Delighted to be back to changing my own oil

Back in 1974, when I bought my first car (a green 1969 Ford Fairlane 500 - see inset), my limited income as a teenager required me to do most of my own maintenance. That included such things as oil changes, as well as brake jobs, replacing a carburetor, and many other parts. I purchased a big manual for my car and spent some long nights in the garage making lots of mistakes and learning from many of them. I also remember the feeling of being self-sufficient and frugal. 1969 Ford Fairlane; Former girlfriend serving as model After I got my first full-time job, I drifted away from working on my own car. Until now. Seeing a $27 oil change sign from a distance, I pulled into Jiffy Lube. Only after I pulled in did I notice that this was a special price that didn't apply to me because it wasn't 7-10 am. Then, after the Jiffy Lube guy treated me rudely and then told me that my oil change, using basic 5W30 oil, would cost almost $40, I blurted out, "Forty dollars for an oil change?" The Jiffy Lube guy protested, "That includes topping off your windshield washer solution and cleaning your windshield." I said, "No thanks." I decided to remind myself what it's like to slide under the car and get oil on my hands, and to do physical work, a welcome change from my desk job. I drove to the local O'Reilly Auto Parts store, where I bought enough oil and oil filters for three oil changes for $40. O'Reilly told me that they would happily dispose of my used oil at no charge. I also bought a gallon of windshield wiper fluid, an air filter and some new wiper blades for a fraction of what Jiffy Lube charges. Jiffy Lube specializes in telling you that you need these sorts of things and then gouging you for them. If you don't believe me, check the Jiffy Lube web site -- what does it tell you when a big company doesn't have the balls to tell you how much they will charge you for standard services until they have your car hostage? img_1172 Back at home with a case of oil in my trunk, all I had to do was find my old jacks (a hydraulic jack for lifting and a stand jack for safety), plastic oil pan, funnel, oil filter wrench and a few other tools. None of this is expensive stuff, in case you're interested in joining me in the Jiffy rebellion. BTW, my Jiffy Lube story is not unique. One hurdle: it took me about 10 minutes to locate the oil filter on my '98 Saturn SL-2 (It's deeply buried under the back of the engine, requiring me to crawl way under). Because it got dark while I was working, I pulled out my trouble light and that made it official: I was now reliving my teenage years and enjoying it immensely. Take that, Jiffy Lube! Added bonus: I now know exactly what kind of oil is really going into my car and that the right amount is going in. Another bonus: Next time I give one of the cars an oil change, I'll give my daughters a little lesson about car maintenance--a passing of the baton. Yet another bonus: In less than the time it takes to drive to Jiffy Lube and back, I will have changed my own oil without burning any gas. Changing one's own oil is not a big deal. But saying no to old expensive habits and getting back to a simpler, cheaper and self-reliant way of life, one step at a time, can be a big deal.

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AIG secured our (bleak) financial future

While looking through some older articles, I happened across a November 2005 edition of Natural Science. An AIG ad decorates the back cover. Note the AIG claim that "You can count on us." Also note the claim that "50 million customers know the strength and experience of the AIG companies can help secure your financial future." AIG ad - 2005 None of this fluff was technically untrue. It turned out to be true in terrible way that will rob Americans of tax revenue for decades to come. AIG has helped to secure a bleak financial future for most Americans, while securing a windfall for a well-connected group of elite executives. But perhaps this tragedy and this should-be-crime needs to be quantified to be appreciated. The AIG bailout followed AIG's calculated decisions to gamble in a dangerous way in search of obscene profits, rather than to be content with its honest business of selling insurance. Then, when the house of cards came crashing down, AIG somehow convinced our lawmakers to divert our precious tax dollars to preserve AIG, which responded by trying to pay out $165 million in bonuses to its employees for a job well done. How much federal tax money has gone to AIG to date? The latest count is $30 billion dollars. To put that in perspective, note that there are approximately 112,000,000 American households. If each American household were to each bear the same share of this $30B bailout of AIG, they would each pay more than $250. $250 is considerably more than the price of a Nintendo Wii. Can you imagine the outcry if Congress had approved buying a Wii for every household in America? What a horrific and irresponsible waste of money that would have been, especially when that money is desperately needed for education, infrastructure and alternative energy, to name only a few things. AIG is the poster boy of why we cannot have "too big to fail," yet it is not on President Obama's agenda to break up the big financial corporations that still sit there like huge ticking time bombs. It turns out that in the process of "saving" AIG, Treasury Secretary Tim Geithner (then acting as president of the New York Fed) hammered American taxpayers. If you Google "AIG criminal," you'll find almost nothing of note in recent months. Apparently, intentionally threatening the entire American economy in the pursuit of greed is not a criminal issue. Ruining the national economy is not as serious as stealing bread from a grocery store or smoking a joint.

