It’s a great time to be working in the financial sector (if you can keep your job)! Market and rate volatility gives all us stuffy banker types something interesting to talk about at dinner parties, and it makes for some darn good reading as well.
By the time I get around to publishing this post, this morning’s emergency rate cut by the Fed will be old news. Because I work in the industry, I have spent the whole day reading the headlines and watching the market. Bernanke’s decision to cut rates 75 basis points a week before the regular meeting was a surprise, and I have been getting a kick out of some of the more sensational headlines:
And my personal favorite: Fed cuts rates to stop bloodbath (Edit: this headline has since been changed)
Watching the sub-prime fallout trickledown to overseas markets has reaffirmed my belief that we’re in the early throws of a recession. You don’t need to be an economist or have an MBA to figure it out - here are some every-day examples from my life in a small Midwestern city that have led me to believe a recession is underway:
1. ATM fraud is on the rise at my bank.
This is something we typically see a lot of around the holidays - but it hasn’t tapered off since the New Year. People are floating themselves “loans” (and committing a federal offence) by depositing empty envelopes in ATMs and taking out cash that they don’t have. This only works once, however, and most banks have a $100 limit on withdrawals from same day deposits.
2. More declined cards
I went to Target over the weekend to buy socks and shampoo (this is me being frugal, people - it’s an exciting life, I’m telling ya’). As I was standing in the 10 Items or Less lane, waiting to check out, I observed cards being declined by three different people at three different checkouts. These people were purchasing things like diapers and cleaning products! It may have been a glitch in the card processing system, but my card went through just fine. That leads me to believe that people are maxing out their credit cards and overdrawing their bank accounts, just to meet basic needs. Not good.
3. Realtor’s signs are languishing
I live in a very desirable neighborhood (craftman style homes and tudors built in the 30’s and 40’s with mature trees, close to downtown). When a home on my street went on the market a year ago, it got snapped up pretty quickly. Now, there are several houses within a couple of blocks of my place that have been sporting “for sale” signs for months.
4. More people in my network are asking for job referrals
I live in city where the majority of jobs are in the financial services sector. As companies look for quick fixes to their balance sheets, it’s often highly compensated middle managers (newly minted MBAs) that are the first to go. Two people close to me have been laidoff, and even more in my wider network have sent mass emails that ask ”who’s hiring?”
Interest rate cuts are going to help people in the situations outlined above. And don’t get me started on the proposed Bush ‘tax rebate’.
In my opinion, we were long overdue for a correction - I plan on just buckling down on my spending and riding this out.Stumble it!