I was on the metro yesterday and I noticed a big yellow sign (advertisement) on the inside wall of the train car (actually, several different train cars). It said “earn 19.5% interest, guaranteed” at XXX bank. Hard to believe, eh?

First of all, almost nobody here puts their money into the bank. Only people that have to, for tax reasons at their job, leave/put any money into bank accounts. Nobody trusts the banks! It has happened oh so many times… you go to your bank to withdraw, and POOF! –> it is gone! Yep, the “bank” just up-and-left, WITH YOUR MONEY of course!!!

So, why would anyone deposit any money there? Well… for one, they offer 19.5% interest rate (APR). And now, in times of complete global financial turmoil, it seems even more surprising that these “institutions” can offer such a whopping return. But they advertise it. In a year you’ll be lucky if the bank is still there.

Speaking of turnover, there are tons of little banks here. No, not even as big as the independent, “Main Street” savings&loans like in the good ol’ days in America. But teeeny, tiny, questionable, unscrupulous, sleuthy, sneaky, curious, fly-by-night businesses. Did someone say laundering?

Anyhow, back to the 19.5% sticker-shock. I’ve seen these ads before, but for some reason, I never really took them “to heart.” I just ignored them. However, yesterday I couldn’t tear my gaze from the ads. I couldn’t believe they were boasting about being suck “scammers.” Sure, sure, that’s probably not fair for me to judge because I really don’t know if it is, or isn’t, a scam. Nevertheless, I’m confident in saying that I believe, to the best of my ability to understand how money works on this planet, that there is no way that little [shitty] banks can provide such a return while maintaining the utmost integrity with respect to the law. Plus, if this were really the case, and they could in fact guarantee a near 20% return on your investment in 1 year’s time, then WHO WOULDN’T give them their money? People would be flocking to these little banks from across America, Europe, Iceland, etc…

I mean… where else are you GUARANTEED a ~20% return? Stock market – no way. CD’s – not EVEN close. T-Bills – Ha! Startups – not a chance. Hmmmmm……  makes you wonder, doesn’t it?

Finally, I found it incredibly amusing to see that they are offering 5-day and 7-day CD’s at the same high rate! No shit! So if you are stupid enough to give them your money, EVEN FOR JUST A WEEK, they can turn it right around and give you 0.375% on your money (19.5%/52 weeks). In other words, give them $1000 and they will give you $3.75 in one week’s time. And of course, if you leave it there for the whole year, you’ll get $195. NOT TOO BAD! (Again, hopefully the bank will be there in a year to give you YOUR money.)

Oh yeah, there’s also the problem of the bank simply NOT GIVING YOU YOUR MONEY. Yep, it happens ALL the time. You deposit money. This time let’s say it’s $100,000 into a 7-day CD at 19.5% APR. Well, in a week you should get your $100,000 back, plus $375. Well — good luck getting your money. It has happened:  you go to the bank, and tell the teller that you want to cash out your 100K. They say “I’m sorry sir, but we can’t give that back to you right now…”  Remember this?

Ha!

I think they’re all crooks. But I’m a pessimist. Inflation (check this, and this) is huge here, and they are predicting that the dollar is going to get stronger and stonger (making the grivna weaker and weaker). At some point, it may just collapse. It has happened before. And no, I seriously doubt the 43 BILLION $ that the world bank gave to Ukraine to stem the collapse of her financial system is going to do anything. I think it’s probably already in the pockets of the politicians. What a joke….

Nevertheless, the banks are quite desperate now. Especially now. They will offer anything to entice grandma to pull out her ~$1000 life savings, that is stuffed in her mattress, and deposit it into the bank. But people know, and People fear, and People simply don’t do it here. It’s just TOO RISKY to give some [questionable] bank their hard-earned, mattress-scented cash!

I think I might buy a safe, and bolt it to the concrete floor I live on.