Tag Archives: banking

Twilight Zone banking – 1% interest on your savings! Get it while it’s hot.

The US Federal Reserve and its branches oversee these matters, while staying in the background and keeping a low profile.

The US Federal Reserve and its branches oversee these matters, while staying in the background and keeping a low profile.

Hi readers.  Thanks for coming by for a read.

An acquaintance of mine sold off his home and land elsewhere a while back, carried the note.  But the buyer payed off the whole thing unexpectedly far in advance of when it was due.

So my acquaintance suddenly found himself with almost a million bucks rolling around in his wallet wondering what to do with itself.  Checked out money market, certificates of deposit, all the usual suspects figuring to make some interest on it as savings.

And suddenly found himself in Twilight Zone.  Nobody’s paying interest on savings anymore, to speak of.  The best interest he could find was 1%.  Lucky to get that much.

So what the hell does that mean?

Heck, I’m clueless.  My whole life it’s been background culture and policy, tradition, that savings were a good thing to do, prudent, wise, encouraged by government and banks alike.  I think the worst interest I’ve ever known of in my life for savings was US Savings Bonds they hammered us into buying when I was in the military.  Those paid 3% or so, and we all believed we were being raped.

About all I can figure is that banks are making all their money these days off high interest and fees on credit card debts, so much so they don’t need savings of investors to loan out.  Don’t want to be having to share their profits in the form of interest payments with people who just save money in their institutions.

But I also think it must all go back to the smoke and mirrors of the Federal Reserve ghosthood, and who-knows-what-else involving stuff I can’t begin to imagine.

But if they’re only paying 1% interest on a million bucks, seems to me the government ought to be getting off fairly light on interest payments for the deficit loans.  The folks loaning the government to keep going ought to be able to feel rich drawing 2% increase, say, on umpty-ump trillion quadrillion buzzillion dollars.

Somewhere in all this Economics 101 circa 1970 flees to Atlantis and sinks into oblivion.  We’ve entered the Twilight Zone where no man has gone before.

Old Jules

Slouching into the Millennium – August 1998

The Beginning

We staff members of the New Mexico State Emergency Management Planning and Coordination Bureau [EMPAC] didn’t laugh much.  We were a collection of old guys mostly retired from something else, except for a few youngsters, mostly support and training staff.

Radiation Response and Recovery [the RAD catchers] was a retiree Bird Colonel from the US Army named Sam.  Hazardous Materials Response and Recovery was headed by Joe, a retired US Air Force Lt. Colonel who’d piloted B47s for the Strategic Air Command in his youth.  Joe sat at the end of a runway in a B47 loaded with hydrogen bombs for two weeks during the Cuban Missile Crisis.  Natural Disasters – Earthquake Preparedness was a shot-up in-Vietnam old Lt. Colonel, infantry.  And so on.  My program was Flood Plain Management and local coordination and training for one of the regions.  Too long out of the military to remember whether I was enlisted or an officer.

Our Bureau Chief, Larry, was a retired Master Sergeant, US Army Search and Rescue, another Vietnam vet. An enlisted man coordinating the activities of field grade officers, giving instructions, approving their work and their per diem expenditures would have been a potential source of laughter if we’d all held our mouths right, but “That’s what happens when you put an enlisted man doing the job of an officer,” was a frequent grumble every time something went awry.

The staff meeting was in the bomb shelter of the old National Guard Headquarters building in Santa Fe where our offices were located.

“I had a weird call from one of the aids to the Governor this morning.”Larry’s eyes searched our dozen blank faces. “Any of you know anything about Y2K?”   Calls from the Governor’s office to anyone at EMPAC was bad news.  We liked to think we were invisible, nobody knew we existed.  This particular governor, however, we considered a space cadet.  A flake.

We all exchanged scowls while my mind toyed with the phrase. “Y2K. Y2K? Where the hell have I heard about Y2K lately?” The thing rang a bell in my head, but I couldn’t think why.

“The Gov just got back from a meeting of the Association of State Governors. They did a big program on Y2K. He’s all excited about it. Evidently there’s some damned thing going on with computers to make them all fail January first, 2000.” Sneers and a chuckle or two.  We all agreed on something.

“Do any of you know what other states are doing? Any ideas what we should be doing? We have to send an answer over to the Gov’s office. We have to put together a plan of some kind.”

Background rumble around the table.  “Y2K?  Why the hell would all the computers crash when the 20th century turns over?”  “Damned idiot governor.”

“Hmmm computers. That’s it.” Now I remembered.

“It’s all a farce, Larry.” I was remembering a conversation and exchange of emails I’d had with my ex-wife. “Carolyn heads the department in Texas that’s supposed to be preparing for it. She told me a while back they were spending a lot of money on it, hiring a lot of people. Pissed her off when I said it was just another bureaucratic scare plot to build more empires.”

Larry stared at me, mind busy with what I’d said. “Could you find out what they are doing over there?”

“Sure. Why not?”

“Also, get on the internet. Find out what people are saying is going to happen. Find out everything you can about what all the other states are doing.”

The others in the room relaxed a little. No one wanted this project and now it was clearly mine. “How much time do you want me to spend on this?”

“A week. Two maybe. We just need to put together a plan that makes sense.”

As I left the staff meeting I was feeling pleased with the diversion this offered me. Something away from flood plain management and routine emergency management coordination. I didn’t expect it to be any problem at all.

I began by sending an email to Carolyn. This was the response I got:

“The Year 2000 deal is a real threat. Lots of people have been doing lots of
work to mitigate the consequences, and we’re still ‘influencing the future’.

The real problem is that we can generally fix what we know about, but there is
so much we don’t know.

For example, the power grid – there are many many power generators and power distributors in this country, and many “embedded systems” in each company. Some companies are taking the problem seriously by contacting their suppliers (of power grid equipment, as an example) to see if components will work.

Afraid of litigation, the manufacturers hem and haw around and provide no definitive data. Yes, I think there will be power outages, thus water problems, heating problems, etc, but I don’t think the whole US will go dark, and we still have some time to work on it.

One scenario I’ve heard is that elect. companies will work to distribute what power they have so that rolling black or brown outs will limit the negative affects of the power failures.

Some good news, the banking industry in the US is in very good shape. Our only
fear there is fear itself. I think a lot of IT systems are being corrected at a
more rapid pace than originally anticipated, and governors like yours and mine
are at least anticipating problems so they can prepare for them. I think if the
people anticipate the problems, and know that someone has already developed a
work around, we’ll be fine.

Any disruptions will probably be short lived.
I could go on, but duty calls.
C.

I trusted Carolyn about as much as any man can trust an ex-wife after 25 years of marriage.

I didn’t know it yet, but for me this began the end of one lifetime and heralded the start of another.

Old Jules

Creedence Clearwater Revival– Bad Moon Rising
http://youtu.be/5BmEGm-mraE