Archives For Money

Buying a Thousand Pillows…

September 30, 2014

Two colorful pillows over whiteYeah. So it is true that rich people can spend more money than middle class people, but there’s this upper limit on what we can spend. I drive a very nice car, but it’s only one car. I don’t own a thousand, even though I earn a thousand times the median wage. I have a few jackets, not a few thousand. My family can afford to go out to eat more than most American families, but not more than three times a day. We can’t go out 3,000 times a day.

So if you concentrate wealth in the hands of a very few people, you break down this feedback loop between customers and businesses. My family, among other businesses, owns a pillow company, and the pillow business is tough because fewer and fewer people can afford to buy pillows. Again, I may earn a thousand times the median wage, but I don’t sleep on a thousand pillows.

You need everyone to be able to afford a pillow every year in order to have a successful pillow business, and concentrating wealth at the top essentially creates a death spiral of falling demand.

 

SOURCE: Why capitalism has nothing to do with supply and demand | Making Sen$e | PBS NewsHour.

To me it just seems common sense that if you want an economy to thrive you put money in the hands of people who will spend it. Putting it in the hands of those who will simply stash it away with an already absurd bank account does nothing for the good of the country or its citizens.

Trickle down is still the mantra of many in the GOP, especially Mr. Ryan. If they get their way all social services would cease to exist and everyone would be left to themselves. Ayn Rand, who is Mr. Ryan’s hero, believed that altruism, that is caring for humanity, is a weakness and not a strength and it needs to be driven out of any truly successful society. That mentality seems to permeate those who are at the very conservative margins of our country now days.

It seems there are basically two distinctively different types of people in the U.S. There are those who love and care about everyone at least on some level and this  includes people they don’t know. Then sadly there are those who care seemingly only care about themselves and maybe their immediate families. Everyone else is to be feared on some level or simply of no or little consequence to them.

Trickle down does not nor has it ever worked. Raising the minimum wage and giving workers their fair share of the rewards benefits everyone, even those who believe in trickle down.

Why???

September 17, 2014

2014-09-15_20-26-03I have a question for my Republican friends.

Yes, that sounds like the setup for a smackdown, but though the question is pointed, it is also in earnest. I’d seriously like to know:

If Republican fiscal policies really are the key to prosperity, if the GOP formula of low taxes and little regulation really does unleash economic growth, then why has the country fared better under Democratic presidents than Republican ones and why are red states the poorest states in the country?…

Yet, every election season the party nevertheless makes those claims. It will surely do so again this fall. So it seems fair to ask: Where are the numbers that support the assertion? Why is Texas only middling in terms of per capita income? Why is Mississippi not a roaring engine of economic growth? How are liberal Connecticut and Massachusetts doing so well?…

It seems to suggest Republican claims are, at best, overblown. If that’s not the case, I’d appreciate it if some Republican would explain why. Otherwise, I have another earnest, but pointed question for my Democratic friends:

How in the world do they get away with this?

 

SOURCE:  If GOP is right, why are red states so far behind? – Leonard Pitts – Newsday.

Why is probably my favorite word in the English language. Everyone should use it many times a day. If we don’t questions things in our lives then we leave the door open for others to determine how we live.

Why do we let others, particularly the politicians, say almost anything they want without questions? The above example is a biggie for me. If the Republican mantra of low taxes, no regulation, and small or maybe no government at all is the answer then why are so many of the red States so poor. With their iron-fisted control of their State governments why are so many “liberal” States so much better off then the red ones?

Theoretically it is possible to replace over 85% of our representative in congress in the coming months. So, if as the polls suggest, we are all so disgusted with those folks why will we return the vast majority of them to a job that they seem utterly unqualified for?

Are we just too lazy to take the necessary actions to turn our totally dysfunctional government around?  What we have to do is really not that difficult; just a couple of button pushes in early November. Out with the old and in with the new. The new couldn’t be any worse so why not give it a try?  Why??

