Wednesday, August 25, 2010
Sunday, August 1, 2010
A Reality Check
I sent this to family members, and I share it here:
This is prompted by two emails I recently received, and by two conversations including one with a dear relative, and by the realization that I have to pack for another business trip. It is also prompted by the fact that I returned to Chicago only a few days ago and my spouse has now returned from Dallas, and I will soon be “on the road” again. I am becoming more and more aware that “Life is short” as the saying goes. Perhaps teenagers can afford to pretend that they will live forever. I will not, cannot, and I still have a lot to accomplish on my “to-do list of life”.
This is prompted by two emails I recently received, and by two conversations including one with a dear relative, and by the realization that I have to pack for another business trip. It is also prompted by the fact that I returned to Chicago only a few days ago and my spouse has now returned from Dallas, and I will soon be “on the road” again. I am becoming more and more aware that “Life is short” as the saying goes. Perhaps teenagers can afford to pretend that they will live forever. I will not, cannot, and I still have a lot to accomplish on my “to-do list of life”.
As for the relative referenced above, he is struggling, has continuing difficulties, has made a series of bad decisions spanning 6 years and has also had some misfortune, including timing issues related to the economy. As a result, he has spent more than a few nights in a PADs shelter this year. He has been optimistic throughout and insists that his “modi operandi” is viable and that he will turn things around. That may occur in 2013, but for the immediate future I beg to differ with him, have repeatedly told him so, and have made suggestions. He persists in his path. This is an individual who is educated, very smart and for many years made well into 6 figures a year, each and every year. It is difficult to watch him struggle, persist in his path and to resist change.
We are now about 4 years into a very nasty recession. I use June 2006 as the start date because that is the date that real estate prices began to fall and the economy began to contract. That is also the time at which I first experienced significant change in the business climate.
My spouse and I now know of 7 families of immediate acquaintance who are experiencing acute financial difficulties. By “acute” I mean forced short sale of a home or condo, unemployment for a period exceeding 12 months, etc. We also know of 6 additional families who are experiencing financial difficulties which are also severe, but not quite as distressed. Those families have acknowledged that they are in a “negative cash flow” situation. Which bluntly means, they are living beyond their means and headed for a financial cliff, and a day of reckoning.
To some extent our lives and our life styles are a personal decision on the part of us all. But not entirely. My relative felt he could “beat the odds.” He had a strategy and a plan. It was flawed but possibly capable of success. We discussed this and I told of him of what I perceived were shortcomings. He persisted and he has failed.
I am unwilling to fail. To that extent I will do whatever it takes, and will make and have made, great sacrifices. My spouse will possibly be on this planet for another 40 years. It is essential that we have a financial plan in place to accommodate that life span. To do otherwise is irresponsible on my part, on her part, and dishonors the relationship.
My spouse and I have made a conscious decision to attempt to live within our means. By that, I mean not to spend any more in a calendar year than our net incomes (wages after taxes, rental income, dividends and interest, etc.), and to also save a reasonable amount for retirement and to make concrete plans for that retirement. This requires some sacrifice on both of our parts and also some trade-offs in life style. It also requires decisions that are not popular. We will not and cannot attend every family event or function.
To be blunt, we have not the financial means to do so. Perhaps you do and if so, all I can say is “good for you.”
Let me also state, that that you are free to make any request. However, in any request or negotiation there are three possible responses: accept, counter-offer or decline. I am free to choose any of those responses, but I prefer to counter-offer rather than to decline.
On a personal level, this year we did not meet our financial goals, and had to dip into savings, “but we had a lot of fun and one hell of a party”. Frankly, I am concerned by the possibility of another 4 to 6 years of malaise in this economy, and the impact on those around us. I now wonder and question “are people prepared for this” and “how will people survive?” By survival, I mean can we all maintain our lifestyle, our relationships and our sanity and simultaneously meet our promises and commitments?
I made the decision last year to honor or attempt to honor, requests or invitations that are serious. I cannot honor all requests and invitations and keep my commitments Those commitments have also included an increased level of “giving” in various forms, including consistent gifting to two local churches and several other charities and food pantries, and to distressed family members.
