(Photo: flickr.com)

Depositor confidence in the banking system is vital to the working of the modern economy. Banks lend out money assuming that they are not going to face a situation where all their depositors demand to withdraw funds simultaneously. At the same time, depositors entrust their money to the bank, believing they can withdraw it when they need to do so. A hundred years ago, many people still kept their savings at home. Those who deposited money in a bank would often rush to take their money out at the first rumors of trouble. These “runs” on banks were common causes of the bank collapses these depositors feared. The establishment of the FDIC in 1913 was prompted by a financial crisis in 1907 when the US Stock Exchange fell by 50 percent. This triggered many runs on banks and trust companies.

What Happens When a Bank Fails?

As soon as a state bank is unable to pay off all its creditors, the FDIC intervenes. They try to act in a way that does not draw public attention – the last thing they want is to cause a run on the bank. Their staff of bank analysts, accountants and other financial professionals makes a detailed survey of the bank’s assets. The aim is both to reach an assessment of the bank’s value as well as uncovering the reason for its failure.

The FDIC has the authority to close a bank, or alternatively take control of its management. Generally the preferred approach is to seek a buyer who is interested in taking over the failed bank. The FDIC is willing to offer inducements to buyers of failed banks. For example, they might agree to reimburse the takeover bank for 80 percent of the losses it is going to incur through acquiring delinquent loans.

Has Depositor Confidence Been Damaged Beyond Repair?

FDIC statistics show that over a 120 banks have collapsed in 2009 and the year is still not over. Compare this with 2007, when there were just three bank collapses. The FDIC recognizes the need to address public concern over loss of deposits due to bank collapses. This is one of the prime reasons why they guarantee deposits of up to $100,000 in banks with FDIC insurance. Sheila Bair, Chairman of the FDIC, seeks to reassure Americans that the crisis is under control: “Our projection right now is bank failures will continue at a pretty good clip through 2011. Again, we’re prepared for it; we’re ready for it. The rate of healing in the economy will drive the rate of healing of the banking sector.”

Are Bank Failures Unmitigated Disasters?

To the wealthiest depositors and investors who stand to lose a considerable amount, there is no doubt that a bank collapsing is very bad news. Management and employees are also going to be concerned over the loss of jobs that is almost inevitably going to happen. However, from a macro-economic perspective, failure is not necessarily a great disaster. While the recent spate of bank collapses has certainly damaged confidence in the U.S. economy, some economists argue that over the long term there may be benefits. The disappearance of the weakest banks is viewed by these analysts as a healthy development that strengthens the economy.

She's found that silver lining amidst the dark clouds of the recession. It's a matter of effort and perspective. (Photo: picasaweb.google.com)

Millions of people around the world have fallen victim to the current recession. Business houses with international reputations have filed for bankruptcy and employees who were confident of their job security have been dismissed. While the experience of unemployment is common, the reactions of the unemployed vary widely. Unfortunately, many people allow their worlds to collapse around them once the job they have worked at for years has disappeared, and they add mental anguish to the financial sufferings that usually come with job loss. However, there are also those who lose their job and are able to take advantage of these unfortunate circumstances to make a new start in life. As with many other things in life, a great deal depends on whether you choose to view changes in circumstances as a personal disaster or a source of motivation. A search on Google for “starting a new business” turns up an incredible 70,000,000 hits, which surely indicates that despite the downturn, there is a healthy interest in new business opportunities.

Redundancy Can Lead to Something Much Better

Although the vast majority of people are upset when they are made redundant – unless they receive a generous early retirement package – some workers find a silver lining in the dark cloud of job loss. Redundancy sometimes furnishes an opportunity to make a welcome break with a “dead end” job and start enjoying life. For instance, employees who lost their positions working for large companies have found this event gave them the motivation to go ahead and set up their own businesses, and they have succeeded beyond expectations. Instead of having to fit into the schedule of somebody else’s business and being paid a fixed wage, they now find they can manage their own time and they feel their quality of life has consequently improved and their financial status advanced. Rather than allow the economic recession to wreck their lives they take advantage of it to realize their dreams. In some cases, unemployed people have also been able to transform a former hobby into a source of livelihood, or they have taken their professional skills and applied them in new fields such as teaching or consultancy. For example, www.gaebler.com describes how an applications consultant for a small software company took advantage of his redundancy to open his open business training other people to become consultants.

Environmental Side Benefits from Industrial Decline

Just as the recession has brought unforeseen benefits to some of the individuals affected, its impact on the life of nations has also revealed a positive side. A good example of how recession has led to an improvement in life quality comes from the North of England. This area is famous as the cradle of the Industrial Revolution, and it has suffered severely from a loss of jobs in traditional industries like textiles and coal mining over the last forty years. At the same time, the decline of industrial activity has been responsible for a dramatic improvement in the quality of the environment. The industrial sources of water and air pollution have been so dramatically reduced that fish have returned to rivers that have been biologically dead for over 150 years, and respiratory diseases have been much reduced by the cut in factory smoke emissions. The river Irwell in England is a classic example of a dead river that has returned to life as the polluting factories along its banks closed down. The people may now be poorer, but at the same time their environment is so much healthier.

Image from Flickr.

The ridiculously high national unemployment rate (9.8 percent) has convinced Congress to consider a bill that would allow people to collect unemployment for an additional 13 weeks. However, an unemployment extension of three months might not be long enough for many people.

CNN Money reports that the job market will get better — in a year or so. Actually, the forecast says it won’t be until summer of 2012 that employment is back up to normal rates. Though people are starting to apply for auto loans again and spend a little more, the unemployment situation is not getting any better, and in many places it is actually getting worse.

How do they know?

The recession is crawling to an end as reports show the economy actually grew last quarter. Still, it’ll be a long time before there are enough jobs to go around. CNN explains:

Jobs are what are known as a trailing or lagging indicator, meaning that they change in response to other economic events, rather than predicting changes the way a leading indicator, such as the stock market, does. That’s because even after a recession has ended, employers are slow to add staff until they’re sure that demand has returned.

The article from CNN also points out that the last two recessions we’ve had were followed by a “jobless recover,” and this one probably will be, too.

When is unemployment extension vote?

Though the unemployment extension legislation has already passed the House, there is not a vote scheduled for the Senate yet, which is bad news for people whose benefits will be running out soon.

The length of time a person can collect unemployment is different in different states, but anyone who is on unemployment right now most likely will not be able to continue collecting their checks until the summer of 2012, even if Congress does pass the unemployment extension.

Feel like the government is rolling the dice when it comes to debt relief? Don't forget how much must be factored in! (Photo: flickr.com)

The global recession continues to batter our financial shores, and world governments are working non-stop to implement programs designed to restore the financial viability of borrowers and promote debt relief. There are numerous theories regarding just how government should go about assisting populations as they progress toward debt relief. Whether their action should be a) measured and look toward long-term stability or b) immediate in order to quell the pain the general population is facing and jump-start the economy through multi-billion dollar stimulus is being debated across the globe.

A June 2009 study by Luc Laeven and Thomas Laryea of the International Monetary Fund entitled “Principles of Household Debt Restructuring” states that any government-sponsored program to promote debt relief should help individual borrowers while at the same time minimizing fiscal cost, reducing the possibility that banks will fail and establishing the a clear plan for real recovery. Unfortunately, it is unclear for nations like the United States whether such a clear plan is in place.

What Should the Structure of Government Aid Be?

