No doubt you have heard all about global warming and climate change being blamed on human activities. Humans this and humans that. Gosh, humans must be the worst thing to ever happen to this planet! I cannot take this too light hearted, as I am a human and apparently I am also helping to kill the planet. For this I apologize, but rather than make excuses, I have devised the perfect solution to the ‘human problem’. Now, if the term ‘human problem’ sounds earily like hitler’s ‘Jewish problem’, it is intentional. No, I am no fan of the nazi party or hitler, but sometimes the solution to climate change starts to mimic the solutions hitler had in mind for his ‘Jewish problem’.

How can I equate the two seemingly very different issues. Just research the nazi movement of the ‘30 and ’40s. Citizens are told that Nazis measures against the Jews are reasonable and defensive — but there are also hints of what was to come. Hmm, sounds a bit like what we are being told about climate change. “we must make new laws to control people”.

The following list is from the above link, but the words jew and jewish have been replaced:Legal Measures to Solve the human Problem

Humans are prohibited from owning shops, mail order firms, or branches, and from owning an independent craft firm. They are further prohibited from offering goods or business services at markets, exhibitions, or trade fairs of any kind. A human can no longer be a factory director, a leading official, or a member of a cooperative.Shops, mail order firms, and branches owned by humans are to be closed down and eliminated. Only in particular cases can human firms be aryanized. The same is true for human craft firms.Human commercial firms and the associated property, as well as wholesale operations and industry that are human because of the degree to which they are under human ownership, can be de-humandified. Important patents and commercial secrets must be transferred to non-human control.

Humans in the German Reich may no longer own or control property. humans stocks must be turned in.

Humans with German citizenship, or humans without a nationality, are prohibited from acquiring, selling or disposing of items of gold, platinum, or silver, as well as precious gems and pearls.

Far fetched? Probably, but is it really much different from some of the modern proposals to solve global warming? Laws that punish certain groups of people for the sake of the greater good! Some will say that the proposed legislation on climate change is aimed only at large industry. That is the way it is supposed to be heard. But who actually works at these large industries and will be hurt by the proposed changes? It is the little guy trying to earn a living. It is the consumer who drives the economy. Will it stop CEO’s from retiring with multi-million dollar bonuses – No. Will it cause people looking forward to a decent pension to be hurt – yes.

So, the point of this far fetched rambling? Incentives are key, not more taxes and legislation.

And the only true answer to the ‘human problem’? No more humans!

The bottom line is that Corporate America will always be focused on the bottom line. As a dependent corporate employee, you are subject to the whims of the corporation. You have absolutely no control over how much you earn, where you work, the longevity and reliability of your income, or your position. You are simply a number. At any given moment, some nameless pencil-pushing number-cruncher, can deem that you are no longer an asset to the company and, rather, have become a liability. At any given moment, it can be deemed that you no longer factor into the profitability of the corporation – and you’re OUT. They don’t care if you have a mortgage to pay, 3 kids in college or a new shiny car with a hefty payment. They don’t care that you’ve come in early for the last 9 years or given 20 years of your life to them. The bottom line is that you don’t affect the bottom line in a positive way…so you’re OUT.

Corporations no longer hold value in employee commitment or dedication. Each day, companies are choosing to cut costs by outsourcing to less expensive countries with cheaper labor, downsize, and reduce costs by eliminating cost of living increases, benefits and retirement guarantees. Recently, the media has been focusing on the deliberate actions of corporations that cost employees each year. The Christian Science Monitor, on November 7th, 2005, featured an article, “Workers Face Paycheck Pinch”. In the article, the author, Mark Trumbell, details the lag of Corporate America to maintain pay increases with inflation:

“For all its strength, the current economic expansion is not boosting the American worker’s paycheck. Wages have been rising nominally: Average pay rose 8 cents last month to $16.27 an hour, according to a government report Friday. That’s not fast enough to counter inflation.

By one common measure, average pay for an hour’s work has less purchasing power than it had four years ago – when the current growth cycle began. It’s a pattern of weak wage growth that’s now several years old, but the trend has worsened in recent months. Wages for the most recent quarter were 2.3 percent lower, after inflation, than workers received a year before”

Time Magazine recently featured an article entitled “Broken Promises”

“It was part of the American Dream, a pledge made by corporations to their workers: for your decades of toil, you will be assured retirement benefits like a pension and health care. Now more and more companies are walking away from that promise, leaving millions of Americans at risk of an impoverished retirement.”

