I just read an article (http://www.energybulletin.net/node/46564) that makes a good case for the fact that humanity will return to the hunter/gatherer phase of our existence and that the sooner we do so the easier it will be. I think that may go too far, I think that a limited agrarian society might be workable as well, but the issues the US is facing are not going to get better. Attempts to fix them will prolong the collapse of the western economy leaving things in a worse state than they would be if the collapse was just embraced.
I read a book by Kotlikoff some time ago and was appalled to learn of the present value implications of our debt, continued deficit spending, and massively unfunded transfer payment programs. These are very scary issues, but then I heard another interesting perspective. I imagine the truth to lie somewhere in the middle of the two, but consider this:
Analyzing America's cash flows like a corporate balance sheet means we have to consider total equity worth, total debt, and total assets in the entire country. Capital (debt and equity) is used to acquire productive assets that earn income. In the case of a country we call this income, GDP (or GNP, whatever).
Businesses (or savvy individuals) seek to balance the equation:
cost of capital = return on capital
This means that when you can borrow for cheap and earn more of a return than the cost of borrowing, it makes sense to borrow until you reach that equilibrium condition above.
For the U.S. we borrow at ~ 3%-4% (treasury rates) and earn ~ 12% when you count GDP/total asset base. This perversely suggests we have a far higher debt capacity than is being utilized. I wrote about this in an article awhile back:
I was just pointing out what I had heard about his real estate dealings which raised questions, thanks to your links and looking up a few more (above), I now know that Rezko and Obama were friends for 17 years, Rezko was one of his largest contributors, Obama paid $300,000 under the value of the property, Rezko is now an felon, and the Obama real estate deal was at the same time as Rezko's to an adjacent piece of property, sold by a single owner. Does that not raise some serious questions. I have never heard any serious answers. Thank you, you prove my point that whether you are a Democrat or Republican, just like with the troubles in the market, the truth does not always follow when the mouth opens, or when the keys, upon which the words are typed, are depressed. (Note: Your link was an editorial, my links are the actual articles.)
I love the optimism of this article! Regardless of where the economy or markets head over the next decade there will always be opportunities to make what you want of your life.
This is definitely a time that favors net savers, so keep on putting away money and picking up depressed assets. Everything is up for grabs; from real estate, global stocks, to commodities. Determine what will win over the long haul and buy in now while it's cheap. I've hesitated getting into China for the last year b/c of sky high valuations..now is a good chance to do so, at least incrementally as things cool off.
One thing that scares me, though, is when crowds rush towards protective group-think. This is illustrated with Obama saying that what's happened in the past few days is "nothing less than the final verdict on an economic philosophy that has completely failed."
Freedom has not failed...you cannot dissociate social from economic freedom. The right to live freely means you must also have the right to employ your capital resources freely. It is a mistake to call this financial catastrophe a failure of Capitalism. There were many people duped by unethical mortgage brokers, there were flaws in financial models, and there were risks taken that probably shouldn't have been taken...but in the end it's the freedom to live on your own terms (economically this is called Capitalism) that will continue to provide prosperity and real hope to the world.
1. Recall all troops deployed abroad. 2. Execute most of the Executive and Legislative branches for treason. 3. Imprison the management of most financial firms and confiscate all of their assets. This economic "event" or "crisis" didn't just happen; it was the result of a huge Ponzi scheme involving the participation and collusion of thousands of bankers, politicians, and real estate speculators. The perpetrators will continue to transfer money from taxes and through the devaluation of the currency to themselves unless they are neutralized.
I wholly agree with Rob. We are at the point where everyone believes that they should get something for nothing, and should get paid doing it. Now, I may be a "youngster" in his 20's but when I look back at the economic state of yesteryear as compared to today, the one thing thats missing is loyalty in corporations. Back in the day, it seems to me that corporations loved money, as most do today, but they loved America first. Today, it seems their loyalty lays with the highest bidder, whether that be the US, or the Saudi's, or China, or any other country. They could care less if this country falls, they have billions invested in other markets that will help them cope.