Laeven and Laryea suggest the following framework:

• Clear Objective: Troubled loans (bad debt) must be converted. Debt service requirements might be reduced for some borrowers who are suffering due to interest or currency exchange rate explosion.
• Scope of Debt Relief: Helping those who cannot satisfy their debt but would likely be able if debt restructuring were to occur. The criteria for choosing such borrowers would be difficult, and would have to be feasible within the envelope of public funds received to operate the debt relief program.
• It Must be Proportional: Bring the greatest aid to those who are in the greatest need.
• Voluntary Participation: Banks should not be forced to restructure borrower debt, as this will give rise to legal challenges that will hinder the debt relief process.
• It Must be Simple: Household debt involves a large sample of loans, so simple rules are needed if systemic abuse is to be avoided. The government and banks must share information in order to conduct analysis of debt load.
• There Must be Transparency and Accountability: President Obama promised transparency during his tenure. This kind of openness is essential in order to perform the analysis necessary for debt relief using public funds. All organizations involved should know where the money is going, and if a mistake is made or there is an intentional infraction, those responsible should be required to stand accountable.

Unsustainable Debt Requires Swift but Sure Action

The world financial crisis has hit many countries hard. Household debts on the individual level (as well as the ability to service such problems) create a downward spiral from which it is difficult to escape toward debt relief. Financial institutions reel in the face of consumer financial paralysis, as their own balance sheets will with non-performing loans. As a result, banks tighten the rains on available credit, which in turn affects housing prices and the value of other assets. This lessening of collateral value comes back to hit households where it hurts. Consumption goes way down, which hurts retail and leads to unemployment. Greater unemployment contributes mightily to slackening income figures.

Turn Frowns Upside Down? How?

How will society effectively deal with the massive volume of distressed loans? Government involvement will necessarily bring costs; what we have to decide is whether the benefit of their involvement in debt relief outweighs said costs. Any government spending to affect debt relief should be tempered by the need to remain fiscally responsible, suggest the study authors.

The rise in personal bankruptcies and foreclosures presents an important hurdle for government involvement in debt relief. Working each case out individually through the court system is hardly efficient. A gridlocked system based on allowing the market to correct itself – while legal fees mount – suggests in the minds of the authors that a more organized debt relief approach from world governments is necessary.

Is Government Debt Relief Feasible or Credible?

This is an interesting question. If intervention can produce real gains in helping to alleviate public debt without abusing the will of taxpayers, perhaps governments should move forward. The study authors remind us that if debts are written down in value, banks will need their own recapitalization programs in place. These programs should be tuned toward establishing solvency for the financial institutions, rather than gross profits.

The Case-By-Case Approach

If government agencies can assess the current size of the financial problem they face by determining

• An accurate, current picture
• The problem’s evolution to this point
• How the financial burden has been concentrated across a sample of individual banks
• How debt relief via restructuring will help these lending institutions,

then Laeven and Laryea figure that the path for government involvement would be open.

The approach to the problem should advisably first focus on case-by-case debt relief (when numbers make such an approach feasible). Dealing with household insolvency through a framework that addresses collection enforcement, the value of collateral after debt is secured, loan modification that respects the capacity for debtors to pay and (in some cases) debt relief via discharge after a liquidation period. While this framework would address legal issues, the authors suggest that governments could also offer incentives and make loan restructuring easier by promoting such things as nonbinding private sector guidelines for the restructuring process.

Across-the-Board Government Subsidies

When a case-by-case approach isn’t feasible, the authors suggest government-sponsored debt restructuring for debt relief. This would involve direct financial support to debtors. Some or all loans could be covered, where the government would give funds to banks that agree to restructure loans. The creation of asset management companies that buy and resolve bad debt would be another approach. In addition, household subsidies along the lines of debt forgiveness or interest rate/tax rebates are options under this plan.

Ideally, only those who are honestly unable to repay their debt could take advantage of such across-the-board government debt relief programs. Determining a person’s ability to pay is tricky business. “Debt restructuring,” write the authors, “should not be regarded as an instrument that can displace sound macroeconomic policies.” Caution and close study would be needed.

A Restructuring Plan

This would include a variety of incentives and reforms, claim the authors. It begins with incentives for borrowers, where they are encouraged to restructure their loans with a series of subsidies. There would be subsidized refinancing, write-offs and insurance against being harmed by exchange or interest rate hikes in the future. In the area of bad mortgages, the authors state that shared appreciation mortgages might be one way to go. Repayment would then necessarily be related to the value of a home when it is sold. These mortgages could be written so that governments could share in the upside as value appreciates.

Lenders could also receive their share of incentives. Tax credits for those who agree to restructure loans or even access to low interest credit lines as a reward are not out of the realm of possibility in Laeven and Laryea’s plan. To help prevent an endless chain of recapitalization aid, the government could also create “an effective personal bankruptcy framework for addressing collective enforcement of creditor claims and rehabilitation of debtors.” Helping borrowers in that case could also help lenders.

Foreign Currency Loans

Considering that the authors compiled their study for the International Monetary Fund, it comes as no surprise that the issue of foreign currency loans is addressed. They suggest such loans could be converted to local currency, and when the exchange rate problem becomes too prohibitive, liquid assets denominated in the original currency could help make up the difference.

And as a Last Resort…

When the above measures aren’t enough, the authors believe that a new standard for modifying bad loans is needed, as well as temporary bans on foreclosure and repayment. Governments who delve into these areas do so at their peril, however, as lending contracts are superseded. The market could begin to view contract enforcement capability in a negative light, which would diminish investor confidence. In that instance, debt relief is not procured and incentives to default are unintentionally created because the danger of penalty is not so near.

Debt Relief Through Asset Management Companies

Of the ideas Laeven and Laryea present, debt relief through the use of asset management companies has the most promise in my eyes. Such companies would be better equipped to resolve bad debt than the already overtaxed lenders who require recapitalization. Then, on a case-by-case basis with banks, the government can be more selective as to where taxpayer dollars go to help. The relative strength of a financial would be taken into account.

Various Countries are Applying Variants of These Ideas

However, there is no one solution that works for all nations. Debt relief is necessarily a long, slow process, one that individuals may not be able to stomach as they stare down their monthly slate of bills to pay. But for lasting change, it appears that slow reform may be the only route for true debt relief.

Photo from money.cnn.com courtesy of Jollibee Foods.

Though higher-end restaurants are struggling as people try to scrimp and save, fast food restaurants in the United States are doing as well as ever. In fact, more foreign fast food restaurants are opening locations in the United States, even during this recession.

CNN Money wrote a series on several foreign fast food restaurants that are continuing to spread their businesses across the United States. Here are some highlights.

Jollibee

CNN Money says “Jollibee is known universally as the McDonald’s of the Philippines.” There isn’t a Jollibee anywhere near me, unfortunately, but this place sounds pretty good. Jollibee burgers can come with pineapple on them and sides of spaghetti. A side of spaghetti with a burger? Sure, why not.

I like the cute, smiling bee that’s the restaurant’s mascot. Also, instead of apple pies like McDonald’s, Jollibee has mango pies. Sounds delicious! And, because it’s fast food, you can keep up on your debt consolidation loan and still afford to eat there. Jollibee also serves a side dish called palabok, made of shrimp and noodles, and fried chicken.

Pollo Campero

Speaking of chicken, another restaurant continuing to open U.S. stores is Pollo Campero, the Guatemalan chicken place that beat out KFC in South America. CNN Money writes:

The problem, however, is describing exactly what Pollo Campero’s taste is. “Even when you talk to most experienced and devoted followers,” says Roberto Denegri, president of Campero USA, “describing the flavor is so hard.”

So as the chain grows in the United States — 52 stores so far, since they first opened in 2002 — they’re trying out a new marketing slogan this year: “Flavor you can’t Compero.”

