How you too can participate in the financial crisis

About 15 (or was it 25?) years ago many building societies conned their members into agreeing to them turning themselves into banks. Was this the law of unintended consequences in action? Oh the joys of capitalism!

Bishop Alan’s Blog: HBOS: Personalised Credit Crunch:

Welcome to the share offer that enables you to have your very own credit crunch at home this Christmas. As a student I earned some holiday money and put it in the building society. Then the building society became a bank and my shares were converted into, er, more shares… Imagine my joy, then to be sent an “important document” this morning that “required my immediate attention.” It’s my opportunity to bail the bank out by taking them up on a very special offer — They are willing to flog me 261 shares, as a special favour, at only 113.6 pence a share. Here comes fate, tapping me on the shoulder, offering me a career as a major capitalist, and all for only £296-49! Deep Joy!

650,000 Americans Joined Credit Unions Last Month — More Than In All Of 2010 Combined | ThinkProgress

650,000 Americans Joined Credit Unions Last Month — More Than In All Of 2010 Combined | ThinkProgress: “One of the tactics the 99 Percenters are using to take back the country from the 1 percent is to move their money from big banks to credit unions, community banks, and other smaller financial unions that aren’t gambling with our nation’s future.

Now, the Credit Union National Association (CUNA) reports that a whopping 650,000 Americans have joined credit unions since Sept. 29 — the date that Bank of America announced it would start charging a $5 monthly debit fee, a move it backed down on this week.”

Now there’s an interesting thought.

The South African equivalent of a credit union was a building society, but the building societies all went commercial, turning themselves into banks in about 1987.

Building societies specialised in one thing — lending money for building and buying houses; in other words, mortgages. It was something they were actually quite good at, and something commercial banks are very bad at — much of the economic crisis of the last four years or so was caused by American banks playing fast and loose with mortgage finance.

So the news that Americans are moving their money to credit unions might herald the beginning of a return to sanity.

As I understand it, a credit union is like a general putpose building society, lending money not only for building and buying houses, but for other things as well. I believe that, like the building societies, they are cooperative rather than commercial.

Can South Africans do the same thing?

Are there any building societies left? Perhaps this is their opportunity to make a come-back. If anyone reading this knows of any South African bulding societies, please post a link in a comment. And revived building societies could even help to solve the housing shortage.

There are, of course, stokvels, but they usually have to keep their money in commercial banks, with the ever-increasing bank charges. I saw that my bank now charges R25.00 for a cash withdrawal.

That’s a good and sufficient reason to move my money to a building society… if there was one.

SA savings rate dips below zero

The savings rate has slipped below zero? Why are they surprised?

One thing is certain: a penny saved is a penny lost. If you try to save money, it will dwindle away to nothing.

The Times – SA savings rate dips below zero:

South Africa’s saving rate has dropped from 2.7% in 2001 to a negative rating of -0.5% in the second quarter of this year, the SA Saving Institute said today.

If the SA Savings Institute wan South Africans to save, they must work for the bringing back of the building societies.

Before the building societies went commercial a little over twenty years ago, anybody, but anybody, could open a savings account at a building society with R1.00, and earn interest on it. With R10.00 they could buy indefinite period or fixed period paid up shares, and have the dividends from these paid into their savings account, and accumulate savings, no matter how poor they were. A R1.00 a month subscription share could accumulate over 3 years, and so people could save for a fixed term objective, a holiday, for example, and, of course, in the case of building societies, a home.

But now, since the building societies all turned into commercial banks, anything you put away for a rainy day will be swallowed up in bank charges, and eventually the bank will send you a letter to say that you owe them money.

And it’s interesting to see that a lot of the present financial crisis began with mortgages, and that some of the institutions in most trouble in places like Britain have been building societies that became commercial banks.

The present situation favours only the rich, those who can afford to put away enough money so that the dividends or interest received outwighs the bank charges. But for the poor saving makes no sense — far better to spend it as soon as you get it.

The SA Savings Institute is not just barking up the wrong tree, it’s barking in the wrong forest.