One final question I have is why is my home State of Indiana a red one when all our surrounding neighbors are so blue? For the life of me I can’t figure that one out. :)

 

I laughed out loud. Couldn’t help it; I had just overheard Mr. Newport Beach say something about how Obamacare is an unmitigated disaster despite how, of course, it’s not, and if America were to somehow actually develop a health care system similar to, say, Canada’s, that would be the end of America for certain; we’d never recover from such a devastating blow. Or something. And then came the [president is the] “worst thing to ever happen” quip, and I couldn’t hold back

They didn’t hear me, of course; the orgasmic thrum of their perfect lives drowned out my chuckle, and as I turned and looked at this beautifully entitled, happy crew from my vantage point only a few feet away but a million light years in perspective, we all shared one of the most spectacular, envied locales in the world and all of us sipped superb regional grape and not a single one of us suffered the slightest personal, social or economic indignity, every first-world need instantly met, every crab cake perfectly formed, the sunshine as flawless as Jesus on toast and no lines at the restroom and lots of free parking for his Lexus SUV…..

Even so, I desperately wanted to ask Mr. Newport Beach what his stock portfolio looked like a mere six or seven years ago, when Bush & Co. ravaged the country and led us into one of the deepest, most brutal social and economic pits in modern history. Did he lose half his net worth? More? Was he worried he couldn’t feed his family or pay his mortgage? Did he lose his house? His job? Did he blame Bush? Clinton? Islam? The gays?

And by the way, how does he like the recovery so far? Which of his three perfect, multimillion-dollar homes was he on his way to, right now?

I also wanted to know, when Bush/Cheney lied to the world, openly violated the tragedy of 9/11 and invaded Iraq, killing tens of thousands, was he furious? What about now, when even Fox News is calling out Cheney and declaring Iraq invasion a colossal mistake, a lie from which we’re still unable to extricate ourselves?

SOURCE:  The Best Worst President Ever | Mark Morford.

Mark Morford has become an instant hero of mine. This post says almost exactly how I feel about those rich guys who are so much against making healthcare a right instead of a privilege for all America’s citizens. I agree exactly with his amazement of calling our current president the worst ever while he is benefiting from all the massive recovery, at least for those who own a lot of stocks, that has occurred under this president.

I agree completely that it totally confuses me how this rich guy can completely ignore the disastrous condition that the previous president left the country in after eight years in office and how he put us in a $trillion+ off the books wars that the current president had to dig his way out of.  Compared to his predecessor the current president deserves  top three status in the presidential list.  How can this rich jerk even swallow the vitriol words that spews from his mouth.

But then I have to step back and recognize that this rich guy probably doesn’t represent most in his financial category. Or at least I hope he doesn’t? The hypocrisy of this rich guys words strike me as being one of the root causes for the trouble this country still has.  Thanks Mark for getting the words just right…..

Americans tend to score poorly on financial literacy tests, but it’s not entirely their fault: School systems don’t generally require personal finance classes, and many parents feel ill-equipped to pass on big lessons about spending, saving and investing to their kids. Here are ten basic tenants you should know in order to navigate today’s financial world:

You have to earn more than you spend.

SOURCE: 10 Things Everyone Should Know About Money – Yahoo News.

When I was in high school many decades ago we had various life skills courses that we were expected to take.  I don’t specifically remember a course on home finance but I do remembers some lessons about that subject. Credit cards were not very available to the masses back then so if you didn’t have the money you didn’t buy the item.

But I do remember that when I graduated college at least a half-dozen credit cards were automatically sent to me in the mail. They didn’t need permission to give you a credit card as they do today. I have always been a pretty frugal guy so I didn’t see a need for them. They usually ended up in a drawer someplace.

Now days it seems that every institution has its own credit card and who can blame them.  Most of the items that we buy today have a low profit margin, while credit cards charge an outrageous interest rate. The money you might manage to save gets you less than 1% interest and  credit cards are at 10- 20% interest!  That was called usury in my day and it was illegal. I don’t know when that changed.

Getting back to the subject of this post I can understand how kids today are ill-equipped when it comes to credit card debt.  Our capitalist system depends on consumer spending so it is drilled into us that we can have it all now and pay for it later. Of course for too many that means huge debt that will inevitably come back to destroy many people.

