardized testing is a way to determine whether the higher grades better performance and more learning …  or simply grade inflation.

If grades are going up, but standardized test scores are going down, that’s a red flag.

WaPo: $369 billion won’t do much to control the climate.

August 9, 2022

… or curb inflation, for that matter.
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The Dems massive Inflation Reduction & Climate Control Bill is getting backlash … even from the left!

Let’s start with the Inflation Reduction malarkey.

More than 200 economists wrote a letter to Senator Schumer detailing how this bill will not reduce inflation, nor reduce the deficit.” Source

“Several nonpartisan experts believe it’ll have no noticeable downward pressure on prices — including the Congressional Budget Office (“negligible at best”), the Bipartisan Policy Center (“small impacts one way or the other”), and the Penn Wharton Budget Model (“statistically indistinguishable from zero”).” Source

And, my favorite:

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Even Mark Zandi — Moody’s Analytics chief economist and Biden’s go-to flack — says that the bill will have near-zero impact on inflation.

Why? Corporations will pass through tax increases to consumers, oil prices will stay high (or increase) and drug price controls won’t kick in until “mid decade””.

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And, about climate control…

Specifically, the electric car incentives that are headlined to shave $7,500 off a high-priced EV.

In WaPo’s own words:

“An entire supply chain of rare minerals, semiconductors, batteries and financing has to fall into place before Americans give up their combustion engines.”

Here’s the big rub…

“American consumers can only claim the full $7,500 credit for an all-electric engine if their manufacturers displace Chinese batteries by 2024 and minerals from China or other countries lacking free-trade agreements — a threshold that automakers are warning could be impossible to meet.” Source

For the record:

60–80 % of EV batteries’ mineral ingredients are controlled by China which currently produces 76 % of the world’s lithium-ion batteries, while the U.S. produces only 8 %.

Despite ambitious plans to scale up, the U.S. and Europe together will likely account for only about a quarter of total global production of EV component minerals by 2030. Source

English translation: Expect to pay full price if you want to impress your friends with a climate-cooling EV.

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So, I guess we’ll have to count on windmills circling Nantucket and dotting the Jersey coastline.

When that happens, I’ll start taking the climate-controllers seriously…

Set your phone’s passcode … right now!

August 5, 2022

Tips from my “hacked” experience
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In a prior post, I recounted how I got hacked …

A perp hijacked my cell phone numbe,  used it to breach my BofA bank account and withdrew a statistically significant amount of money.

For details of the sophisticated hack, see:
I was HACKED … and my story is worth reading!

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The first lesson that I learned (again) is that cell phones are the weakest link in online security.

Step #1 is to secure your phone with — at a minimum – a passcode.

Yeah, it’s an annoying inconvenience, but…

It’s not just to keep kids from grabbing your phone to play games … or keep peering friends & family from sneaking a peek at your texts and emails.

If you lose your phone (or have it stolen), it buys you some time to call your carrier and de-activate your number.

An amateur may get stymied trying to guess which of the 10,000 possible 4-digit numeric codes you use on your phone … a hack-pro can eventually crack the code, but it takes time & effort, so it buys some time … and the perp may just toss the phone and hunt for a non-passcode phone.

Of course, if your phone is equipped with fingerprint or facial recognition, consider using it.

It adds to the inconvenience, but it ups your phone security by orders of magnitude.

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Why is this important?

If perps can open your phone, they can see where you have accounts.

For example, they can scan text message alerts that you’ve received from your banks and credit card companies.

Bingo, they know where you keep your money.

Then, they can go to the banks’ web sites and simply click “Forgot user ID & password “.

The bank will likely recognize the device (remember, the perps have your phone) … and, if you’ve activated 2-factor authorization, the bank may unwittingly send the 2FA code to your phone … which the perp is holding in his hand.

BINGO … account breached … and the perp is off to the races.

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P.S. My phone wasn’t lost or stolen.  It and my number) were hijacked when my carrier “sold” a perp a new iPhone, charging my account and over-riding my activation with the fraud purchased phone.

My bet: A likely “inside job”.

You (and I, now) are way more likely to lose our phones (or get them stolen) than getting them hijacked … which is why passcode protecting them is important.

Again, doing so may cut off some easy paths to your accounts … and may at least buy you some time to contain possible financial damage.

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P.P.S. If you have any anti-hacking ideas, please post a comment or email me.

I was HACKED … and my story is worth reading!

August 3, 2022

Strong passwords and two-factor-authorization gave me a false sense of security … lessons learned!
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Cutting to the chase: a perp breached my B of A account and withdrew a statistically significant amount of money.

Here’s the story as I’ve been able to piece it together…

Somebody (in Ft Worth TX) “bought” a new phone on my Verizon account and activated it to “highjack” my cell phone number.

It’s not clear to me how he did it.

It appears that he bought the phone in a Verizon store (though some Verizon reps say it was an online purchase).

My questions…

If a store purchase, why didn’t somebody check his photo ID and notice that the account has a Maryland address … not a Texas address?

If an online purchase, he might have illicitly got his hands on my ID and password, but how did he get by the “challenge question”?

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My theory of the case:

The perp downloaded the Bank of America app to the highjacked phone, signed on to B of A and clicked the “forgot ID & password” button.  B of A sent my 2FA code to the hijacked phone … which allowed the perp to access my B of A account … changing the password and processing transactions

My B of A “connection log” does show transactions via the B of A app … which I have never even downloaded,.

B of A did send me email alerts about “User ID lookup” and “Password changed” … but I didn’t notice them until about an hour after-the-fact … and, it took me another hour to finally get through to B of A’s fraud department.

In the 2 “open season” hours, the perp made 2 withdrawals from my B of A account. — an online funds transfer and a branch bank cash withdrawal

Again, all of this is happening in Fort Worth TX … it’s not clear to me why the branch didn’t check a photo ID and take notice of the account’s Maryland address

Once I connected with the fraud department, they froze my account and started the process of reversing the fraudulent transactions.

I’m confident that B of A will make me whole.  I’ll keep you posted on that.

Since my account is now frozen (for 6 months, deposits ok but no outflows), I had to open a new account.

That sounds simple enough, but …

Opening a new account means:

  • Changing the delivery instructions for all of my direct deposits (e.g. Social Security and retirement “checks”)
  • Restoring my list of “Bill Pay” accounts
  • Changing instructions for a couple of recurring direct debit charges (e,g, medical insurance)

That all sounds easy enough, but trust me, it’s a frustrating and time-consuming process …. and I’m sure some things will fall through the cracks.

The bad news: Getting to the “right” customer service reps is a challenge.

Many are “above my pay grade” or “not my department” people … some speak with practically unintelligible accents … some sound like they’re using fast-food drive-thru speaker technology to communicate

The good news: While it took many calls to get to them, several of the Customer Service reps were fantastic.

They obviously knew what they were doing …they spoke clearly … they were patient with “dumb” questions … they knew how to “work” their company’s systems … and they “got it done”

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My biggest takeaway

Our IT director at Georgetown frequently reminded me that cell phones are the weakest security link … and strongly advised not using them for online transactions.

I don’t use my phone for online transactions … and I never dreamt of my phone number being hijacked … and, I didn’t even consider the implications (e.g. 2FA codes going to the hijacked phone number).

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Some action items

Some things that I’m doing:

  1. Tightening security on my cell phone account
  2. Changing (and strengthening) all financial account passwords.
  3. Activating 2FA for all accounts (after being sure that #1 is done)
  4. Updating accounts’ contact information (especially fraud dept. phone numbers) for all financial accounts.

Trust me, #4 is easier to do before, not during, a hack when nerves are frayed.


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