“Corporate promises are often not worth the paper they’re printed on. Businesses in one industry after another are revoking long-standing commitments to workers.” (Bartlett and Steele, October 31, 2005, p. 32-33)

So, how do you achieve Financial Security in this changing global economy? Employers aren’t even keeping up with inflation and are doing everything in their power to reduce benefits and retirement income. The days of being rewarded for loyalty to corporations are long gone – it’s now every person for themselves. In addition, loop holes in corporate law enable companies to restructure, file bankruptcy and maneuver their way out of promises to employers to provide benefits.

In reality, true Financial Security is belief in yourself and your ability to instinctively create income for yourself at anytime, anywhere. Entrepreneurs understand true Financial Security. They’re self-reliant, creative, and independent and solution focused. We know that at any given time, regardless of the economy, trends, timing, etc. that we have the skills, know-how, and guts to create our life. Entrepreneurs refuse to be dependent on or subject to the whims or decisions of corporate America, rather establishing themselves as corporations, producing their own incomes through commitment, service and sheer motivation. We are responsible for our own retirements and count on the promises of no one. Entrepreneurs ARE financial security and as such we reap the rewards.

There are many opportunities for people to become successful entrepreneurs. Thousands of people have made fortunes on the internet alone. Decide what type of business you want, what your ultimate goal is (time, money, leisure, etc) and go from there. A common misconception is that businesses take thousands of dollars to start. It is true of some, but there are many lucrative opportunities available for nominal start-up costs. Once you make the decision to be self-employed, do your research, find the right business for you and move forward from there.

