My bologna has a first name, it's O.S.C.A.R.
My bologna has a second name, it's M.A.Y.E.R.
Oh, I love to eat it every day
and if you ask me why I'll saaaaay......
- Oscar Mayer bologna commercial jingle
If ever you could apply food songs to the financial market it is now. My bank is Washington Mutual and it's first name is mud. And its management is clearly full of baloney.
Last week, I spoke to one of the tellers at my bank and she said the employees don't know a thing about what is going on. They know it is not good but it seems that all they got was a pep talk recently.
And last night before the news broke, I said to myself that I should probably talk a few hundred, not thousand, bucks out in cash - just in case. After all, just because my bank folds does not mean I won't have to buy food and heat. What will happen to my merchant account as all the money from my newsletter business goes into my WaMu business account?
Well, its not that bad as Super Bank JP Morgan Chase Manny Hanny Bear Stearns is swooping in to buy up the branches and deposits. They must gird up to do battle with Bank of America Countrywide Merrill Lynch!
Not to mention that I owe WaMu a lot more money (mortgage) than they owe me (bank accounts). Go ahead - fold the bank! Cancel my mortgage and give me the same relief that Fannie Freddie Chrysler Airlines is getting.
But let's get back to the point about taking money out - just in case. It is no secret that the FDIC is woefully unprepared for a financial meltdown. Rumor has it that China is not letting their banks lend to US banks and even stopped ATM withdrawals from US bank accounts. I don't know if that is true but it all plays to fear and fear is what sparks runs of banks.
Lehman's sponsored ETNs (exchange traded notes that everyone thinks are just like ETFs) went belly up. So, if I buy gold ETFs is that the same as gold bricks in my vault. Maybe not. Maybe Jim Sinclair has it right - get all your hard assets in physical form.
Well, I am not going to panic here. Just like driving a car despite the potential for accident, I am going to live my life and not be an ostrich with my head in the sand. But I sure as heck will buckle my seatbelt and keep my tank full.