No cracks have split the earth outside my home. No doubt my pathetic little investment portfolio has shriveled further, but it was only a lab specimen in a petri dish that I could use to observe the behavior of such things and extrapolate on the lives of larger organisms. It wasn't going to support me in my old age for more than about a week.
If we are to believe the press, someone, somewhere, is being badly hurt by all this. I have this primitive habit of living within my means, so I'm insulated from many of the direct effects of disruptions in the credit and investment sectors. It hits me and others like me through our jobs.
I've wondered for decades how much of our prosperity depended on people living beyond their means. Even if you don't, do you get money from those who do? People who live deeply immersed in their credit capacity feel the effects of tightening credit immediately. They cease to spend. As much as the market needs to be corrected, even fiscally cautious citizens can become collateral damage. The blow may not be fatal or significantly weakening, but it will hurt for a while. In some cases it can push a stable personal or household economy over the brink into a period of credit dependency. Or it can force the debt-averse to pull back even further.
Raise your hand if you were planning to die in debt, laughing at your creditors. It sounds like fun, but it's another selfish way to push problems onto future generations. Lending institutions can seem evil and predatory. Some of them are. But in the same broad category are the lenders who let Joe and Jane Average buy their first home and send little Johnnie and Julie to college. Lenders cover the spectrum from the benevolent credit union to the leg breaking loan shark. Even in the murky middle ground, credit card companies are trying to cover the costs of servicing customers like me, who steadfastly refuse to carry a balance or pay an annual fee, and habitual deadbeats who follow the introductory interest rate from card to card and never really pay off anything.
If you pay a credit addict's tab, it gets them to zero that one time, but it doesn't cure their underlying problem, which is the inability to manage credit. On the other hand, if you don't pay the tab, the problem mushrooms as fees and interest accumulate. You have to get to zero. You have to stop the hemorrhage. Unless you're willing to punish debtors drastically, whether you pay their tab or just forgive it, they're still not going to be able to cough it up themselves. The high rate of return was already lost. Now limited loss is the only gain.
Tuesday, September 30, 2008
Monday, September 29, 2008
No Bailout!?!?!?! WAAAAAAAAAAAAAAAAAAAA!!
"Bad Wall Street! No bailout! Lie down! Play dead!" said the US House of Representatives, as a majority of legislators bowed to pressure from constituents they couldn't ignore quickly enough if a well-funded special interest had come by offering candy.
So now what?
Opponents of the bill say it was cobbled together too hastily. They say it saves the bacon of Wall Street gamblers at the expense of ordinary taxpayers (those being the ones without the wherewithal to avoid paying taxes altogether). Unfortunately, the rank and file often lacks the information and knowledge to make sound decisions about high finance. That fact underpins the entire financial advice industry and puts the piquant sweetness in insider trading. The boobs and the marks are just along for the ride, a sponge to be squeezed for cash. Now they're telling their elected representatives how to decide a gigantic financial question and the representatives are actually listening? Please, God, no.
The ones who are afraid to vote for the bailout want to avoid any taint of having voted for the war and then voted against it. They're betting that the economy will survive long enough for a more methodical solution to pull it back up, or that the whole thing will right itself without any government intervention.
The patient dies or the disease runs its course and the victim staggers out of the hospital more or less cured after being ignored on a gurney in the hall for days or weeks. Either way, problem solved. Right?
The problem is, everything associated with Wall Street is a gamble. All investment involves some risk. Anyone who tells you they have a lucrative sure thing is lying or delusional or has it fixed. If the fix is in and you're on the right side of it, party on. Just remember that eventually the mob arrives with pitchforks and torches, metaphorical or actual.
The opponents of this bailout have placed their bet on behalf of all of us. As far as that goes, kudos to them for showing considerable backbone. If things really do spiral down the commode after this, guess who's getting barbecued immediately.
The sudden, scary nature of the collapse of the financial sector did seem to call for fast response, which did rob us of vital time to think. But how often does it turn out that some disregarded academic or ousted bureaucrat has already been thinking about a problem for years? Something blindsides the public in their cocoon of plasticized news bites, and all the wonks nod sagely and say, "see, I knew that would happen." September 11, 2001 is the most spectacular recent example, but there are plenty more. In my own childhood I witnessed a few smaller ones from the sidelines. The solution to this problem is out there, nearly assembled, even if it was not the bill most recently kicked aside.