More sheep farmer than the flower child many mistook her for, Waring’s short speech signaled to approving women across the land that their concerns would no longer be ignored. In this moment of emancipation, everything seemed possible. Fast-forward two years. As head of the Public Expenditures committee, Waring found herself putting together the national budget. It was almost as if she was being guided. Running her finger down columns of figures measuring the nation’s transactions, she was surprised to find not a single line item for women’s work at home. It should have taken up pages of accounting. But New Zealand’s single biggest occupation wasn’t listed at all.This is bizarre, Waring thought. As she pointed out to her male colleagues, no one puts in longer hours than women raising children. While “on call” to their round-the-clock needs, mothers acting as principle teacher, nurturer, nurse and lifeguard also attend to the most or all of the maintenance, accounts and logistics for households as complex as small businesses. Yet this huge labor sector is completely missing from the national budget. WOMEN’S WORKNo one could argue the facts. But sheep farming had taught Waring that when nature’s cooperative yin/yang survival strategy gets this far out of balance, any economic system that so thoroughly excludes the mothers on whom it depends must eventually collapse. Along the way, she knew, the feminine side of human nature and entire populations invariably suffers the most. Sure enough, when she superimposed a graph showing a mother’s typical daily chores over a similar graph of a man working a salaried job, most of the empty “time off” blocks in the male chart were filled in on the mom’s.  When census takers finally tallied the toil of Aeotearoa’s huge lost tribe of unpaid women workers, they found that the hours put into raising children and managing household tasks exceeded the value of all mining in this Maori country by a multiple of three, and all manufacturing by 1000%. Across the Tasman Sea, based on equivalent wages for people paid to provide child and senior care, janitorial and maintenance work, taxi and delivery services, all this unpaid work was worth 571,000 full-time jobs in Australia alone. Most North American households still cannot afford the cost of replacing a mother’s tasks with paid hands. Penney Kome, author of Somebody Has To Do It: Whose Work Is Housework? calls this “invisible national treasure” an “enormous pool of unpaid workers who can be forgotten when it’s time to draw up national policies such as childcare, elder care, health care, unemployment insurance, pensions, or social assistance.” [Ottawa Citizen May 9/97] It was no coincidence that the first women in New Zealand’s parliament was the first to notice that women who often toiled like sharecroppers taking care of their families received almost nothing from governments busy shoveling public tax dollars into the maws of corporations that sponsored their elections, but paid little or no taxes themselves. ”The question arises,” said Waring, “which is the biggest industry? Which is the biggest productive and service sector…and why can’t those allowances be extended to that sector?” FREE AT LASTIt wasn’t just women put at risk by a skewed economics that counts all monetary transactions as a “plus”, without ever debiting the downside. The young parliamentarian soon joined her neighbors in opposing a proposed a mountaintop mine that would have destroyed their centuries-old way of life by poisoning the abundant croplands below. Their campaign was successful. And in 1975, Waring became an international celebrity after forcing a “non-confidence” vote against her own party for failing to uphold New Zealand’s status as a Nuclear Free Zone against visiting US warships. When Waring “crossed the floor” of parliament to join the opposition, Kiwis cheered, the government collapsed—and the bullying boats had to take their radioactive mischief elsewhere. Why is it that peace has no market value, while the terrible waste and destruction of war drives the world’s biggest economies, Waring wondered? Surely, any national economy based on building and buying weapons can only lead to constant war. On the other hand, how much is the serenity of not living near nuclear weapons or a nuclear reactor worth? How does the fluctuating “value” of digital dollars equate with happy children, abundant crops and undisturbed wildlife? It doesn’t, she saw. A global accounting system that counts monetary exchange as the sole yardstick of “value” must be deeply flawed. The more she looked, the more it seemed to Waring that national accounting practices “had been co-opted by a pathological value system.” What else could you call a system that counts making, storing and using nuclear bombs as “good” for national and global economies? HIDDEN CODESMarilyn Waring traveled to more than 35 countries searching for a different budgetary model. Everywhere she went, she was startled to find that national budgets never accounted for women’s worth outside the paid workforce. Nor did their accounting practices ever consider many other values most people consider vitally important.Where did the notion of “Gross National Product” come from? Waring wondered. And why are monetary transactions so universally applied as the sole measure of national worth in countries where relatively little cash changes hands? The secret, someone told her, is that all UN member nations must use the same accounting procedures. This system of National Accounting was first set forth in the 1940s by two men as a way for Britain to pay for the Second World War. They had no idea that their short-term economic equations would become the price of UN admission for member states that today governs the lives of nearly everyone on Earth. On learning that the only set of National Accounting available for public purview is kept at the UN, Marilyn Waring flew to New York, where she spent weeks poring over this arcane accounting lore. The more she read, the more she was appalled. Said to be “Applicable to economies around the world,” formulas that were nothing of the sort simply ignored such key cultural and economic contributions as small scale farming, and women’s unpaid work. Waring concluded that the worldwide economic system was rigged against nearly everyone who participated in it. She started asking how such disastrous distortions could override national sovereignty and self-determination to favor a few rich folks over seven billion other wild and human lives? And how is it, she wondered, that a woman hired for housekeeping counts as a contributor to the GNP—but if she marries her employer and continues doing the same work without pay, her labor is seen as a “loss” by the same system of measurement? None of the economists she talked to had ever heard of National Accounting. PAY UPThe enthusiastic participation of the International Monetary Fund and the World Bank in this global “pyramid scheme” raised another flag. As Kome pointed out, most projects implemented by those organizations “have tended to overlook women’s struggles to feed and support