Americans, too, have lost their loyalty to this country. While the politicians and the "gubmint" may be corrupt, we shouldn't lose faith in this country as a whole. Most of the American people are not the politicians, CEO's, Chairmen of the Boards. They're our next door neighbors, the garbage collecters, the Mom and Pop store owners, people we see and interact with everyday. It is in them we should put our trust, and should work together with them, no matter what color, religious beliefs, etc., to build this country to its former glory. All I ever seem to hear today is how bad this country is, or how Americans are stupid, fat, lazy, arrogant, etc. I believe that we may have made many bad choices, as anyone does and will in the future, but we shouldn't put our selves down because of it. We have the ability to get up, shake the dirt off, and try again. We need to realize our mistakes, band together and fight for what we believe in. We don't need to give up on America, we to give up in believing that everyone else will pick us back up when we fall. Because if we don't, as Rob said, we could be going the way of the Roman, Grecian, Persian, Babylonian, civilizations of times past
I think of writing for Wise Bread much differently than writing for a personal blog, especially since this is a group blog. I love being able to add personal slant and don't think that anyone (okay there's probably an exception somewhere) can write without some sort of bias -- even real journalists -- and sharing personal experiences and thoughts is a great way to get a conversation going. Just for the record, I personally do lots of research in order to make sure that the information I provide is accurate, even if this is a blog.
"I am worried for all the families who will be affected by the lack of government support. People in the US seem to have a horror of the thought of 'the government' getting too involved in their lives."
If we weren't paying for so many entitlements, our national debt wouldn't be so much of a problem. Some people learn personal and fiscal responsibility, the majority don't. Entitlement programs teach the exact opposite - why behave responibly when the government will bail you out anyway? Unfortunately, the cost of government bailouts may finally be coming home to roost. The problem is government making to many promises and taking personal responsibilty away from individuals.
I've been warning friends and family for a couple years that banks and mutual funds are at risk. Also advised people to think about taking money out of money markets and possibly putting it into savings accounts.
This is the storm I've seen on the horizon for years - wasn't hard to see it. But, of course I was labeled 'kook'. Eventually, I learned it was best to keep my opinions to myself.
We've entered into a different realm. When 2 guys, not congress, not the president, not any elected official, but 2, one a government bureaucrat, the other the head of a private consortium of banks (the FED) - Paulson & Bernacki - take 85 billion dollars of the taxpayers' money to essentially buy an insurance company, SOMETHINGS WRONG!
It's going to be tough sledding going forward. The FDIC has prepared itself by hiring and 'un-retiring' hundreds of auditors. They fully expect scores of banks to go under.
Protect yourselves and your families. Personally, I'm heavily invested in Gold, an excellent place to be in times like this. If you took note, yesterday gold had it's biggest one-day rise in history. One note of caution, it's not without risk. You must seek out quality companies (if you invest in miners) with little debt. And, prepare yourself for excessive, stomach-churning volatility. Use golds recent up and down moves as a guide.
There is a big difference between a blog of any kind and a news article. You can assume that bloggers have plenty of personal slants and will express them freely online. With reporters, however, we count on them to delivery accounts of events as neutrally as possible.
As for accuracy, I don't do any original reporting here. It's all my opinion, with facts and figures presented only to back up my point. Rather like an Op-Ed piece in a newspaper. No reason to hide my support for one candidate or another -- although it's not always relevant.
Thanks for putting a positive spin on the current downturn (recession). With all the negative press, it's hard to remember that things will get better eventually and there are opportunities out there if you look.
I happen to agree with you that sometimes losing your job is a good thing - it happened to me in 2003 and I think it was the kick in the pants I needed to finally think about where I was headed. It sucks at first, but it gets better.
Thank you for enlightening your readers to your political views in a financial blog. I'm sure we're all now more able to judge the accuracy and slant of your writing.
As a mom of four (now adults) I'm a long-time comparison shopper, first with a quick glance through the competing sales ads that land in my mailbox, then a quick look at the coupons.
Quality is definitely a concern with store brands, and I've discovered which name brand items are superior. I'm not willing to sacrifice taste or clean clothes.
