BlogHer - Bankruptcy, Takeovers, and Bailouts - Oh My! - Comments

There is the scariest part

paulag01 — Fri, 19 Sep 2008 11:21:33 -0500

Truly I am not steeped in politics or history, but these facts are probably what is most frightening. The total denial is what got us here. Lord knows we don't want that going forward?!? Unless of course we can't learn from our errors.

Thanks Mandycat for that bit of history.

Paula Gregorowicz
The Paula G Company

www.thepaulagcompany.com
www.coaching4lesbians.com

Phil Gramm - McCain economic advisor

mandycat — Fri, 19 Sep 2008 11:14:47 -0500

This would be the same Phil Gramm who recently scolded Americans for being "whiners" on the subject of the U.S. economy which he describes as being simply too, too wonderful.

Mr. Gramm certainly can't be faulted as a flip-flopper. He's been living up to his beliefs for decades now. He helped deregulate the banking industry, he helped pass what is generally known as "The Enron Loophole" and then he parlayed a career in politics into a highly paid job at a Swiss financial services company that is currently being investigated for allegedly marketing tax-evasion strategies to wealthy Americans. Heckofa job, Grammy!

Student loans are breaking already

miteegirl — Thu, 18 Sep 2008 22:39:19 -0500

I didn't expect it to be happening QUITE so fast. That is a bit daunting.

http://www.cnn.com/2008/LIVING/wayoflife/09/18/student.debt/index.html

the burden will be spread

nakedanarchists — Thu, 18 Sep 2008 10:56:46 -0500

ultimately, we are the bail out. People's retirement monies will be very affected, corporate employees, non-profit employees who see donations dwindle and cutbacks in that sector...

I am nervous and am only keeping "safe" debt--student loans and mortgage. I want to minimize risk. What worries me is that this is such a complex problem and I can't even wrap my lobes around it with my minimal knowledge of macro-economics.

http://nakedanarchists.wordpress.com

Thanks!

Laracolvin — Thu, 18 Sep 2008 09:00:06 -0500

I'll check the link out!

Credit card debt

miteegirl — Thu, 18 Sep 2008 08:58:45 -0500

Even if you don't have a credit card with a failing bank, this could affect you as well in the form of higher interest rates, higher minimum payments and toughter credit requirements. Advice from professionals is to do everything that you can to pay your credit card debt down while avoiding new debt.

Lara-- I'm sprinting out the

miteegirl — Thu, 18 Sep 2008 08:56:20 -0500

Lara--

I'm sprinting out the door but this should help explain it.

What happens to credit card debt if bank fails?

What about credit card bills?

Laracolvin — Thu, 18 Sep 2008 07:15:02 -0500

I'm showing my inexperience w/the market and economics, but I haven't been able to find the answer to this question: what about credit cards? I have a WAMU credit card...if they go belly-up, what happens to the money that everyone owes? Anyone have any idea?

Notions of Identity

Great facts and historical perspective

paulag01 — Thu, 18 Sep 2008 06:47:15 -0500

Thanks miteegirls for the historical perspective and facts. Even more frightening than the current view only thinking.

Candelaria - I hear you about the figures...they are surreal which is what makes it even more monumental. Despire how our government budgets have worked in the past -- you really do need to HAVE the money to do things...even though they own the printers, printing up more money just isn't going to do it.

Warmly,_Paula

Paula Gregorowicz
The Paula G Company

www.thepaulagcompany.com
www.coaching4lesbians.com

Unfortunately,

miteegirl — Wed, 17 Sep 2008 23:53:59 -0500

regular old savings are what is next at risk.

Let's say I have $50 in savings at Washington Mutual Bank (WaMu). WaMu is a bank like Chase. Or Bank of America. Or Main Street Savings and Loan. You go in, see a teller, give them a deposit. They give you a checkbook. Plain old bank.

And WaMu fails as a results of this mess. Which is not farfetched and they are looking for a buyer to save them right now since they are so close to folding.

If the FDIC cannot find enough money to insure WaMu's depositors? You never see your $50 again.

Or maybe they give you pennies on the dollar. So, you get a check for $15 instead and you never see that $35 again.