Although it is a fast food place, it serves exotic foods — well, foods that seem exotic here in the U.S. — like yucca fries and fried plantains, and drinks like horchata, cinnamon-flavored milk served cold, and agua de tamarindo, a sweet-and-sour fruit drink. Pollo Campero is growing quickly and ambitiously. It has 52 U.S. stores now and plans to bring that number to 300 by 2014, so keep an eye out.

Chutney Joe’s

I am a huge fan of Indian food, but in some areas it’s so hard to find! If Chutney Joe’s has its way, though, that won’t be the case anymore. The founder, Vijay Puniani, had a restaurant in New Delhi, but moved to the U.S. to work in real estate. Apparently cooking and serving Indian food is where his heart is because he is back to it.

Chutney Joe’s uses healthy cooking techniques — no frying — and doesn’t use butter or heavy cream. Puniani said turning Chutney Joe’s into a fast food chain is challenging because Indian food is complex and consistency is an important element of a chain. He’s managed to focus on a few simpler dishes, and he plans to open five new locations in Chicago in the near future before expanding to New York, Dallas, Atlanta, and Los Angeles.

Nando’s

Most Americans have had Indian and Latin American food, but cuisine from South Africa is not easy to come by unless you’re in a large city. One of those places you could get South African food in Washington, D.C. is Nando’s, which expanded to several other countries — Botswana, Australia and Great Britain just to name a few – before finally coming to the U.S.

Though Nando’s serves foreign food, it’s using a very American marketing strategy, which is to tell people that Oprah Winfrey is a fan. No one’s saying that isn’t true, but I am hoping that the food will be able to speak for itself when it expands to 10 more stores in the next couple of years. CNN Money says:

At the heart of this chain is a Portuguese-style of cooking chicken in a spicy, vinegary sauce known as “peri-peri,” brought to South Africa long ago by Portuguese explorers.

There are a lot of different factors that could be signs of the recession easing up. Though in some sectors we’re still seeing evidence that the recession continues to get worse, a few rays of hope are starting to shine through.
CNN Money reports that companies are starting to recall previously laid off workers, giving them back their old jobs. This is a good sign that economic conditions are improving. Paired with the stable unemployment rate, I’d say there’s definitely potential for some prosperous days ahead.

Other economic indicators

JP Morgan Chase has lost a lot of money in its credit card division, and this company sees that as a sign that the recession is not getting any better, especially because it is continuing to lose money. However, I think it’s a sign that people are getting smarter about credit and discovering alternatives like installment loans instead of using their credit cards like there’s no tomorrow.
I think the fact that people are using credit cards less even though there are strong indicators that economic conditions are improving is another piece of evidence to support the idea that people are simply changing the way they spend money and use credit. Here are some statistics from CNN Money that show we’re headed for better economic times:

• About 38% of employers have indicated they anticipate some type of recall of cut workers, according to a recent report from the Labor Department.
• General Motors, Ford Motor, Dell, AK Steel and truck maker Oshkosh, have already reached out to previously laid-off employees to meet rising demand.
• In a survey, 18% of laid-off workers who landed new positions were rehired by the employer that let them go, up from 13% in 2005, according to Right Management’s outplacement services, a division of Manpower.

Not out of the woods yet

Though some companies are able and willing to rehire their laid-off workers now, the economy is still pretty unstable, and we will definitely still see more layoffs before the recession ends. But it’s important to remember that laid-off workers really can and do get hired back by their former employers.

Getting laid off is tough. It makes people scared, depressed and usually very angry. However, remember that if you get laid off, the way you handle it could come back to haunt you later. It’s easy to have fantasies about telling off your employer and saying all of those horrible things you’ve imagined saying to your coworkers, but finding a job is not easy, and if you have the chance to get your old job back while you’re still looking for another, wouldn’t you want to take it. So always leave companies on a good note. Don’t count on being rehired, but make sure you consider the possibility that it could happen and behave accordingly.

More from CNN Money:

There are many upsides to rehiring former employees, according to management professor Peter Cappelli of the University of Pennsylvania’s Wharton School of Business. The positives include savings on recruiting and training costs, maintaining associations between customers and employees, and the fact that the rehired employee doesn’t need an introduction to his or her colleagues.
But redundant firing and hiring can also be costly for the company, particularly in the form of severance payments, and can even be disruptive to workforce performance.

Glamorous? No. A vacation to remember? Definitely. (Photo: flickr.com)

Everybody needs to get away sometime. We save our nickels and dimes throughout the year. We stockpile vacation time and cut corners where possible to ensure that we have that little bit extra to help us get away for a nice holiday. Now that we’re dealing with a serious recession, being able to save on travel costs is certainly welcome. We all want cash now, and sometimes we resort to a cash loan or two to get it, but the reality is that if we are to be able to enjoy things like ocean vacation, we have to keep our impulses in check. Only those expenses that are truly necessary will do if we are to make that vacation we’ve been dreaming about.

An ocean vacation?

Yes, there are many of us who enjoy the occasional cruise on the ocean blue. However, even with a good rate on a cabin aboard a reputable tourist cruise line’s freighter, the costs can mount. Every smiling face aboard that vessel is looking to serve you, and tipping is customary. You can see how that can add up, as will the expense for alcoholic beverages if there’s a limit to what your food allowance will cover. At least square meals tend to come standard with your cabin fee.

If an ocean cruise is definitely for you but the cost has you a deep shade of blue, consider freighter world cruises. By that, I mean travel aboard a cargo ship instead of a luxurious ocean liner. Yes, I’m talking about freighter world cruises. According to numerous travel outlets, it isn’t as bad as it sounds… not bad at all, in fact.

You are cargo, but you won’t be treated that way

A recent L.A. Times travel story at http://www.latimes.com/travel/sns-trvrail2-wk4-aug19,0,186203.story indicates that there are cargo ship companies that make space available (not cargo hold, but actual rooms) for a “limited number” of guests. Think 10 people or less in most cases. Amenities generally include three square meals with the crew, a comfy room with TV and movies available, a reading room, an exercise room and sometimes even a pool. Plus, you can usually get a tour of your freighter, which is something most people never have the chance to see. So long as you book months ahead of time, you can find space and save money over conventional cruise lines.

But what about the view… and the entertainment?

On the latter, you’ll have to concede that one unless the crew gets together for karaoke on your freighter world cruises. But as for view, look off the deck of the ship and you will see nature’s splendor.  You may not be taking the most direct route to those exotic ports of call, but you’ll get there eventually. Not the tourist traps, but more industrial locations. Check on this ahead of time, but you probably will even have time to travel while in port, so there’s no need to stick around the shipyards.

What kind of trips do freighter world cruises take?

Ports may look like this, but that doesn't mean you have to stay there! (Photo: flickr.com)

According to an AARP travel column, you can travel the world if you’re willing to take the time to fit into the schedule for your freighter world cruise. One AARP member inquired about passing through both the Panama and Suez canals on one journey, and it is possible to make that loop through both South America and the Middle East. As an example (as there are multiple companies that do this), the AARP travel writer suggests Maris Freighter & Specialty Cruises – www.freightercruises.com.  They have a 15-week trip, which is the shortest voyage through both places that they offer. However, it begins and ends outside the United States (flexibility is important when it comes to travel). Trips sail from Dunkirk to Le Havre, France, then cross the Atlantic to Cristobal, Panama. From there, they take the Panama Canal and travel on to Tahiti. Then come New Zealand, New Caledonia, Fiji, Vanuatu, the Solomon Islands, Papua, New Guinea, and Singapore. Suez Canal passage leads to the Mediterranean and finally ends in Hamburg, Germany. How’s that for a voyage?

