Archive for October, 2010

Not Everyone Is Having a Lean Time

October 29th, 2010

Some people are back to spending their money
The divide between the haves and the have-nots is growing if spending is any measure of the difference. Some consumers are out in the malls buying luxury items but spending remains tight for everyday essentials such as food and dental care, suggesting a growing divide between haves and have-nots. Government data show that the purchases of TVs, jewelry, recreational vehicles and pet supplies are on the increase. It also shows that spending on medical care, day care and education is down in the dumps.

The rising tide
“The rising tide isn’t lifting all boats,” says Carl Steidtmann, chief economist at the Deloitte accounting and consulting firm and author of an index tracking consumer spending. He says higher-income and older households, helped by a strong stock market, are experiencing increased wealth and spending more. However, high unemployment is pulling in the other direction, depressing spending among people without jobs and those anxious about job security.

Spending in decline
More than one-third of the 350 spending categories tracked by the government remain in decline, as if the recession that technically ended in June 2009 was still underway. Spending on new cars has fallen another 8% this year, on top of disastrous drops in 2008 and 2009. Consumers are spending less on prescription drugs, life insurance and a wide range of everyday essentials while spending more on watches, wine and toys. Part of the jump in luxury items is a rebound from deep lows in the recession. Look at these indicators:

Television sets
Spending is up 35% this year, tops among consumer items. “There’s lots of excitement because of 3-D TVs, bigger panels and high definition,” says Best Buy’s Scott Morris.

Recreational vehicles
Winnebago sales have doubled. The company added 350 workers. Buyers, typically 55 or older, are purchasing somewhat less expensive RVs, says Winnebago spokeswoman Sheila Davis.

Pet supplies
Organic dog food, timed cat food dispensers and other high-end pet items are driving healthy increases in spending, says Bob Vetere, president of the American Pet Products Association. “People are cutting back on themselves more than they’re cutting back on pets,” he says. Pet products illustrate how some consumers are going high end and others low end. Cheap pet food is selling briskly, reflecting the weak economy, at the same time costly items are thriving, he says. It’s the middle of the market that’s shrinking, he says.

Entertainment
This depends on mass appeal and is still hurting. Spending at concerts, movie theaters and casinos is down. The revenue decline at casinos is starting to stabilize, says Frank Fahrenkopf Jr., president of the American Gaming Association. “We’re not going to see a dramatic turnaround until employment picks up,” he says. “We’re still packing people in. They’re just spending less.”

The malls
Winter fashions are in the windows and everyone is stopping to look. The big question is, are people buying? I, for one, am waiting. I may decide to spend this winter in tee-shirts and shorts.

Posted in Finance, Money, Personal / Internet | No Comments »

One American Stock Poised To Power onto the Stock Exchange

October 28th, 2010

Have you seen and listened to this sales spiel?
I could kick myself for falling for this yet again. This must be the third time I have seen and listened to this sales pitch and if anything, it’s worse than ever. Here’s one of these share advisory services that offers you success on the stock exchange. Not just any success, Warren Buffett standard success. Their two brothers are the best stock pickers in the world and they absolutely guarantee that you will double your money in xxx months or they will give you your money back.

All you have to do
All you have to do to become stinking rich is to click on the ‘send’ button and your fortune will come sailing through cyberspace and land right in your bank account. The video is long, the graphics are few, the voice is boring and the come-on is stale. How many times a day are we told to “just click the send button”? Unlike other videos, the time line had been deleted so you cannot see how much longer it will have you pinned in your seat.

I wish it was me
In some ways, I wish I was the great stock picker and the person who has the know- how to make that video. That’s where the similarities end. Instead of making sales material, I would be spending my time in some exotic place on the planet, the fortune I had gathered together by my great stock picking safely and securely invested in a fund that pays me a nice monthly income. This is what allows me to spend my time on the beach, fishing, golfing and eating at great restaurants. From time to time I would do a little fiction writing much in the manner if Ian Fleming. Whenever I get the yen to get involved with money I would take my plane to Monte Carlo and spend a couple of evenings in the casino. After all, I can always get my losses back by picking a few great stocks and calling my broker to buy.

What I wouldn’t do
I definitely would not try and sell my stock-picking gift to others on the internet. This is what I don’t understand about all these stock advisory services. Why are they always trying to help me get rich? And why do they want to sell me the information? Obviously if they are any good at stock picking they are already rich. So how will my paltry $179 help them? On the other hand are they just trying to make a sale off some poor sucker? They know there can be no recourse. “Well we didn’t expect that a tribal war would break out in Outer Mongolia and send the market crashing, did we?”

I have tried it
I tried one of these services once. I even got a white plastic membership card with my name printed on it. While the market was rising they were good. When the market fell and I needed help, they were worse than useless.

Posted in Economy, Finance, Money, Personal / Internet | No Comments »

I’m Going to Open My Own Bank

October 27th, 2010

Remember the days of free checking accounts? They may be coming to an end
It seems that the banks got a whiff of money and are going to substitute profit for service. I remember the good old days with some regret. I would walk into the bank and be greeted, by name if the teller knew it. Otherwise he or she just said, “and how may I help you today, Sir?” It’s not like that today although the young fellow where I bank is pleasant. On my last visit there was a young woman sitting in his seat with an open cellphone jammed between her shoulder and her face. We never exchanged a single word. I never got a greeting and in return she never got a thank-you. I hope her phone call was successful.

Free checking is ending.
The days when you could walk into a bank branch and open an account with no charges and no strings attached appear to be over. Now you have to jump through some hoops, keep a high balance, use direct deposit or swipe your debit card several times a month. One new account at Bank of America charges $8.95 per month if you want to bank with a teller or get a paper statement. Almost all of the largest U.S. banks are either already making free checking much more difficult to get or are expected to do so soon, with fees on even basic banking services.

Why the change?
It’s happening because a raft of new laws enacted in the past year, including the financial overhaul package, have led to an acute shrinking of revenue for the banks. So they are scraping together money however they can. Bank of America, which does business with half the households in America, announced a dramatic shift in how it does business with customers. One key change: Free checking, a mainstay of American banking in recent years, will be nearly unheard of.

The overdraft charge
In the last year, lawmakers in Washington have passed a range of new laws aimed at protecting bank customers from harsh fees, like the $35 charged to some Bank of America customers who overshot their account by buying something small like a Starbucks latte.

eBanking
To make up for lost fees, the banks started thinking of new products. In August, the bank introduced a new “eBanking” account, where customers were offered a free checking account if they banked online. The catch: If they opt for paper statements, or want access to tellers for basic transactions, they would be charged a monthly fee of $8.95.

Emergency cash
This summer, Bank of America also started offering “emergency cash” for a $35 fee to customers who went to the ATM for withdrawals that would exceed their bank balance.

The bank’s short memory
It seems to me that the bank has forgotten why they are in business and how they got to be in business in the first place. The original idea was to look after people’s money. If it wasn’t for our money (and my overdraft), the bank wouldn’t be in business at all.

Posted in Economy, Finance, Money | No Comments »

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