How much money is tied up in the obscene compensation packages of top executives in the distressed companies? Do they have enough to contribute significantly to the bailout if squeezed nearly dry? As satisfying as that would feel, probably not. To borrow from a famous feel-good movie about real estate investing, "I don't have your money, it's in Joe's house...And in the Kennedy house, and Mrs. Macklin's house, and a hundred others." And they're not worth crap anymore!
A Coldwell Banker television ad says hopefully "affordability is at an all-time high!" What a nice way to say that asking prices have collapsed and it's a buyer's market. Really? Hope you have cash, because no one wants to lend. When the numbers are all crunched, it may turn out no one CAN lend.
I know, I know. People with plenty of money will always be able to borrow money. Even George Bailey only kept his skinny neck above water in "It's a Wonderful Life" by being able to raise the coin at critical moments. He was one slip away from annihilation while the wily Potter patiently bought low and held assets. Bad economies help the wealthy maintain control. Money gravitates to wealth, flowing away from smaller, weaker hands. The only way to create a countervailing monetary mass is to have a citizen government made up of the little people, willing to pool enough resources and demand such laws as keep the money flowing both ways. Rich people can buy things for themselves that they might not want to buy for everybody, things like good schools, health care and safe neighborhoods. So the bad news is, big government really is the friend of the little people. Big wealth doesn't need or want big government. Big wealth just needs strong military forces, lots of police and a stout prison system.
Big wealth does not need a large, strong middle class. Big wealth just needs some low life to clean the pool, take care of the landscaping, drive the limo, be the nannies, the housekeepers, the cooks. A small middle class will survive among the managers in corporate systems and the entrepreneurs in service occupations that are hard to corporatize. The wealthy will still want to eat at interesting restaurants, providing a middle-class niche for the owner and the head chef. The rest of the staff will probably have to live like cockroaches. Other small business owners may do well if they establish a niche near a population of the wealthy, as building contractors and landscapers have done around Lake Winnipesaukee in New Hampshire. As conditions worsen for the middle class, those companies will compete harder and harder to hold their position, rising and falling with the fortunes of their noble patrons, as feudal vassals do. This pattern is repeated anywhere the rich put down roots or visit on a regular basis.
The real return of feudalism still lies in the dim mists of the not-so-distant future. Right now we have to get through the next few weeks, and the winter, and see what's left of us in the middle of next year. Will some great leader like Franklin Roosevelt be able to con some wealthy people into voting against their own best interests, and reanimate the battered corpse of the middle class? It was easier to do when the world faced a cataclysmic war, with all its oportunities to profit from the carnage and control the population through the threat of obvious dangers. Economics and terrorism are murky stuff. Nazis and Japs are concrete villains. And we're all more suspicious of our leaders. That should be a good thing, but is it too little, too late? And has it made us unable to believe the good suggestions when they finally do arrive?
No one can tell us for sure.
So now what?
Opponents of the bill say it was cobbled together too hastily. They say it saves the bacon of Wall Street gamblers at the expense of ordinary taxpayers (those being the ones without the wherewithal to avoid paying taxes altogether). Unfortunately, the rank and file often lacks the information and knowledge to make sound decisions about high finance. That fact underpins the entire financial advice industry and puts the piquant sweetness in insider trading. The boobs and the marks are just along for the ride, a sponge to be squeezed for cash. Now they're telling their elected representatives how to decide a gigantic financial question and the representatives are actually listening? Please, God, no.
The ones who are afraid to vote for the bailout want to avoid any taint of having voted for the war and then voted against it. They're betting that the economy will survive long enough for a more methodical solution to pull it back up, or that the whole thing will right itself without any government intervention.
The patient dies or the disease runs its course and the victim staggers out of the hospital more or less cured after being ignored on a gurney in the hall for days or weeks. Either way, problem solved. Right?