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Why bailouts might not be long-term solutions for distressed homeowners

Well-founded criticism abounds that we shouldn't be bailing out large banks that have profited by providing imprudent (and oftentimes scandalous and even criminal) sub-prime loans to homeowners. One oft-mentioned alternative to bailing out the banks is to bail out the homeowners. One might justify this move on the ground that many recipients of sub-prime loans were invited to take out loans with exploding ARMS (adjustable rate mortgages). These are not the ARM's from decades past, mind you. Rather, these are loans that, within a few years of the loan closing, are guaranteed to require monthly payments that the homeowners couldn't afford, regardless of market fluctuations. Imagine, for example, a loan requiring payments of $1,000/month that would rise to $1,800/month within a few years, even when the cost of money stays relatively stable. The mortgage companies offering these types of refinances would be long gone by the time that this kind of loan explodes, forcing many of these homeowners into foreclosure or bankruptcy. In addition to the exploding ARMS, many distressed homeowners were victimized by hidden fees and penalties, including substantial pre-payment penalties, as well as "yield spread premiums," which are essentially under-the-table bribes paid to brokers. But why did so many homeowners sign up for loans they wouldn't be able to afford? Many of them were lied to by the mortgage companies (disclosure: In my law practice, I've represented many of these folks). Other borrowers were clearly irresponsible. Most of of the borrowers suffer from a condition mathematician John Paulos calls “innumeracy”: the “inability to deal comfortably with the fundamental notions of number and chance.” I'm not accusing the borrows of stupidity; rather, they tend to lack a specific skill set, the origin of which often extends all the way back to the grade school struggles with mathematics. The above observations serve as context to a discussion of a potential plan of action. The simple question are these: Should we bail out distressed homeowners? [more . . . ]

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So who wants to be a billionaire?

Clusterstock has detailed and easy-to-follow instructions to making ridiculous amounts of easy money. Start by forming a bank, hire all of your friends as bankers and raising some capital. After those preliminary steps, the hard part is done:

STEP 4: Borrow $9 billion from the Fed at an annual cost of 0.25%. STEP 5: Buy $10 billion of 30-year Treasuries paying 4.45% STEP 6: Sit back and watch the cash flow in. At this spread, you should be earning at least 4% per year on your $10 billion of capital, or $400 million. Sure, there's some risk that the Fed will grow a backbone and raise short rates, but there's not much risk. (They have an economy to fix and banks to secretly recapitalize). And in any event, if the Fed raises short rates, making your $1 billion will just take a bit longer. (And if they REALLY raise rates, causing you to actually lose money, it will be someone else's problem.)

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Four litmus tests for Congress

According to consumer advocate Ed Mierzwinski, the following four reforms "seem obvious to taxpayers. Not to Wall Street." I would add that they don't seem obvious enough to most members of Congress. They should have been passed at least a year ago:

1) Will Congress enact a strong version of the Consumer Financial Protection Agency? [It needs to be independent, needs to regulate all financial products, needs to reinstate federal law as a floor, not a ceiling, of protection]. 2) Will Congress regulate the shadow markets, e.g., unregulated derivative, hedge fund, and private equity shadow markets? 3) Will Congress audit the Fed? 4) Will Congress end the too-big-to-fail system that led to taxpayer-funded TARP bailouts?
I agree with Mierzwinski that these needs are obvious. The only reason they aren't yet law is that Congress is flooded with banking industry money. It's time for Congress to show whether it has any integrity for enacting these four reforms, which constitute some very low bars, indeed. These are minimum standard that any reasonable person would immediately support. Members of Congress need to show us that they really represent the People of the U.S. by immediately voting for these four reforms.

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