Friday, July 10, 2009

Having fun with IOUs in California

To the left you can see a registered warrant that happens to be an IOU, in the state of California. You might ask yourself, isn't a warrant something that a court will issue for your arrest for some type of crime? Yes it is, but for those of you new to the wonderful world of California world of finance, a "registered warrant" is actually what most of us would think of as a "check," something which, normally, you could deposit in a bank.

However, if you look carefully at the picture to the left, you might notice that there are several words that differentiate this registered warrant from a check, due to the following words: "This Registered Warrant will be honored on or or after 10/2/09." Aha, that is what separates this warrant from a check, because this means that this check cannot be deposited in a bank account until 10/2/09, unless, of course, you are one of the lucky ones who has a bank that will actually take this things as payment. After July 10, a number of these elite institutions, which exist to protect and serve us all, as I discussed in my previous blog, have said that they will no longer accept such "instruments" as payment. So, one might ask, if I have been paid one of these glorious-looking pieces of paper by the state, what can I do?

Do not fret, my fellow Californians, the IOU Stressbuster is here. (I was thinking of analogizing this to "Ghostbusters," which came out in 1984, but since many of my potential readers are too young to remember this, I will not dwell on this point). So, here are some of my IOU Stressbuster solutions:

1. You may be one of the fortunate ones whose banks might opt to accept one of these sharp-looking pieces of paper as payment anyway. Le chayim! (which means to life in Hebrew). Life is good, so fret no longer.

2. The state of California has indicated that those who wish to pay their bills to the State of California may be able to take an IOU, and, voila, send it back to the State to pay their bills. The thought of doing this is delicious. Just imagine if the State of California owed you some money, and sent you, say, $30,000. What if, for example, you were a tax cheat and you owed the state of California, say, $500,000. If you were exceptionally shrewd, you could turn around and send them some of this "funny money" that you had recently received from the state back to the state in payment of your debt. But, you might ask, how can you get away with paying the state "funny money" for 30K and thus shorting the state by 470K? The answer is that with the state laying off tons of workers, and "furloughing" other workers for two or three days a month (i.e giving them unpaid leave so they can spend quality time with their families, while they are scrounging for leftover food in dumpsters since they will have virtually no money on which to live), the state audit division is probably low on employees, so, if you are really lucky, they won't notice. If they do notice, and you end up in with an immense amount of fines and penalties, you can at least be satisfied that you did your best to "take one for the team."

3. The "secondary market" option--This means that there may be people that actually want to buy and sell these warrants/IOUs. So, in other words, somebody might buy your warrant for a discount, and then sell it for a markup later on. Or, if you want to try out a different kind of "secondary market" a try, you might want to consider using an illegal poker game as a market, especially if you have lots of rich friends who have lots of money to "burn," just as many of us feel "burned" since we have to put up with this nonsense. Let's say that you enter a high-stakes poker game, and you decide to go for it, by putting up an IOU for your bet. If somebody is stupid enough to take your bet, and you lose the bet, voila! Just hand them the piece of paper, and tell them that it is a warrant, from the state of California. Remember, per our economics lesson above, all items that look like checks from the state of California actually are called warrants. However, as we know, in regards to IOUS, in this case, just because it "walks like a duck," and, in this case, it definitely smells like a duck, it may not be a duck at all, because warrants that are IOUs are not treated by banks like checks unless, you are lucky enough to have a bank that does treat the warrants which are IOUS as checks, even though they are not really checks.. Are you confused yet? I know that I am, as well as probably most people in the Great State of California. Anyway, this betting strategy is worth a try, but, just in case the people you are playing are the impatient, unfriendly, possibly violent kind, make sure that you bring your best running shoes with you to the poker game, so that you can make a timely escape if that is what the situation requires.

4. If you are one of the unfortunate ones who are stuck with many warrants/IOUS, you might consider using the warrants to construct a model of a house, since you may be among these who have found that they cannot afford the house that they are living in, meaning that such a paper IOU/warrant house is the fanciest house you will ever be able to afford. Be careful when you build your IOU/warrant house that you do not unduly damage the IOU/warrants too much, so you don't have excess damage to your house of cards/IOUS/warrants/checks when it tumbles to the ground, just as the economy of our state has being doing lately.

5. Another possibility is neatly stacking your warrants/IOUS in a vertical manner, such that the warrant/IOUS can be used as the modern equivalent of a domino rally, where the warrants can be neatly aligned all over your living room, so that as soon as you knock over one warrant/IOU, all rest of the fall over in a properly synchronized fashion. If you are really clever, you can set up your warrant/IOUS all over your residence, so that, once you have perfected your techniques, you can have the pleasure of watching the warrant/IOUS/checks (maybe) beautifully undulating everywhere you look.

6. Having IOU/warrants can be of great assistance in maintaining a clean and healthy lifestyle. You can use the IOUs to clean your shaver, and, if you cannot afford a vacuum cleaner, and perhaps, even a broom, you can use the warrants to scoop up any refuse and carefully empty it into any nearby trash bags. Remember, however, to keep the IOU/warrant in a clean and sanitary condition, in the event that you intend to have an alternative use of the IOU/warrant in the future.