The problem is, everything associated with Wall Street is a gamble. All investment involves some risk. Anyone who tells you they have a lucrative sure thing is lying or delusional or has it fixed. If the fix is in and you're on the right side of it, party on. Just remember that eventually the mob arrives with pitchforks and torches, metaphorical or actual.
The opponents of this bailout have placed their bet on behalf of all of us. As far as that goes, kudos to them for showing considerable backbone. If things really do spiral down the commode after this, guess who's getting barbecued immediately.
The sudden, scary nature of the collapse of the financial sector did seem to call for fast response, which did rob us of vital time to think. But how often does it turn out that some disregarded academic or ousted bureaucrat has already been thinking about a problem for years? Something blindsides the public in their cocoon of plasticized news bites, and all the wonks nod sagely and say, "see, I knew that would happen." September 11, 2001 is the most spectacular recent example, but there are plenty more. In my own childhood I witnessed a few smaller ones from the sidelines. The solution to this problem is out there, nearly assembled, even if it was not the bill most recently kicked aside.
How much money is tied up in the obscene compensation packages of top executives in the distressed companies? Do they have enough to contribute significantly to the bailout if squeezed nearly dry? As satisfying as that would feel, probably not. To borrow from a famous feel-good movie about real estate investing, "I don't have your money, it's in Joe's house...And in the Kennedy house, and Mrs. Macklin's house, and a hundred others." And they're not worth crap anymore!
A Coldwell Banker television ad says hopefully "affordability is at an all-time high!" What a nice way to say that asking prices have collapsed and it's a buyer's market. Really? Hope you have cash, because no one wants to lend. When the numbers are all crunched, it may turn out no one CAN lend.
I know, I know. People with plenty of money will always be able to borrow money. Even George Bailey only kept his skinny neck above water in "It's a Wonderful Life" by being able to raise the coin at critical moments. He was one slip away from annihilation while the wily Potter patiently bought low and held assets. Bad economies help the wealthy maintain control. Money gravitates to wealth, flowing away from smaller, weaker hands. The only way to create a countervailing monetary mass is to have a citizen government made up of the little people, willing to pool enough resources and demand such laws as keep the money flowing both ways. Rich people can buy things for themselves that they might not want to buy for everybody, things like good schools, health care and safe neighborhoods. So the bad news is, big government really is the friend of the little people. Big wealth doesn't need or want big government. Big wealth just needs strong military forces, lots of police and a stout prison system.
Big wealth does not need a large, strong middle class. Big wealth just needs some low life to clean the pool, take care of the landscaping, drive the limo, be the nannies, the housekeepers, the cooks. A small middle class will survive among the managers in corporate systems and the entrepreneurs in service occupations that are hard to corporatize. The wealthy will still want to eat at interesting restaurants, providing a middle-class niche for the owner and the head chef. The rest of the staff will probably have to live like cockroaches. Other small business owners may do well if they establish a niche near a population of the wealthy, as building contractors and landscapers have done around Lake Winnipesaukee in New Hampshire. As conditions worsen for the middle class, those companies will compete harder and harder to hold their position, rising and falling with the fortunes of their noble patrons, as feudal vassals do. This pattern is repeated anywhere the rich put down roots or visit on a regular basis.
The real return of feudalism still lies in the dim mists of the not-so-distant future. Right now we have to get through the next few weeks, and the winter, and see what's left of us in the middle of next year. Will some great leader like Franklin Roosevelt be able to con some wealthy people into voting against their own best interests, and reanimate the battered corpse of the middle class? It was easier to do when the world faced a cataclysmic war, with all its oportunities to profit from the carnage and control the population through the threat of obvious dangers. Economics and terrorism are murky stuff. Nazis and Japs are concrete villains. And we're all more suspicious of our leaders. That should be a good thing, but is it too little, too late? And has it made us unable to believe the good suggestions when they finally do arrive?
No one can tell us for sure.
Not Chocolate!
British candy icon Cadbury has had to announce a recall of chocolates made in China, because the confection may contain China's insidious bane, melamine.
With all the problems in this world, with fears of nationalistic and terrorist aggression, economic and environmental collapse, now we can't even trust the premier comfort food? You bastards! How could you let this happen?
