Boston Gal’s Open Wallet

Where does the Fed get $30 Billion to lend – easy when it owns the printing presses
I avoided posting about the Bear Sterns bailout, since I was sure NewsHour would cover the story, and I was not disappointed. Reaction Is Mixed After Fed’s Efforts to Shore Up Economy gives a clear rundown of what happened over the weekend:
And, Joe, let me start with you. Explain as simply as you can, what happened to Bear Stearns?

JOE NOCERA, Business Columnist, New York Times: It’s like something seizes up; that’s really the best way to describe it. There was panic among its counterparties, the people they traded with, that they wouldn’t have the money to pay them back.

So people, gradually first and then with increasing acceleration, stopped trading with them. In fact, hedge funds that did business with them were sending notes to their clients over the last week or so saying, “Don’t worry. We’ve stopped trading with Bear Stearns.”

When you’re an investment bank and you depend on trading, and you depend on liquidity, and suddenly no one will trade with you, it really doesn’t matter how many securities you have, how much money you have. You have no business and the securities that you hold have no value, because no one will trade with them.

So this is a classic — this is the modern version of the run on the bank. And, you know, there’s a reason their stock closed on Friday at $30 a share and by Sunday night they were bought for $2 a share. They had no business.

So I get that the Fed gave JPMorgan a 28 day $30 Billion dollar line-of-credit to help make this deal happen – not a gift of $30 Billion. But the idea that the Fed helped finance this fire sale does make me uncomfortable. What other shoes out there are waiting to drop?
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Monday, March 17, 2008
Free Sample Glad ForceFlex
To order your Glad ForceFlex bag sample click here. – Enjoy!
Labels: Free Sample

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Inflation Intimation


A commenter recently suggested that I replace my Recession Obsession with an Inflation Obsession (since it now appears that the recession is here). Perhaps replace is not the right word, I guess adding the new category is more accurate. So the new category of Inflation Intimation is born.

What is the big deal about inflation and why should we watch out for it? Well, there is the obvious issue of rising prices. A loaf of bread cost $3 last week and this week it is $3.75 – that type of thing. While that hurts your pocketbook today, it is not the worst inflation can due to you. You see inflation is insidious, generally it creeps up on you. Lately it just happens to be racing up on us which makes it more noticeable. While paying a dollar more here and there does add up, it is the longer term impact on your financials where inflation really gets us.

Say I put a dollar away today for future needs. The future arrives and I take that dollar out to pay for my need. Unfortunately inflation has made that future dollar worth less than it used to, so while my need used to cost only one dollar, now it costs three. So past self should have saved three dollars instead of only one if it really wanted to meet future self’s needs…

So this long and convoluted example means inflation = bad and needs to be watched for and more importantly prepared for. So be warned inflation, I have my eye on you!
Labels: Inflation Intimation

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Sunday, March 16, 2008
Money Makeover: Judy and Steve Haibach
The LA Times Money Makeover: Tough problem: What to do with a $1.7-million nest egg? should be reclassified as a spending makeover, since the gist of the recommendation is to stop saving so much and start spending some more.
Judy and Steve Haibach had never dreamed they’d wind up as middle-class millionaires. Now they don’t know what to do with the $1.7 million they’ve squirreled away for their retirement.

Since the high school sweethearts married 35 years ago, they have lived a life of frugality — sharing one car, taking thrifty camping vacations and eating countless brown-bag lunches.

“Whatever was the cheapest thing we could do, we did,” said Steve, 56, a Southern California Gas Co. technician. Judy, 55, is a nurse.

The Haibachs want to retire early, perhaps next fall. But they are faced with the unusual challenge of how to spend their hard-earned money.

“These guys are ridiculously secure. Even if the Great Depression comes tomorrow, they’ll be fine,” said Brent Kessel, president of Abacus Wealth Partners in Pacific Palisades and author of “It’s Not About the Money.”

“Their problem is that they’re going to die with too much money,” said Kessel, a certified financial planner who considers the psychological and financial aspects of money.