7. Finally, an IOU/warrant is a fine idea for a gift. Imagine what pleasure you can give to your aunt in Wisconsin, if, in the event that you cannot afford a gift for her this year, since you have no money, you can just take the warrant, put it an envelope, and send it to her. Or, when Christmas or Hanukah rolls around, in December, since the economic situation in California may still be unresolved at this time, an IOU/warrant is truly a gift that keeps on giving.

Happy IOU Stressbusting!

Thursday, July 9, 2009

Surviving in the land of IOUS

It is not easy living in California these days. Everyone is depressed and nervous for good reason. Would you accept this thing as payment?

But, let's try to look at the bright side of all of this. I am trying to do my best to make people that I meet feel good about themselves. It's not easy, but it's worth a try.

A couple of days ago, I walked into my bank, currently known as Chase Manhattan, previously known as Washington Mutual, known before that as Great American Federal, and before that, who knows? I have only lived in San Diego for twelve years, so I would have to turn to the old-timers, who might remember the beginnings of this fine institution. Anyway, I walked up to the teller to make my deposit, and I observed that this woman, probably about age 50 or so, looked quite depressed. That is hardly a surprise based on her employer's emergence from the ashes of the previous incarnations of this financial, ex-high flyer, which has lived to enjoy another day thanks to the devoted attention of we, the loving taxpayers. Unlike our financial institutions, the only stimulus packages that we have, are......I don't want to lose my G rating, so I will stop there.

This teller was quite down, perhaps because, as one Chase Home employee confided in me, her employer was trying to maximize their return on investment by several astute moves, including, first of all, taking away some of the earned vacation of some of their employees. I think that was a clever move. After all, why should we, the taxpayers, pay for time given to their employees, who are overjoyed to have this job, when they are, gasp, not working hard enough to keep us, the customers, happy?

Another brilliant move, from what I was told, is that their employees were asked to no longer have water bottles at their desks. After all, if I have come to the bank to deposit my hard-earned paycheck, watching an employee drink from a water bottle could get me so upset that I might walk away from this bank and take my multi-dollar accounts to other elite institutions across the street. Another reason for this move could be that a customer might surmise that perhaps the employees might fill their water bottle with hard liquor, and then take the liberty of swigging it while we, the customers, would watch in horror.

Finally, back in the good old days, when this bank was known as Washington Mutual, the bank decided to take away all of the safe deposit boxes of their customers in most locations. Again, a truly outstanding move. Apparently, the reason for this move was to maximize the business potential in every square inch of every branch. All that newly gained space may have contributed to the fact that the geniuses running this bank invested millions of dollars in either loans that people could barely afford, or, perhaps, placing bets, known as "reverse credit swaps," (with the entire civilized and uncivilized world's economy as collateral), that these people taking on these loans would (would not?) be able to pay their mortgages. Thanks to this move, I was forced to either take my multidollar contents of my safe deposit box and put them under my mattress, or, take my safe deposit box elsewhere. I opted for option number number two, where I got the pleasure of paying a fee for the privilege of using of another elite institution's safe deposit box.

I do feel bad picking on this institution, because it is probably no worse than the other ones, and I do appreciate that they have stuck with me for all of these years, but there are a couple of other interesting moves they have made. On the one hand, one of my accounts went below their minimum, and hence I was charged a fee for something like "inadequate balance maintained." . However, I was using another account to fund this account, and I made such transfers so often that my other account I was charged an "excess activity fee." I was told that to avoid such fees, I could make such transfers either with the teller doing the transaction , or by using an ATM machine. I suppose that this move was to prevent me from trying to do an online transaction and then suffer the indignity of being unable to access my bank account in the event some catastrophe stopping the Internet from functioning, such as the recent passing of Michael Jackson. I feel good though; I am just doing my little part to help this bank be successful in such a difficult time.

Anyway, the woman teller was wearing a very sharp looking Chase Manhattan shirt, blue with a couple of buttons and a nice collar. I complemented her and told her, "Hey, things can't be that bad. After all, you are wearing a nice shirt with Chase Manhattan insignia." Alas, she told me that her nice new shirt was actually torn in a couple of spots, and that one of the buttons was coming off, which lead me to thinking, how many times a week do these employees have to wear these shirts? Do the employees get a new shirt to wear every day, or do they have go home every night, to wash the one shirt that they have been issued, and then repeat this ritual every day to the point where their shirts start falling apart and become shabby-looking? I am afraid to inquire more into this, so I have let this one go.

Anyway, as you probably can guess, the morale of this story is : Accentuate the positive. Do your best to cheer up everyone you meet, even bank employees. You might try to do your best Michael Jackson dance moves in the bank lobby, by doing some spins, standing on your tip toes and doing some Moonwalking. You will definitely put on the smile of everyone in the bank (except for, perhaps the security guards, who might, unfortunately, deduce that you are a threat to the bank in light of your behavior, and arrest you, or even shoot you. ) But, do not fear. America will survive this economic meltdown, as long as we and all consumers keep a smile on our faces, and, as the old saying goes, "Don't let'em see you sweat."