What if the FDIC CAN find the money to insure WaMu's depositors, but they have to get it from the US Treasury? Where does the US Treasury get it? Higher taxes.

So, either you lose it outright. Or you get only pennies back. Or you lose it through higher taxes because a politician decides to tax you. OR you keep it because a politician decides to tax someone in a different tax bracket.

That is an oversimplified explanation of how this all trickles down.

I'm Frightened and a bit Scired (mispelling on purpose)

Candelaria Silva — Wed, 17 Sep 2008 23:33:19 -0500

but I realized some years ago that there's no security in any sector any ore. Our security has to come from being resilient, having several income streams, always having our ears open for opportunities to earn money, etc. I think we all have to have side businesses and gigs.

It seems to me if the government can spend the billions it did to bail out these giant institutions - perhaps we could have expanded pre-school educational opportunities, fixed Social Security, etc., etc.

The #s are so huge it makes me feel like maybe its play money. A lot of this is surreal to me. Luckily, having always been working poor, I've never had a gravy train and have had to scrap by to get along. Regular old savings just feel more comfortable to me now. I like knowing that the $50 I put in savings will always be there, versus the volataility of stocks and bond. High risk, high rewards, and devasting failures.

Oh, my!

blog.candelariasilva.com

Good and plenty!

Herbert Hoover, Redux

miteegirl — Wed, 17 Sep 2008 22:44:45 -0500

Well, I read the quote from McCain about the economy being fundamentally sound, I did a spit take, laughed and then sobered up very quickly when I realized what that meant.

It meant that we have a person running for President that is in total denial of reality.

The last time that we had that in was 1929. And Hoover was President. No one was better at denying reality than Hoover as you can see from his dismal record of speeches about the economy during the Depression.

The last time that Wall Street was as unregulated as this was...1929. Right before the Stock Market Crash.

Right after the Depression, in 1933, the Glass-Steagall Act was established. This Act prevented the markets from indulging in risky speculation with your savings and checking accounts.

In 1999, this Act was repealed by a Republican Senate and a Republican House, led by Phil Gramm (R-TX). The 2/3rds majority vote meant that Clinton could not veto or stop the deregulation. The barrier between deposit accounts and risky investments was removed.

The last 9 years have been a very big party for Wall Street. With our money. Lots of commissions and speculation.

If you are an investor in the Primary Fund/Reserve Fund, that fund has "broken the buck". This is only the second fund to ever have done that in history. As of today, you will only receive back 97 cents for every dollar you have invested. Primary Fund has frozen its redemptions (withdrawals) because it cannot pay investors. This means that the money market fund is holding less money than it is supposed to be holding because of losses at Lehman Brothers.

If your small business can't get a loan, your son or daughter can't get a student loan, you can't get a mortgage or a car loan, yes. That is related to what is happening right now.

If houses in your neighborhood are foreclosed upon, and are boarded up, and the value of your neighborhood starts to decline? And squatters move in, or housing stock is converted to rentals, or houses are broken into and stripped for reclaimed metal? That is related to what is happening right now.

If your credit card interest rates soar from where they are right now or your credit limit is lowered, that is related to what is happening right now.

If Washington Mutual fails tomorrow or next week, we can trace the
reason directly back to 1999. If the FDIC cannot cover depositor's
WaMu accounts with its shrinking reserves, we have Phil Gramm to
ultimately thank for that.

Phil Gramm. John McCain's economic advisor. THAT Phil Gramm.

Think about it.

Bankruptcy, Takeovers, and Bailouts - Oh My!

paulag01 — Wed, 17 Sep 2008 21:32:38 -0500

Just when I thought last week's news with Fannie Mae and Freddie Mac was groundbreaking, the last week has brought us unprecendented news in the form of shocking bankruptcies (Lehman Brothers), takeovers (Bank of America/Merrill Lynch) and bailouts (AIG). It's a new form of the memorable line from the Wizard of Oz "Lions and Tigers and Bears Oh My!". Or perhaps Chicken Little had a little truth in him; well, at least if you watch the recordbreaking plummeting of the stock markets.