The Haibachs need to live it up a bit more and help those who are less fortunate than they, he said. As extreme savers, they can balance their thrift through more volunteering, charity and pleasure-seeking, he said.
While I am happy it looks like the couple can start spending more and can think about how to give more to charity, I just have to wonder how many organizations right now are adding these folks to their mailing lists and call sheets. Nothing like letting people know in a newspaper article that you have excess money and are willing to start giving some of it away…
Labels: Money Stories

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The Boston Federal Reserve would really rather you not default on your home loan
You know things are bad when the head of the Boston Federal Reserve reaches out to the common consumer…

The Boston Globe alerts us to these actions in the article: Boston Fed makes rare direct appeal to hard-hit borrowers while a copy of Eric Rosengren’s, president of the Federal Reserve Bank of Boston, appeal can be found here: Consult the mortgage holder before home is in jeopardy with the helpful subtitle – Interest rates can often been negotiated (I am hoping the original letter had that as “be negotiated” and the typo is the fault of the Concord Monitor, because it sounds a little “Freudian slip” to me – as in interest rates could have been negotiated back when you took out that terrible loan!)

The letter basically points stressed New England homeowners to the website Mortgage Relief Fund and provides some info and contact phone numbers regarding the $125 million loan package available to homeowners caught in bad or unaffordable loans.
For borrowers without easy access to the Internet, the Mortgage Relief Fund banks can be contacted at the following numbers: Bank of America, 800-344-9403; Citizens Bank, 888-411-1145; Sovereign Bank, 800-288-6225; TD Banknorth, 800-281-0025 (x2315); and Webster Bank, 888-681-7788 in Connecticut and 800-635-9191 in Massachusetts or Rhode Island.

To qualify, borrowers’ incomes must be verifiable and sufficient to support the payments. The borrower must have a history of generally making timely payments. The value of the home must support certain loan-to-value limits.

For borrowers who qualify, the savings can be substantial – hundreds of dollars a month, and thousands of dollars a year. For example, if the interest rate on a new FHA mortgage is 6 percent and the initial rate on a sub-prime mortgage was 8 percent, the monthly payment on a $200,000 loan would be about $268 less, for a yearly savings of over $3,200 (and more, had the original loan reset higher). One borrower already helped was at risk of losing her home. Her loan had adjusted from 7.4 percent to 8.9 percent, and was due to adjust again soon. Her new fixed-rate loan is saving her about $250 a month.
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Saturday, March 15, 2008
Time to put a chicken coop in the back yard…
The New York Times article: Costs Surge for Stocking the Pantry notes the rising food prices at your local grocery store:
With a few exceptions, nearly every grocery category measured by the Labor Department, which compiles the official inflation numbers, has increased in the last year. Milk is up 17 percent, as are dried beans, peas and lentils. Cheese is up 15 percent, rice and pasta 13 percent, and bread 12 percent.

No food product has gone up as much as eggs, jumping 25 percent since February 2007 and 62 percent in the last two years.

“It’s a great time to be an egg farmer,” said Paul Sauder, a third-generation farmer in Lititz, Pa. His farm ships eggs to food service customers and grocery stores, including Stop & Shop. “We’ve never encountered this kind of run like we’ve had right now.”

While food costs increased, overall inflation held steady in February as the cost of gasoline declined that month, according to the latest Consumer Price Index, which the Labor Department updates monthly. That was an unexpected dose of good economic news that opens the door for more aggressive interest-rate cuts by the Federal Reserve, which is trying to head off a recession.
Labels: Recession Obsession

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Friday, March 14, 2008
Oh that glittery gold
With gold now over $1,000 an ounce, is it time I bugged my parents about this topic? Last week I printed out the Wall Street Journal article: Turning Old Bling Into Fresh Green for them to read and they both mentioned gold jewelry they would be interested in selling.

Whenever I try to help my parents with financial stuff I start to worry. Am I really helping them or am I trying to push them to do something? When they seem interested in something I mention are they just being polite or do they really want to take action?

I asked them to gather their gold items together and let me know when they had done that and I would help them look the stuff over. A few days after reading the article they had me come over and look at a pile of chains, charms, rings, and watches. So I guess they were right in saying they had some stuff – I was pleasantly surprised by the quantity. But after helping them group the items into 10K, 14K, and “can’t read such tiny markings” piles things have kind of stalled.