their families. Instead, foreign agencies consulted with the local men, and imposed expensive and ill-fated projects, directed at bringing developing nations into the monetary economy. Somehow the profit never seemed to stay in the community.”Because subsistence agriculture is specifically excluded from their calculations, Kome continued, “IMF and World Bank projects often evict mothers and their families from small patches of arable land—where they are, at least, reasonably well nourished—to create huge plantations with cash crops. The nation’s GDP flourishes, but the local children go hungry.” [Ottawa Citizen May 9/97]The world’s accounting system is all wrong, Waring revealed to audiences attracted by her insights, because “national accounting only recognizes currency changing hands.” Raising children, growing food, supporting partners, protecting the environment on which all depend—these and many related activities are accorded no value at all unless money is involved. For this Kiwi sheep farmer, it all came down to a fundamental question about what we really cherish. “Ask people what they value most in life, they will say my children, my partner, my health, my religion,” she told an interviewer. “Usually, it’s something that can’t be bought.” SPEAK ENGLISH But the economists she talked to seemed to be coming from other planets, considering their profound ignorance of the one they were actually on. Perfecting “the art of the dumb question,” Waring kept asking them to translate their jargon into recognizable English that made some practical sense. The learned ones patiently explained that her concerns were irrelevant. Filling the air with poison gases, lacing food and water with pesticides, stripping the planet’s solar radiation shielding, and hastening climate collapse are all “externalities” that can be ignored they said. Until people get sick. Or start dying. That’s always counted as a plus, because money invariably changes hands.  ”Is any activity that make the Gross National Product (GNP) of countries go up, considered good?” Waring asked. ”Absolutely,” replied academics poring over abstractions that had little to do with real lives. “Money paid for goods and services always adds to the economy,” they chanted.  ”But what about the Exxon Valdez oil spill that devastated Alaska wildlife and shorelines?” Waring wanted to know. Very profitable, she was told, with millions of cleanup and salvage dollars pumped into corporate coffers and the local economy.”What about the white slave trade in Eastern Europe, the sex industry in Indonesia and Thailand, prostitution in central and eastern Europe?” she asked. These activities, too, are “an important part of the Gross National Product in those countries.” Deeply troubled by these revelations, Waring returned to farming after her term in office. She also took the time to earn a PhD in political economy, before returning in 1988 to rock the mostly male world of economics with a book on all those missing women.Counting for Nothing: What Men Value And What Women Are Worth was an eye-opening exposé of women’s productive and reproductive work missing from the National Accounting of more than 140 nations.It received some serious attention. John Kenneth Galbraith praised her contribution as an overdue antidote to badly flawed assumptions. Gloria Steinem called Waring “a populist and an excellent explainer [who] puts human beings and human values into economics.” For example, everyone talks about the importance of “community”, Waring liked to say. But community “is usually mom or daughter or aunty or neighbor or some other woman who already works 16 to 18 hours a day.”Waring thought that if she and her cohorts “could demonstrate overwhelmingly that women’s unpaid household work could be defined as servitude,” then the countries that stood for human rights—places like Canada, New Zealand, Australia and Scandinavia—would be in breach of their fundamental obligations and “would have to start practicing what they were legally bound to do.”  She was right. In 1993 the system of National Accounting were expanded to include all of women’s subsistence agriculture, including activities such as carrying water and collecting fuel wood. Four years later, Saskatchewan homemaker Carol Lees gave this process another shove when she refused to fill out her census form. Lees told the media she was willing to risk jail rather than list her many work hours at home as “zero” just because she wasn’t being paid for them. She had a point. The UN had just found that women do two-thirds of the world’s work, while receiving less than 5% of its income, and owning less than 1% of all assets. The United Nations further calculated that if women’s work were counted worldwide, their unpaid labor would be worth $11 trillion a year. [Ottawa Citizen May 9/97]Mothers Are Women teamed up with Lees to win three new questions about caregiving hours in the next Canadian census. But Statistics Canada already knew that unpaid women were doing work equivalent to more than third of the country’s GNP.1997 turned out to be a banner year for women. A “Platform for Action” adopted at a World Conference on Women in Beijing enjoined governments to start counting women’s unremunerated work. Caregiving for dependents and elderly family members, subsistence farming, and women’s self-employment or small businesses were to be included in these reckonings. [Ottawa Citizen May 9/97]Seven countries did just that.HAZEL HENDERSONOn the other side of the globe, Hazel Henderson was also looking at an economic system blind to billions of women workers. A self-described “housewife” in New York City, Henderson found a new calling after leading a successful campaign to enact groundbreaking air pollution laws during the 1960s. Like Waring, she would soon became a frequent consultant to governments, as well as an international speaker on a “new economics” that was newly inclusive.”I realize that I’m operating in a patriarchy, but then every other country in the world is a patriarchy,” Henderson told Wired’s Kevin Kelly. “The UN is the biggest patriarchy of all. I feel like Virginia Woolf. I have no country. I’m a woman. I have no country. That means my country is my planet,” [Wired Feb/97]Describing her mission as “just to weigh in on the side of life in human evolution—that’s all,” Hazel Henderson proposed to the first Earth Summit that economists go back and take all the important courses they’d missed—subjects like “ecology, cultural anthropology, social psychology, thermodynamics, and every other discipline concerned with human development.” Calling such a broadened economic perspective “the politics of reconceptualization,” Henderson described a more harmonious economic vision in her books, Politics of the Solar Age and Building A Win-Win World.Was anybody listening? Opinion-shaping “news” anchors kept reciting government and corporate press releases, cheering each upsurge in consumer spending without ever mentioning the toll all this extra consumption, debt and pollution is placing on this wounded world—and generations of finned, feathered, furred and two-leggeds to