If you’re willing to take three extra weeks, Maris offers an eastbound cruise that begins and ends in Texas. Go up the U.S. east coast, over to Hamburg, then to Belgium, Italy, and another European port. Next comes the Suez Canal to India, Indonesia, Singapore, Vietnam, China, Korea and Japan. The final leg of the voyage takes you to Southern California, through the Panama Canal, and finally to Houston.

How much does it cost and what else should you know?

The length of your trip may vary from as little as a few days to as many as several months. Prices generally are around $100 per day, which is more than flying but less than a glitzy cruise. According to AARP, these rates are generally Euro-based, so hopefully the conversion rate improves sometime soon.

If you’re in good health, freighter world cruises can be a great deal for you. I can’t stress good health enough, as cargo freighters don’t generally carry a doctor on board. If there’s an emergency, one can be airlifted in, however. But you will pay for it. That’s not to say that your life isn’t worthy it – it is – but I’m just trying to make you aware. You may need cash now from a nice cash loan. Why not be prepared ahead of time? You can apply for a cash loan right here by clicking the green button!

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(Photo:fr.wikipedia.org)

This recession has put the proverbial shackles on the aspirations of people both rich and poor. The availability of credit is still moving at the pace of a slow crawl, while consumer spending is still searching for a way to pick itself up off the floor. But of course, it won’t truly be able to do that until the question of job security becomes less a hot button and more background scenery. Until money and credit begin flow as they did 10 years ago, the stock market will continue to show only modest gains at best. People are looking for help, whether it is the temporary assistance of cash advance loans or the more permanent change in which wages actually begin to keep pace with inflation.

Most of know just how the recession has taken a bit out of our finances. But did you know just how much even those who would have been “untouchable” have been hurt by the downturn? A recently New York Times articles takes a look at John McAfee, founder of the software company that produces McAfee Antivirus. His $100 million fortune has dwindled by an astounding 96 percent. Sure, that still means that he’s worth about $4 million and won’t need a cash advance, but what a drop!

“Horrific news”

Yes, Gawker jests when they call this “horrific news,” brought to us by “those tireless chroniclers of the plight of the rich, the New York Times,” but this cautionary tale does give us some idea of just how far America’s economic dealings have run aground. The number of super-rich in the United States may just be at its ebb tide. Yes, there are those who have already recovered to their pre-recession salaries, but there are many more that have not.

John McAfee is certainly not one of those who have recovered. He founded his company in the late 1980, and then sold his stock a couple of years after the antivirus giant had its initial public offering on Wall Street. He made $100 million in the deal, and he went on to invest much of it in real estate and bonds through the Lehman Brothers brokerage. At the time, it seemed like a great way to keep his fortune safe. Everyone in his income tax bracket was doing it.

Then the bubble burst

And John McAfee’s real estate holdings dropped in value like crazy. A 10,000-square-foot home in Colorado with a view of Pike’s Peak cost him $25 million to buy and build. In 2007, it sold for only $5.7 million. Then Lehman Brothers went belly up and his bonds were suddenly worth pennies on the dollar. Other stock investments cost him millions more in lost revenue.

Wait, there’s more. John McAfee has sold his 10-passenger Cessna and now flies like the rest of us. I wonder if he used the JetBlue unlimited pass when he went to visit his Hawaii oceanfront estate for the last time. That estate is gone too. It sold at auction for $1.5 million (much less than he paid for it), and there were only a handful of bidders. Apparently the former antivirus software mogul is going to high-tail it to Belize, where tax laws are more favorable to sinking millionaires like him.

What’s in store for John McAfee?

Let’s be realistic. I’m sure he’s going to land on his feet in Belize just fine. However, he’ll have to make do with much less than before. We who get cash advance loans when we need a cash advance will surely weep for him, particularly after ANOTHER estate (this one in New Mexico) goes up for a no-floor auction. In other words, no matter how low the top bid is, John McAfee has agreed to accept.

(Photo: glyphjockey.com)

I bring all of this to your attention not because John McAfee deserves a pity party. I’m sure he was aware that he was taking some risks with his money, and he certainly isn’t hurting with $4 million left over and likely a nice home in Belize. What I’m saying is that we can no longer allow the game players who manipulated the levers and knobs of the U.S. economy to carelessly speculate with our money. They walk away with something left over, but what of the less sophisticated investors? Like Tommy Wilhelm in Saul Bellow’s “Seize the Day,” they’re left with nothing. Financially, it’s a perpetual funeral.

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(Photo: Monroe College)

Trina Thompson spent $70,000 in tuition for a degree in Information Technology from Monroe College in the Bronx, New York. Now that she can’t secure a job with her advanced degree, she has taken it upon herself to sue the university and get her tuition money back.

Some would call this ridiculous, and the majority of them would most likely be those who had a successful college experience and are in some way still in connection with their own university due to alumni activities or the like. Gary Axelbank, spokesman for Monroe College and the man who says that Thompson’s lawsuit is “completely without merit,” is likely one of those people. He also probably wouldn’t know payday loans or short term loans if they bit him on the backside.

True success comes from struggle and toil

That is how America was built. The Rockefellers, Carnegies and J.P. Morgans of the world didn’t rise to prominence because of a fleeting phenomenon like a dot com boom that dumped money in their laps for no good business reason. They had to work hard to rise to prominence. On a slightly lesser scale, college graduates have to do the same thing in order to be successful. Just going to college is not a guarantee of success, as you have to make some connections and learn how to market yourself.

Marketing yourself – where schools fail us

Along with real-life skills, this is something schools should begin to teach at a much earlier age, as part of the core curriculum. Too few people understand what they have to do to stand apart from the pack. As I don’t know Trina Thompson, I can’t say how much she knew about packaging/marketing herself to employers. What I do know is that she graduated from Monroe College, and that she is unemployed. Yes, a difficult economy has played some role in that, but I think that colleges get away with too much of our money without giving equal value. A student shouldn’t have to dig around, beg and squeeze until they actually get the info they need from their universities. Considering how much of our money they’re stealing, colleges should lead with pay dirt, right up front. Instead, countless people are left in need, using payday loans and short term loans to remedy temporary financial problems. They apply for such loans here.

Somebody needs to set a precedent. Go for it, Trina Thompson

The AP story at http://www.google.com/hostednews/ap/article/ALeqM5hOd5SMu_c48SwH6dYreQ4Cf7JNTQD99R312G0 tells us that Thompson, a 27-year-old New York City woman, has claimed that she “can’t find a job,” so she’s suing Monroe College, where she earned a Bachelor’s degree. Let’s set aside the fact that today’s Bachelor’s degree means about as much as yesterday’s high school diploma. I believe each and every accredited college has connections in the business world. With the money given to them by students for education (more than is needed to cover costs… even small colleges are bloated with enough cash to send administrators on lavish retreats), it should be the obligation of colleges to connect their graduates with jobs.

But Monroe College has failed to do that, and Trina Thompson is suing them for $70,000, the cost of tuition. That’s a hefty sum, yet colleges continually lie to us that it’s necessary in order to pay salaries, costs, etc. I say do the work and help the students who are funding your European vacations. Thompson says that she has had particular trouble with Monroe College’s Office of Career Advancement, which she claims “hasn’t provided the leads and career advice it promises… they didn not try hard enough to help me.”

What? Economy has them sitting on their hands?