This year, the last of three and one-half college loans that I paid for, were retired. None of these were mine, by the way! The good news: I’m no longer under that specific “financial burden.” So should I now pursue an advanced degree? I think not. I am sufficiently educated to accomplish whatever it is I intend to in this life. Don’t misunderstand. As one who has been committed and lived a life of “continuous improvement” I have no intention of atrophy at this point.
I have the benefit of having struggled for years after a very bad divorce and some very difficult economic times. Do any of you recall the recession of 1981-1984? I actually started and grew a business in the middle of that recession. Just prior to that, I went into the office each week and wondered if each Friday would be my last. That went on in 1977-1978 and prompted me to start my first business. If I was to be “fodder for the cannons” I decided I would choose my own destiny. Business worked but marriage didn’t and after my divorce, I had a maximum of $75 per month for all expenses after rent and electricity. I’ll let you think about what that “disposable” monthly amount of money would mean to your lifestyle. For me, at that time I couldn’t afford a monthly Dunkin’ Donuts, and getting a haircut was a major economic decision!
As a consequence of that experience and the fond memories it includes, the nearly 20 years of “lost life” including the nearly 10 years it took to dig out of that hole, I have vowed never, and I mean NEVER to allow myself to be in that situation ever again. As a result, I am the “hard ass” in my relationship with many people and that includes with my spouse. She knew that when we married. What you see is what you get, and I have been very transparent with her. That is, however, no excuse for any irresponsibility on my part.
I hope that each of you is taking steps to protect your way of life. I suggest you consider where this economy is today and to project that into the future for another four or more years. What would that economic reality mean to you and your loved ones? Do you have a plan in place? Is your plan and lifestyle compatible with that possible reality?
I realize you may not agree with my prognosis. You may prefer to listen to optimists and certain politicians. I suggest that you consider the risk and risk to your family and your relationships that you are taking, should you be incorrect. This is neither about being “wrong” or being “right”. It’s about succeeding and honoring agreements and commitments. I am not willing to take the risk, or to say it another way, there are some risks that are worth taking but this is not one of them. To anyone who thinks they can “beat the odds” I suggest you consider how well you have done in the past four years, since this economic malaise began. Then consider that things might actually get worse.
I am personally very fortunate. I have a loving, compassionate, hard working and successful spouse. We are both like the tortoises in a country of wild hares. My business remains at levels that are adequate. That permits me to flush a certain amount of money each and every year on lifestyle choices. However, I consider certain things to be extraordinary risk taking at this time. Mortgaging ones future is certainly one of them. Five years ago, I might have thought differently, but this is “here and now”. For the Boomers, be prepared for a retirement below that of current seniors. For the GENX group, I suggest you save more as your life style will be significantly less than that of those today in retirement. For GENY, if you don’t save 10 to 15% of your wages for retirement, be prepared to starve.
To use that old Hells Angels’ quote “Life is a bitch and then you die”. Or not, but the choice is ours. If you want to be in a responsible conversation about this, let me know. However, if you want to tell me that I am too pessimistic, etc., then don’t bother. I decided, in 2006 that the economy was headed for disaster and took appropriate steps. If I hadn’t, well, I’d be in the s***hole today. So save your optimism for other gamblers.
Saturday, July 31, 2010
Keeping the Eye on the Ball
I received an email from an associate. The purpose was to quote an article describing the SEC charges against the Wyly brothers. The subject matter of the email was: "SEC's Wyly brothers charges may depress GOP donations - THESE ARE THE TWO A******S WHO FUNDED THE Swift Boat add (sic) against Kerry 6 years ago."
I saw this as a diversion which is not too significant given the severe economic problems currently experienced in this country. The article stated that the Wyly's had given roughly $2.5 million to Republican candidates and committees during the past 20 years.
Here is the substance of my email response, edited slightly for posting here:
"Hmmm. $2.5 million over 20 years. That’s chump change compared to what the bankers have given to politicians – to both presidents and to congress. Here’s a quote from the April 21, 2010 WSJ:
“Since 1990, investment firms and their staff have given a staggering $683 million to federal election campaigns. While Democrats have done better in recent elections, this industry is not partisan: Over two decades the donations have split 51% to Democrats, 48% to Republicans. The GOP got a majority of the money from 1996 through 2004.”
