Knowing About Your Money
Posted on 11 October 2008 by Jenni Hammitt
I’ll never claim to be an economy expert. However, my not so bright cockatiel could tell you we are amid a financial crisis, and that we have been slowly circling the drain for some time now. As we are inundated with rhetoric about the bail out and golden parachutes, it becomes obvious that many people just are not informed.
I’m not a fan of the government having to bail out our Financial Institutions. I believe that this could have been avoided if better choices were made, and our government admitted we were in trouble long before it became the current mess. Normally I would be against the government using tax payer money to come to the rescue of financial institutions. However, I’m completely aware that without the bail out, our Market may fall further into disrepair.
So how does this effect the average American? Okay so let’s say my back folds. Back when the stock market crashed in 1929, I would have been screwed. The banks did not have enough money, and people panicked and withdrew all their funds. If you didn’t get to the bank before they ran out of money, you were out of luck. Because of that mess, Congress created the FDIC in 1933. That means that my money, up to $100,000 per institution, is insured.
Let’s be honest, most of us will no have more than $100,000 in any particular bank. That means that we don’t need to run out and withdraw all our money, like some people think. Others know about FDIC, but think that the coverage is unlimited. They don’t know about the $100,000 limit. At any rate, our money will probably be okay.
What worries me are the business that have more that $100,000 per institution. They are at risk. These are places where people work, and places you do business every day. If they cannot access their money, or gain access to more credit, there could be trouble. Of course there is the stock market. This is a scary time for investors. Retirement Plans, 401Ks, and all things investments are looking scary. I had a friend refer to the NYSE as looking like a Kmart Blue Light Special.
In a way he’s right. Everything is way cheap right now, but the question is can you find the treasures? If you have the money, and you pick the right stocks, you might actually come out ahead when the market rebounds. That might we a while, so it could be some time before you know how you fare. People who already were invested, are wondering about their futures. Will they be able to retire? Will they have to change their plans? It is a huge mess, and the less informed people are about the situation, the more dangerous it becomes.
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