We are currently living through one of the worst financial crises ever, but when it comes to handling money, the world is no stranger to messing things up. While the current economic situation is no laughing matter, there have been a slew of hilarious mishaps that have cost countries a bundle. From Superman's obscenely expensive CGI-ed mouth in 2018's Justice League, to Spain building a luxury submarine that was unable to resurface, here are some of the biggest money mistakes in history.
20 Fenchurch Street's eyesore of a building was already hard to look at considering how reflective it was in the sunlight. But when Martin Lindsay returned to his new Jaguar on a hot day, the London skyscraper was actually so reflective that it had melted parts of the cars body and rearview mirror. In addition to the 946-pound payout to Mr. Lindsay for damage to his car, the building had come up with a way to give the already 200-million-pound building more sunscreen. Needless to say, the whole ordeal was quite expensive and embarrassing.
Tepid action actor Henry Cavil had just wrapped up filming for Justice League when he had started filming for Mission Impossible – Fallout, but Warner Brothers decided a few scenes needed to be redone for the former. Unfortunately, Cavil had worked very hard to grow out a pencil thin mustache, and the filming schedules were too set in stone for him to shave. Coordinating the reshoots, and CGI-ing out Cavil's facial hair all cost around $25 million, and they didn't even succeed, as fans were quick to point out how weird the actors face looked on the big screen.
French Train Company Made Trains Too Big For Track
(Photo by Frederick Florin/AFP/Getty Images)
French train company SNCF purchased 2,000 trains in 2014 for around 15 billion euros, but they soon realized their platforms were too narrow for the new orders, a mistake which cost them an additional 50 million euros. It was all at the fault of the operator, who didn't factor in measurements of train platforms that had been built more than 50 years ago.
Spain's Submarine that Couldn't Resurface
Spain coughed up around $2.2 billion to build a luxury submarine named The Isaac Peral. But before the vessel was completed in 2013, engineers discovered that the unfinished submarine was so heavy that it probably would not resurface if placed underwater. The design flaw was fixed, but it was embarrassing when news broke.
Mizuho Securities loses $225 million dollars Due to a Typo
In 2005 Japanese security company Mizuho lost an enormous sum when a single stockbroker mistyped some financial data. Instead of offering a single share in J-Com's stock for about 610,000 yen (or $5,000 dollars,) he offered 610,000 shares for 1 yen. The disaster meant investors were buying out Mizuho's stock for an insanely low amount of money, costing the company around $225 million in damages.
When you take out a loan for a car, charge something to your credit card, or get a personal line of credit, there is going to be an interest rate that applies to your loan.
A lot of different factors go into what you will be charged, including your own personal credit score. But even those with flawless credit still see a minimum charge that they can't get around. That all goes back to the Federal Funds Rate.
One thing consumers rarely realize is that all of our banks are lending money to each other every night. Banks are legally required to maintain a certain percentage of their deposits in non-interest-bearing accounts at the Federal Reserve to ensure they have enough money to cover any withdrawals that may unexpectedly come up. However, deposits can fluctuate and it's very common for some banks to exceed the requirement on certain days while some fall short. In cases like this, banks actually lend each other money to ensure they meet the minimum balance. It's a bit hard to imagine these multibillion-dollar financial institutions needing to borrow money to tide them over for a bit, but it happens every single night at the Federal Reserve. It's also a nice deal for those with balances above the reserve balance requirement to earn a bit of money with cash that would normally just be sitting there.
The Federal Reserve
The exact interest rate the banks will charge each other is a matter of negotiation between them, but the Federal Open Market Committee (FOMC) (the arm of the Federal Reserve that sets monetary policy) meets eight times a year to set a target rate. They evaluate a multitude of economic indicators including unemployment, inflation, and consumer confidence to decide the best rate to keep the country in business. The weighted average of all interest rates across these interbank loans is the effective federal funds rate.
This rate has a huge impact on the economy overall as well as your personal finances. The federal funds rate is essentially the cheapest money available to a bank and that feeds into all of the other loans they make. Banks will add a slight upcharge to the rate set by the Fed to determine what is the lowest interest that they will announce for their most creditworthy customers, also known as the prime rate. If you have a variable interest rate loan (very common with credit cards and some student loans), it's likely that the interest rate you pay is a set percentage on top of that prime rate that your lender is paying. That's why in times of low interest rates (it was set at 0% during the Great Recession), a lot of borrowers should go for fixed interest rate loans that won't increase. However, if the federal funds rate was relatively high (it went up to 20% in the early 1980's), a variable interest rate loan may be a better decision as you would be charged less interest should the rate drop without the need to refinance.
The federal funds rate also has a major impact on your investment portfolio. The stock market reacts very strongly to any changes in interest rates from the Federal Reserve, as a lower rate makes it cheaper for companies to borrow and reinvest while a higher rate may restrict capital and slow short-term growth. If you have a significant portion of your investments in equities, a small change in the federal funds rate can have a large impact on your net worth.
Whether you're leaving a job involuntarily, departing for something new, or just want to prepare for the unknown, it is smart to understand all your options regarding your 401k.
Frugal gifting often gets a bad reputation. However, this shopping method does not make you cheap — it makes you practical. Frugal gifts often avoid waste and overspending and can be just as meaningful (if not more so) as any other present.
With the National Retail Federation predicting each consumer this holiday season to spend upwards of $1,000 on holiday gifts amidst an economic recession —this year might be the perfect time to reconsider your spending budget. We've formulated the ultimate list of frugal gift-giving ideas to get you started.