Main Street & The World...
It wasn't all that long ago that I wrote about the St. Francis Bank being acquired by a northern Illinois banking company called Mid-America followed by the take-over of Mid-America by Cleveland-based National City Bank.
National City Bank has had its problems, as have many banks, with poorly performing mortgage loan portfolios and its stock has been in the dumps for some time. It received a $6 billion infusion of cash not long ago from a private equity group by the name of Corsair Capital.
We'll have a new bank, at least a new bank name, in our world. National City Bank agreed yesterday to be purchased by the PNC Corporation which is based in Pittsburgh. National City "agreed" under duress since the government had told it to either get itself acquired or fail. The PNC purchase is expected to close by year-end, and is being financed by a government infusion of $7.7 billion, some $5.8 billion of which will go for this deal. The Corsair Capital group squeaks through this deal whole since it had the sense to build some protective language into the deal it did earlier this year. That begs the question of why you and me are always at risk when the big capital organizations can do 'sweetheart' deals.
I went through this 'dry' explanation of the change for the simple reason of reminding us of just how global is our economy and of just how much each of us has at stake in the world-wide financial problems now on the front pages. The people whom I see when I bank are about to get their fourth set of bank 'logo' clothing before the first set ever showed signs of wearing out. They are about to be "treated" to the need to learn another banking system and another banking language. I hope they all remain in place because they do an excellent job at customer service!
Even though we live in Germantown, we can't hide from the world wide realities of economics. We're subject to the ups and downs of the global stock exchange system as much as we are to the ups and downs of Wall Street because it is all inter-connected. The 'futures' trading in Japan and China set the tone for the rest of the world as it awakens to another day. OPEC makes our gasoline prices fluctuate when it decides to reduce production...except for yesterday when it dropped production 1.5 million barrels and saw the price go down by $4 per barrel instead of rising as it had expected. Even the oil barons are flummoxed with the current 'goings-on'. It isn't just hitting you and me, although admittedly we feel it more intensely since most of us don't have the luxury of big cash cushions.
Another thing this should remind us of is this: our government makes decisions we don't know about until after the fact, and those decisions are often critical to our existence. We are the ones who determine who leads that government as we will again in a week or so. There are already discussions going on in Washington that would impact our individual 401Ks dramatically and that would see the money accumulated being used by our government as it sees fit with guarantees of interest made to those of us holding the account.
Those promises are only so good as our economy and are only so trustworthy as our government. Let us not go down the pathway that Argentina is on where we permit nationalization of individual accounts.