On an unrelated matter, but certainly much more important, as a small business man, I’ve been monitoring the Democratic led congress these past four years, and of course, our current President Obama. So how are they doing? It’s important to me and I would expect, to you, as a small business person. But first, I think it’s useful to look at some government statistics. Small businesses, are businesses with less than 500 workers in the non-farm sector of the economy. This is what the Department of Commerce says about “small businesses”.
Small Businesses in the U.S.:
Currently, Congress is obfuscating over a bill to create a fund of $30 billion for community banks. That money would be made available to banks at very low interest rates by the government. The banks would repackage this, and making a profit, provide loans to “small business”. An additional $5 billion is also to be available as “tax breaks” to small business. However, I understand that $5 billion is for special tax treatment which will actually benefit large businesses, including Airlines and Telecommunications companies. The name “small business” is being used as a smoke screen. It is likely that none of this money will help or be available to the majority of small businesses in this country.
Returning to the issue of priorities in government, in June, President Obama made a big deal about the 80,000 $250 checks he was sending to seniors to help with their medical payments. That’s $1 Billion that was given away. There were no checks for small business or any of the others in the U.S. for whom insurance is not subsidized by the U.S. government, but is paid by employers. Currently, 3.3 of us are working to for each beneficiary. We pay the taxes to provide SS and Medicare benefits to millions. That's a 7.65% tax on each employee, paid for by the small business employer, to the maximum required by law. There's nothing personal here, but it is a tax, and for many employers, that 7.65% could go elsewhere, including to fund their own and employees retirement 401K or SEP-IRA plans.
I hope you are saving a ton for retirement because the till will be dry. The Boomers will retire at standards below those of current seniors. GEN X will see their retirement life style significantly eroded. GEN Y will starve if they don’t save at least 10 to 15% for retirement.
Clearly, one has to have their priorities as a politician. One also has to be a master at obfuscation and misdirection. And they are.
Small businesses are important, it would seem. However, the government gave better than $60 billion to two automobile manufacturers. Twice what it is even offering to all the small businesses in this country. And what is it offering to small business? Low interest loans so we can pay mandatory expenses, such as SS and Medicare taxes!. I’ll spell this out to you. A bailout of big banks and even General Motors and Chrysler, to the tune of about $1 trillion was made by our government, and yet "small business" is being offered loans that amount to about 3 cents on the dollar. That's right, $30 billion is 3/100 of $1 Trillion. That’s real "chump change"!
So where are the politician’s obligations and priorities? It should be obvious.
Of course, none of this may be of interest to you. However, most small business people I talk to are struggling. Small businesses are usually self- funded with credit cards, cash from operations and in the past, from equity loans on homes. These sources of financing have disappeared for most small businesses, as I am sure you are aware. We are now entering the second phase of the recession in which many strapped businesses have exhausted reserves and credit and are failing. Time is and was of the essence. But for the President and Congress time apparently has no meaning and there is no urgency. That's too bad for the country!
If we had 3.3 workers funding each beneficiary of social security and we are at "unofficial" unemployment or underemployment of 15%, then we now have only 2.85 workers per beneficiary. There is now talk in government about "handling deficits" and even more talk about un-affordable entitlement programs. I see this as a shot across the bow of the middle class, and a warning to us. For the Boomers, be prepared for a retirement below that of current seniors. For the GenX group, I suggest you save more as your life style will be significantly less than that of those today in retirement. and the boomers who proceed you. For GenY, if you don’t save 10 to 15% of your wages for retirement, be prepared to starve.
Our leaders and politicians have missed a significant window of opportunity and I am now more pessimistic than I was even one year ago.
I hope you are doing well. My worst-case prognosis for the duration of this recession was “about 10 years”. I now see that more and more economists are aligning with that view. I hope you have a plan of substance. You will need it.
Comments, Corrections, Omissions, References
================================
I've sent abbreviated versions of this to my Congressmen and to the President at the White House. I have asked for a reply and so far, have received one automated response.
I saw this as a diversion which is not too significant given the severe economic problems currently experienced in this country. The article stated that the Wyly's had given roughly $2.5 million to Republican candidates and committees during the past 20 years.
