Cap’n Ken’s Homespun Wisdom

The AJC is running the story (presented in full below because the AJC requires readers to register with a fake email address before they”ll display their content) today of an old woman in Buckhead who was swindled out of $773,081.

Basically, she ran into a couple who said they had an assload of cash they”d found and they needed some help getting it out of the country. If granny ponied up some cash now, they”d give her $3.5 million later. And granny went for it.

What a greedy old bitch.

This, of course, is assuming granny still possesses all of her mental faculties - and considering she met twice with the people and handled a rather complicated set of bank transfers herself, I assume she does.

She”s 86 years old and had at least $773,081 in assets. The National Center for Health Statistics says she now has a life expectancy of about 6.5 more years.

Let”s be optimistic and say granny”s going to be around another 10 years. Without earning another cent of income on that money, granny would have $77,308 - tax free - per year to live on in addition to whatever Social Security and other income she may have.

But she wanted more? Does granny have her eye on some sweet place in Boca that she needs that $3.5 million for?

I”d have a lot of sympathy for an old lady who just had a few thousand dollars in savings and was worried about being on a countdown clock toward cat-food dinners. And I”d have more sympathy for this granny if she”d been taken for a couple thousand dollars because she was trying to help out a stranger.

Clearly, though, this granny was in it for the cash. If she”s in a mental state where she knew what she was doing, then she”s stupid, greedy and got what she deserved.

What the scammers told the 86-year-old woman they met at a Publix parking lot was sweet: We”ve found $8.5 million. Help us move it overseas to avoid paying taxes, and you get a piece of the pie.

Alas, she ended up losing her own savings instead, authorities say.

“If something is too good to be true, don”t believe it,” said Sgt. Terry Joyner of the Atlanta Police Department, but “there”s no doubt there”s a greed factor in here.”

Police are looking for a duo who swindled the Buckhead resident out of $773,081. Authorities did not release the victim”s name.

The scam began Dec. 1 at Publix at 3434 Peachtree Road in Buckhead, when the elderly woman was approached by a well-dressed woman who introduced herself as “Jennifer Baker.”

The stranger showed the senior citizen a pouch she claimed to have found in the parking lot — bundled cash and government bonds that the stranger said were worth more than $8.5 million. The woman told the victim she had an international financial investor as a friend and would seek his advice.

A few days later, the two met again. The scammer relayed the friend”s suggestion that they invest the money outside the country. But first, the victim needed to cough up her own money to transfer the money out of the country to avoid IRS and customs. In return for her participation, the elderly woman was promised $3.5 million.

The senior citizen cashed her Wachovia securities and deposited money into three accounts. The bank was concerned and asked the woman whether she was absolutely sure about the withdrawal of such a large sum, but the woman, who had been coached by the scammers, replied yes, Joyner said.

The last contact was on Dec. 29. The victim never met the male partner, known as “John Goldstein,” in person, but spoke to him on the phone several times.

“Baker” was seen driving a plum-colored BMW and an off-white Chrysler. She is white, 30 to 38 years old, 5 feet 4 or 5 feet 5 inches tall, and weighs about 110 pounds.

Anyone with information should call 911 or Major Fraud at 404-817-6810.

Thanks to John for sending this along. I like it.

On the eve of the BCS National Championship game, part of the ESPN establishment is actually recognizing today that USC will not be a “three-peat” champion if they beat Texas tomorrow night.

“LSU won the title two years ago. It”s disingenuous, it”s cheap and it”s a marketing ploy to try to call this thing a “three-peat” “, said Erik Kuselias on The SportsBash just now. Apparently Mike Golic took Lee Corso to task this morning on the “three-peat” thing as well.

Kuselias said Corso had no answer to the logical question: How can you call a team that didn”t make the BCS title game the “national champion” - because they were the AP poll champion - when the AP was part of the formula that determined the BCS title game teams?

I doubt logic will get any traction here, but it”s good to see somebody in the ABC / ESPN / BCS machine standing up for the truth.

I have to take Carol Costello to task for something she said on CNN”s American Morning today. Following a story on credit card spending this holiday season, she made this statement:

“It”s always good when people don”t use credit cards.”