Here in So. California I'm fortunate to have access to a Costco, two WalMarts, 3 Trader Joe's, several major chains, several small grocery chains and wonderful farmers' markets. There are certain things I buy from each, and sometimes even on certain days.
One small grocery chain, Henri's, for example, has a Wednesday sale on produce, but their weekday sale overlaps and is still going on Wed. Their prices on produce almost always beat the big supermarket and they're fresher.
I've never been a great coupon user since the coupons are not usually for something I don't typically use, but many times require buying two or a larger quantity.
One important part of saving money on groceries that's seldom mentioned is how much time it costs to save that money. As an author,speaker, consultant and coach my time is very valuable, so I've on occasion paid more for an item that's in a store I'm passing rather than drive farther away or out of my way to save a dollar.
As Kitty points out, powdered versions of products are cost savers. One stringbean recipe I use calls for chicken broth. At one time I bought these in cans from Costco. On the surface it was a good buy, but the recipe only calls for 1 cup of the broth. Even the small cans of broth are more than a cup. I would refrigerate the rest to use later, but not having an immediate need again would forget it and end up throwing it away. Now I use the powdered chicken broth and I'm very happy that I use just what I need.
Spices have always been ridiculously high. Even though they are coming down somewhat, I found that mixing my own combinations was cheaper and tastier. Instead of buying the store's garlic pepper salt, I saved an empty spice jar and mixed my own.
Speaking of empty jars. I have to laugh at myself the day I considered buying storage jars for leftovers and realized that the empty spaghetti sauce jars are perfect for this. The word recylcing wasn't around when my mother was raising us, but she doing exactly that long ago.
As for the Obama comment, I can only hope that McCain wins, too many skeletons in Obama’s financial closet. Obama has a nice personality, and inspires hope, but when the questions about his financial deals are asked, and not answered, such as his real estate transactions in Chicago, he starts to remind me of the guys on Wall Street making statements like “how this could happen”, as they get in their Porsche to drive to the Hamptons. I want the guy, who has a record of fighting for the little guy and disregarding his Party when it comes to doing what is good for all. If you doubt that is McCain try Google News for the old stories about him fighting the Republicans and Bush.
Not to make this an election discussion, but the questions about the "real estate deal" were asked and answered, not only by journalist but also by court and the verdict was: There was not a single piece dubious or done wrong: http://www.chicagotribune.com/news/opinion/chi-0316edit1mar16,0,4441703,...
McCain of 2000 fought against his own party and for the small man. Sadly he isn't available in this election, the 2008 version is sadly the opposite of the old McCain and in party line in everything - and his VP and thanks to McCain's age likely President is downright scary.
Richard Cohen has written something that's pretty much my thoughts on this too: http://www.washingtonpost.com/wp-dyn/content/article/2008/09/15/AR200809...
In the UK Tesco and ASDA (WalMart) are the biggest supermarkets. I use Tesco as they are closest. Since July I have never bought any items outside of the Tesco store brand range - and they are all excellent.
I've bought cheese, pasta, pasta sauce, noodle, veg, coke, beer etc.
Not to highjack the conversation, but I am digging all the input regarding Tampa area savings, particularly the agricultural production / farmers' market tip.
And I am also a Save-A-Lot fan and have been introduced to Sweet Bay. (Loving the fact they carry Hannaford store brand, as that is familiar to me.)
Kitty- I've been noticing outrageous produce prices as well. And we didn't even get slammed by those storms. You guys must really be getting hit in the wallet.
Meow! Just kidding.
unfortunately its within our genes to be ruled by greed and fear (not to mention power)--thats what causes booms and busts
I just read an article (http://www.energybulletin.net/node/46564) that makes a good case for the fact that humanity will return to the hunter/gatherer phase of our existence and that the sooner we do so the easier it will be. I think that may go too far, I think that a limited agrarian society might be workable as well, but the issues the US is facing are not going to get better. Attempts to fix them will prolong the collapse of the western economy leaving things in a worse state than they would be if the collapse was just embraced.