Not that China ever springs to mind after one hears the word chocolate. Belgian chocolate, Swiss chocolate, Mexican chocolate, French chocolate, even Hershey's chocolate, sure, but Chinese chocolate? It doesn't fit in with either the Westernized fare of the so-called Chinese restaurant or the much more alien cuisine some of us have experienced and others can only imagine, in which all sorts of unusual animals and vegetables repose in strange sauces.
In the consumer goods department, China is synonymous with quantity more than quality. No doubt this is an over-simplification, but everyone has to admit that we don't build factories over there for the legendary craftsmanship. We do it because they can master production techniques quickly and for less money than anyone else on the planet. Some of the stuff is quite good. Some of it is not. My new Chinese violin, made on a pattern drawn from a Czech copy of an Italian classic, has not passed my mentor's standards yet, but it's pretty and it's very loud. We'll see whether a little sound post tweak tones down its alarming blare. If not, I can use it to antagonize the neighbors when they play their radios too loud. Hmm. More Chinese-made weapons.
Meanwhile, read your chocolate labels carefully and check the provenance on all your comfort consumables. Maybe your favorite laughing juice has been jobbed out across the ocean as well.
You can't be too careful.
With all the problems in this world, with fears of nationalistic and terrorist aggression, economic and environmental collapse, now we can't even trust the premier comfort food? You bastards! How could you let this happen?
Not that China ever springs to mind after one hears the word chocolate. Belgian chocolate, Swiss chocolate, Mexican chocolate, French chocolate, even Hershey's chocolate, sure, but Chinese chocolate? It doesn't fit in with either the Westernized fare of the so-called Chinese restaurant or the much more alien cuisine some of us have experienced and others can only imagine, in which all sorts of unusual animals and vegetables repose in strange sauces.
In the consumer goods department, China is synonymous with quantity more than quality. No doubt this is an over-simplification, but everyone has to admit that we don't build factories over there for the legendary craftsmanship. We do it because they can master production techniques quickly and for less money than anyone else on the planet. Some of the stuff is quite good. Some of it is not. My new Chinese violin, made on a pattern drawn from a Czech copy of an Italian classic, has not passed my mentor's standards yet, but it's pretty and it's very loud. We'll see whether a little sound post tweak tones down its alarming blare. If not, I can use it to antagonize the neighbors when they play their radios too loud. Hmm. More Chinese-made weapons.
Meanwhile, read your chocolate labels carefully and check the provenance on all your comfort consumables. Maybe your favorite laughing juice has been jobbed out across the ocean as well.
You can't be too careful.
Sunday, September 28, 2008
The Bailout
If the government uses taxpayer money to stave off the collapse of private financial institutions, it makes each and every taxpayer a shareholder in those corporations. Might we not become more permissive toward business leaders who maximize profits if we know they will not be able to reimburse the national treasury otherwise? Are we not actually buying into a form of the failed system? Those institutions will have us by the 700 billion, not the other way around.
Forgive me if someone else has already covered this notion and done it better. I would not be at all surprised. But in case it hadn't been said, I wanted to get it out there.
As for the permissive attitude, I imagine most people don't realize that they really own a piece of all this. Even the anti-tax crowd talks about "your money" and "government money" like separate things. Power players in the private sector treat their own funds like a sacred well that the muddy feet of the public government must never pollute. It all seems very grand and distant from the average citizen, even when one is wading through the labyrinthine paperwork of April to figure out how much coin of the realm the machine demands for fuel this year.
Forgive me if someone else has already covered this notion and done it better. I would not be at all surprised. But in case it hadn't been said, I wanted to get it out there.
As for the permissive attitude, I imagine most people don't realize that they really own a piece of all this. Even the anti-tax crowd talks about "your money" and "government money" like separate things. Power players in the private sector treat their own funds like a sacred well that the muddy feet of the public government must never pollute. It all seems very grand and distant from the average citizen, even when one is wading through the labyrinthine paperwork of April to figure out how much coin of the realm the machine demands for fuel this year.
