| Subject: | Re: [socialcredit] criminal conspiracy: JAK | | Date: | Sunday, October 17, 2004 21:03:39 (+0200) | | From: | Per Almgren <info @........se>
|
At 16:15 2004-10-17, you wrote:
[Almgren]...but JAK has now
managed to get the
Swedish "Konsumentverket" (Consumer Protection
Agency) to accept that JAK doesn't need to include
them [compensating balances] in their calculation
(which means a decrease in the effective interest
rate of at least 2 - 3 % [actually much more than
that because principal is completely repaid half way
through the amortization period] mainly depending on
total repayment time).
The difference is not greater than
that on the longest repayment times but it is greater on the shorter
repayments. It is therefore iI wrote "at least".
-------------------------------------
-----------------------------------
I can imagine that JAK has managed to get some naive
Konsumentverket bureaucrat to sign off on its mumbo
jumbo, the sort we have seen from you in postings to
this list, which I will assure you doesn't get it off
the hook for fraud. I will now take it on as a
personal project to see that the agency becomes
better informed. I am sure there are private
consumer advocacy "watchdog" groups in Sweden that
are not aware of what is happening. There must also
an independent press that has missed this story. From
what we've seen from you and the "economist" Mark
Anielski, JAK is nothing short of a criminal
conspiracy.
Bill Ryan
-
It is not so severe as you express
it but it ought to be more correct in the presentation but still it is
doubtful to use effective interest rate as it usually gives 3 solutions.
How do you argue that it shouldn't be the middle negative one that could
be used. I think that I several years ago found some examples where there
were no positive interest rate solution at all!
Per Almgren
Per Almgren
<info@nordspar.se> wrote:
- At 20:22 2004-10-14, you wrote:
- Question for Mark Anielski, Oscar Kjellberg, Per
- Almgren, et al.
- [Anielski 10-13-04] "Members of JAK are fully aware
- that becoming members and qualifying for a loan
- requires them to both repay the principle on the
- original loan (without interest charges) and
- replenish the liquidity pool with the equivalent
- value of the loan payment in the form of savings.
- These savings are available to them upon completing
- their loan repayment. Until then their regular
- savings (what you term "forced", which it is not)
- help to maintain a healthy and necessary liquidity
- pool for the security of all members."
- ----------------------------------------
- --------------------------------------
- The question is addressed directly to Mark Anielski,
- but anyone may answer or comment:
- How is the required "replenishment" of the "liquidity
- pool" with the "equivalent value of the loan payment
- in the form of savings" factored into the effective
- interest rate that JAK discloses to potential
- borrowers, the public and regulators? It certainly
- does not appear to be factored into the calculation
- as depicted on page 14 of Anielski's "JAK" report.
- Moreover, Per Almgren told us the other day it isn't
- factored in, and shouldn't be, and offers his own
- formula, which shows a rate even lower than
- Anielski's.
- I didn't wrote that it
"shouldn't be", all payments of savings and withdrawals of
savings connected to the loan should be part of the calculation, but JAK
has now managed to get the Swedish "Konsumentverket" (Consumer
Protection Agency) to accept that JAK doesn't need to include them in
their calculation (which means a decrease in the effective interest rate
of at least 2 - 3 %, mainly depending on total repayment time).
- The effective interest rate at JAK was lower during the time 15 to 30
years ago when I was in charge of the system but it is additional costs
for running a bank compared to running a coop organization.
- The Excel spreadsheet I submitted for effective interest rates at JAK
and Nordiska sparlån (Nordic Savings-loans) should be correct, even if
they don't include the membership fee which for the moment is 27 USD per
year, the members get a quarterly journal and some other stuff for that
money. The membership fee has no direct coupling to the cost of the
loans.
- A JAK-loan of 100,000 SEK with a pre-saving period of 2 years with
2,000 SEK / month and amortization time of 20 years where the
after-savings amounts to 95 % of the loan has an effective interest rate
of 5.86 %, or -7.50 % (yes, it is minus) or - 55,7 %. There are this 3
solutions which all are mathematically correct. This may illustrate that
the method of comparing financing costs by using the effective interest
rate might be a doubtful one when it comes to savings-loans.
- The corresponding figures from Nordic Savings-loans are 3.85 %, -5.27
% and -55,8 % because the fees are lower than the fees of JAK.
- With an ordinary bank-loan the equation of effective interest rate
gives only one solution.
- If not, that would be a deceptive trade
- practice actionable under civil, if not criminal law,
- in every jurisdiction, inasmuch as the omission would
- result in a gross understatement of the effective
- rate. In addition, the mere claim by any bank that
- it is "interest free" if its effective interest rate
- is greater than zero, which both Anielsky and Almgren
- in their respective calculations admit is the case
- for JAK, would seem to be deceptive trade practice
- per se.
- Effective interest rate is a
pure mathematical defined entity. The word interest of today stands for a
mixture of two kinds of costs. One is for paying the administrational and
other work done, the other part is paid to people or companies who owns
money. This mixture causes misunderstanding and it would be good if
somebody created a short word for "income or cost only due to
ownership". Using such a new word will make it easier to clarify
what is going on within the economy.
- I append some material relating to the law as it
- stands in the United States. I would bet that the
- law in Sweden is not dissimilar.
- Bill Ryan
- --------------------
- http://www.chicagofed.org/consumer_information/abcs_of_figuring_interest.cfm
- Provisions of the Truth in Lending Act have been
- implemented through the Federal Reserve's Regulation
- Z, which defines creditor responsibilities. Most
- importantly, creditors are required to disclose both
- the Annual Percentage Rate (APR) and the total dollar
- finance charge to the borrowing consumer. Simply put,
- the APR is the relative cost of credit expressed in
- percentage terms on the basis of one year. Just as
- "unit pricing" gives the consumer a basis for
- comparing prices of different-sized packages of the
- same product, the APR enables the consumer to compare
- the prices of different loans regardless of the
- amount, maturity, or other terms...
- In addition to the interest that must be paid, loan
- agreements often will include other provisions that
- must be satisfied. Two examples of these provisions
- are mortgage points and required (compensating)
- deposit balances...
- Required (compensating) deposit balances: A bank may
- require that a borrower maintain a certain percentage
- of the loan amount on deposit as a condition for
- obtaining the loan. The borrower, then, does not have
- the use of the entire loan amount but rather the use
- of the loan amount less the amount that must be kept
- on deposit. The effective rate of interest is greater
- than it would be if no compensating deposit balance
- were required.
- -
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