Without some parental guidance, either from parents or teachers, that teach you that you have to earn more than you spend, kids can too easily get into financial trouble. Why isn’t this topic covered in our school system?

2014-07-05_11-00-20A stagnant economy has undoubtedly put a lot of financial stress on the middle class. And that is bumming out America’s 1 percenters. “Our country is rapidly becoming less a capitalist society and more a feudal society,” entrepreneur Nick Hanauer wrote recently in Politico, in an open letter to “my fellow zillionaires….

“If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us,” he writes. “One day, somebody sets himself on fire, then thousands of people are in the streets, and before you know it, the country is burning. And then there’s no time for us to get to the airport and jump on our Gulfstream Vs and fly to New Zealand.”…

The economic trends Hanauer identifies are, in fact, real problems. America as a whole will suffer if the fortunes of the middle class don’t improve. There are solutions, however, and they’ll probably materialize in the usual American way — right before disaster strikes. It’s nearly inevitable there will be government spending cuts and, yes, tax hikes, when the government’s finances become unsustainable, which could take a decade or more. When it happens, the politicians in Washington will find ways to spread the pain around and America will muddle through. The rich will have to pay more, but they’ll still be rich. And they still won’t have to worry about pitchforks.

SOURCE:  The rich can stop worrying about a middle-class revolution | Daily Ticker – Yahoo Finance.

This is an interesting article about the words of a rich guy and the income inequality.  If you want to skip the commentary and go to the original article click here.

I think to some degree Mr. Hanauer has it right. He talks about things that need to be done to stifle a possible revolution against people like him and that includes returning to pre-Raegan tax rates for his segment of society. We as a country have at least in the past  been able to avert crisis right before disaster strikes but I kind of think if we count on that strategy working every time we are might be in for a severe disappointment.

It might appear otherwise from some of my posts  but I personally don’t have anything against rich guys, at least those who earned their riches themselves. I do have a certain degree of disdain for those who came by their wealth through the work of others, even family members. To me that is unearned income and should be very thoroughly taxed as such.

People like Bill Gates become rich by discovering a “better mousetrap”. He gave us a means to quickly advance our business technology.  I grew up near the Army Finance Center at Fort Benjamin in Indianapolis. The building was a huge complex. It took hundreds of thousands of square feet of desks for thousands of workers to process and pay military wages. Today, thanks to Mr. Gates and others that task is now handled by a mere handful of working using computers. Mr. Gates deserves every penny, minus taxes of course, that he earned.

 

 

2014-06-29_08-08-44

1. You will spend your life chasing a net worth number you think you will make you happy, but never get there.

People talk about their “number,” or the amount of money they think will make them happy and content. I’m convinced these numbers are what most people live for.

But they’re dangerous. People are bad at forecasting almost everything, but trying to predict how you’ll feel in the future is a whole different level of delusion….

2. A lot of what you know is wrong, incomplete, distorted, and subject to revision

There’s a bias called the “end of history illusion.” It says that people think changes in taste, new ideas, and learning in general occurred in the past, but today we’ve got it all figured out.

The truth is we’re always learning how wrong we were in the past…..

3. People are less impressed by your success than you think

Most people in the developed world are about as comfortable and safe as they’re going to get in their lives. Their incentive to get richer is to impress other people.

But while people spend their lives trying to impress their friends, a trait they find most attractive in those friends is humility. Few of us ever connect these dots….

SOURCE: Unfortunate Realities You Should Get Used To.

The folks over at Motley Fool have struck another chord with me. Here is a post about worrying on your wealth. Let’s take them a number at a time.

Number 1 – I don’t think I have ever spent any time chasing my net worth number. Money has just not been an important a topic with me. But of course that is probably because I had a fairly good career path and put away enough to now be comfortable. Now don’t get me wrong, I am not some closet millionaire but I am pretty sure I have enough to last out my years.

Yeah, people are usually very bad at forecasting anything. I am a planner at heart and of course most of those plans change because of circumstances. Nothing ever goes as planned. The ability to adapt is what is important.