I say they should call in their favors. Live up to their obligation. Then I’ll believe places like Monroe College when they insist that they help students in career placement. Looking at my own example, I was successful in college and have achieved reasonable success in professional life thus far. There’s room for improvement, but I’m still young. I was rather shy when I was in college, so I wasn’t the first one to jump at networking opportunities. Furthermore, since my college campus was very large, I’m not sure how easily I could have found their office of Career Advancement. But if I had been given a bit of a kick start by a required professional development class, I would have appreciated it. It would have been the least they could do, considering the money I was giving them.

Here’s the point – know what you want to do and what you want BEFORE attending college

Take a brief respite after high school or junior college if you aren’t sure. But don’t stay away too long. If you have a direction and know what you need before you go to the inadequate halls that pass themselves off as institutions of higher learning, they’ll work for you. However, you have to twist their arms – most of the time – if you want them to truly DO anything for you.

Then there’s the debt

This is hitting Trina Thompson and her family right now. Her mother, Carol, said her daughter was “very angry at the situation” after putting all his faith in his college. Student loans are coming due, and Trina sought help from Monroe College but got nothing in the way of career placement.

What your local college president thinks about (Photo: collegeotr.com)

Yet Axelbank continues to spout the party line: “The college is proud of the excellent support for career development that we offer each of our students, and this case does not merit further consideration.”

Will you continue to be so proud if you lose this lawsuit, Monroe College? If you haven’t delivered something promised, I don’t believe you’re entitled to the money you were paid.

And Janet Shan weighs in

Janet Shan, a blogger for Black Political Thought, may think of herself as an enlightened, professional black woman. I’d say two out of three there ain’t good enough. In her analysis of Trina Thompson’s dilemma, she leads off with a rather expected question: “Do you realize that 6.5 million workers have lost their jobs since the recession started?” Then, while she recognizes that Monroe College should be doing more, she stops short of what needs to be said and what needs to be done:

Monroe College, Miss Thompson is at the stage in her career where she needs help! While I understand the situation Miss Thompson is in, there are many others who share a similar story of unemployment, but do they sue their alma maters or previous employers? I seriously doubt that.

Do they sue? Generally, no. But they should. Colleges needs to be held accountable – America’s entire education system needs to be held accountable. I wish Trina Thompson luck in her suit, even if the deck may be stacked against her. Major change is needed in the way America prepares people to succeed in the world.

Related Video:

Old Country Buffet filed for Chapter 11 in January 2008, but emerged with reduced debt in April 2009.

People say recession sparks innovation, creativity, responsibility, and all other sorts of optimistic-sounding things. It also causes failure, collapse, bankruptcy and all other sorts of apocalyptic-sounding things.

It also causes complications, such as leaving franchise owners to figure out how to deal when their parent company goes bankrupt. Sometimes the parent company manages to get back on its feet, and sometimes it shuts down. Either way, the franchise owner is still responsible for his or her store, and left with the decision of what to do when selling a tarnished brand.

CNN Money published a list of franchises that went bankrupt since the recession became official. Some came back and some didn’t.

Mrs. Fields Famous

The Mrs. Fields Famous brand, based in Salt Lake City, Utah, is the parent to 1,200 Mrs Fields Cookies and TCBY stores. Last August, the company filed for Chapter 11.

Lucky for the franchises,  which continued to operate throughout the bankruptcy proceedings, only a couple of months later,the company was on the road to recovery. I don’t know if they  used private money lenders or what, but it  managed to restructure its $196 million in debt down to $50 million.

Cork and Olive

Small Florida parent company Cork and Olive wasn’t so lucky. Cork and Olive, which was made of eight company stores and nine franchises, filed for bankruptcy in June 2008.

The company stores shut down, but the franchises are still soldiering on. CNN Money reports that “the franchisees meet regularly to discuss how to keep their brand alive without the parent company.”

Bennigan’s

Texas-based family dining restaurant Bennigan’s filed for Chapter 7 bankruptcy — that’s right, the bad kind — in July 2008. All of the corporate locations were shut down. CNN Money says:

Its 138 franchisees were left in PR hell, struggling to convince patrons that they were still open for business.

However, private equity firm Atalaya Capital company acquired the brand in October and reopened the corporate stores quickly, many of which are now operated as franchises.

Bally Total Fitness

This gym just can’t seem to catch a break. The nationwide franchise, based in Chicago, has filed for bankruptcy more than once. CNN Money reports:

It was a déjà vu for the health club chain in December 2008 when it filed for Chapter 11, a mere 14 months after emerging from its first Chapter 11 filing in July 2007. Just weeks ago, Bally signed an agreement to emerge from bankruptcy by restructuring the $1.5 billion in debt it had accrued and by granting 94% of the company’s equity to lenders such as J.P. Morgan.

Fatburger

This one gets a little complicated. Two subsidiaries of Fatburger Corp, Fatburger Restaurants in California and Fatburger Restaurants in Nevada, filed for bankruptcy in April. However, parent company Fatburger Corp. did not file for bankruptcy. Confusing matters more, that parent company, Fatburger Corp., is based in California.

Furthermore, Fatburger Restaurants in California and Fatburger Restaurants in Nevada accounted for 72 percent of Fatburger Corp’s total revenue. So what now? Good question. CNN says “The company’s 90 franchise owners are waiting to see what happens next.”

He wants to teach your kids about money. You should listen, too. (Photo: DIC Entertainment)

What have we learned about the way people handle money lately? Loose and lazy seems to be the general rule in America, in that people don’t tend to plan as much for the future as they should and operate on instant gratification. Lack of impulse control is common. Yet the current recession has been a deep, dark, truthful mirror of sorts, not only for ourselves but for our government. Just as we must manage our money well and make informed decisions, the government needs to do the same and stop shoveling problems under the rug. Hopefully, the Obama administration will start breaking some of the old ways.

But what about us?

Payday loans and unsecured loans offer short-term help, but what should we do over the long haul? We should look to any sources we can find to teach ourselves and our children about finance. First and foremost, it should be part of the core educational curriculum from a very early stage in schools.

However, there are other tools. For instance, Warren Buffett, the mastermind investor of Berkshire-Hathaway, has agreed to lend his voice to a new animated series called “The Secret Millionaire’s Club.” The idea behind this is to “get children to grasp basic finance lessons well before they do things like, say, agree to a risky, adjustable rate mortgage,” reports The Huffington Post.

Here’s Buffett’s idea

If we can get through to some young people, say it’s better to be ahead of the game than behind, watch out for credit cards, most important message is the best investment you can make is in yourself. Teach them if something is too good to be true it probably is. So if they learn those things the easy way through these stories early on it may save them learning the hard way later on.

He’s definitely enthusiastic about “The Secret Millionaire’s Club.” Here’s a recent CNBC interview:

Stock market looking up

Definitely animated (Photo: Poolparty.com)

People need to know about these kinds of things. People want to know what’s going on with the stock market. Specifically, whether or not they should start investing again. On that matter, Warren Buffett has had good things to say. Now that the Dow has hit 9,000 for the first time since January, he’s weighing in: “I would much rather own equities at 9,000 on the DOW than have a long investment in government bonds or a continuously rolling investment in short term money now. Again, I don’t know where it’s going to go next week or next month.”

So according to Buffett, investors should invest now. Business may still be flat, but as Buffett puts it, “If you wait until you see the robin, spring will already be over.”

Short term money?

Payday loans and unsecured loans are short term money. If your budget has a real need for that kind of boost, you can apply right here, right now. And be sure to check out “The Secret Millionaire’s Club” when it hits a computer or television near you.

Related Video:

Here we go again – the same headlines, the same accusations and the same agonized shrieks and violent threats coming from gypped investors. It all sounds so nice and familiar.