come. But then, denial is the strongest human propensity. ”For us to maintain our way of living, we must tell lies to each other and especially to ourselves,” lawyer and lecturer Bill Reese pointed out. “The lies are necessary because, without them, the truth would stop us from doing stupid things. Economic growth is one of those stupid things, because if we really thought about its impact, we would have to change our entire worldview.” INSTRUMENT FLYINGAfter all, “Money is not wealth,” Hazel Henderson kept insisting. “I have been going around these past twenty years giving thousands of speeches about how ridiculous it is to measure a country’s progress using GNP. I always like to compare it to flying a Boeing 747 with nothing on the instrument panel except an oil pressure gauge.” [Sustainability Spring 1990]For a more accurate measure of planetary progress, she suggested, “Newscasters and policy-makers should look to the Genuine Progress Indicator to provide a more balanced measure of the economy.” Unlike GNP, the GPI assigns value to leisure time, unpaid housework and volunteerism. Genuine Progress indicators also subtract crime and family breakdown, resource depletion, traffic accidents, and other social debits counted as “pluses” in the global system of National Accounting. ”The GPI recognizes the importance families, communities and nature play in economic well-being,” Henderson told her audiences. “Under the current national accounts system, these factors are ignored.” [adbusters.org] Next to the faulty GNP gauge and a wildly spinning compass, a dozen “Quality of Life” instruments Hazel Henderson helped duct-tape to our spaceship’s instrument panel can help us gauge how well we’re really doing with regard to what matters most. How does your neighborhood and nation measure up in terms of:Income distribution: Is the poverty gap widening or narrowing? Social and environmental costs: Depletion of nonrenewable resources.Ratio of energy input for goods produced: Measures efficiency and recycling. Military/civilian budget ratio: Effectiveness of government/diplomatic skills. Education: Literacy levels, school dropout and repetition rates. Health: Infant mortality, birth weights, weight/height/age ratio. Nutrition, shelter, availability and costs of medical care.Basic services: water purity, sanitation, telephones, electrification. Political participation and democratic process.Status of minority and ethnic populations and women.Water, soil and food qualities, air pollution in urban areas. Environmental depletion: Hectares of agricultural lands and forests lost annually.Bio-diversity and species loss.Child development. While Marilyn Waring was rousing people Down Under, Hazel Henderson went to work with Germany’s Green Party, and Soviet economists at the USSR Academy of Sciences to pitch the adoption of a new “national report card” that would enable real comparisons between nations “based on genuine progress and genuinely sustainable development.” [Whole Earth Review Fall/95] The idea took hold in South America, where Henderson next joined a group of experts from five continents in advising Venezuelan President Perez on an economic framework that looked at new ways of measuring development. At a meeting of non-aligned nations, 15 countries—Algeria, Argentina, Brazil, Egypt, India, Indonesia, Jamaica, Malaysia, Mexico, Nigeria, Peru, Senegal, Venezuela, Yugoslavia, and Zimbabwe—formally accepted the new Quality of Life guidelines, creating their own economic summit for the southern hemisphere. The “G-15″ will first meet in Kuala Lumpur for the June 2005 South Economic Summit. The G-15 represents 30% of the world’s population; the G-7 13%. FULL COST PRICINGHere was real progress. But the overdeveloped nations in the North remain in urgent need of a similar overhaul never mentioned on the nightly news. ”You cannot have a system where a few people are accumulating an enormous amount of material wealth and power and still have an ecologically sane and peaceful society,” Henderson points out today. Especially when most of the destructive accoutrements of our fast-paced high-tech lifestyles—are not being charged at their full health and maintenance costs. [Red Herring Apr/98]The solution, say new economists like Waring and Henderson, is to move immediately to “full cost pricing” that accurately transfers the costs of producing, using and recycling products onto the balance sheets of producers and buyers. Once gasoline is priced at its true “cost” at the pumps, for example, a wheezing planet might have a chance to catch her breath.When we insist on full-cost pricing, and turn away from warehouses jammed with products so cheap they can only be made in child sweatshops and forced labor camps, we will begin to see more durable and efficiently made goods that benefit everyone involved. We will also experience “a greatly enhanced quality of life” as the pace of our pathologies slows down, Hazel Henderson believes. Until then, she plans to stay busy “designing new cultural DNA and splicing it into cultural codes, as well as identifying malfunctioning DNA strands, such as GNP, which generate pathological patterns in the body politic.”THE NEW WORLD ORDER IS USWith the entire planet creaking under the press of populations striving for survival and more stuff, we are at a bifurcation point, Henderson believes. “We need to pull back and take a wide shot and see what the whole thing looks like.” Bifurcation occurs when whatever comes afterwards radically diverges from what came before A sharp turn away from monetary exchange is already seeing countries and corporations using computer networks to swap billions of dollars of services and goods—without exchanging a single dollar, dinar or dinero. This is huge, Henderson says. This changes every economic equation. ”When you tell economists we are going to a new system that doesn’t use money, they get very upset,” she laughs. But bartering over electronic trading systems is already weakening the money monopoly, she points out. Local currencies are also springing up everywhere, “raising consciousness, building community, and restructuring our economies in a sustainable direction.” [Red Herring Apr/98]Ignored by a $24 trillion global economy that is largely a digital mirage, today’s “hidden economy” is forging ahead, Henderson says, with person-to-person barter, reciprocity, sharing and cooperation carrying out an estimated $16 trillion worth of trades every year –without exchanging a single cent. [Wired Feb/97]Now add another annual $12 trillion or so of uncounted women’s work, and the picture that emerges is quite unlike the economic picture lauded on the virtual “news”.  Which is more real to you? Which would you rather support? And what does it all mean? As Hazel Henderson says, “Things are getting a lot better and a lot worse, at the same time.” And the things that really matter aren’t for sale at all.# # #ACCESSMARILYN WARING AUDIOhttp://aurora.icaap.org/talks/waring.htm#audio1rtsp://chinstrap.cs.athabascau.ca:8080/mmserv/au/journal/aurora/waring.raMARILYN WARING TALK (Transcript)http://aurora.icaap.org/talks/waring.htm

