Its not that bad

I really should write something about the economic situation. The problem is, however, that there really isn't really much to say which hasn't already been said in various news columns, blogs, and chats around the water cooler. Much of this relatively well informed literature probably has it more or less correct. Well, at least as far as anyone can be correct with hindsight and a bit of self assurance with a pat on the back.

So, its time for another ill informed post about something to do with the real world while not actually reflecting it. Actually, that doesn't actually do anything to justify this post or anything else I've ever written. But oh well, its the Internet.

Just as a side note. I'll be referring to bankers and cosmetic surgeons a lot. In this context they're more or less synonymous with rich people.

So lets see what this 'recession' has actually done. This wiki page gives a nice overview about the (likely) events that might come from this 'economic crisis'. It rekons that 20 million jobs might be lost because of the crisis. 20 million is not a small number by any means. But that is 20 million worldwide. We've got 6 billion people worldwide. Thats 0.3% of the total population. In Australia, people don't make too big of an issue about 0.3% of the population.

Granted, I'm overgeneralising a bit. A lot of those 20 million people are centered in a few select places, and if we take 20 million people out of the working population, then that figure gets a bit higher, but still... this 0.3% isn't the group which requires a lot of help.

Lets look at the people who lose their jobs first. That is, the people who are working for those big banks who lost all that money trading what a lot of people are now calling 'junk bonds'. These people, in a good year, make the same as about a gazillion Mexicans making Nike shoes or begging for extra Pesos only a few thousand miles away. If they lose their jobs, they might also lose the ability to get their daily botox injections or that Audi R8. *dribble* Needless to say, they'll survive, even if it means that they can only eat out once a week, and have to skip on the appetiser.

Then of course we got on to all the effects of bankers like these not having botox injections. Less botox injections means less cosmetic surgeons. Less cosmetic surgeons means less medial secretaries. Less medial secretaries means less secretaries and cosmetic surgeons' wives going shopping for Gucci bags on their lunch break. The Gucci salesperson therefore probably loses that extra bonus they might get to buy that box of chocolate cookies at the supermarket. If this happens to a large degree, some cookie cutters at the factory might lose their jobs too. But we all have cookies once in a while. How many bankers and cosmetic surgeons are there anyway? Well, I can't actually find a good link on short notice, but here's what I've got instead. At number 2 on the top 5 list of cosmetic surgeries performed in the US is breast implants. 364,610 breast implants performed in the US in one year. So out of a population of about 300 million, 0.1% of the population gets breast implants every year. At number one on the list was liposuction. 455,489 procedures performed in a year. About another 0.1%... Then we go onto things like eyelid surgery, so that Asians can have less squinty eyes, nose reshaping, so that Italians can look like they haven't been lying their whole life, and Botox injections so that people don't have to try and smile, they're stuck with that expression all the time.

These are all things, I'm fairly sure, we could do without. Instead of lipo, run around the bloody park. I don't care if you can't get out of the room without help. You got in without help right? You can use all the energy you gained in the room trying to get out, losing weight at the same time and thereby saving everyone else a whole heap of trouble. I know I can't talk. I'm a lazy bastard who doesn't do enough exersise and is quite fat.

As for breast implants - Sure, I appreciate a nice rack, but I'm not all that shallow. A nice pair doesn't make up for the fact that your brain probably needs an implant as well. Probably explains why you didn't ask for the 2-for-1 deal. Me? I probably need breast removal.

For Asians who want double eyelids - put on some weight, your eyelids will sag over soon enough. Italians - stop lying to everyone about how its lunchtime and its time for the shops to close. The rest of the world take staggered lunch breaks. We can all do without.

These are the same sorts of luxury industries that grow because bankers have too much money to burn. We don't NEED them. In fact, if someone like a cosmetic surgeon spent his time doing more socially beneficial work, like say, fixing up psychos, that'd be nice too. Though one could argue that the same people who are a bit psychotic are also the ones who get the Botox. Apparently theres no shortage of psychos.

I only know of one person who has lost his job because of this financial crisis. He was a management jargon spewing project manager who was looking after a project that was doomed from the start. So doomed in fact that the project has now been canned. Not to say that it was his fault, (it was doomed before he got there) but I think he was excess management fat anyway and hired only to grow another person's empire. Sure, he's got kids to feed, but he'll get another job. It might not pay as much, but they'll survive.

A colleague of mine recently had a friend who was laid off by one of the big banks. She seemed devestated. From a high flying banker job to being unemployed in New York City is probably a fairly big deal from their point of view. However, the banker salary probably covered a relatively lavish lifestyle compared to what they get in Mexico. So they can't get cable and have an interior decorator anymore. Shucks. Sometimes people don't get enough to eat.

The very same colleague told me during one a lull at work, where we just bitch about how stupid some things are: "Its not that bad." You know, it really isn't.

Credit Cards

I think I've finally figured out how credit cards made money, and also how they make different amounts of money in different countries. Well, at least in this country and at home. Its actually quite a LOT of money when you add it all up. Actually its quite sad the amount of money that they make at the cost of 'everyone else'.

Somehow its really obscene. Before 'plastic money', there weren't that many alternatives. There was cash, which people carried around and are legally worth a certain value. There were also cheques, which are basically IOUs and were easier to carry around for large amounts of money, and first pioneered by the Romans. Then some weird person invented the ATM, and the requisite card that goes along with it. However, in each case you're using your own money, or money that was originally in a bank account in your name, or at least usually.

Then enter the credit card. Here we start introducing methods of paying for things where you actually borrow money to pay for your goods. Not that it appears this way to the guy you're purchasing off. In effect, you have borrowed from the bank and the bank has agreed to pay the amount for you and you have agreed to borrow from the bank. As long as the merchant has the piece of paper with your signature on it, the money is as good as theirs. You still owe the bank money for borrowing it though. For that, you might be charged an annual fee for the ability to have this line of credit, and also any interest you might have accrued during the period that you have borrowed it for.

In addition to this, the bank also has other revenue sources stemming from the use of credit cards. They also run the machines that process your cards as well. For that, they charge a nominal fee per annum to the merchant, plus a small fee on every transaction, plus a percentage of each transaction. All these things start to add up.

Lets start putting some numbers to it:

Annual credit card fee: Lets say an average of $50
Average credit card debt is about $5000 in Australia
Interest rate: 15%

This works out to about $800, assuming that people only have 1 credit card each and ignoring the interest free period.

From the merchant side, we have people spending about $18bn in a month on their credit cards. For your average small retailer, your credit card fee works out to be about 2.5% in Australia. So annually, thats about $5.3bn. Thats a lot!

The number of people with credit cards in Australia.. well.. actually I can't really find a link, so we'll be conservative again. I can see thats theres about 17m credit cards on issue, and even if everyone has 2, I think its relatively safe to say that half that number is about the number of people with at least 1.

So in total, we have 8m x $800 + $5.3bn, plus some extra cash that merchants pay the banks for having the privilege of using their machines, which works out to be $6.4 + $5.3bn = $11.7bn worth of revenue. According to Wiki, the GDP of the entire country is about $760bn USD, which in todays exchange rate, works out to be about $1100bn AUD. So if you work it out, thats about 0.5% of the total GDP comes from the use of credit cards. 50c out of every $100 that goes through the country... That might not sound like a lot, but fark, if I had 50c for every $100 that ANYBODY spent in the country, I'd be bloody happy.