It seems that to get them to the next step of going to a store and having someone weigh and price the items, I will have to go with them. This is where I start to feel like perhaps I am pushing. Or would it really be just helping them at least get a quote or two of what their items are worth?

Initially I had hoped together they could visit a couple of local places to get some quotes and then I could help them with the downtown jewelry exchange building or perhaps working with the Internet broker mentioned in the WSJ article.

If they do decide after getting some quotes to not sell and instead hold onto the gold that is fine with me and I have told them that. I have also pointed out to them that if they do sell the jewelry and then just stick the money in savings, their rate of return on dollars might end up being lower then if they held onto the gold jewelry (if the dollar continues to fall and gold continues to rise).

Ugh, things just get more complicated when it is not your money. What would you do? Do I need to stop being so pushy or should I try to be more helpful?
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Amazon.com Friday Sale
Another Friday, another sale! While it feels way early to be thinking of Christmas, this winter emergency car kit would make a perfect Yankee Swap gift in my area.

Find your own bargain at the Friday Sale. – Enjoy!

Don’t forget to check out my Amazon Tips for more money saving ideas.
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Credit Card companies silence customers who want to complain
The ABC News story: ‘Muscle’ Silences Credit Card Adversaries was pretty annoying to read. A group of credit card consumers were set to testify in front of a Congressional panel on consumer credit. Willing and ready to tell their stories, up until their credit card companies threatened to reveal all their personal financial info to be entered into public record if they dared tell the panel their complaints!
At the 11th hour, the credit companies found a way to stop those that had traveled to Washington today to tell their story to the Congressional panel on consumer credit.

The banks whose practices were about to be discussed on Capital Hill were demanding that those testifying before Congress about credit card practices sign a waiver that allowed their personal financial information be revealed to the public.

The Republicans on the sub-committee were backing the banks’ requests and a procedural battle would have ensued.

All the panelists declined to sign the waiver.

Autry described the waiver “as broad and vague as their agreement is deceitful. It said basically, anywhere, anytime, any issue involving your credit is fair game in any public forum.”
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Thursday, March 13, 2008
Time to order more budget greeting cards
Ugh, looking at my calendar reminds me that I need to replenish my greeting card box. I am a big fan of budget greeting cards and find that having a box of cards always available on my desk improves the likelihood of mailing cards to folks BEFORE their birthdays. It also saves me a lot of money. Why spend $3 – $7 for greeting cards when I can spend $0.30 to $0.75 per card?

I first discovered the benefits of boxed cards when I purchased a set off Amazon.com. Now I purchase refills from Current Catalog. The many niece and nephew kid cards are something I definately feel good about saving on, particularly since those cards generally include a check from me for their college fund. The selection of adult birthday cards has improved over the last couple of years and I now stock those as well in my greeting card box.

FREE Shipping on any $40 order from CurrentCatalog.com until 3-31-08…SAVE NOW!
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Some misc dates on my calendar
Here are some dates on my “remember when this is happening” blog calendar:

Today, March 13, 2008 – Wall Street Journal online is free to all thanks to ING Direct.

March 20 – 23, 2008 – Comcast (in Boston anyway) is having its HBO & Cinemax free Preview long weekend. I am looking forward to catching some episodes of the John Adams Miniseries in the On Demand channel for HBO during the free preview period.

April 15, 2008 – Tax filing deadline. Since I don’t want to file for an extension, I have to keep this date in the forefront of my mind – must mail taxes on or before this date!

May 12, 2008 – USPS is raising stamp prices from $0.41 to $0.42 for first class mail. Other rates will be rising as well. If I need to buy stamps before this date, I am making sure to get Forever Stamps since I will not have to then worry about buying $0.01 stamps after May 12 to go along with any old $0.41 stamps…

Know of any other dates I should note on my calendar? As always, leave the suggestions in the comments…
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Wednesday, March 12, 2008
How Much Nest Egg Do You Need to Join the True Elite
This SmartMoney article: How Much Nest Egg Do You Need to Join the True Elite is pretty depressing. I could care less if I ever found myself in the “True Elite” level of wealth – but come on, now you need $10 Million to be considered middle class?
More and more rich people certainly believe they need at least $25 million. In a recent survey by Chicago-based Spectrem Group, 25% of affluent folks said it takes $25 million to be rich, and another 8% said $100 million. Those two groups combined weren’t all that much smaller than the 45% who cited $5 million.

