Sunday, September 28, 2008

If You Can't Save It, Spend It

Jeremy Clarkson has been in a bit of a dither since a dinner conversation with a banker a few months ago.

But then I was snapped into hair-straightening consciousness when he casually mentioned that the giant Union Bank of Switzerland was in trouble. UBS? That’s where I’d plonked all my life savings.

The next day, in a bit of a flap, I rang the bank, which quite understood my concerns and offered to transfer the bulk of my savings to a company I’d never heard of. It was called AIG.

As you can imagine, the past two weeks have been most enjoyable. No wait. That’s the wrong word. I mean blood-in-my-feet, dead-faint-half-the-time terrifying.

He attempted to take action.

Of course I made strenuous efforts to get my money out of AIG as soon as the scale of its problems became apparent. But it wasn’t possible. It had shut the fund in which I’d invested and it would remain closed for three months while it tried to sell the assets. “We need to do this in an orderly fashion,” said the man on the phone, calmly.

Inwardly I was screaming. I don’t give a shit about an orderly fashion, any more than a man in the trenches wants to look smart while running for his life.

Efforts to become better informed about the crisis were not reassuring.

I decided to try to understand banking. And what I’ve gleaned from a two-week crash course is that it is completely unfathomable. There isn’t a single person in the entire world who has the first idea how the system works.

Out of nowhere, salvation seemed to appear.

Then, for no reason that anyone can explain, news came through that the American taxpayer had rescued AIG. I was beside myself with happiness. I was also in California. So I..... ran downstairs and, much to the surprise of the hotel doorman, thanked him and everyone in the lobby for getting me out of such a deep and confusing hole.

But it wasn't what it seemed.

I’ve just received a letter from an AIG assistant general manager – it has obviously put its top men on the job – saying that I can either have a fraction of my investment back in December, or I can take out a new fund – using imaginary money that obviously doesn’t exist – and hope to get it all back at some unspecified point in the future.

What to do?

Now, I’m a gambler. I love the horses and playing cards. But this is a big one. This is keeping me awake at night.

My banker can’t help. He, like everyone, is caught up in a whirlwind of uncertainty.

And so it’s up to me to come up with what I hope, for once, is a spot of sensible advice for those who are in the same boat. (At least those who can get to their money.)

Because there is no safe haven for your money, you need to give it to someone else. That way, it becomes their problem. So, why not pay your income tax early? And call your kids’ school to see if you can settle all forthcoming fees in advance. Need a new car? Why not buy one now?

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