Virus Warning

If someone, anyone, whether his name is Ponzi, Madoff, Standford, Tannebaum or anything else, offers you a return on your investments of 20 percent per month, hit delete and run for your life. You were at the point of losing everything. You were about to be stung by the Ponzi virus. If you are having a genuine money problem, contact the Personal Money Store and take a Cash Advance. That way you may get a little less, but you will be free to move around town and spend it.

Money

Money is a strange thing – everyone wants it. They want theirs and they want yours. If they have some, they want more. Then they want yours no matter how little or how much you have. Some people cannot control their desire for money and will go to great lengths to get their hands on it. And some, of course, are prepared to sit in jail for it.

A recession

Every financial situation gives rise to a new crop of crooks, those who come out of the woodwork when they get a whiff of a new smell. The recession is producing its share of these people as well. Simply put, new financial conditions produce new challenges.

The recession factor A

One of the good (?) effects of the recession is that old and ongoing Ponzi schemes are not only affected, they are ravaged by the same fiscal turbulence pounding the world’s legitimate businesses. They have been collapsing at a record clip, exposing prolific, rampant and colossal frauds that have bilked investors of billions of dollars.

The recession factor B

The bad effects of the recession are that many more people are trying to set up fraudulent money making schemes. They use the low interest rates that prevail in such times to entice investors (read suckers) into placing money with them at high and unobtainable interest rates.

The latest

A South African by the name of Tannenbaum launched a scheme which has fleeced billions of dollars from about 400 investors, including some very high-profile businessmen. The scheme has been operating for about four years and provided investors a return of more than 20 percent over three months. In all honesty I ask you, if someone came and offered you an investment plan that would pay more than 20 percent over three months, wouldn’t you be suspicious, or at least cautious?

The high profilers

In every one of these Ponzi schemes that has burst into the limelight, we hear the agonized screams of the injured, the lamed and the ruined. “I put my life savings in there,” he/she sobs to the media. “How could my friend do this to me?”

It’s easy

According to the many Ponzi stories on the internet, it’s easy to get into this business. No start-up capital required. Just a little nerve and a great big uncontrollable desire to make money on someone else’s back.

Thanks to some unreasonable and unjustified bad press, payday loans have come to be regarded in some quarters as a bad thing for consumers. Basic principles of economic science say that if we, as individuals or as a nation find ourselves in sudden monetary troubles, more often than not, it’s because of some flawed practices and policies that get entrenched in our behavior over a period of time. Gradually, such behavior leads to a crisis and that’s what we face today. Payday loans are not the source of the crisis, they are a small but very powerful tool to help you in overcoming any such crisis in your life.

The purpose of payday loans

Payday loans are designed in such a way that they take care of the following extremely important aspects:

• Payday loans or short term cash advances are extended to you against your next monthly paycheck. So in essence they are meant to be very short term, so that you can take care of your normal or urgent expenses in a very convenient and easy way. In the present recessionary situation, with pay cuts and job cuts looming over all of us, this is not an extraordinary situation to be in.
• Also, considering the prevalent reluctance of banks to lend money for personal loans, due to a variety of reasons like the credit crunch or your bad credit ratings etc, payday loans in contrast provide an easy way to fulfill your monetary needs in these times when other sources of credit are drying up.
• So basically payday loans are designed to act as a shield; to protect you and your loved ones against any sudden monetary shock(s). In that sense they are nothing short of a blessing.

But where do problems start?

So you are asking, if payday loans are all that good, then what about all those articles that you have read warning you about the so called ‘hidden traps’ that lie in them? Well, the problem lies partly in our spending habits that have been ingrained into us from so many decades of prosperity. According to Demos, a firm that specializes in public policy research, the general credit card debt leapfrogged by 315 percent during the period between1989 to 2006. This shows that availability of easy credit has made us more and more dependent on it, playing havoc with our saving habits. This has got to change. Payday loans are not meant to make you dependent, they are meant be used as quick fix and easy solutions to your immediate fiscal problems. However, for that to happen, you must be responsible enough to plan and utilize your cash advance with good helpings of intelligence and accountability

What must you do with your payday loan?

• First and foremost, the amount of the payday loan that you apply for should correspond directly to your current needs for which you need cash. E.g. if you are short of cash to pay off your electricity bill, then take out a payday loan that can take care of this bill, nothing more.
• Plan your budget carefully, and see how you can make the best use of your payday loan. Payday loans could be very helpful in a number of situations like during a vacation, for home improvement etc., all depending on how you plan your budget. Also remember to plan enough savings so that you are able to pay off this loan with your next paycheck.
• It’s perfectly human to be tempted to spend the cash in hand according to your so called ‘instincts’. While it might be understandable to do so when you have a surplus of expendable cash, it doesn’t make sense to spend thoughtlessly on credit. Payday loans demand accountability.

Like any other thing in our life, payday loans could either be used or misused. They are a great blessing if we make a thoughtful and responsible use of them.

I went back to the gym this morning. It’s on the top floor of the mall across the street from where we live, convenient, clean and a nice clientele. I had been a regular there for some years and didn’t think it really did me any good other than keeping the guilt down. When the recession started and I lost a few of my writing clients and my income dropped drastically, I cut back on as many expenses as I could, especially the regular monthly payments that are there no matter what. The gym was first out of the window.

The loan system

I switched my finances to a Personal Loan system while I rushed around looking for new clients and sat, hour after hour, scouring the internet for work opportunities. Slowly things returned to some sort of normality, although at a lower level, and the first place that I thought about reinstating was the gym.

The monthly payment problem

One of the problems of joining a gym is the financial side. I have no complaint about the monthly cost, but rather about the ‘contract’ that you have to sign. The contract is usually for a minimum of 24 months and payments are made through your bank account, making it virtually impossible to cancel. Whatever happens, the payments go through on the specified date every month. You get up feeling tired and don’t go, that’s your problem. You feel like dropping out for the winter – that’s your problem. If you take a holiday or become ill, you bring a copy of the air-tickets or hotel booking or a doctor’s letter and maybe, just maybe, they credit you with the missed weeks or months.

You are locked in

I hate the “locked in” feeling of such a contract. Another place that I gave up on was the art school and my painting group there. It was just plain expensive but here the deal I signed was for monthly payments via the credit card, only for the months that I attend. No long term contracts. It was a relief to know that I could cancel at any time without paying a penalty.

Back to the gym

I was wrong about the ‘no benefits’ from going to the gym. After I stopped going there I began walking in the streets instead, and I quite enjoyed the change in scenery and faces. But I am lazy by nature and soon began to find excuses not to walk. After a month or so I wasn’t walking at all. Then I found myself short of breath whenever I had to walk. I panted up a single flight of stairs and worst of all, I found myself walking unsteadily, like an old man, weaving my way down the sidewalk. That made the decision for me.

Walking lessons

A few years ago, a young man suddenly appeared in town and offered walking lessons to anyone interested. We would meet outside the Mango Coffee Shop at 8 of an evening and he would lead a group of 10 to 20 people through the town streets in single file. Often he would stop and take a critical look at each one of us as we passed him. He then came over and explained how we were walking, why it was wrong and what we had to do to correct it. I remember his lessons very clearly and I still try and walk to his specifications. So with thanks to him and thanks to the gym I will soon be fit again and I’m sure that the fittest part of me will be my head.

In Latin they say…

Mens Sana In Corpore Sano. This translates from Latin as “a healthy mind in a healthy body”. The intended meaning here is that only a healthy body can support a healthy mind, so we should strive to keep our bodies in top condition. I’ve changed this to, “Mens sana in bank account sano,” meaning a healthy mind and a healthy bank account. They go hand in hand, don’t they?

