by Lee R. Phillips

Here’s a little PS on the bank rating information previously posted.

Several years ago, I shopped for the best rates on a CD investment I had. I picked a coupe of banks that offered great rates (for the time anyway). Funny thing-both of the banks I picked were the first to go under when the banking crisis came. They were immediately bought out by bigger banks and everybody was happy. However, I got burnt to a small degree.

You need to pay attention. The banks “on the edge” are the ones that offer the higher CD rates. They need to raise capital desperately, and to get money in the door, they offer the best rates. In addition to checking out the bank’s rating (see instructions in my previous blog) you can also see if the bank has had any enforcement actions issued against it by the Feds. Usually, before the bank fails the Feds will try and change its risky behaviors by issuing enforcement actions against it. Go to www.FDIC.gov to find enforcement actions against your bank. (more…)

By Lee R. Phillips

One of my million dollar questions today is where do I put my little bit of extra cash.  The market scares my pants off.  I haven’t invested in the market for years.  The good news is, I didn’t lose much in the crash the past couple of years.  My record is well established; when I buy a stock, the stock doesn’t go down — the company goes under.  Real estate is a good idea, and I have done well, but I think it is time to have some cash in reserve, so I don’t want to dump every dime I have into more real estate.  I’m becoming paranoid enough that I don’t love banks anymore. (Not that I ever had a love affair with banks.) Keeping your “dime” in the bank can be risky today, and I’m not sure we’ve seen the bottom of the banking crisis.  You need to evaluate your bank, but how?

Banks are the place you keep “secure money,” but with the interest rates they are paying, the mattress looks tempting.  Inflation scares me to death.  M2 (basically the amount of US money in print) has doubled and tripled in the past year.  We’ve gone from about a trillion dollars in circulation to almost 3 trillion in the past year.  I am sure there is a shortage of green ink in the world, because the US government is using it by the ship load to print more money.  The money has been printed, but it isn’t “floating around” yet, because people are now actually saving money.  The U.S. savings rate has gone from the negative to the way positive.  Everybody is hanging onto any extra cash they have.  Inflation won’t hit until people start to circulate their cash.  It’s a concept known as the “velocity of money.”  There is now no way major inflation can be avoided. Click “Read More” Link for Bank Rating Instructions—–> (more…)