Here is the substance of my email response, edited slightly for posting here:
"Hmmm. $2.5 million over 20 years. That’s chump change compared to what the bankers have given to politicians – to both presidents and to congress. Here’s a quote from the April 21, 2010 WSJ:
“Since 1990, investment firms and their staff have given a staggering $683 million to federal election campaigns. While Democrats have done better in recent elections, this industry is not partisan: Over two decades the donations have split 51% to Democrats, 48% to Republicans. The GOP got a majority of the money from 1996 through 2004.”
On an unrelated matter, but certainly much more important, as a small business man, I’ve been monitoring the Democratic led congress these past four years, and of course, our current President Obama. So how are they doing? It’s important to me and I would expect, to you, as a small business person. But first, I think it’s useful to look at some government statistics. Small businesses, are businesses with less than 500 workers in the non-farm sector of the economy. This is what the Department of Commerce says about “small businesses”.
Small Businesses in the U.S.:
- Represent 99.7 percent of all employer firms.
- Employ just over 50 percent of all private sector employees.
- Pay 44 percent of total U.S. private payroll.
- Have generated 64 percent of net new jobs over the past 15 years.
- Create more than 50 percent of the nonfarm private gross domestic product (GDP).
- Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
- Are 52 percent home-based and 2 percent franchises.
- Made up 97.3 percent of all identified exporters and produced 30.2 percent of the known export value in FY 2007.
- Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.”
Currently, Congress is obfuscating over a bill to create a fund of $30 billion for community banks. That money would be made available to banks at very low interest rates by the government. The banks would repackage this, and making a profit, provide loans to “small business”. An additional $5 billion is also to be available as “tax breaks” to small business. However, I understand that $5 billion is for special tax treatment which will actually benefit large businesses, including Airlines and Telecommunications companies. The name “small business” is being used as a smoke screen. It is likely that none of this money will help or be available to the majority of small businesses in this country.
Returning to the issue of priorities in government, in June, President Obama made a big deal about the 80,000 $250 checks he was sending to seniors to help with their medical payments. That’s $1 Billion that was given away. There were no checks for small business or any of the others in the U.S. for whom insurance is not subsidized by the U.S. government, but is paid by employers. Currently, 3.3 of us are working to for each beneficiary. We pay the taxes to provide SS and Medicare benefits to millions. That's a 7.65% tax on each employee, paid for by the small business employer, to the maximum required by law. There's nothing personal here, but it is a tax, and for many employers, that 7.65% could go elsewhere, including to fund their own and employees retirement 401K or SEP-IRA plans.
I hope you are saving a ton for retirement because the till will be dry. The Boomers will retire at standards below those of current seniors. GEN X will see their retirement life style significantly eroded. GEN Y will starve if they don’t save at least 10 to 15% for retirement.
Clearly, one has to have their priorities as a politician. One also has to be a master at obfuscation and misdirection. And they are.
Small businesses are important, it would seem. However, the government gave better than $60 billion to two automobile manufacturers. Twice what it is even offering to all the small businesses in this country. And what is it offering to small business? Low interest loans so we can pay mandatory expenses, such as SS and Medicare taxes!. I’ll spell this out to you. A bailout of big banks and even General Motors and Chrysler, to the tune of about $1 trillion was made by our government, and yet "small business" is being offered loans that amount to about 3 cents on the dollar. That's right, $30 billion is 3/100 of $1 Trillion. That’s real "chump change"!
So where are the politician’s obligations and priorities? It should be obvious.
Of course, none of this may be of interest to you. However, most small business people I talk to are struggling. Small businesses are usually self- funded with credit cards, cash from operations and in the past, from equity loans on homes. These sources of financing have disappeared for most small businesses, as I am sure you are aware. We are now entering the second phase of the recession in which many strapped businesses have exhausted reserves and credit and are failing. Time is and was of the essence. But for the President and Congress time apparently has no meaning and there is no urgency. That's too bad for the country!
If we had 3.3 workers funding each beneficiary of social security and we are at "unofficial" unemployment or underemployment of 15%, then we now have only 2.85 workers per beneficiary. There is now talk in government about "handling deficits" and even more talk about un-affordable entitlement programs. I see this as a shot across the bow of the middle class, and a warning to us. For the Boomers, be prepared for a retirement below that of current seniors. For the GenX group, I suggest you save more as your life style will be significantly less than that of those today in retirement. and the boomers who proceed you. For GenY, if you don’t save 10 to 15% of your wages for retirement, be prepared to starve.