Three billionaire brothers, the Kwoks, apparently took a long hard look at the melting ice-caps and rising waters of the oceans and decided that the time has come to build an ark. Not for them a naval architect to design the ship, they simply took the plans and specs of an earlier successful model and copied it. Noah would have been proud except that he too was not the designer of his ark. His contribution was the money he raised on a Personal Loan which he used to send warnings out in all directions.

A life-size replica

The new ark is anchored off the coast of Hong Kong which at the moment is struck by a catastrophe – not rain pouring down, but an economy sliding into the mud. The island of Hong Kong, usually the dynamic metropolis of the Far East, has sunk into the depths of the global recession and is having a desperate time.

The ark

The Hong Kong ark, designed as a new tourist and visitors’ attraction, is 450 feet long, has a luxury hotel at roof level, and is populated with 67 pairs of fiberglass animals. They are planning the Grand Opening soon. Unlike Noah’s, this ark was not a rush-job and has been in the planning stage for 17 years. Now the recession provides a nice marketing hook for the Kwoks’ ambitious project, which will hopefully bring visitors from beyond Hong Kong’s city limits and inject a little cash into the island.

The plan

This version of the ark contains 270,000 square feet of space and was developed in conjunction with five Christian organizations. It comprises a restaurant, an exhibition hall and children’s museum as well as Noah’s Resort hotel. The ark is beached on a small island in Hong Kong’s harbor and must be reached by the ferry which plies from the foot of the busy bridge that connects the city to the airport.

Ever heard of Sun Hung Kai Properties

At the height of the real-estate boom, Sun Hung Kai Properties was the world’s largest property developer by market capitalization. The Kwok brothers are the heirs to this blue-chip company founded by their father. In recent years, the three brothers squabbled and last year the board voted to oust eldest brother Walter Kwok as chairman and installed their 80-year-old mother in his place.

A matter of faith

The Noah’s Ark project reflects Thomas Kwok’s evangelical Christian faith. During the 1990s, he set up a church on the 75th-floor pyramid atrium atop Sun Hung Kai’s Central Plaza office complex. The Noah’s Ark project was initially hatched as a theme park with rides, but Mr. Kwok thought he could improve on this. It was held up in planning for several years, and construction on the ark’s foundations didn’t begin in earnest until 2004.

And a matter of survival

“People are experiencing a crisis right now,” says Mr. Lu, standing in front of his masterpiece floating in the China Sea. “Hong Kong is having a really bad time. Everything is a little upside down. Is it possible that this financial tsunami has come here for a reason? Whatever it is, the doors of the ark are open, and the animals, representing new life, are going to save us.”

I know that when I leave town on a 2-day business trip, I expect to find great changes when I return. It’s only natural; one leaves one’s own environment, flies off to a totally different place, there’s a change in the weather, major differences in the food and upheavals in conversation topics. Then you come back and hey! Nothing’s changed since I left? Hard to believe-isn’t it?

Now you’re an astronaut

So if the effect on a normal earth-bound human is surprising, imagine what an astronaut feels. He’s been torn out of earth’s gravity for 12 days, he has been in a state of weightlessness, his blood pressure is zero and the blood is probably circulating anti-clockwise, he has lost his connection to the stock exchange and in fact has been worrying that it may not be there and that he will have to start applying for all sorts of Personal Loans to make it through to the end of the month. His arrival has been delayed for 2 days, he was diverted to a different airport and he can’t sue the airline.

What happened to the recession?

He puts one foot down gingerly onto mother earth and faces the crowd of reporters who have been hanging around the landing strip for 48 hours without sleep, food or cigarettes. “Welcome back to earth, Commander! How were things in outer space?” “All was okay. How’s the stock exchange doing?” the reporter looks him as though he has been too near to the sun or the moon. “How did the crew behave, Commander?” “Fine. What’s with the swine flu? Have the scientists isolated the guilty bug yet?” “No change. Commander, how was the food on the trip?” “Tasteless, as on all flights. Are there any changes in the housing market?”

Back in space

By this stage both the astronaut and the reporter wish they were floating somewhere up there in outer space on a very high orbit, far from earthly matters such as recessions and swine flu. The astronaut is stunned – he has been involved in earth- shattering exploits for 12 days and here people are still walking around in the same shirts. Nothing has changed; he has been to the stars and back and boring old earth is still swinging its way around the sun as though nothing has changed. How can it be?

The spanner or the list

“Do you have anything exciting to report, Commander?”

“The spanner was quite exciting. About as exciting as watching your stock dropping through the floor. Is General Motors still making automobiles?”

“Tell us about the spanner, Commander.”

“Well, I was busy fixing this Hubble telescope thing. I had a spanner in my hand and I was tied to the end of the spacewalk rope. I reached into my pocket to get the list of stocks I want to buy when I get back to earth and I nearly dropped the list. So I let go of the spanner.”

Did you drop the spanner???

Not actually dropped, you understand, because of the weightless factor. It floated off horizontally. I wish GM would have been weightless, then they could have gone off horizontally as well, instead of dropping through the floor. You see, that spanner is still going, unlike GM.”

Pomigliano d’Arco is a town of about 40,000 inhabitants in Italy. It lies northeast of Naples and quite near to Mount Vesuvius, once the scene of some real fall-out. The town basically has one industry – automobiles. And it also has only one kind of car – Fiat. The entire town relies on Fiat for its very life.

Disaster country

Mimmo Vacchiano stands outside the locked gates of the Fiat car plant and says there is going to be a disaster unless its gates reopen. And the people in this part of Italy know all about disasters. “If this plant closes, there’s nothing else here, only unemployment.” But there is something else in the town and that is organized crime on a massive scale. “We can choose which way to go - unemployment, crime or a volcanic eruption,” says the 48-year-old father of two.

We live in panic

“We’re living in panic. Every morning I promise myself that today is the day I will take a Personal Loan and buy railway tickets for my family so we can move to Northern Italy where there is still hope. Here in the south job opportunities are zero. This place is going to be like Pompeii after Vesuvius blew her top.”

Unemployment

Unemployment in Pomigliano already runs at nearly 20 percent and Fiat’s temporary closure of the plant - in a bid to slash costs, same as other major automakers – has brought the town to its knees. Fiat employs 5,000 people directly and the plant provides jobs for 20,000 if suppliers are taken into account.

A shut down?

The Pomigliano workers are among the most militant in Italy. They have already clashed with police and are now warning the government not to do anything rash with the Fiat plant. “Shutting this plant would cause a revolt,” said Vacchiano. The Fiat CEO has said he will only meet unions once he has a clearer idea of the possible deal with Opel but, with Fiat idling the plant for weeks at a time, workers say monthly welfare payments of about $950 are not enough.

A melt down?

The volcano of Mount Vesuvius cannot be completely disregarded. The famous eruption in AD 79 led to the destruction of the Roman cities of Pompeii and Herculaneum and the death of 10,000 to 25,000 people. The volcano has erupted many times and is still considered active. Today it is regarded as one of the most dangerous volcanoes in the world because of the 3 million people living close to it and its tendency towards explosive eruptions.

The auto industry’s woes

CBS aired an overview of the state of the auto industry yesterday on their newscast and the senior editor, Joe Wiesenfelder, put the subject most succinctly:

• If fuel prices weren’t high and the economy got soft – they might be OK.
• If fuel prices went high but the economy was still strong – they might be OK.
• All these different factors together leave them with losses at every turn.

Back in Italy

Things are tough and things are going to get tougher. We built a car industry to save the world and make it a better place to live. Now that industry is sick and we’re all going to get the plague.

Soon, residents in Mexico will be able to partake in the imitation Chinese tradition that is P.F. Chang’s. The American restaurant chain is expanding, and it struck a deal with Latin American restaurant operator Alsea SAB to open 30 restaurants in Mexico in the next 10 years.