... is a pretty cool blog. And I don't think there's anything wrong with the post cited, even if LK did get prickly with me.
I especially like this post, and I don't mind skipping over any "unabashed patriotism" to get to it:
http://modernnomadism.blogspot.com/2008/09/new-world-order-update.html
Heck, that's what I like about blogs. We know where the people we're reading are coming from.
I blog at www.shopliftingwithpermission.com.
I read a book by Kotlikoff some time ago and was appalled to learn of the present value implications of our debt, continued deficit spending, and massively unfunded transfer payment programs. These are very scary issues, but then I heard another interesting perspective. I imagine the truth to lie somewhere in the middle of the two, but consider this:
Analyzing America's cash flows like a corporate balance sheet means we have to consider total equity worth, total debt, and total assets in the entire country. Capital (debt and equity) is used to acquire productive assets that earn income. In the case of a country we call this income, GDP (or GNP, whatever).
Businesses (or savvy individuals) seek to balance the equation:
cost of capital = return on capital
This means that when you can borrow for cheap and earn more of a return than the cost of borrowing, it makes sense to borrow until you reach that equilibrium condition above.
For the U.S. we borrow at ~ 3%-4% (treasury rates) and earn ~ 12% when you count GDP/total asset base. This perversely suggests we have a far higher debt capacity than is being utilized. I wrote about this in an article awhile back:
http://www.thefreedomfactory.us/do-countries-need-to-stick-to-a-budget/
thanks i needed that
Maine's minimum milk prices are set by a board, and kept somewhat artificially low as a result. The dairies pay a fee to have this done.
http://mediamatters.org/items/200706140007
http://www.suntimes.com/news/watchdogs/757340,CST-NWS-watchdog24.article
http://www.suntimes.com/news/politics/124171,CST-NWS-obama05.article
http://abcnews.go.com/Blotter/story?id=4111483&page=1
I was just pointing out what I had heard about his real estate dealings which raised questions, thanks to your links and looking up a few more (above), I now know that Rezko and Obama were friends for 17 years, Rezko was one of his largest contributors, Obama paid $300,000 under the value of the property, Rezko is now an felon, and the Obama real estate deal was at the same time as Rezko's to an adjacent piece of property, sold by a single owner. Does that not raise some serious questions. I have never heard any serious answers. Thank you, you prove my point that whether you are a Democrat or Republican, just like with the troubles in the market, the truth does not always follow when the mouth opens, or when the keys, upon which the words are typed, are depressed. (Note: Your link was an editorial, my links are the actual articles.)
Well, LK, thank GOODNESS you are able to prevent yourself from falling into partisan politics on your blog about motherhood... oh, wait.
That's what we refer to as an EPIC FAIL.
I love the optimism of this article! Regardless of where the economy or markets head over the next decade there will always be opportunities to make what you want of your life.
This is definitely a time that favors net savers, so keep on putting away money and picking up depressed assets. Everything is up for grabs; from real estate, global stocks, to commodities. Determine what will win over the long haul and buy in now while it's cheap. I've hesitated getting into China for the last year b/c of sky high valuations..now is a good chance to do so, at least incrementally as things cool off.
One thing that scares me, though, is when crowds rush towards protective group-think. This is illustrated with Obama saying that what's happened in the past few days is "nothing less than the final verdict on an economic philosophy that has completely failed."
Freedom has not failed...you cannot dissociate social from economic freedom. The right to live freely means you must also have the right to employ your capital resources freely. It is a mistake to call this financial catastrophe a failure of Capitalism. There were many people duped by unethical mortgage brokers, there were flaws in financial models, and there were risks taken that probably shouldn't have been taken...but in the end it's the freedom to live on your own terms (economically this is called Capitalism) that will continue to provide prosperity and real hope to the world.
Great graphics. I got to room 850!!!
1. Recall all troops deployed abroad. 2. Execute most of the Executive and Legislative branches for treason. 3. Imprison the management of most financial firms and confiscate all of their assets. This economic "event" or "crisis" didn't just happen; it was the result of a huge Ponzi scheme involving the participation and collusion of thousands of bankers, politicians, and real estate speculators. The perpetrators will continue to transfer money from taxes and through the devaluation of the currency to themselves unless they are neutralized.