While $1 million was once a sign that you had arrived, plenty of people with up to $10 million nowadays don’t think of themselves as rich. Many actually consider themselves “middle class,” according to survey work by the authors of a new book, The Middle-Class Millionaire. That’s increasingly true as the $10 million crowd finds a new intruder in its gated communities: the weakening economy. The delinquency rate for “jumbo” home mortgages — a category that includes loans for basic McMansions — more than doubled last year, to 0.74%, according to Fitch Ratings.

True, only a tiny portion of all Americans meet our definition of rich: Just 0.20% of households have net worths of $25 million or more. But in absolute numbers, the group is considerable. If one representative from each of the 175,400 households filed into an NFL stadium at the same time, they wouldn’t all find seats. In fact, they would have to go in two shifts — and even then, some 15,000 would be left in the parking lots, tailgating in their Bentleys.
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So glad I did not attend Yale if this is what their graduates come up with
The Atlantic Monthly article: Marry Him! is such a load of self-involved crap! This Yale educated, daughter of wealthy Hollywood living parents, who triumphantly profited by writing about her self-empowering CHOICE to break up with a long time boyfriend she was not “connecting” with to then go on and have a baby at forty using donor sperm – is now supposedly building a case for settling for Mr. Good Enough?!? WTF!

Sorry, but this article is pushing all of my buttons tonight.
Before I got pregnant, though, I also read single-mom books such as Choosing Single Motherhood: The Thinking Woman’s Guide, whose chapter titles “Can I Afford It?” and “Dealing With the Stress” seemed like realistic antidotes to the faux-empowering man-hunting manual headings like “A Little Lingerie Can Go a Long Way.” But the book’s author, Mikki Morrissette, held out a tantalizing carrot. In her introduction, she describes having a daughter on her own; then, she writes, a few years later and five months pregnant with her son, “I met a guy I fell in love with. He and my daughter were in the delivery room when my son was born in January 2004.” Each time I read about single women having babies on their own and thriving instead of settling for Mr. Wrong and hiring a divorce lawyer, I felt all jazzed and ready to go. At the time, I truly believed, “I can have it all—a baby now, my soul mate later!”

Well … ha! Hahahaha. And ha.

Just as the relationship books fail to mention what happens after you triumphantly land a husband (you actually have to live with each other), these single-mom books fail to mention that once you have a baby alone, not only do you age about 10 years in the first 10 months, but if you don’t have time to shower, eat, urinate in a timely manner, or even leave the house except for work, where you spend every waking moment that your child is at day care, there’s very little chance that a man—much less The One—is going to knock on your door and join that party.

They also gloss over the cost of dating as a single mom: the time and money spent on online dating (because there are no single men at toddler birthday parties); the babysitter tab for all those boring blind dates; and, most frustrating, hours spent away from your beloved child. Even women who settle but end up divorced might be in a better position than those of us who became mothers on our own, because many ex-wives get both child-support payments and a free night off when the kids go to Dad’s house for a sleepover. Never-married moms don’t get the night off. At the end of the evening, we rush home to pay the babysitter, make any houseguest tiptoe around and speak in a hushed voice, then wake up at 6 a.m. at the first cries of “Mommy!”

Try bringing a guy home to that.
Look Lori, you embarked on single motherhood with eyes wide open. To me it sounds like you need to invest in a live-in Nanny and perhaps a good cleaning person. You don’t have to grow old all by yourself. You have already found the man who should now be the love of your life and you greatest passion – your son. Forget handsome and successful creepy coma and terrorist man. Stop feeling like you are entitled to have it all. Stop coveting your friends husbands and marriages. No one has a perfect life. Start appreciating what you have – a nice career, good friends, and a healthy son. Find a way to be happy, don’t drag someone into your and your sons life just so you can feel a bit more financially secure. I have a feeling you could do that all by yourself by selling your New York apartment and moving to a more affordable area.
posted by Boston Gal @ 12:34 AM * * View post reactions * 16 comments *