Number 2 - I don’t know how many times in my life that I figured that I now had all the needed knowledge of life. Of course that was, and will continue to be, just naive thinking. I am still learning many of life’s basic lessons when I was sure I would have it all figured out by now. Learning how wrong we were in the past, how true that is.

Number 3 - I am a contrarian and in this regard because I am just not impressed with the wealth of a person. At least in monetary terms.  Personally, trying to impress others with wealth is way way down on my radar screen and anyone who IS impressed by wealth is usually not going to be much of a friend of mine. Humility  and how you treat others is way further up there for me….

2014-06-29_08-08-44Consider this headline from a recent survey of retirees: “Many Regret Decision to Take Social Security Early.”

Sounds ominous, right? Well, the problem is that the title isn’t entirely supported by the survey’s actual results, which found that only 38% of respondents “say they wish they would have waited” longer before taking benefits. According to this, in other words, somewhere along the lines of 62% of respondents, or a large majority, evidently don’t regret the decision.And why should you?

As Motley Fool contributor John Maxfield explains in the following video, the Social Security Administration has designed the benefit formula to pay the same amount of total benefits over the life of a typical person irrespective of when they elect to take them. Additionally, as John goes on to discuss, taking benefits sooner rather than later can facilitate an earlier retirement, which allows retirees to escape the physical and psychological wear and tear associated with many jobs.

SOURCE: Social Security: Why You Shouldn’t Regret Taking Benefits at 62.

The source of this article is “Motley Fool”. I readily admit that they are on my daily read list. They, like me, have a somewhat contrarian philosophy. Maybe that is what draws me to them.  I don’t know why the topic of the article isn’t talked about much. Since I know that many of my readers are approaching or are in retirement, I thought I would talk about this again.

The fact is if you have a relatively normal or shorter life line in your genealogy then it makes good sense to take Social Security early. As the article mentions SSA has a formula that basically gives you the same overall amount independent of when you take it. I think the calculated age at death is currently 78. If you die before this age you will come out ahead if you take social security early. If you live longer than you may come out ahead if you wait.

The other thing that even this source article doesn’t mention is that if you take it early and  are able to invest the money profitably you will bank even more. Now I know in the age of almost zero percent bond rates and very fluctuating markets investing anything for a substantial profit takes work and some risk but even a small return will allow you to come out ahead.

In my case I look at the family tree and I see parents, grand parents, and great grand parents dying before the 78 year mark so I took it early and like usual I am not looking back on that decision.  I am among those 62% who don’t regret that early decision. It allowed me to bank about an additional $75,000 that is still growing today six years later.  If I live to be an old ornery fool of ninety I  would have been better to wait but at  ninety I probably won’t even be able to appreciate that fact. :)

2014-03-20_09-06-16Tesla’s campaign to sell its electric cars directly to consumers shifted into high gear this week as state lawmakers debated Tesla-related bills while powerful auto lobbyists braced for a fight. In New York, a measure designed to ban Tesla from opening new stores passed a key hurdle, while in Arizona, lawmakers pushed a bill to make it easier for Tesla to sell its cars without establishing a dealer network.

The escalating conflict underscores Tesla’s role as a disruptive force in the U.S. auto industry, not only because the company’s cars don’t use gasoline engines, but also because Tesla is trying to upend the dealership-franchise model that has underpinned the automobile industry for decades. That model — and laws protecting it — emerged in the 1930s as a way for automakers to build a national sales and service force and help foster local economic growth.

SOURCE: Tesla’s War With the States Shifts Into Overdrive | TIME.com.

I have mixed feelings about the above topic.  This is kind of like a David/Goliath type thing. The little dealership guys are being squeezed out by the big corporations the same way as WalMart is squeezing out local retailers.  But size is a relative thing. Yeah Telsa is probably bigger then most auto dealerships but it is very small compared to its other automotive competitors. It is also pretty easy to see that those who own local or regional auto dealerships are usually much wealthier than the rest of us.  It is not uncommon to see mufti-millionaires auto dealer owners.  So David/Goliath is a relative thing.

