While I'm waiting for my mood-elevating soma to arrive from the government, I'll try to reduce my financial meltdown anxiety by griping about what the federal stimulus and bailout plans are doing for us, personally.
In short: nothing.
At least, nothing that I've been able to discern from reading all the newspaper and magazine articles with headlines like, "How you'll benefit from the stimulus package."
Well, the only good news is that this makes me feel like a monetary brother to Warren Buffet, investing guru extraordinaire.
Our net worth and economic knowledge are vastly different, but both Warren and me are ticked at how financial failures -- corporate or individual -- are getting a much better deal than the rest of us.
Here's how Buffet sees things:
Conversely, highly-rated companies, such as Berkshire, are experiencing borrowing costs that, in relation to Treasury rates, are at record levels. Moreover, funds are abundant for the government-guaranteed borrower but often scarce for others, no matter how creditworthy they may be. ... Though Berkshire's credit is pristine -- we are one of only seven AAA corporations in the country -- our cost of borrowing is now far higher than competitors with shaky balance sheets but government backing.
Yeah, that's just how I feel. Still-solvent individuals are getting screwed just as much as successful firms like Buffet's Berkshire Hathaway are.
On the income side, money market interest rates are down to just about zero. Our interest-bearing checking account paid us 41 cents last month, even though we had an average daily balance of several thousand dollars.
I feel like telling West Coast Bank, "just keep your damn money." At the end of a year the CEO can buy himself a fancy large latte with the picayune interest. That way somebody will get some evident benefit from it.
Recently Vanguard reported it is closing Treasury money market funds to new investors because the yields are so low.
So retirees and others who have acted responsibly, building up a decent nest egg of cash, now are getting hardly any income from their savings since the Federal Reserve has reduced short term interest rates to nearly zero.
Searching for a bright spot in the financial meltdown gloom, I figured that if we're getting just about no interest on our savings, then we should be able to borrow money for just about nothing.
Not exactly. Rates for a home equity line of credit are running between 4% and 10% at the MAPS Credit Union that we belong to. Home equity loans, between 5% and 10.6%.
That seems pretty steep, given how little financial institutions are paying out to depositors and, as Buffet says, how minimal money costs are to them.
Meanwhile, failed corporations like AIG keep on raking in big bucks from the government (which means us, the taxpayers, ultimately). This morning I heard Treasury Secretary Tim Geithner tell a congressional hearing, "AIG was able to grow up without any adult supervision."
That was a nice off-the-cuff remark regarding necessary regulation. However, it doesn't negate the fact that the Federal Reserve chairman says AIG acted irresponsibly.
Yet still has gotten $150 billion from the government.
We need a new well. Not wanting to deplete our cash reserves, we're considering borrowing the money for it. It'd be nice if the stimulus or bailout packages threw us a financial bone that we could chew on.
But since we're retired, we don't get a break on payroll taxes. Since we aren't behind on mortgage payments, we don't get low-cost financing. Since we aren't a failed corporation, we don't get an infusion of capital.
What we get is next to zero interest on our savings, and a hefty comparative borrowing cost. Plus being able to watch our net worth sink along with the stock market.
Things would be a lot worse if Bush were still in office, or if McCain had won last November. Still, I'm waiting for the Obama economic bump.
Or failing that, a big box of soma to support my psyche through these tough times.