What a load of horseshit. I have to assume that her statement comes from the incorrect belief that the typical American household is drowning in credit card debt. If you”re one of the poor saps who carries a high level of credit card debt in relation to your income (36% of households who owe more than $10,000 in credit card debt have household incomes under $50,000. Ouch), obviously adding to your debt load is a bad idea. But routine and heavy use of credit cards can be a very smart thing if managed properly.

Consider:

- If you pay off your credit card balance each month, the credit card company is giving you an interest-free short-term loan. The money floating on your credit card can be put to “work” elsewhere. If you”re really gung-ho, you could move that money to a brokerage account and try to turn a quick profit. If you”re like me and just let it sit in your bank (you do have interest-bearing checking, right? If not, see NetBank or others) you can earn a tiny amount (with today”s interest rates). But still, it”s a net positive, and if interest rates go up, you”ll make more on the float and still pay no interest to the credit card company.

- If you have a “rewards” credit card (and why wouldn”t you?), each dollar you run through the credit card pays you back in some way. After earning 100,000 SkyMiles from credit card charges, I”m back using my cash-rewards card, which pays me 1% on all charges and 5% at grocery stores and gas stations. Again, free money if you pay off the card every month.

- A lot of people use Visa-branded debit cards tied to their checking account, and while that”s good if you”d otherwise turn purchases into credit card debt, it”s not a smart decision. If your Visa debit card is stolen, you”ll get your money back, but it”ll be your money the criminals are using until your bank sorts things out. Having a couple thousand dollars disappear from your checking account for a week might not be such a good thing if that mortgage payment is due today. When a real credit card gets stolen, it”s the credit card company”s money that”s being stolen, not yours.

- A good credit card also provides 90 days of purchase protection, so if you buy that Video iPod today, pay for it in 30 days and lose it in 60 days, the credit card company will buy you a new one. Not a bad deal when you”re not paying anything for the protection.

- Cash sucks. Cash in your pocket costs you money. A $20 bill would earn me a penny per month if it sat in my checking account (hey, a principle is a principle). Many people pay money in the form of ATM fees to get cash, which is the worst idea ever. And cash is a bad thing for the businesses who get it. The labor and capital costs of counting cash, securing cash, moving cash, etc. is pure waste, especially when you consider the same costs exist to get the money to you. I can”t find good stats on what it costs to move physical money around between banks, customers, retailers and back to banks, but it”s a horribly inefficient thing when an electronic alternative is available. I think the fact that smart retailers like Starbucks and QuikTrip encourage even small purchases to be made by credit cards (they don”t make you sign for things under $25) speaks to it being better for business.

This year, The Wisdom household will run about 1,500 transactions through credit cards for everything from a $2.50 iced coffee to a $2,000 insurance payment. About 30% of our gross income will pass through our credit cards, which means through the interest float and cash-back rewards, we”ll increase our gross income by about 0.6% with zero cost. That”s about an extra day and a half of pay for doing nothing but being smart.

So please don”t tell me “it”s always good when people don”t use credit cards.”

The in-laws had a little Christmas night gathering Sunday in which the topic of conversation finally rolled around to Katrina damage on the gulf coast. The wife and I talked about our trip through Waveland and the unimaginable level of destruction there.

But instead of the standard “yeah, it was really bad” stuff, I got this from a know-it-all, Miami-centric transplanted Yankee co-worker of a family member:

“I can”t believe Mississippi didn”t have stricter building codes. Of course wood houses aren”t going to survive a hurricane.” She went on to explain how houses in Miami are built to withstand 250-mph winds.

It wasn”t wind, I told her, that destroyed the Mississippi coast. It was the massive storm surge that literally washed away everything from the beach to the railroad tracks - a half-mile inland.

But the hurricane-code houses can take a flood, she said. The interiors have to be re-done, but you don”t see houses destroyed like in Mississippi.

Sure, I said, rebuilding in Mississippi will be to modern code. But these houses had survived a lot of storms - including Camille - and Katrina was just on a scale never seen before. These places weren”t even built on the beach.