Realtors are also in this type of corundum. When I sold my house in New Jersey it never actually went on the market. My realtor happened to have someone waiting for my type of house. When we closed on the house the realtor received a check from me for almost $18,000 for two hours work or so.  The only ones who even come close to that hourly wage are big time surgeons and some CEOs  :)

The other example in my part of the country is in liquor distributorships. If you can land one you are assured a big annual paycheck. They are given out mostly as a political favor by State level politicians.

I don’t know but it seems like these sort of things need fixing. We should be able to buy direct and bargain with others for what are currently set as “standard” fees. Wages for most of us haven’t changed much in the last decade or more so the little guy needs all the help he can get in today’s world even as a consumer.

 

2014-02-17_11-16-13What they haven’t been doing is giving extra cash to employees, despite s a year of solid – and often record – profits and huge cash hoards. A survey by Aon Hewitt on compensation trends for 2014 shows that companies plan to raise salaries by just 3% this year – the highest since 2008, when the average raise was 3.7%. Economist Ed Yardeni notes that employee compensation and capital spending as a percentage of GDP has been the lowest since the mid-1950s.

But suppose each company with $1 billion in cash took 5% of that stash and give it to employees as a bonus. Unlike a raise, which is an ongoing cost, a bonus is simply a one-time payout – a way of thinking workers for a good year. What would each employee get?

SOURCE: If companies shared their cash with employees.

What happened to the idea of the three legged stool concept of corporate governance? It used to be that there were three pretty equal priorities for American business: Owners, Customers, Employees.  All were considered of equal importance to the well being of an American corporation. It seems in the last thirty years that the owners have become far and away the only leg. Of course this trend is also analogous to the accumulation of wealth at the top end of the economic scale.

I can remember in the 1970s getting year end bonuses. They were never even close to approaching the ones given out on Wall Street and board rooms today but it was always a good feeling to know that we got a little extra for our contribution to our company’s economic health. It made us feel we were appreciated.

There are thousands of companies today that have mammoth stockpiles of cash sitting in company coffers.  Their employees have worked hard and made the company a success. Why aren’t they thanked the same way as those who buy their stocks? If that were to happen maybe at least a small amount of company loyalty would return to American business.  Everyone likes to know that their contributions to any effort are appreciated. A little pat on the back both physically and economically will go a long ways.

The source article goes on after the above quote to show that it would mean about $3,000 to each of the S&P 500 companies. It would mean about $270 for each McDonald’s employee. That is almost the equivalent of one week’s pay at the typical minimum wage that most earn. Wouldn’t it be nice to know that you are appreciated even for flipping hamburgers?

Dual Income Requirements…

February 24, 2014

We know that the majority of households now require both spouses to work outside the home. That fact has contributed significantly to the number of seniors in nursing homes and other assisted care facilities. Simply put there is just no one at home to care for aging parents or grand-parents anymore. As a result more seniors are institutionalized than ever before.

Of course this is just another example of the problem with the gross income inequality here in this country and even around the world to maybe a lesser degree. Just when our population above 65 starts to explode there are fewer and fewer of us who will be able to stay with our families.  I know from personal experiences with my parents, nursing homes are very expensive. They quickly zap whatever wealth might have been accumulated. After that personal wealth is gone then Medicaid often takes over the expenses and that of course raises taxes for all of us. That seems to be the major Catch-22 of this early century.

When a mother is required to work outside the home she often only adds a small percentage increase to the family income since her children are now forced into childcare outside the home. That eats up much of the income gained. I wonder if anyone has ever done an economic analysis of these type situations?

I suspect that we are actually doing more damage to our society by continuing to squelch income at the bottom end of the scale.  While history shows us that when we raise the minimum wage the threat of losing a significant number of jobs does not materialize, that argument continues to be made today. I realize that raising the minimum wage is not an answer to all our problems but maybe it solves more problems than are realized.  Raising education levels to meet the requirements of 21st century jobs is also an important part of the solution. But then again, there will always be the need for someone to do the things that are now minimum wage jobs. Those jobs will not suddenly disappear with an educated population or be replaced by a robot. Minimum wage jobs will always be part of our world. We need to make sure that anyone who is working full time has at least the minimum income to sustain sustenance.