Our leaders and politicians have missed a significant window of opportunity and I am now more pessimistic than I was even one year ago.
I hope you are doing well. My worst-case prognosis for the duration of this recession was “about 10 years”. I now see that more and more economists are aligning with that view. I hope you have a plan of substance. You will need it.
Comments, Corrections, Omissions, References
================================
I've sent abbreviated versions of this to my Congressmen and to the President at the White House. I have asked for a reply and so far, have received one automated response.
Thursday, July 29, 2010
Why I am less than Optimistic at this time
We are now in a mild recovery for the current recession. So why aren't people dancing in the streets, why is President Obama's approval rating so low (lower than former Pres. Clinton's even today, according to a recently released poll) and why am I turning more pessimistic by the month?
Our government, which is today, the congressional majority led by President Obama and his administration have made many decisions over the past months. Those decisions, it is my opinion, have assured an economic recovery that will be anemic for years. This is not due solely by current government policy but is due to government policy over the past 25 years. The current administration is merely accelerating the demise.
Why am I pessimistic at this time? After four years in the currently Democratically controlled Congress and after two years of "change" what has actually occurred? The country is more divisive than ever. Our government spends $billions on a jobs program called the "transportation security administration" but refuses to protect our nation's borders. We have millions of chronically unemployed, and unemployable. Infrastructure building by the government seems limited to roads and highways. How does that help the construction industry and the carpenters, electricians and plumbers, etc.? If there are any jobs being created, they are in government. Small businesses which are financed through cash flow, credit cards and personal reserves, are being starved.
Here are some sobering statistics on small business:
According to government statistics and documents released by the commerce department, "small business" represents 99.7 percent of all employer firms and:
• Employ just over half of all private sector employees.
• Pay 44 percent of total U.S. private payroll.
• Have generated 64 percent of net new jobs over the past 15 years.
• Create more than half of the nonfarm private gross domestic product (GDP).
• Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
• Are 52 percent home-based and 2 percent franchises.
• Made up 97.3 percent of all identified exporters and produced 30.2 percent of the known export value in FY 2007.
• Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.
So what is the state of small business today? Another question is "What is government and the Obama Admistration doing to promote and support small business? The President held a meeting in a sandwich shop on Wednesday. Wonderful!
Some other statistics about the role of government in small business. According to the SBA using U.S. Department of Commerce statistics, here is the cost per employee required by firms to comply with U.S. government federal regulations. Small businesses are those with fewer than 20 employees and large businesses are those with greater than 500 employees:
U.S. Gov't Regulations ---Small businesses --- Large businesses
All Federal Regulations ---$7,647 -------------- $5,282
Environmental Regulation - $3,296 -------------- $710
Economic Regulation ------ $2,127 -------------$2,952
Workplace Regulation ------- $928 --------------- $841
Tax Compliance Regulation - $1,304 --------------$780
While America declines, Congress obfuscates and President Obama makes empty promises and sits down to share a sub sandwich with the unsuspecting dolts. $30 billion is promised for community banks as low cost loans for small businesses, but can't get through congress. Another $5.5 billion is earmarked in legislation labelled "Small Business Assistance" and yet, most of that, it seems will go to "big business" including the airlines and telecommunications industry. $30 billion is 3 percent of $1 trillion. That's like 3 cents on the dollar. Chump change for chumps. Yep, my tax dollars at work! We are so easy, aren't we?
Our government, which is today, the congressional majority led by President Obama and his administration have made many decisions over the past months. Those decisions, it is my opinion, have assured an economic recovery that will be anemic for years. This is not due solely by current government policy but is due to government policy over the past 25 years. The current administration is merely accelerating the demise.
Why am I pessimistic at this time? After four years in the currently Democratically controlled Congress and after two years of "change" what has actually occurred? The country is more divisive than ever. Our government spends $billions on a jobs program called the "transportation security administration" but refuses to protect our nation's borders. We have millions of chronically unemployed, and unemployable. Infrastructure building by the government seems limited to roads and highways. How does that help the construction industry and the carpenters, electricians and plumbers, etc.? If there are any jobs being created, they are in government. Small businesses which are financed through cash flow, credit cards and personal reserves, are being starved.
Here are some sobering statistics on small business:
According to government statistics and documents released by the commerce department, "small business" represents 99.7 percent of all employer firms and:
• Employ just over half of all private sector employees.