Reverse mortgages have been offered in order to provide sufficient funding to senior citizens in order to live their remaining years in comfort.  How the death of the borrower who had taken out a reverse mortgage on the home would greatly depend on the surviving family he or she has left behind.  If the borrower is married and his or her spouse is still living, then the reverse mortgage would not need to still be repaid since the reverse mortgage has been structured in such a way that the spouse of the borrower becomes a co-borrower.  When the borrower passes away, the co-borrower becomes the principal borrower and the same terms and conditions with regards to the reverse mortgage that has been taken out.

The situation is different when both the borrower and the spouse pass away.  Since the ownership of the home will now have to be changed and transferred to the beneficiary or beneficiaries, the reverse mortgage taken out on the equity value of the home would need to be repaid.  The beneficiary would be notified of this and the schedule of payments that would need to be made.  The beneficiary would then be given a year to repay the reverse mortgage in full with the corresponding interest that the borrower had agreed upon.

This may lead many heirs and surviving relatives to become frustrated since instead of inheriting some funds or assets that may be able to help them now, especially with the country having to face a financial crisis they have inherited a debt that now needs to be paid.  However, when looked into the benefits that have been provided by the reverse mortgage to the senior citizen and his spouse, this would make the surviving members of the family understand why the mortgage was taken out in the first place.

In order to avoid having to leave your family behind with any outstanding debt brought about by the reverse mortgage that you are planning to take out, it would be a good idea to first consult the advice of a lawyer or financial advisor.  He or she would be able to give you suggestions on the necessary precautions that you would need to take in order the mortgage you have taken out would not be passed on to your surviving family at the time of your demise.

For more information on how you can protect your surviving family from inheriting the burden of repaying the reverse mortgage you have taken out, you can visit any of the following websites.  After all, nothing could be more frustrating on the part of your surviving family than having to inherit a number of outstanding debts while having to go through the painful process of grieving as a result of your passing:

An investment banker is someone who works or is connected with an investment house. Such investment houses or companies are often called investment houses, brokerage houses, underwriters, or simply investment banks. Many investment bankers are employees, but others may function as agents or independent contractors.

