Informal Brain

Today Nancy Pelosi made a bold statement about the 700 billion dollars requested by the current administration to rescue the financial markets:

Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive executive compensation.

[From The Page - by Mark Halperin - TIME]

Unfortunately, I couldn’t agree less. Now is not the time to fix what is broken. What must be done immediately is put some liquid capital into the markets. Once that is done, I believe some additional regulation is needed, but protection for homeowners doesn’t make any sense. These people knew they were getting into a mortgage they couldn’t afford immediately or at some point in the future.

What a week for the financial markets! Wow, what started the week as a minor correction ended the week with the news media calling Friday’s government bailout the equivalent of the FDR “New Deal” for 2008. I heard financial analysts saying things like “we avoided the second Great Depression!”.

Whoa, are we really in that much trouble. Yep, appears so.

So, the big difference between the Great Depression and the 2008 depression we “narrowly avoided” is that the Great Depression was allowed to run its course, thus, changing behavior in a positive way. Now, I won’t argue that the Great Depression was an extremely painful time for anyone alive at that time (understatement), but it did serve to have the American people fundamentally reexamine their financial value system.

What worries me about the 2008 Great Bailout, is we acted before we felt any real pain. Ok, so some of us had a bit of a heart stopper this week when the Dow dropped but by the end of the week we gained that all back. So, can we positively say we are all reformed credit addicts? Are we sitting in our living rooms thinking, “wow, I really need to rethink that credit card I have wracked up, or that second mortgage, or that new car?” Somehow, I really doubt it. I suspect we are relaxing and thinking about heading out to the mall this weekend to do some much needed spending now that things are back to normal.

I contend we see this as fixed, and our credit behavior will continue. When interest rates shoot up we “might” see some positive behavior shifts, but until then, I hardly count this as over.

Here is something that continues to annoy me about using PayPal to complete internet transactions. If you are a frequent PayPal user you might recognize these types of transactions showing up in your online banking reports:

PAYPAL INST XFER 010423 5T3J339YZKBAL SHAWN SMITH

Unfortunately, this provides NO detail as to what the transaction was for? So when it comes to analyzing your spending habits on Mint.com for example you then have to remember the fact you bought a show or song on iTunes vs paying for software, and eBay item etc. If you head over to PayPal’s website they give you the option of running a transaction report. You then quite clearly see the name of the merchant you completed the transaction with.

Hey, PayPal, why not pass the merchant name in the transaction detail to the banking system. That would help us categorize our transactions better!