Where’s My Bailout?

Posted on November 3, 2008

I meant to write a post like this earlier, but I was waiting for the world to end. Seeing that it’s still here, I figured I’d go ahead anyway; more than enough interesting things have happened to make this an entertaining blog post!

Ever since the start of the economic crisis Well, “start” wouldn’t be quite the term to describe it. The economy was already heading south, but it wasn’t until the bankruptcy of Lehman Brothers that things really started going bad. Of course, working families and homeowners are among the hardest hit, as are those about to retire. But what about someone like myself – single, young, and just starting out in the world? I hadn’t considered myself extremely vested in the U.S. financial system, but I took a look at my own situation, and was a bit surprised just how much all this economic turmoil affects me personally:

Event: Bankruptcy of Lehman Brothers. Result: I lose my job.

This one needs very little introduction. Almost overnight, Lehman Brothers, one of the biggest underwriters of mortgage based securities, went under, becoming an object of astonishment; the largest bankruptcy in history! To make a long story short, I find myself unemployed as a result, with only a cactus and some entertaining cocktail stories to mark my time at the 158 year old firm.

But it’s not only bankers, traders, and IT folk who got the short end of the stick here. I also think about the building maintenance staff, cafeteria workers, outside consultants, surrounding businesses; think of the bars I’ll no longer be frequenting, and all the restaurants where my friends and I grabbed lunch when we were gainfully employed. And I definitely won’t be getting any flat-panel TV’s this year – sorry, Newegg!

It’s interesting that companies lay off workers to save themselves, when it’s employed consumers that really drive the American economy.

Event: Failure of Washington Mutual Result: Nothing, thank goodness (and the FDIC!)

Guessing from the way WaMu was planting branches and ATMs left and right, you might never have guessed the ship had sprung a leak. Back in high school, I started a savings account there, since it was one of the few places that didn’t charge a king’s ransom in account fees. Eventually, I moved most of my money to Chase, because here in the city, you can’t take three steps without finding a Chase ATM.

But I kept some money in my WaMu savings. Imagine my chagrin when I came home from work, only to find that WaMu has become the biggest bank failure in history.

“Dang. I could’ve stopped by the ATM on my way home.” 🙁

Event: Stock market goes haywire. Result: I lose 37% of my 401k.

After the collapse of Lehman, the nationalization of AIG, bank failures, and other nasty things in the financial world, the markets became more volatile than a vat of kryptonite. The Dow Jones became the world’s largest pendulum, swinging between the bear and the bull faster than you can say “bailout”.

In spite of these wild movements, many investors portfolios remain sharply lower, my 401k included.

Originally, I couldn’t have cared; my employer matched all my 401k contributions. This meant that I started with a 100% rate of return, so the worth of my 401k would have to go down by more than a year’s worth of deposits for me to lose. Well, with my employer going belly-up, none of this year’s contributions will be matched, and so I’m left with a retirement fund that’s lost more 37% of its value.

It looks like I’ll have to put this year’s retirement plans on hold. 🙂

Event: Credit crunch! Result: Credit card companies screw me over.

When times were less…trying, credit flowed from the banks and into our wallets like milk and honey. In particular, American Express, in issuing me my student credit card, was willing to give me enough credit to purchase a well-equipped Honda Civic. Back then I was shredding 4-5 credit card offers a week, and begging Indian-accented telemarketers not to call me again.

How about now? The other day, I purchased a Nikon D90 (beautiful camera; you really ought to try it). If you check that link, and see how much it costs, you will understand why it would have put me over the credit limit on another one of my cards. Simple solution – call up the credit card company (Chase), and ask them to boost it a bit, right?

Wrong. The issuer, which once would have been all too happy to sign me up for dozens of other cards, suddenly decided it couldn’t extend my credit line, despite the fact that I’ve been faithfully paying off that card (and all my others) every month.

To make things more interesting, American Express decided to cut my credit line more than 73% – something I didn’t notice until a store declined my card. Again, this baffled me – I’ve been faithfully paying off that card every month since I got it my sophomore year of college.

Then my mother showed me this article from the New York Times. Apparently, if you live in areas “ravaged by the housing crisis”, work in a “troubled industry”, or even shop at the same stores as other delinquent borrowers, you are likely to have your credit cut or even revoked entirely.

C’est la vie. Again, it’s faintly ironic – don’t credit card companies earn money by extending credit to consumers? Trimming the credit of trustworthy customers such as myself is kind of like completely shuttering a store because sales are slowing down.

I reflect on these things, not to raise my pulse or throw a pity party, but to take a step back and and realize just how bad things are. And yet, there are many who say that things will get worse before they get better. Here’s to hoping we can kick the bears out of our backyard, and find some path to easier times!

» Filed Under Everything and Nothing


One Response to “Where’s My Bailout?”

  1. DonaldNo Gravatar on November 3rd, 2008 6:39 pm

    I feel for ya bragel. I’m actually surprised about your credit limits. I’ve only ever had one credit card from bofa and the limit stands strong around 10k. They even have the courtesy to call me seconds after I make large purchases to confirm it is indeed a desired charge. Maybe it’s because they still think I work for them…

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