As we try to regain our stomachs much like after a double ride on the tilt-a-whirl, so many are wondering "What's Next for the US Economy?". I am one of them. Are we headed toward one big government run bank? Will the government start to own significant pieces of all kinds of financial institutions because they can't seem to run themselves soundly? Are we headed for a new brand of socialism? Who can tell...

Why so many of us wonder, one of our candidates in this historic election does not share the uncertainty of the majority of Americans. Pam's House Blend captures this quotable:

And the Dow dropped 450 points today -- $700 billion in investments vanished. ABC pummeled John "The fundamentals of the American economy are strong..." McCain:

Obama weighed in as well and McCain's counter-comments once again totally contradict what he just said.

Obama called it "the most serious financial crisis since the Great Depression." McCain declared in a new TV ad that "our economy is in crisis" and that only he and his running mate, Alaska Gov. Sarah Palin, could fix it. McCain also told voters in Jacksonville, Fla., "The fundamentals of our economy are strong."

Ah- so we are fundamentally in a crisis? Right on John! All of my personal sarcasm aside, we're dealing with historic and serious financial business here. At a time when the job market is already dicey with people losing jobs regularly, so many find themselves vascillating between making a real career for themselves and simply spending each day with their tail between their legs gripped with fear that the bottom could fallout at any moment. Unfortunately that is no way to live a fulfilling life. You create your own reality and it is up to you to put excuses about the economy, money, and other random things aside and focus on what matters most. Pam Slim who is knee deep in writing a book on how to help cubicle dwellers make the leap to entrepreneurship had this to say:

Yes, things feel quite bleak in the market today.

But, I would argue, if you are sitting back with your head between your knees gripping your corporate job like a favorite teddy bear, you are putting yourself at risk.

I learned from my martial art days that the safest thing to do when under attack is to keep your eyes wide open, ground yourself, leverage your strengths and let curiosity, not fear, be the emotion your opponent sees in your eyes.

Like in any crisis or economic downturn, some people are going to thrive and grow despite the chaos. These are the people who are not afraid to try new things, work on side projects, network like crazy outside of their day jobs, and maintain a balanced and positive outlook on life.

The unfortunate part of all this is that all these bailouts being made in big sums using taxpayers money isn't doing a damn thing to stem the stock slump and who knows what the long term impact of these massive expenditures will be.

Yet, perhaps this is the chaos before the truly creative solutions show themselves. Maybe the shakeup the economy really needs to get back to fundamentals. The Baglady had this to say on the matter:

First of all, I think most of us have had the experience of eating something horribly uncouth and falling ill. What usually happens is a bit of a stomach ache, and then full blown diarrhea, but once the last bit of toxin is out of your body you start to feel better. I think the financial markets is basically in the middle of a cathartic bowel movement right now. As many commentators have said, the debt and mortgage backed securities were "toxic" and these securities poisoned many firms and it is only natural that we’re seeing death and destruction. As a result, the more prudent firms are surviving and becoming stronger. For example, Bank of America has snapped up Countrywide and Merrill in the midst of this, and their position as a financial services company has been strengthened.

It's not often that you get to use the phrase bowel movement and financial markets in the same sentence, but I say - seize the moment!

What are your thoughts on the matter? Do the big stock market plummets have you nervous? Are you changing your spending, investing, or financial institution choices as a result of the recent chain of events? Do you grip your corporate job like a faux security blanket or are you out there creating opportunities for yourself regardless? Please share in the comments...

Paula Gregorowicz, owner of The Paula G. Company, works with women who are ready to create their lives and businesses in a way that fits who they are rather than how they were told they "should". Get the free 12 part eCourse "How to Be Comfortable in Your Own Skin" http://www.coaching4lesbians.com and start taking charge of your own success.

To get the latest word on personal finances from an LGBT perspective and Paula's practical coach approach to the topic check out Queercents http://www.queercents.com.

Are you a small or solo business owner who wants to be comfortable in their own skin online via a website that is a true reflection of who you are and what your business is about? Paula's signature down to earth and "plain English" approach to website design and consulting can help. Visit http://www.paulagwebdesign.com to download the free successful website planner which will make your web project a breeze.