• Pay 44 percent of total U.S. private payroll.
• Have generated 64 percent of net new jobs over the past 15 years.
• Create more than half of the nonfarm private gross domestic product (GDP).
• Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
• Are 52 percent home-based and 2 percent franchises.
• Made up 97.3 percent of all identified exporters and produced 30.2 percent of the known export value in FY 2007.
• Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.
So what is the state of small business today? Another question is "What is government and the Obama Admistration doing to promote and support small business? The President held a meeting in a sandwich shop on Wednesday. Wonderful!
Some other statistics about the role of government in small business. According to the SBA using U.S. Department of Commerce statistics, here is the cost per employee required by firms to comply with U.S. government federal regulations. Small businesses are those with fewer than 20 employees and large businesses are those with greater than 500 employees:
U.S. Gov't Regulations ---Small businesses --- Large businesses
All Federal Regulations ---$7,647 -------------- $5,282
Environmental Regulation - $3,296 -------------- $710
Economic Regulation ------ $2,127 -------------$2,952
Workplace Regulation ------- $928 --------------- $841
Tax Compliance Regulation - $1,304 --------------$780
While America declines, Congress obfuscates and President Obama makes empty promises and sits down to share a sub sandwich with the unsuspecting dolts. $30 billion is promised for community banks as low cost loans for small businesses, but can't get through congress. Another $5.5 billion is earmarked in legislation labelled "Small Business Assistance" and yet, most of that, it seems will go to "big business" including the airlines and telecommunications industry. $30 billion is 3 percent of $1 trillion. That's like 3 cents on the dollar. Chump change for chumps. Yep, my tax dollars at work! We are so easy, aren't we?
Congress Intends to Help Small Business?
President Obama made a speech earlier this week about "helping small business". The congress has been wrangling over a small business bill that would provide $30 billion in low cost loans to community banks (at 5.0%) that in turn offer loans to small businesses. The bill would also provide about $12 billion in tax breaks. The Republicans in congress have been arguing with the Democrats over the bill, and Republicans say they are being blocked by Democrats from making any changes to the bill.
Let me get this straight. A bailout of big banks and even General Motors, to the tune of about $1 trillion was made by our government, and yet "small business" is being offered loans that amount to about 3 cents on the dollar. That's right, $30 billion is 3/100 of $1 Trillion. Wow, talk about "chump change"!
So much for political help for "small business". Here are some statistics from the U.S. Government Small Business Administration website.
How important are small businesses to the U.S. economy? Small businesses, which are businesses with less than 500 workers in the non-farm sector of the economy:
Let me get this straight. A bailout of big banks and even General Motors, to the tune of about $1 trillion was made by our government, and yet "small business" is being offered loans that amount to about 3 cents on the dollar. That's right, $30 billion is 3/100 of $1 Trillion. Wow, talk about "chump change"!
So much for political help for "small business". Here are some statistics from the U.S. Government Small Business Administration website.
How important are small businesses to the U.S. economy? Small businesses, which are businesses with less than 500 workers in the non-farm sector of the economy:
- Represent 99.7 percent of all employer firms.
- Employ just over 50 percent of all private sector employees.
- Pay 44 percent of total U.S. private payroll.
- Have generated 64 percent of net new jobs over the past 15 years.
- Create more than 50 percent of the nonfarm private gross domestic product (GDP).
- Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
- Are 52 percent home-based and 2 percent franchises.
- Made up 97.3 percent of all identified exporters and produced 30.2 percent of the known export value in FY 2007.
- Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.
Tuesday, June 8, 2010
Maybe our Bankers should hire these guys
Goldman Sachs is the latest group of bankers to become the target of Congress. With only 29% of voters considering voting for incumbents in the fall elections, those in Congress are keeping their heads down and simultaneously looking for some way to divert voter anger.
What's an investment banker to do? Well, perhaps they could take a note from Iran's playbook. The New York Times ran are article on June 7th exposing Iran's network of disguised ships and shell companies which allow it to circumvent international sanctions.
Tricks include reregistered ships, which includes changing flags and "owners, operators and managers, too," and succeeds in avoiding the U.S. blacklist on "Islamic Republic of Iran Shipping Lines" (Irisl) ships. According to the times, of 123 ships on the original list, only 46 are still registered to Irisl. The remaining 73 are now registered to foreign companies that are nothing more than Iranian shell companies.
