Category Archives: Banking

Do the Math

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Lordy Lordy™. Do the math, people.

Oh.

Wait.

It isn’t math. It’s simple arithmetic.

Under the subject line, A Bail Out Plan That Works, I’ve been subjected to about 14 repeats today alone of the following bright idea:

I’m against the $85,000,000,000 bailout of AIG.

Instead, I’m in favor of giving $85,000,000,000 to America in “We Deserve It Dividend.”

To make the math simple, let’s assume there are 200,000,000 bonafide U.S. Citizens 18+.

So divide 200 million adults 18+ into $85 billion that equals $425,000.00.

My plan is to give $425,000 to every person 18+ as a “We Deserve It Dividend” …

It goes on from there.

I’m all for giving $700,000,000,000 to individual Americans in “We Deserve It” dividends (as long as it’s your money) but do the math, people.

85 billion dollare: $85,ØØØ,ØØØ,ØØØ
divided by 200 million peeps 2ØØ,ØØØ,ØØØ
= $425 per person


Maybe we should put the $85 million into our elementary schools instead of Wall Street.

And speaking of Wall Street, the yahoos in Congress blocked the bailout today (September 29, 2008).The DOW is down about 777 points, the largest one day point drop ever. Anybody want to guess how many Congress Critters are buying stock right now because they know, absolutely know, the market will soar when the package passes.Wouldn’t you? After all, we’re talking more than 10% right now for a few days “work.”

I love politics. It is so enriching.

Congress wants to make sure nobody on Wall Street gets rewarded for this mess. Do you suppose we could take away Congress’ parachutes and severance?

Lordy Lordy™.

Some Assembly Required

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My bank insisted the other day that I get new checks. They had changed their routing numbers in 1997 or so and really wanted me to spend my money with something that didn’t screw up their machinery.

They also wanted me to pay for the new checks but I declined. After all, I didn’t change the routing numbers.

They paid for the checks which arrived from Deluxe today.

I do most of my banking online so I write very few checks any more. Not only that, since all the banks were forced to accept colorful (and inexpensive) checks from sources like Checks-R-Us-In-The-Mail, I haven’t bought anything from Deluxe since about 1978. Taken together, I’m thinking the near-captive check printing operations like Deluxe are the buggy whip manufacturers of the 21st Century and that the days of even independents like Checks-R-Us are numbered. Imagine a wry grin at that. Our writer friend Alma in Washington state would thwap me.

Someone at Deluxe got the bright idea that they would save money by shipping the checks with a flattened box.

“Let the customer assemble the box and we’ll save money,” that Deluxe genius thought.

And it was so.

Understand that the cardboard pre-box had been printed, cut, folded, glued, and taped together by machines at the factory. Then the (flattened) pre-box and the little stacks of bound checks were bundled loosely into an envelope to be mailed.

I don’t see the savings.

After all, the cardboard pre-box could have been printed, cut, folded, glued, and taped together as a box shape by machines at the factory and the little stacks of bound checks could have been put inside the box!

I’m a mechanical engineer with an actual diploma and everything. I have built a boat from scratch and gotten it out of the barn. It even floats. I can put the top up on one of Carroll Shelby’s original Cobras. I can even program my VCR. I just spent half an hour folding and gluing and taping this darned box together.

Bean counters. Bah.

At least the couple of hundred checks they sent will likely last my lifetime. Or until the next routing number change.

It’s the Economy, Stupid

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The accent may be on the wrong syl LA ble.

A friend mentioned that he had heard that a very large bank was talking to the Fed about liquidity problems. He was nervous that we might be on the brink of something way uglier than most are thinking.

He had probably heard the first rumblings about the Bear Stearns calamity. JP Morgan Chase agreed Sunday night to acquire B-S but the problem in the financial markets is widespread and still growing. The Wall Street Journal has a short history of troubled investment bank sales here: snipurl.com/21y4f

We recovered from the junk-bond market debacles and from the savings and loan scandals and from the insider trading/arbitrage adversity. We will recover from this sub-prime mortgage mess, too. Nonetheless, I am not happy about owning banking stocks right now.

That said, I have two thoughts for my friend.

Really.

Just two.

(1) 99.94% of the ARM crisis has been caused by systemic fraud (as in felonious behavior) on the part of the mortgage sellers and particularly the banks that financed the mortgages, then resold them as “secure” investments to pension funds and the like. The only good news is the Saudis and the Chinese appear to hold at least some of the paper.

(2) There is no real real estate problem no matter what the news says. Lemme repeat that. There is no real real estate problem no matter what the ID10Ts in Congress say.

We own a house. The roof still keeps the rain off, the heat still keeps the cold out, and the rent-a-cat still curls up by the fire. It absolutely does not matter to me today if this house is worth a dollar, a million dollars, or something in between. As it happens, the house is worth more than when we bought it. Yay! It’s also worth less than it was a year ago. Boo! Oh, wait. I didn’t sell it a year ago and I don’t plan to sell it today so its value on the market is of absolutely no consequence to me.

OK, its value on the market is of absolutely no consequence to me except when I pay taxes on its value but that’s a whole nother story.

Now the bad news. In other words, here’s why my friend may be right.

Nobody believes me.

We are so driven by this Chicken Little squawking about the housing sky falling that we really really believe the end is nigh.

And so it will be.

For a while.

Wot to do, wot to do.

Buy.

Warren Buffet is a whole lot smarter about this stuff than I am. His advice is simple. When you find a good property at a bargain price, buy it. Unfortunately, nobody believes him right now, either.

It’s not just the economy. It’s the stupidity of the herd that drives the economy.