Adios NCC (National City Bank)
It didn’t fail, it just got acquired at a fire-sale price.
I somewhat expected this to happen, rumors of a PNC buy have been circulating since shortly after my last introspective post wondering if NCC would fail.
I’m glad this is the course it’s taken, for a few reasons. My deposits are still safe, PNC has significantly less exposure to the risky markets than NCC had, and my NCC shares will be converted to a share of PNC (which is currently trading higher than my buy-in to the NCC shares were) , which at least for the last few quarters has continued to dole out $0.66/share dividends.
So hey, who’s crying that the markets are hitting lows not seen since 2001? I’m not… yet.
Honestly, I’m looking at this going “whoo hooo! I get to establish my investment savings on the way to the bottom of a crash! Oh Yeah!” Seriously. Think about the possibilities had you been able to invest in the Dow index in Nov. 1987. It was around 1800 points. If you managed to keep pace with the index from 87 to today, you’re still in really good shape. Granted, the markets are still in panic mode, and I think we’ve still got a ways to drop… The bail outs are prolonging the pain, otherwise it would have been nearly over by now as the chips would have kept falling unabated.
This freak-out period will last at least through Dec. The retail season is going to suck, and things will keep going down as retailers miss benchmarks and fail to meet goals because Black Friday won’t be as strong. My guess: It’s moved from real-estate to finance, next up is retail, then producers. Durable goods are already down, construction is down, raw materials will continue to decline until everything is righted. My fears are no longer of bank runs or liquidity problems. My fears are rampant inflation, which will -have- to take place to account for the billions in government-deficit-based bail-outs.
People want bankers to be patsies and scapegoats. The problem is intervention. Intervention in housing markets, subsidies to lenders for risky loans (credit expansion), bail-out of failed businesses encouraged to give risky loans (more credit expansion), continued deficit-spending by the government (even more credit expansion), encouragement of banks and private lending institutions to use expanded credit (the bailouts) to continue lending (credit expansion).
This is a big snowball of crap that’s going to hit everyone really hard. Instead of stopping the snowball by letting the industry contract credit, we’ve piled more snow in front of an avalanche as a way of trying to stop it. We’ll be very lucky if that snow we’ve piled up doesn’t join the rush and make the devastation at the bottom of the mountain even worse than it would have been.
That’s my thoughts for the day.
Next week I’m going to start building a chest of drawers for the nursery. I’m thinking Red Oak, it’s reasonably priced, hard as all get-out, and should look gorgeous when it’s all done. A trip to Northwest Lumber Co. is in my near future.