The Times also reports that Iran has buried ties with ships built since the blacklist, making it difficult to link new ships to that government. The Times reported that three new companies have mysteriously appeared in Iran. Hafiz Darya, a supposedly private company, announced that it had taken over Irisl—one of the world's largest shipping companies. All these new companies were later found to be registered to Irisl addresses throughout Tehran and are run by Irisl managers.
Under secretary of the Treasury Stuart Levey was reported in the Times as saying "We are dealing with people who are as smart as we are, and of course they can read our list."
Yep, sounds like the bankers, brokers and hedge fund managers aren't the only one's adept at avoiding regulations. However, Iran has succeeded to a degree that Goldman Sach's would envy. Perhaps Iranian president Mahmoud Ahmadinejad should be approached for advice.
Click Here for the Link to the New York Times Article
What's an investment banker to do? Well, perhaps they could take a note from Iran's playbook. The New York Times ran are article on June 7th exposing Iran's network of disguised ships and shell companies which allow it to circumvent international sanctions.
Tricks include reregistered ships, which includes changing flags and "owners, operators and managers, too," and succeeds in avoiding the U.S. blacklist on "Islamic Republic of Iran Shipping Lines" (Irisl) ships. According to the times, of 123 ships on the original list, only 46 are still registered to Irisl. The remaining 73 are now registered to foreign companies that are nothing more than Iranian shell companies.
The Times also reports that Iran has buried ties with ships built since the blacklist, making it difficult to link new ships to that government. The Times reported that three new companies have mysteriously appeared in Iran. Hafiz Darya, a supposedly private company, announced that it had taken over Irisl—one of the world's largest shipping companies. All these new companies were later found to be registered to Irisl addresses throughout Tehran and are run by Irisl managers.
Under secretary of the Treasury Stuart Levey was reported in the Times as saying "We are dealing with people who are as smart as we are, and of course they can read our list."
Yep, sounds like the bankers, brokers and hedge fund managers aren't the only one's adept at avoiding regulations. However, Iran has succeeded to a degree that Goldman Sach's would envy. Perhaps Iranian president Mahmoud Ahmadinejad should be approached for advice.
Click Here for the Link to the New York Times Article
Friday, May 28, 2010
Investing in America
Something to think about. According to the Federal Reserve, as of May 10 money in bank and money market accounts has increased to about $9.36 trillion. In May, 2007 this amount was $7.44 trillion!
American's aren't broke, but they are fearful. A substantial part of this money was pulled from the stock market. Take that, Goldman Sachs! People may be fearful, but they aren't stupid.
To give you an idea of how much moolah this is, consider that all of the employer sponsored retirement plans in the U.S. currently total "only" about $2.7 trillion.
American's aren't broke, but they are fearful. A substantial part of this money was pulled from the stock market. Take that, Goldman Sachs! People may be fearful, but they aren't stupid.
To give you an idea of how much moolah this is, consider that all of the employer sponsored retirement plans in the U.S. currently total "only" about $2.7 trillion.
Thursday, May 20, 2010
A Correspondence on Depression and Being in Resignation
Tom wrote, in response to my email:
"ok - i'm on a roll today - this is for all those who are depressed or sad for some lame reason...
you have so many thoughts there...
you should get a blog.... jus kidding...
yeah... i have a [relative] who is always depressed....
and it annoys the f*** out of me...
which is i think half the reason why i sent that out...
life is short....
my quote is....
if you don't like it,
don't complain...
do something about it... either accept it or do something about it but shut the f*** up.....
we are the luckiest country in the world and this country has some of the luckiest people in the world.
every day i wake up and spend a moment being grateful. period."
I replied:
"As for depression, that is sometimes what happens when people get "stuck" in their situation in life. Being stuck sometimes means realizing that what one is doing isn’t working but we lack the ability to take steps to move on. The result is resignation and we sometimes say we are "depressed".
At present, there at 10s of millions of people in the US who definitely feel stuck. Some feel trapped, and they are. They expected that their life would be a certain way; we were "invincible" and it would turn out because we willed it to be that way. Well, surprise. I have a favorite saying: "God loves us, but the universe doesn’t care." So it is.
