Double Screwed

Yesterday I went across the border to attend to some odds and ends. One of my stops was the Bank of America. A small CD had rolled over with me missing it and the Bank kindly put it at the new rate – 1.29% interest and tied up my money for seven months. And this was a high rate for them, in a regular savings account it was .9%!
As I stood at the counter growling, it occurred to me that I had just been twice screwed by the bank. This lovely bank, where I have been doing business for a faithful 27 years is one of the biggest of the Welfare Queens. They are the guys on the dole in the bank bailout, standing palms up in front of our government for tax dollars. Hmmmm.
That means they are using my money, paying me 1.29% interest, and taking money from my tax dollars as well. Am I missing something? There is little or no incentive for me to leave money in the bank. There is no way I’d put my pennies into the stock market right now, not with the same crooks still in charge. In fact, my mattress is looking pretty good at the moment.
After all, a thousand dollars left for a year earns me a whopping $12.90 and if I had $10,000 I could earn $129.00 – a year! Taking it a bit further, it means that $100,000 pays $1,290 and $1,000,000 the munificent sum of $12,900 – a year! Not very interesting for people who worked all their life to put away a nest egg for retirement and hoped to live on the interest, oh, sorry, I mean starve on the interest.
The Federal poverty level is considered to be $10,400 for a family of one and $14,000 for a family of two. Obviously, if a couple scrimped and saved to put a cool mil in the bank for retirement, if they hope to live off just that, it’s dog food and sleeping bags. Even if their house is paid off, the real estate taxes could be more than their income in many areas of the country – forget about little things like food, water and electricity. When my mother passed away, her income was $9,000 a year and her real estate taxes, with discount for her age, were $13,000. A friend of mine, when I mentioned it, replied “Then she should have moved!” Yeah, right! You tell that to a ninety-nine year old woman who’s lived in the same house for almost 70 years.
This is where I think I’m missing something. Where is the incentive for Americans to save? If we were incentivized to put money in the bank, then wouldn’t the banks have money to lend, or am I being too simplistic? That was the old fashioned model. The banks paid us to keep our money with them in the form of a decent interest. They then turned around and used our money for mortgages and loans at a higher rate of interest to make a profit.
It seems to me that if they again paid a decent interest rate, people might start to save and the banks might have money to lend again without being on the dole. That is, if they can also convince us they will use it in a prudent manner. But I’m old fashioned, that was the way it used to work.
For instance, Bank of America is paying me 1.29% interest and charging from 9.99% to 18.99% interest on credit cards. Then, if you are late, the interest can go as high as 52%! One time my husband opened a credit card and forgot about it, he charged a few dollars and forgot to pay the bill. What a shock it was a month or two later when it showed up with Mafia interest! Anyway, it is certainly a profit on my money! Even a mortgage is currently in the 5+% range. Surely, they could eke out another percent or two for my pennies on deposit, couldn’t they?
At the moment, I just feel double screwed, and with no kisses. There I am, standing at the bank fuming about banks being the world’s biggest Welfare Queens, taking a huge government dole, and at the same time not even paying a reasonably viable interest to depositors so they could get more money in the usual way by encouraging savings. If that isn’t a double screw job I don’t know what is.
And there is a third screwing peeking around the corner, way off in the wings - the nasty specter of wild inflation caused by government printing money to cover all these bailouts. Our same poor friends with money in the bank that earns nothing will soon find the buying power of their nest egg sorely decreased. Unless there is a total deflation, they will be left with worthless paper, the result of a life’s work. They can stand in line for the dole next to the rich defrauded by Wall Street scammers and mega crooks. Maybe it will be some consolation, but I don’t think so.
The next screwing is from the auto dealers. I was with a friend the other day who lives near the port and he was telling me about the miles of cars sitting in lots nearby that auto dealers imported from Japan and don’t have a prayer of selling. Since they’ve all made a profit from us for so long, wouldn’t you think they might just be interested in turning that inventory and clearing a buck, even if it was at a loss? After all, automobiles aren’t like fine wines; they don’t really improve with age.
Now I know these are Japanese cars made off shore, but they still compete with automobiles made in the states and in my mind, any deal is often better than none. But no, the cars will sit and rust and we Americans will just keep on paying our own manufacturers to turn more out and let them rust too, sort of like paying the farmers to not plant, or let their crops rot in the fields. Don’t you just love government subsidies?
A few months ago I went into a Hyundai dealer and was looking at a very nice sedan on the lot. The 2009 models were already in but this was an unsold 2007 model. The sticker was $28,000, all tricked out in leather, very nice. I went home and looked it up on Kelly Blue Book and priced it out retail with 50 miles on it. The trade in value was $15,000 and the retail was $17,000 so I went back and offered them $16,000. I figured I could be magnanimous and split the difference.
They looked at me like I was a madwoman. No way! I laughed and walked off the lot sans car. I’ll bet it’s still there. There is nothing more dangerous than an old broad who knows how to research and isn’t afraid of making offers. What the hell, I’ve been turned down plenty in my life, and if someone just happens to go for it, well, what a deal I might make!
This evening I’m going to a real estate auction with my friend Steve. We’re interested in picking up a bargain or two. We figure when it all turns to shit as it’s heading, we can at least plant potatoes on the front lawn or rent it out for a few bucks. People have to live somewhere and they will at least pay some rent, might be a better return on my investment than my 1.29% and give someone a roof over their head at the same time. It seems like a double benefit, a lot better than a double screwing! I might even get a kiss in return at that!