We are in our second day of inhaling all the recent political movements. While 99% of the attention is being paid to the Obama campaign and the pending transition in the White House, there was another vote that I think was just as important.
The citizens of California voted to define marriage only between man and woman. The citizens voted. THE CITIZENS VOTED. Now, opponents of Prop 8 are protesting in the streets and filing lawsuits challening the results. The L.A. Times reports that three seperate lawsuits were filed a day after the election asking the California Supreme Court to overturn the results, in effect, negating the will of the voters. The lawsuits were filed by the ACLU (surprise there), National Center for Lesbian Rights and Lambda Legal. Suits were also filed by Santa Clara County, the city of San Francisco, and a private attorney on behalf of a married lesbian couple.
Without going volcanic, I'm really at a loss for words. The democratic process overturned a judges ruling on this issue that I believe he had no business ruling on in the first place. The people have proclaimed how marriage should be defined. And unhappy with the results, gay marriage proponents are asking judges whom they support to overturn the peoples vote. How UN-Democratic.
Thursday, November 06, 2008
Tuesday, October 07, 2008
Freeze! Hold it right there!
So banks aren't lending money to each other. Huh? You mean to tell me that banks, where thousands of people put thousands of dollars don't have enough money on deposit to make loans?!?!
Like my previous post lamented, companies, including banks, are running their finances just as bad as the typical American family.
On the news this morning, they say that banks aren't making loans to other banks because they're hoarding money. Banks are trying to protect themselves from a possible run - meaning that they need enough money to cover their deposits.
Here's a quick example. I gave Bank of Me $1,000 to put in a savings account. I only get 1.25% interest. Not too much. The bank turns around and gives my money away to someone else in the form of a loan. And that person, with good credit, pays about 6% interest. So, the interest is used to pay my money back to the bank, and also to make the bank money.
So, that model works fine. UNTIL, the bank starts making a lot more loans to people who have spotty credit and worse work history. All of a sudden, the loans aren't being paid back and the bank starts to panic because they don't have enough money in the coffers to cover the deposits. So, they start hoarding money.
The banks will stay afloat. Leave your money there. It's a lot safer than in the stock market right now. But instead of government and taxpayers money being used as corporate giveaways, I think financial institutions need to be creative in raising their own capital.
One of the major reasons that people put $1,000s of dollars into the stockmarket is because of a higher yield in long term investments than what banks offer through traditional savings vehicles. To increase the amount on deposit for banks, I propose that banks offer higher interest rates based on the amount on deposit. Customers need a reason to put money in the bank. I like my money to work for me - as little as I have, I like to know that it's making me something. If banks started offering no-min savings accounts with higher interest rates in the 3-5% range rather than the paltry 1.25%, it would give banks more money on deposit, thus more latitude in making loans. Even higher rates could be offered to people with substantial amounts in accounts.
I expect the feds to raise the FDIC insurance to $250,000 anyway to entice people to leave their money in accounts rather than pull it out.
Anyway, this is just something thats been stewing about for the last few days. Discuss.
Like my previous post lamented, companies, including banks, are running their finances just as bad as the typical American family.
On the news this morning, they say that banks aren't making loans to other banks because they're hoarding money. Banks are trying to protect themselves from a possible run - meaning that they need enough money to cover their deposits.
Here's a quick example. I gave Bank of Me $1,000 to put in a savings account. I only get 1.25% interest. Not too much. The bank turns around and gives my money away to someone else in the form of a loan. And that person, with good credit, pays about 6% interest. So, the interest is used to pay my money back to the bank, and also to make the bank money.
So, that model works fine. UNTIL, the bank starts making a lot more loans to people who have spotty credit and worse work history. All of a sudden, the loans aren't being paid back and the bank starts to panic because they don't have enough money in the coffers to cover the deposits. So, they start hoarding money.
The banks will stay afloat. Leave your money there. It's a lot safer than in the stock market right now. But instead of government and taxpayers money being used as corporate giveaways, I think financial institutions need to be creative in raising their own capital.
One of the major reasons that people put $1,000s of dollars into the stockmarket is because of a higher yield in long term investments than what banks offer through traditional savings vehicles. To increase the amount on deposit for banks, I propose that banks offer higher interest rates based on the amount on deposit. Customers need a reason to put money in the bank. I like my money to work for me - as little as I have, I like to know that it's making me something. If banks started offering no-min savings accounts with higher interest rates in the 3-5% range rather than the paltry 1.25%, it would give banks more money on deposit, thus more latitude in making loans. Even higher rates could be offered to people with substantial amounts in accounts.
I expect the feds to raise the FDIC insurance to $250,000 anyway to entice people to leave their money in accounts rather than pull it out.
Anyway, this is just something thats been stewing about for the last few days. Discuss.
Tuesday, September 16, 2008
American Family, meet your model.
For years, the American family has been maligned about how much debt we carry. The house, the car payments, the credit cards, the medical payments, the student loans, and on and on and on. Every time you go to Target, they ask you if you would like to apply for a Target card. I found this on MSN's website :
- About 43% of American families spend more than they earn each year.
- Average households carry some $8,000 in credit card debt.
- Personal bankruptcies have doubled in the past decade.
With the fall of financial giants Bear Stearns, Lehman Bros., Merril Lynch, and AIG hanging on to threads, it is clear that the American economy is troubled. But do we really blame a "slow" economy, or is the recent downturn a result of how we all handle money? Would Lehman Bros. go bankrupt if it had money in the bank? These companies risked their future on the HOPES of other people paying their mortgages on time. And they were subprimes at that, not even people qualified to get a good interest rate to start with.
I said years ago when the trickery of the ARM started to get well publicized that the end result would be very ugly, and it is. Those that thought they would have a better job in 4-5 years and be able to refinance don't have the jobs they thought they would have. And it was wreckless behaviour on the part of banks to push those loans on people they knew couldn't afford the loan and payments in the first place.
Financial institutions want us to let them manage our money. But could they do a better job and earn me more money that just a standard savings account at this point?
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