Tuesday, September 30, 2008

What The Money Crisis Means To The Average Joe

I find it a bit frightening that out of all of my co-workers, I was the only one who actually took time on Monday to see how congress voted on the Bail-Out Bill.

Surely I can't be the only one who is concerned about this!

I have a 401K tied up in Wachovia. And it deeply concerns me that CitiBank is wanting to absorb Wachovia. Just when did CitiBank get big and strong enough to absorb a bank as large as Wachovia? What's going on in the financial world?

The part I found most interesting is a quote I read saying that the folks trading at the stock market exchange were holding off to see how the vote went because many had plans to quickly dump the bad stocks in their portfolios so that the Government would purchase them and keep them afloat.

The key words being Bad Stocks. Meaning poorly earning companies that are publicly owned.
The dogs that slow down a portfolio from producing top dollars.

I have to scratch my head at this. Shouldn't a company that is not living up to its earning prospectus be expected to fold? Why keep doing CPR to a dead dog? Let it die and move on!

Didn't that used to be the American Way? Isn't America supposed to be a place where anyone is allowed the opportunity to try to achieve their dreams? And isn't America also the place where people who aren't properly prepared for success are allowed to fail, lick their wounds and then come up with an even better idea due to the things they learn after they have failed?

And it just appals me that there were so many riders tacked on to a bill of such magnitude of importance. Even though I know it is just standard operation for those proposing bills to congress to try to tack on little stipulations that have nothing to do with the initial bill... but on one with so much at stake - for them to tack on such things... well, I'm just glad congress voted this one down.

I know this bill will be re-worked and re-submitted. And it will be interesting to see what happens next. Congress doesn't reconvene until Thursday. Meanwhile, the stock exchange is still open for business. The sky is still blue. I still have my birthday.

So what does this mean to the average person? Why should my co-workers be paying attention?
Well, first off, our aises will be smaller. Everyone is going to have to pay higher taxes and because our employers are paying those higher taxes, they will be less willing to reward the little guy. Please note that this is regardless of what sort of bill gets passed, or if no bill gets passed. Times will be tight for the next 8 years at least.

Here at my house, times are already tight. We don't have a mortgage or a car loan to pay on. But our rent will likely go up. Or our landlady may finally decide it is time to sell the place. Are we prepared to make an offer in such an unstable financial market? But then again, maybe the market value of this house will FINALLY go down to meet the TRUE value of this house. And THEN it would actually be WORTH buying. As it stands, the price is inflated $30,000 over what it is truely worth. I look at the valu of the houses on my block and try to hold back tears. I cannot believe my neighbours would sink so much money into a house in this neighbourhood.
This is NOT a prime spot in my fair city!

There will be more company layoffs. More hiring freezes. Our college students will have a tough time finding jobs in their area of study. In that respect, at my house, we are fortunate there as well. With Hubby working in the service industry, and me working in a health care environment, I think we're fairly safe at the moment. Of course, that could change. At this point, it's all in the air waiting to land.

I'm most curious to see what my 3rd quarter statement for my 401K is going to say. I've never made a killing with it. It's just been a steady growing little nest egg. If it is lost, I don't think I'll cry. But I know others who have portfolios in that 401K who have been putting the maximum allowed amount into their 401K for years. THOSE people will be crying if it is lost. And I do feel for them, especially knowing that they are close to retirement and are really counting on that money.

Another thing I wonder about is, will we be allowed to open a Christmas Savings Account again next year? This year it was more than worth it. Our return will be double our initial investment.
What will the interest rate be next year? Will it be worth it?

How can you not be curious about such things? Wake up, People! The entire world is watching this unfold, and here on our own soil there is just so much ignorance happening! I just don't get it!

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