In this economy?

Everyone knows that sales in the restaurant industry have taken a brutal beating since the start of the recession. Dining out was the first thing to go for many cash-strapped individuals and families. Slate.com:

Restaurants are the top category in which U.S. consumers said they are most likely to cut back, according to a recent Boston Consulting Group survey.

It’s a no-brainer that preparing your own food at home is much less expensive than going out to eat. Clipping coupons and checking for sale items at the grocery store can help you save even more and keep you from needing a payday loan to pay for groceries.

So how is P.F. Chang’s doing so much business that it has the capital to expand?

Hard work pays off?

According to Daniel Gross at Slate.com, P.F. Chang’s “same-store sales fell a bit but profits produced at its 350 outlets rose 38 percent from the first quarter of 2008.” Gross also has a theory about how and why P.F. Chang’s is doing well amid economic chaos:

“The company has avoided wholesale restructuring and panicky discounting. … Rather, it simply has worked hard at doing a better job running things. Co-CEO Rick Federico says that in early 2008, when traffic first softened, management went through ‘all elements of our business that don’t touch our guests or our product’ in a search for efficiencies,” Gross writes.

Restaurant expansion

Here are some details on the Mexico expansion of P.F. Chang’s, which also owns Pei Wei Asian Diner. From the Associated Press:

Restaurant chain P.F. Chang’s China Bistro Inc. said Monday it is expanding to Mexico, with the first location to open in Mexico City in the fourth quarter.

The company will develop 30 restaurants in Mexico over the next decade via a license agreement with Alsea SAB de CV, an operator of fast-food and casual restaurants in Mexico.

The P.F. Chang’s difference

As Gross from Slate points out, P.F. Chang’s didn’t make its fortune off of people seeking authentic Chinese cuisine. Gross uses a musical analogy to explain P.F. Chang’s business philosophy as he sees it:

Just as saxophonist Kenny G provides jazz for people who don’t really like authentic jazz, P.F. Chang’s peddles Chinese food to diners who might not cotton to authentic Sichuan fare.

Gross also chronicles the beginnings of P.F. Chang’s successful ride to economic stability:

P.F. Chang’s rode the trading-up boom of this past decade, opening stores in tony malls and economic hot zones and becoming the first Chinese-food chain to reach $1 billion in revenue.

Let’s not get carried away

Its expansion into Mexico will be slow but steady. P.F. Chang’s provides a good example of how good business decisions and small changes can amount to big success.

I sat at a meeting yesterday, one of about 50 people invited by the mayor to discuss the development of the proposed new park. How boring can a meeting be? First they discussed the site and then they discussed the access to the site and the traffic and the parking and traffic and the traffic. I doodled on the pad in front of me, I uncorked the bottle of water they had provided and I took a sip, corrected my doodle, squirmed around in my seat and finally sneaked a glance at the guy next to me.

He was semi-comatose, his head resting on his hand, his eyes half closed but fully glazed and his town-hall sized watch showing me that we had been sitting here in the never-ending traffic for 3 hours. Then I saw that his watch was a Rolex and I leaned in a little closer to take a better look. How often do I even get near a Rolex anyway? I remember thinking that maybe I could take an Online Payday Loan and buy myself a watch, something a little more modest than the Rolex, but one that would still get me into a town council meeting on its looks.

The great eruption

“Is that thing real?” I asked him. I heard later that people out in the street heard the eruption that came from the Rolex man. Talk about going ballistic! The guy went berserk.

I understand that is was a rather tactless remark, and I will apologize when I see him again. I will explain that in times of a recession things are different and people behave differently. I will tell him that I saw the watch, that I had never seen one like it; that the closest I have ever been to one is in the pictures of the replica watches that sail unceasingly into my computer and so I had questioned his. I am delighted that it is real and I will always remember sitting next to it.

It’s all due to the recession

By coincidence I received one of these spam/junk mails today. It offers a wide range of Watches, Bags and Wallets and Jewelry and Accessories. The website is slick and pleasant and the goods look great.

If things are tight and I’m personally having a slow time and constantly fending off my aggressive bank manager, why shouldn’t I buy one of these watches? I like walking around looking good.

What shall I buy?

All the watches in the spam letter are priced at $229, no matter if they are gold, titanium, aluminum or stainless steel. I like the Breguet watch, it is finely designed and looks very elegant. I have to say that I have never seen one of these watches excerpt in an ad, so I looked it up. Wikipedia tells me that the company was founded by Abraham Louis Breguet in Paris in 1775 and is now part of The Swatch Group. I’ll have one of those, please, at $229.

I see in the ad that if I buy 2, I’ll get a 15% discount. I’ll take one for my wife then and qualify for the free shipping as well.

Short term loans are becoming a standard in today’s economy. Many people rely on supplemental income and resources to pay bills, however with the recession in full swing, those options are quickly dwindling. Maneuvering debt is becoming more and more difficult and shortfalls in cash are creating a new market for short term loan funding.

A short term loan is a reliable way to apply for upfront funding. Normally the requirements are you must be over 18, be employed and have an active bank account to apply. If your application is accepted, the lending company calculates how much you qualify for and it’s deposited into your account within a few days, sometimes within just a few hours. You pay back the amount automatically on your next payday.

The simplicity of these loans has only grown their popularity and today’s economy is fueling their usage even more.

Credit card companies

Many Americans rely on credit cards to handle financial shortfalls, however the industry is quickly changing in response to the recession. Here are some new tactics credit companies are using:

1. Cutting holders’ limits- even if they are below their current balance
   The problem here is that this has a huge impact on card holders’ credit scores. Your available credit to actual credit charges is a deciding factor in your FICO calculation. With balances being cut, it seems like you’ve reached, and exceeded, your limit, when in reality you haven’t.
2. Raising interest rates for all customers
   Although the Federal Reserve brought short-term rates down tremendously, credit card companies are universally raising their rates. The result is card holders will need more time to pay off their debt and incur a lot more interest charges throughout the process.
3. APR penalties reaching as high as 32%
   Credit card companies are penalizing card holders with huge interest jumps. If a customer pays one day late or exceeds their limit by $1, per the new rules, they can suffer tremendous penalty fees. According to a recent survey of credit card companies, almost 90% allow the APR to jump if a customer makes one seemingly innocuous error.

The recession is having a huge affect on the credit card industry and in turn, forcing card holders to compensate for their losses. It’s hard to say when the market will balance itself out and whether or not that will truly bring things back to normal.

Consumers are on their own

Consumers need to have other ways of finding funding. Whether it’s short term loans, downsizing or strict budgeting, people need to tighten up their finances. The huge bailout package is expected to work its way through the economy and actually bring some form of stability mid-2010. What this stability will entail, no one knows just yet. It’s best for Americans to grow accustomed to living thrifty until some indication of an end to the recession and balance of the economy are reached.

Where do credit cards fit

Credit card companies are struggling to manage their businesses just like every company in the U.S. market. Cutting card holders’ limits, raising interest rates and applying high APR penalties, are all tactics being used to minimize their losses. Unfortunately even good customers are seeing these changes and their credit scores are suffering as a result. One analyst suggests cutting down on credit card usage as much as possible until the market stabilizes.

Although credit cards formerly have been accepted as convenient options to paying bills, in the economy today they are bringing many problems along with their usage. It’s simpler and more reliable to look to alternative funding such as short term loans or installment loans as a way to cover bills. There are no penalties and the relationship with this type of lender is short and straightforward. In today’s economy, short and straightforward is the best you can hope for.