I wholly agree with Rob. We are at the point where everyone believes that they should get something for nothing, and should get paid doing it. Now, I may be a "youngster" in his 20's but when I look back at the economic state of yesteryear as compared to today, the one thing thats missing is loyalty in corporations. Back in the day, it seems to me that corporations loved money, as most do today, but they loved America first. Today, it seems their loyalty lays with the highest bidder, whether that be the US, or the Saudi's, or China, or any other country. They could care less if this country falls, they have billions invested in other markets that will help them cope.
Americans, too, have lost their loyalty to this country. While the politicians and the "gubmint" may be corrupt, we shouldn't lose faith in this country as a whole. Most of the American people are not the politicians, CEO's, Chairmen of the Boards. They're our next door neighbors, the garbage collecters, the Mom and Pop store owners, people we see and interact with everyday. It is in them we should put our trust, and should work together with them, no matter what color, religious beliefs, etc., to build this country to its former glory. All I ever seem to hear today is how bad this country is, or how Americans are stupid, fat, lazy, arrogant, etc. I believe that we may have made many bad choices, as anyone does and will in the future, but we shouldn't put our selves down because of it. We have the ability to get up, shake the dirt off, and try again. We need to realize our mistakes, band together and fight for what we believe in. We don't need to give up on America, we to give up in believing that everyone else will pick us back up when we fall. Because if we don't, as Rob said, we could be going the way of the Roman, Grecian, Persian, Babylonian, civilizations of times past
I think of writing for Wise Bread much differently than writing for a personal blog, especially since this is a group blog. I love being able to add personal slant and don't think that anyone (okay there's probably an exception somewhere) can write without some sort of bias -- even real journalists -- and sharing personal experiences and thoughts is a great way to get a conversation going. Just for the record, I personally do lots of research in order to make sure that the information I provide is accurate, even if this is a blog.
"I am worried for all the families who will be affected by the lack of government support. People in the US seem to have a horror of the thought of 'the government' getting too involved in their lives."
If we weren't paying for so many entitlements, our national debt wouldn't be so much of a problem. Some people learn personal and fiscal responsibility, the majority don't. Entitlement programs teach the exact opposite - why behave responibly when the government will bail you out anyway? Unfortunately, the cost of government bailouts may finally be coming home to roost. The problem is government making to many promises and taking personal responsibilty away from individuals.
Industry regulation is a seperate issue.
Ken
I've been warning friends and family for a couple years that banks and mutual funds are at risk. Also advised people to think about taking money out of money markets and possibly putting it into savings accounts.
This is the storm I've seen on the horizon for years - wasn't hard to see it. But, of course I was labeled 'kook'. Eventually, I learned it was best to keep my opinions to myself.
We've entered into a different realm. When 2 guys, not congress, not the president, not any elected official, but 2, one a government bureaucrat, the other the head of a private consortium of banks (the FED) - Paulson & Bernacki - take 85 billion dollars of the taxpayers' money to essentially buy an insurance company, SOMETHINGS WRONG!
It's going to be tough sledding going forward. The FDIC has prepared itself by hiring and 'un-retiring' hundreds of auditors. They fully expect scores of banks to go under.
Protect yourselves and your families. Personally, I'm heavily invested in Gold, an excellent place to be in times like this. If you took note, yesterday gold had it's biggest one-day rise in history. One note of caution, it's not without risk. You must seek out quality companies (if you invest in miners) with little debt. And, prepare yourself for excessive, stomach-churning volatility. Use golds recent up and down moves as a guide.
Good luck to you all.
LK,
There is a big difference between a blog of any kind and a news article. You can assume that bloggers have plenty of personal slants and will express them freely online. With reporters, however, we count on them to delivery accounts of events as neutrally as possible.
As for accuracy, I don't do any original reporting here. It's all my opinion, with facts and figures presented only to back up my point. Rather like an Op-Ed piece in a newspaper. No reason to hide my support for one candidate or another -- although it's not always relevant.