Saturday, September 27, 2008
De Bait
Your presidential choices: young, energetic and slightly green or old, experienced and damaged. Do you want to bet on the learning curve of the bright young guy or the ability of the older man to maintain straight, level flight at his current level for four or eight years? Whose tics are going to break loose right after he gets elected? How bad will they be?
I can't wait.
I can't wait.
Thursday, September 25, 2008
Flotsam from the sea of news
The Bush administration wants 700 billion dollars to try to stop the complete collapse of the American economy. Where is that money coming from? China?
A member of the US Forest Service handed me a government credit card one day in the shop. It felt very weird to be holding a direct pipeline into the national treasury. This is it: your tax dollars at work. I kidded him that the card was declined because it was over his Federal deficit limit.
"Quick! Print more money!" he yelled.
So is that what we're doing this time? Empty citizen pockets want to know.
Venezuelan President Hugo Chavez goes in search of other markets for his country's oil so that his country isn't totally dependent on American demand. Dope dealers need addicts as much as addicts need dope. The move has a lot of other extremely sound economic and political benefits. Wouldn't it be fun to be Hugo Chavez these days?
Yes, I know, everyone has their problems. Suddenly waking up as Hugo might be a total nightmare. But he does seem to enjoy having something everyone else wants.
Sarah Palin spends a few seconds with some foreign leaders and foreign policy legend Henry Kissinger. I can imagine her first question to Hamid Karzai of Afghanistan:
"So how's the huntin' over there?"
Did anyone else find it faintly disturbing that she hugged and kissed Henry Kissinger when they parted? I'm not even sure Mrs. Kissinger hugs and kisses Henry Kissinger. The move seemed folksy and friendly, but not vice presidential and statesmanlike. It seemed to take Hank by surprise, but he's a seasoned professional, so he rolled through it without balking noticeably. And he is kind of a teddy bear.
A member of the US Forest Service handed me a government credit card one day in the shop. It felt very weird to be holding a direct pipeline into the national treasury. This is it: your tax dollars at work. I kidded him that the card was declined because it was over his Federal deficit limit.
"Quick! Print more money!" he yelled.
So is that what we're doing this time? Empty citizen pockets want to know.
Venezuelan President Hugo Chavez goes in search of other markets for his country's oil so that his country isn't totally dependent on American demand. Dope dealers need addicts as much as addicts need dope. The move has a lot of other extremely sound economic and political benefits. Wouldn't it be fun to be Hugo Chavez these days?
Yes, I know, everyone has their problems. Suddenly waking up as Hugo might be a total nightmare. But he does seem to enjoy having something everyone else wants.
Sarah Palin spends a few seconds with some foreign leaders and foreign policy legend Henry Kissinger. I can imagine her first question to Hamid Karzai of Afghanistan:
"So how's the huntin' over there?"
Did anyone else find it faintly disturbing that she hugged and kissed Henry Kissinger when they parted? I'm not even sure Mrs. Kissinger hugs and kisses Henry Kissinger. The move seemed folksy and friendly, but not vice presidential and statesmanlike. It seemed to take Hank by surprise, but he's a seasoned professional, so he rolled through it without balking noticeably. And he is kind of a teddy bear.
Wednesday, September 10, 2008
Such Versatility
Republican VP pick Sarah Palin serves as both Woman of Steel and Damsel in Distress as political need dictates. She'll be able to defend our country as long as her strong, male, party colleagues can defend her honor against remotely plausible hints of insult.
If the only difference between a pit bull and a hockey mom is lipstick, I guess you turn a pit bull into a hockey mom by the application of that cosmetic. By inverse reasoning, remove the lipstick from a hockey mom and you have a dog.
And while we're talking about lipstick on animals (No, Cletus, it's JUST WRONG!), what do y'all think about animal testing of cosmetic products?
How about a sheep in a bustier and a thong?
If the only difference between a pit bull and a hockey mom is lipstick, I guess you turn a pit bull into a hockey mom by the application of that cosmetic. By inverse reasoning, remove the lipstick from a hockey mom and you have a dog.
And while we're talking about lipstick on animals (No, Cletus, it's JUST WRONG!), what do y'all think about animal testing of cosmetic products?
How about a sheep in a bustier and a thong?
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