Reminder: While I am on vacation this week, Consumerism Commentary is featuring articles by other writers. Please read Criminal Charges: Volume XVII, the first of this week’s guest articles.

Rescue Deal for CitiGroup. Citi is too big to fail, so the government is preparing an injection of $20 billion in addition to the $25 billion the company has already received. GM, Ford, and Chrysler are quoted as whining, “It’s not fair!”

Wall Street versus Pennsylvania Avenue. According to the Presidential Cycle, the stock market loses ground during the first half of a new president’s term while increases significantly during the second half. Statistics prove this to be true, but here’s why you shouldn’t abandon stocks for two years.

Gift Cards: A Bad Idea Gets Even Worse. This is bad news for office Secret Santa exchanges. Now we’ll have to think about what trinket someone else may like.

180th Carnival of Personal Finance. Living Almost Large is hosting this edition of the Carnival of Personal Finance with pictures of foreign paper currency. In addition to the Editor’s Picks, check out Visualizing $10,000 Extra in Your Life, The Not-so-Easy Part of Personal Finance, and Financial Education in Schools.

Every Tuesday, Smithee presents an article about his own experiences with and observations about credit cards.

Do you have a credit account with Citigroup? I probably do. I think I started one with Rooms To Go when we started paying for our very comfortable bed. They said it would be interest free for however-many months. I figured out how much we’d have to pay per month to make sure we’d never see any interest accrue, but nothing’s set in stone.

For example, despite a pledge made to Congress in 2007, Citigroup is raising its credit card interest rates for many if not all of its customers by 2 or 3 percent. Citigroup has pointed to the “difficult market environment” as the cause for this euphemistically-phrased “repricing.”

Here’s the weird part: in the last four weeks, the average credit card rate has decreased, which doesn’t point to a system-wide difficult environment. Also, since nobody really knows what’s going with the $700B bailout/rescue plan, there’s a fairly good chance that some large part of our taxpayer money might go to rescuing credit card companies.

I’m not much of a conspiracy theorist, but with all of this news appearing in the same seven-day period, it seems to me like the people making decisions aren’t talking to each other very well. That, or Citigroup is taking advantage of otherwise innocent Americans. Oh, there are those contracts we agree to, of course. But in this instance, Citigroup made a pledge to Congress. That should be worth something, don’t you think?

Should American taxpayers bail out the automobile industry? Automakers headquartered in the U.S. have failed to make products consumers wanted to buy, whether due to a lack of quality, lack of targeting, or a lack of convincing marketing. Democrats in the Congress want to extend $25 billion of the $700 billion bailout bill to reach the “Big Three” automakers (General Motors, Chrysler, and Ford) while the current administration believes the $25 billion should come from a different program.

I receive several emails from public relation firms every day but generally ignore them unless they’re absolutely relevant. Today, I received an email from GM’s public relations firm to explain what would happen if GM were allowed to fail. The email also pointed to a website produced by GM to dispell myths about the company.

I have no doubt that allowing these three huge companies to fail could do more damage to our already suffering economy. If the government decides to extend $25 billion to the auto industry, I hope it is tied to results that show the companies are listening to consumers rather than the oil industry. The Big Three need to shed their reputation, deserved or not, of producing gas-guzzling, unreliable, and unsafe vehicles in comparison to some “foreign” automakers.

Do these companies deserve a $25 billion bailout?

Photo credit: brianc

One of my concerns about the original bailout bill was that the money paid to financial institutions would be used to pay for outsized executive bonuses. While companies must offer outrageous compensation to attract and keep the best executive talent, the market place has forced the price upwards.

That worked well when the financial industry was flush with profits, but you can’t ask for assistance to avoid bankruptcy with one side of your mouth while the other side is pushing money to the top decision makers who oversaw the company’s decline into the abyss.

The Chief Executive Officer of GOldman Sachs, Lloyd Blankfein, and six other executives have announced that they will not accept bonuses for 2008. I hope that this sets a good example for other recipients of funds from the bailout.

Don’t get me wrong; these people are not hurting for cash and will likely not experience any financial difficulty at this time. Their children will still have presents to open this holiday season. But this move sends a signal that it is alright to refuse payment for horrible financial results and I hope more banks follow suit.

Thanks to All Financial Matters, where I first saw this story posted.

Update: UBS has joined Goldman Sachs in the no-bonus crusade.

Blankfein, Goldman Deputies Decide to Forgo Bonuses, Christine Harper, Bloomberg, November 17, 2008
Top Executives at UBS Will Not Get Bonuses, Ben White and David Jolly, New York Times, November 17, 2008

Circuit City files for bankruptcy. This store is the latest victim of the current economy. You can look through the remaining stores, but I don’t think this bankrupcty will lead to fire-sale prices on electronics as we head into the holiday shopping season.

Is It Time to Have a Money Talk, Child to Parent? Will you have to bail out your parents? Finance is always a difficult topic across generations within the same family. This New York Times article includes a sample letter you can use to help approach the subject with your parents.

Reinsuring A.I.G. The Treasury Department added $40 billion to the bailout for A.I.G., bringing the total assigned to this company $150 billion. In return for the additional $40 billion, the government will own a stake in the company. A.I.G. will also benefit from a lower interest rate on the money it is borrowing from the Federal Reserve.

Fierce Financial Tips: The Carnival of Personal Finance #178, Struwwelpeter Edition. Today’s edition of the Carnival of Personal Finance focuses on a strange collection of 19th century children’s poetry from Germany! In addition to the articles featured as Editor’s Choice, start with What Has Changed in Personal Finance, Living Frugal With Other People’s Money, and The Importance of Doing What You Know You Should.

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