Miami, she said again, sees a lot of flooding in hurricanes but not the kind of damage that happened in Mississippi. Her house - five miles inland - has been damaged but never destroyed.

At this point, the wife jumped in: “Not flooding - a 35-FOOT WALL OF WATER.”

In the spirit of Christmas, we let the conversation die. And I figured it best to ignore the side conversation I heard the wife”s father starting:

“If those people [read: black people in New Orleans] were too stupid to leave, they deserved what they got.”

There”s word out today that Katrina was “weaker” than first thought when it struck the Louisiana / Mississippi border. The final analysis showed it came ashore as just a Category 3 hurricane. Measurements in New Orleans showed peak winds of just 95 miles per hour.

The initial reaction from this revelation has been that it shows how inadequate the hurricane protection system in New Orleans was. Quoth Sen. Mary Landrieu:

“This news further highlights the need for a full federal commitment to build the highest level of protection through levees and coastal restoration for New Orleans, South Louisiana and the Gulf Coast.”

It”s an easy equation on the surface: New Orleans was supposed to be protected against a Category 3 storm, but the levees failed when the city was on the weak side of a Category 3 storm - therefore protection against a Category 3 storm isn”t enough.

But the real story here is how useless the 1 to 5 rating system for hurricanes really is. Hurricane Charley made landfall in Florida last year as a Category 4 storm. And as bad as the damage was near Tampa, it was very localized destruction caused primarily by wind - which is typical for hurricanes.

Katrina, on the other hand, was anything but typical. I”ve written before about the unimaginable scope of damage in Mississippi (10-foot surge 2 miles inland). When we drove down to Louisiana for Thanksgiving, we stopped in Mobile to eat at the relocated Original Oyster House and we took pictures of the destruction there.

This is what used to be a gas station next door to what used to be the Original Oyster House across the channel from the U.S.S. Alabama in Mobile Bay:

Katrina”s surge simply washed away all but the concrete frame of the buildings there - about 100 miles from where the storm made landfall. If this is a “Category 3″ storm”s effect, Hurricane Andrew (a solid “4″) should have wiped out the Florida coast from Homestead through Miami, Fort Lauderdale, West Palm Beach and up to Jupiter. But it didn”t.

And New Orleans should have been safe from a “Category 3″ storm. But it wasn”t.

That”s the problem Katrina exposed. Assigning a 1 to 5 rating to a hurricane really tells us nothing. Hurricanes cause wind damage, surge damage and rain-based flood damage. Yet the wind speed is all that goes into the rating people use to gauge their reaction to the threat.

Katrina was a “5″ at one point, and that”s what prompted the evacuation of New Orleans and caused people in Mississippi to pay attention. And surely the intensity the storm reached out in the gulf had a direct effect on the ultimate destruction. Had it carried much of its surge without stretching beyond a “3″, however, a lot more people would have stayed put - and died.

And now people will say the New Orleans protection failed even when the city was on the backside of a Category 3 storm. And they”ll say that means they need Category 5 protection.

The engineers who designed - and will redesign - the New Orleans protection system surely don”t just think “Category 3″ when they”re drawing up plans. They design for water height, pressure and other forces. They may be told “we need Category 3 protection”, but they translate that into what the forces are likely to be in those conditions.

The National Weather Service also tracks much more information about storms than just wind speed. They measure barometric pressure, ocean wave heights, etc. They know how big the storm is and how fast it”s moving, which forecasts localized rainfall and the potential for flooding. Yet the headline term that most people pay attention to is the category rating.

And considering the Hurricane Center folks always have to remind people that even a Category 1 hurricane is dangerous, it”s clear too much attention is paid to the wind-speed number.

So as the U.S. looks at the legacy of Katrina, one change should be a more informative and precise storm categorization system. Getting the public, FEMA, local officials and relief agencies to look beyond the wind number would help everyone better prepare for storms and make relief and recovery more focused and effective.

Maybe what we need is a multi-number system that rates wind, surge and rain. Katrina might have been a 3-5-2 storm in such a system, and nobody would be surprised at the destruction.