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.
2 comments:
funny you mention the FDIC, all the talking heads that i have seen assure us its fine. i like to give everyone the benefit of the doubt on things, you know innocent untill proven guilty...but when it comes to the govt. or anything related i don't trust them, especially when it comes to them saying how they have the money...this is the same one that had to borrow from china stimulus checks of $800 to $1600 for certain qualified taxpayers, they also have 100k to back up any all bank accounts.....ummmmm, smells a bit fishy, and i don't want to hear, "well, that's a seperate institution" it all seems to be intertwined, look what the govt. did to social security, it's basically an i owe u!!!
Have you tried withdrawing money from your bank? I have...it is not a pretty site. They question you why you are taking out a few thousand. I have taken money out twice, just to have, just "in case"...in case of what? In case there is a run and I don't want to have to wait in line with hundreds, if not thousands of others. The second withdraw was a 2 hour process, where I had to wait while they called 6, yes 6 branches to see who had my enough money. That says it all. A friend who did the same had to wait while the teller called the manager so he could come over and question him about what he was doing with the money? What nerve. The teller then proceeded to tell the customer they had a meeting a few days earlier instructing them what to do when someone comes in for a cash withdraw...."stall and try to assure them everything was fine". This teller proceeded to tell the customer how their stock was doing great and they were the one of the safest banks in the country. This teller was all of 25....you think she is a credible source? All I can say is keep a decent amount of cash in hand and spread your money around various banks to be sure you don't exceed the FDIC limits. Hopefully you will never need the cash, but if you do....you can go enjoy a cup of Starbucks while others wait in the long lines waiting to get their money. Citigroup is next. (opinion only) That will cause a shock wave to be sure.
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