I blog at www.shopliftingwithpermission.com.
Thanks for putting a positive spin on the current downturn (recession). With all the negative press, it's hard to remember that things will get better eventually and there are opportunities out there if you look.
I happen to agree with you that sometimes losing your job is a good thing - it happened to me in 2003 and I think it was the kick in the pants I needed to finally think about where I was headed. It sucks at first, but it gets better.
Thank you for enlightening your readers to your political views in a financial blog. I'm sure we're all now more able to judge the accuracy and slant of your writing.
It is scary times. The first priorities have simply to be:
- get food on the table.
- pay the bills.
- keep your job.
everything else is a luxury.
Mary,
As a mom of four (now adults) I'm a long-time comparison shopper, first with a quick glance through the competing sales ads that land in my mailbox, then a quick look at the coupons.
Quality is definitely a concern with store brands, and I've discovered which name brand items are superior. I'm not willing to sacrifice taste or clean clothes.
Here in So. California I'm fortunate to have access to a Costco, two WalMarts, 3 Trader Joe's, several major chains, several small grocery chains and wonderful farmers' markets. There are certain things I buy from each, and sometimes even on certain days.
One small grocery chain, Henri's, for example, has a Wednesday sale on produce, but their weekday sale overlaps and is still going on Wed. Their prices on produce almost always beat the big supermarket and they're fresher.
I've never been a great coupon user since the coupons are not usually for something I don't typically use, but many times require buying two or a larger quantity.
One important part of saving money on groceries that's seldom mentioned is how much time it costs to save that money. As an author,speaker, consultant and coach my time is very valuable, so I've on occasion paid more for an item that's in a store I'm passing rather than drive farther away or out of my way to save a dollar.
As Kitty points out, powdered versions of products are cost savers. One stringbean recipe I use calls for chicken broth. At one time I bought these in cans from Costco. On the surface it was a good buy, but the recipe only calls for 1 cup of the broth. Even the small cans of broth are more than a cup. I would refrigerate the rest to use later, but not having an immediate need again would forget it and end up throwing it away. Now I use the powdered chicken broth and I'm very happy that I use just what I need.
Spices have always been ridiculously high. Even though they are coming down somewhat, I found that mixing my own combinations was cheaper and tastier. Instead of buying the store's garlic pepper salt, I saved an empty spice jar and mixed my own.
Speaking of empty jars. I have to laugh at myself the day I considered buying storage jars for leftovers and realized that the empty spaghetti sauce jars are perfect for this. The word recylcing wasn't around when my mother was raising us, but she doing exactly that long ago.
Not to make this an election discussion, but the questions about the "real estate deal" were asked and answered, not only by journalist but also by court and the verdict was: There was not a single piece dubious or done wrong: http://www.chicagotribune.com/news/opinion/chi-0316edit1mar16,0,4441703,...
McCain of 2000 fought against his own party and for the small man. Sadly he isn't available in this election, the 2008 version is sadly the opposite of the old McCain and in party line in everything - and his VP and thanks to McCain's age likely President is downright scary.
Richard Cohen has written something that's pretty much my thoughts on this too: http://www.washingtonpost.com/wp-dyn/content/article/2008/09/15/AR200809...
In the UK Tesco and ASDA (WalMart) are the biggest supermarkets. I use Tesco as they are closest. Since July I have never bought any items outside of the Tesco store brand range - and they are all excellent.
I've bought cheese, pasta, pasta sauce, noodle, veg, coke, beer etc.
No issues, and very, very cheap.
Hmm.. I can think of a few places.
How about... the trillion dollar war?
Or... giant corporations?
Not to highjack the conversation, but I am digging all the input regarding Tampa area savings, particularly the agricultural production / farmers' market tip.
And I am also a Save-A-Lot fan and have been introduced to Sweet Bay. (Loving the fact they carry Hannaford store brand, as that is familiar to me.)
Kitty- I've been noticing outrageous produce prices as well. And we didn't even get slammed by those storms. You guys must really be getting hit in the wallet.