Financial Problems Aren't Just For the Other Guy

So what started off with a decision to read a post at http://www.emptyeasel.com/ about blogging ended up taking me to England and Wisconsin and back. At the easel, a sketch artist's blog was pointed to as an example of how to attract visitors. But when I got there I discovered the artist/blogger was posting about what she found out by standing in line waiting to get into her bank, Northern Rock.

Apparently, the subprime lending situation isn't limited to the US. In England, when the folks who placed their money at Northern Rock found out that their savings, etc, were not fully insured, they began to line up to move their money. But after several days of the pressure building the bank announced not only were they now fully insured but anyone replacing their money before Oct. 9 would receive a full refund of any penalties they had to pay for early withdrawal. We aren't the only country feeling a credit crunch.

Here in California we haven't seen any bank runs yet, as far as I know, but that hasn't stopped us from beginning to wonder and worry exactly how banks work.

And for that matter what is going to happen in the whole credit industry has become a question that over the next few days I intend to study.

This week I plan . . .

to go with the flow. I liked what I was doing and thinking about last week so much that I am going to keep looking at it this week too. But first I need to explain why I am taking this approach to Personal Finance blogging. I am never very comfortable telling people what to think or what to do. I can give advice but I'd much rather listen and then feed back questions that can help see the topic more clearly.

I don't can food, nor go out of the way to put together recipes, though I am an excellent cook. I prefer to keep things simple. Steamed veggies, I fill the pot and then eat the leftovers for lunch or dinner until they're gone. The same with pasta or with a beef stew in a crock pot. But here's the thing. I could pretend that you've never heard of this stuff and write about like Oh here's a great idea. But it would be a pretense. In life and in my cooking, I season to taste, my taste. I laugh when people ask me how I cooked such a great meal because for me everything is based in experience. First hand.

I read a lot of fiction, and, since T. and I started investing, I am discovering that non fiction writers have become much more literary in their style. Possibly because first person writing has, since the 1990's, been what has been taught in the public school English classes. Or maybe it's because memoir writing has become so popular. But I have found over the years that the more often I recommend a book the less often it gets read. I think its because most people don't like to be told what they should like. Either way, I prefer to tell people about what I'm reading if I am asked or if I feel the need to understand it better myself by writing about it here. Then people can take it or leave it be.

As far as personal finance goes, I know what happened to me as I grew older. There was a time when money was scarce and we ate a lot of potatoes. That was when my family was a wife, a new son, then a new daughter and I was really stretching myself thin between trying to support us and finish college. Then we added a third son. I walked to work, we used the bus if we needed to travel around town, and lived with the entertainment of the radio. Luckily, for us, radio was really good in those days, with jazz hours and radio plays and sports announcers who could let you see the game through their words. And then we had FM before it went commercial. Just about the time I finished my schooling we got a car but I had learned a powerful lesson. You can do what you have to do especially if you are willing to finance it with your own sweat equity. Though I would have laughed in those days if anyone would have suggested such a term for what I was doing working three jobs and going to grad school too.

But though I learned that banks don't help poor people, credit lending companies do, I didn't learn the big lesson about finance all at once. I learned that something in my upbringing taught me to better myself, though I can't really pin down what the something was. After ten years of marriage, we decided that we had different plans, my wife and I, and we went our separate but equal ways. That's when I began to discover what kind of a parent I was, as one son, the oldest, stayed with me and the other two came to visit on the weekends and during the summers.

I grew up mentally in the 70's. I learned that I liked letting people make their own decisions as a teacher and as a parent. I learned that living with the consquences was the best way for independence to develop for all concerned.

Meanwhile, I began living a life from day to day. I worked ten months of the year so I could spend my summers on the beach. I fell back on the old days of no car, no tv, no phone. I rode a 10 speed bike or walked or hitched. I used Grey Hound. But I didn't save for the future beyond each year. I spent it all. Alimony, child support, rent, food and 20% of each monthly check into a savings account for the summer months. Carpe Diem!

Of course, that all ended when I decided to remarry.
To be continued . . .

Wrap of the Week

A history of money, the topic of middle class salaries, and money and politics have been our talking points this week.



Lets just say we might have gotten sidetracked in our study of money. Somehow, we ended up looking at paper money's beginnings in China. And that left us without too much to say about money and what has happened to it historically. One thing is clear, money is only as valuable as its rate of exchange. Apparently, the first money was metal, presumably iron or copper, both of which were valuable to the warriors of the times. That would be in Greece. Money has changed form over time from metal to paper backed by metal (gold) to paper backed by its printing government's GNP to today's most popular material - plastic. (Oh he was right Benjamin.) It's a VISA world now with the national American debt at Nine Trillion and growing according to the latest govt. statistics. Meanwhile, the middle class may be in the process of being phased out. Recession is rearing its gorgon head, while the Pres and the Fed seem set to lower the interest rate in hopes on stemming the tide. Unfortunately, that wave has already formed and is on the move.


Meanwhile, labor department statics show a consistent decline in employment figures. Out of a job, foreclosed, and being taxed to support a war on just about everything, terror, healthcare, drugs, immigration and their children's obesity, middle class america seems destined to stay in denial while the candidates roam the land with more and more promises and accusations. For years, the middle class has supported their keeping up with the Jones lifestyle by cashing in their equity. Now their equity is dried up like a subprime lender in California. Moreover, the politicians appear to believe that the best solution to everything is to keep on blaming the other side and to keep on politicizing every issue.

"Only when the last tree has died and the last river been poisoned and the last fish been caught will we realise we cannot eat money." A Cree proverb that is seeming to be more and more prophetic.

One of my searches into money, brought me to the archives of the Context Institute. In an article first published in 1990 by Alan Atkisson, I found this answer to the question What is Money?

In his search for an answer he first sites

Former astrophysicist Robert Gilman - who for the past dozen years has been pointing his telescope at environmental and cultural systems instead of star systems - noted that money is "a convenient way to lose a lot of information." When you buy a new shirt, you have no way of seeing the cotton fields, oil wells, plastics factories, and impoverished Asian laborers who contributed to its production, because the money effectively hides all that."

This reminds me of the travails of several celebrities who have discovered to their dismay that their famous name was being used to sell sweat shop products. Anyway Atkisson went on to quote another source for a definition.

"Money is just life-energy," says Joe Dominguez, a former Wall Street analyst who writes and teaches about personal economics.. We each have only so much lifetime, and we seem to spend about a third of it converting it into money, usually through jobs. We spend another third of our lives spending the money, and another third tossing and turning in our sleep because we're worried about money."

I began to see that Joe's definition could have a revolutionary impact on one's attitude toward money and work - but I wanted something still deeper. When pressed, Joe told me a story about a remote Mexican village where, periodically, there was no money - not a single peso in the whole town. Under those conditions, Joe reported, people still invent money: "I'll give you three hours of my time for a couple of those fish," they might say.

I was puzzled. Why didn't they just give the fish, and their time, to each other? That's when it hit me: the dangerous truth about money. It's the opposite of a gift. A gift is an expression of love and trust and community. Money, therefore, is an expression of our distrust and fear, and our basic separation from each other. It's not a "measure of value." It's a measure of our lack of love.
They say that money is the root of all evil. But maybe that's backwards: maybe evil is the root of all money.

Atkisson's article was preceded by another even more interesting but I'll let you read it on your own.