This Week in Bank Failures

The trend toward higher fees for banking services could be economically beneficial if as a result, customers move their accounts to the banks that have lower cost of operations and banks look for ways to lower their operating costs. It is one of the curiosities of the U.S. and European banking systems that more than half of banking customers do business with the banks that have the highest transaction processing costs. That is a situation that banks have had little incentive to correct for the past half century, but those changes may be on the way as customers balk at some of the new fees and switch to less expensive forms of banking.

There was a bank failure in Texas tonight: First International Bank, with $209 million in deposits and 7 locations, based in Plano. Deposits are being transferred to and assets are being purchased by Houston-based American First National Bank.

The failed bank was itself the successor to a failed bank, formed in 1991 to purchase the assets of the failed First National Bank of Bedford. It had sought to grow aggressively starting around 2005. This strategy proved as disastrous here as elsewhere, though the scale of the resulting financial problems didn’t become obvious until late in 2009.

Clearing the Clouds

Now that we have scanners and email, you no longer have to keep documents in physical form. Cloud computing promises the next step in this progression: you no longer have to store your own digital documents. But, as with any area of your life that you turn over to a faceless, anonymous business operation, there are privacy and security issues. Alexis Madrigal wrote last week about “The Cloud’s My-Mom-Cleaned-My-Room Problem”:

We’ve always been dependent on software providers to create the digital spaces we inhabit, but when your email and documents and music are in the cloud, you’re giving up the lock on the door and allowing changes to be made on the schedule of the parent. He or she may clean up or buy you a new desk. He or she may take away the car or decide you can’t do something you think you should be able to.

Of course, there are other problems too. Among many others, there is the problem that having your life in other people’s hands makes it all too easy for them to find out your tendencies and use those tendencies to manipulate you, as I wrote in May.

If cloud computing creates the digital equivalent of mom cleaning your room, and if it puts you at the mercy of hidden forces that see you as a resource to be exploited, that just means that cloud computing is not as inexpensive as it appears on the surface. Given the risks involved, you will still likely make some use of cloud computing, but you will want to be careful not to be using it frivolously.

In a nutshell, that means putting documents in the cloud when there is a reason to, and removing them when there is no longer a reason to have them there. It is the second part that is sometimes counterintuitive. Cloud services make it the easiest thing in the world to keep everything indefinitely. That’s a boon for published documents, like this blog, but eventually becomes a problem for almost anything else. Almost everything — photos, manuscripts, spreadsheets, playlists, notes, messages, wish lists — should eventually be deleted, or at least removed from the cloud. Some things, because they are more sensitive, should be deleted faster. If you realize you have a wish list online that you had forgotten about for a couple of years, delete it right now before someone innocently gives you something they selected from the list. For any document or message, though, the ideal time to delete is at least some time before you have completely forgotten what it was about.

I know, it’s not like any of us needs another chore, and clearing the clouds is just that, a chore. But the ease of ownership that cloud computing offers doesn’t take away the responsibilities that go with owning something. It should become an every-few-weeks habit to check some part of what you have online and delete the things you find that no longer belong there.

Cautious Christmas-Season Hiring

U.S. retailers are hiring fewer Christmas-season workers this year. Looking at all employers that permit seasonal hiring, only half expect to do so. Among those, one tenth expect to hire more than last year and one fourth expect to hire less. That’s according to a new Challenger Gray & Christmas survey.

It is about the same story when you ask shoppers what they will spend. About one sixth expect to spend more than last year, while one fourth expect to spend less.

Cutbacks announced so far are substantial. Toys “R” Us announced on Thursday it is hiring 40,000 seasonal workers, 5,000 fewer than last year — though most observers would agree that the toy retailer overdid it last year with its temporary stores and kiosks. This morning we learned that Best Buy will hire 15,000 seasonal workers. That’s a lot of workers, but only half as many as in 2010. Macy’s, on the other hand, says it will hire 3,000 more workers than last year.

Last year, retail stores started to let seasonal workers go as early as the first week of December, and they hope to avoid a repeat of that by hiring fewer extra workers this year. These are other reasons for employers to hire less this Christmas season:

• Many shoppers did much of their Christmas shopping at the Borders liquidation.
• In the future, health insurance mandates will make hiring more expensive, especially for temporary workers, so businesses want to get away from that pattern.
• Many retailers have been overstaffed all year long, and want to give their regular staff a chance at the extra work.
• There are some indications that the extended holiday shopping season of the last five years will repeat this year, with most purchases made before Black Friday. As shoppers adjust to avoid the rush, retailers need to follow.

There is, of course, a downside to the lighter staffing. With fewer workers, sales are lighter also, as customers can’t find what they are looking for or balk at waiting in the checkout lines.

If retailers are hiring fewer workers this fall, they are also hiring earlier than usual. “Act now if you want a seasonal holiday job,” advises the headline in the Sun Sentinel.

Online stores and warehouses cannot afford the risk of cutting back on their Christmas-season hiring, as merchandise has to get out to purchasers and stores in a timely manner. Those jobs, though, don’t require the same level of skill as a retail-store job, and may last just a few weeks.

Greece Is the Word

Twitter tonight is loaded with jokes about advice and support for Greece. Banks in Ireland with advice for the government in Greece. The well-meaning advice from Wall Street. The U.S. Treasury giving advice to its counterparts in Germany about what to do about Greece. Charity fundraisers for Greece that fall short after the U.S. House of Representatives withdraws funding for the United States’ own disaster emergency fund.

It is easy to joke about any problem so complex, but put them all together, and there is a serious point. No one comes to the table with clean hands. If Greece cannot take strategic advice from the bankers in Ireland after what the banking system there has been through, they also cannot take advice from any bankers anywhere, not even in Athens. If the major national governments in the Euro zone are suspect, having seemingly done everything they could two years ago to precipitate a crisis in Greece and now more worried with saving the European banking system than with what happens to people in Greece, countries outside the Euro zone are in some ways even more suspect. Virtually everyone you can think of has some involvement in the problems in Greece or the same problems occurring elsewhere.

If the euro falls in November, we are warned that other world currencies could have problems too. The truth is that we have all become too dependent on money, the banking system, and the financial web that ties all of our work together. We need a financial system, of course, but we lean on it too much. It is not that we should go back to a system where work is controlled by tradition and superstition, but we have gone too far in the direction of anonymous borrowing and anonymous buying, from businesses with reputations built from anonymous online reviews. One sign of leaning too much toward the financial side of everything is that more people know the price of their lunch than know its ingredients. The problems in Greece’s financial arrangements can’t be solved by more financial arrangements, and it is a warning to us all to come to an understanding of the way we work and live that is not merely financial, lest we get drawn into the same mess. Greece is one of the oldest nations in the world, obviously not easily overcome by problems, so if it can come up with a solution here, as I suspect it will, it will be one that we will all want to copy in varying degrees.

Time Is Running Out — And the Situation Is Not Normal

Time is running out. To keep the U.S. government from shutting down, a surprisingly arcane series of five to ten legislative actions need to take place between now and Thursday or maybe Friday, and at this point, leaders only think they agree on what to do. In Europe, several large banks will fail and one or two national governments could also be insolvent in the first half of November if a workaround is not implemented beforehand, and political observers say they are not sure there is enough time to work out even the details that are required this week. Oh, I know, we have heard these stories before. But these are not the situations that come up when things are going well. It is the households that get comfortable with living paycheck to paycheck that are almost guaranteed to experience a cash crisis several times a year, and now the same thing is happening globally. Time is running out again — and as familiar as it might have become, this is not a normal situation for the world to be in.