Most investment bankers who are sales representatives (stock brokers) are licensed individuals and must pass a background investigation and several exams to obtain the required licenses. Having satisfied the requirements, the candidates become “registered representatives,” and may then buy and sell securities through the organized markets.

The body that supervises both investment banks and registered representatives is the NASD (National Association of Securities Dealers).

Investment banks raise money for the Government, institutions, individuals worldwide, and public corporations by arranging the sale of securities (stocks, bonds, and derivatives) to the public in the primary market. After an initial public offering (IPO), the purchase and sale of securities take place in the secondary markets.

Professional services offered by investment banks:

Lacking the expertise to raise capital on their own or through organized securities markets (NYSE, OTC, Nasdaq, or the American Stock Exchange), the corporation must rely on investment banks. Therefore, they contract these banks so that they can design and negotiate the company’s best strategy and to recommend the sale of either bonds (debt) or stock (equity).

The bank’s resident staff includes a legal department that makes sure all Government regulations are complied with and all the necessary documentation properly gathered and printed. An important aspect of this expertise is the research called “Due Diligence,” which certifies that a checklist of material facts have been scrutinized to protect investors, the bank, and the company that is issuing the securities.

For small corporations seeking finance, the investment banks will require a retainer, which varies from house to house, but usually around $25,000. Since each deal is different and unique, the corporate controller must shop around to get a good idea as to what a reasonable fee may be.

With the deal settled, the investment bank proceeds to get the issue out. Initially they will prepare the Private Placement Memorandum (PPM) which contains a blueprint for marketing the issue.

Mergers and acquisitions (M&A)

Investment bankers also handle mergers and acquisitions and corporate restructurings. This is a very lucrative field for many investment bankers. By bringing together companies and either merging them or acquiring them (and letting them work independently), investment banks foster the growth of successful companies. Some companies achieve growth and earnings through mergers and acquisitions rather than through the operations of their main line of business. Take for example, General Electric. Investors no longer think of GE as a manufacturing electronics company, but as a conglomerate and finance company. Not only do investment banks bring together companies to form a larger company, but they also break them up into smaller companies, spinoffs, or carve-outs. In either case, the banks will make money.

Brokerage and proprietary trading

Proprietary Investing refers to the management of portfolios of high-yield bonds, leveraged loans and other publicly traded securities. The management teams use intense credit research and relative value analysis.  The “prop desk” handles the trades of stocks, bonds, options, commodities, swaps, and other derivatives.

Different strategies are employed for different clients. For example, less aggressive techniques and risk will be employed in the management of pension funds. Likewise, not-for-profit institutions will restrict the trading to safer techniques.

Although investment banks are viewed as businesses which assist other business and institutions in raising money in the capital markets, in fact they also do lots of trading for their own accounts. Part of their daily activities involve: index arbitrage, statistical arbitrage, merger arbitrage, and volatility arbitrage.

Management services and other services

Given their huge pool of skilled and talented employees, they can develop detailed plans for businesses to be successful.

Entire departments and managers specialize in industry sectors such as pharmaceutical, health, wind energy, etc. They develop divisional performance measurement: cost, revenue, profit, and investment and expense centers that determine which method is likely to be the most efficient for each client.

Not only do they design and develop strategies for senior executives to manage the cultures within their organizations, but also they recommend equity compensation instruments (stock options).   

For those corporations that are image-conscious, investment banks offer ‘corporate social responsibility’ programs that can enhance the company’s reputation and goodwill.

Students

Many of my students often ask me, can I start with a commercial bank and then transfer to an investment house? Yes. This happens all the time. But, human resources, and division heads in investment banks tend to look down on applicants with commercial bank experience. The action, they feel, is in investment banks. Another question that comes up: what college majors are preferred for investment banking? The answer is: finance, accounting, and economics. Yet, I’ve met successful investment bankers who majored in liberal arts. In fact, a friend of mine majored in French Literature. The ultimate major that is required is: intelligence, coupled with a flair for numbers, and excellent communication skills.