It's unfortunate that the government manipulated the economy for as long a period as they did. That resulted in a very long period (nearly 40 years) in which the US avoided a really nasty recession. By that I mean one with at least 10% unemployment for at least 18 months.
As a result, everyone got "fat and happy". A few intermediate recessions would have given people the opportunity to "exercise" some of the muscles that have atrophied over the past decades, and deal with some serious unpleasantries. Now the "artificial" economy has collapsed and millions remain in hock up to their eyeballs, or stuck in a home they cannot sell, etc. I'm glad [a friend] did sell his house; that gives him and [his spouse] the opportunity to relocate or whatever. Many aren't so fortunate and are stuck and can't relocate; you should be glad you didn't purchase.
Then there are those who say "just do it" to which [a relative] and Nike belong. I've stated that I hate that quip. It implies that one never needs to prepare and that there are no difficult choices. True, one can just "do it" but I also think that if one does, then he or she should be prepared "to pay the price". There are choices to be made. Of course, the "smart rat" will say that "it is the way it is" because they "chose it that way." Yeah, right. So how about taking on one of the things I am avoiding to do and "choosing" to do that? I once told a proponent of "just do it" that each and every day I pick a task I really, really don't want to do and I do that. It's an exercise in preparation for making difficult choices, but I still avoid some of the more uncomfortable tasks.
I personally hate it when people pretend they have no choice. We always have a choice. It may be "expensive" to walk from a house that is under water. It may make us uncomfortable to relocate, or to take a risk. Or there may be a price, such as personal choice to commute to and from Chicago each day. Some years ago I turned down an offer to move and rent in the city; sure, I could reverse commute 35 miles each way each and every day; no thanks! I wasn't willing to spend 2 to 3 hours daily commuting. That's 10% of my life spend doing nothing, or something that works for them. But they still thought it was a good idea.
When someone has an agenda, their idea is always a good idea, since it supports their agenda.
Getting back to the subject of unpleasantries and depressions, since I met my spouse I frequently tell her that today might be the best day of our lives and we should brace for unpleasant times. I didn't mean simply financial. We have many elderly relatives. Life expectancy in the US is about 78 years. As I look at the ages of many relatives and it doesn't take a rocket scientist to realize that we may lose one or more each year. I'm not sure how the family will handle it when some close relatives leave this earth. Based on a recent funeral in which there almost wasn't a "public" ceremony, I can hardly wait for the next installment....
As for the depressed relative who annoys you, I suggest you don't let him or her, or any one else get to you. Focus on yourself and your relationship with [your girlfriend].
The rest of us can deal with our own lives in our own manner. We are all adults and it is insulting to treat anyone as something else. Yeah, I know we all want and need sympathy at some level. So what. As a very hard employer once told me when I was struggling "If you need sympathy, you can find it in the dictionary between shit and syphilis." He was absolutely correct.
As a story, I have a relative who always gets involved in helping those he selects and defines as the "little guy" or those who are struggling. So now he has lost just about everything and part of it was he refused to keep his eye on the ball. I have suggested that he enter the ministry or some such if that is his purpose in life. Otherwise, stop screwing around and live his life well and be an example to others. Same advice as I give to anyone. The best he can do for his grown children is be self reliant and be "available" as a father. I suggest no hand-holding, no pseudo therapy, no feel good crap."
Comment:
The above slightly edited from the original to remove personal information.
"ok - i'm on a roll today - this is for all those who are depressed or sad for some lame reason...
you have so many thoughts there...
you should get a blog.... jus kidding...
yeah... i have a [relative] who is always depressed....
and it annoys the f*** out of me...
which is i think half the reason why i sent that out...
life is short....
my quote is....
if you don't like it,
don't complain...
do something about it... either accept it or do something about it but shut the f*** up.....
we are the luckiest country in the world and this country has some of the luckiest people in the world.
every day i wake up and spend a moment being grateful. period."
I replied:
"As for depression, that is sometimes what happens when people get "stuck" in their situation in life. Being stuck sometimes means realizing that what one is doing isn’t working but we lack the ability to take steps to move on. The result is resignation and we sometimes say we are "depressed".
At present, there at 10s of millions of people in the US who definitely feel stuck. Some feel trapped, and they are. They expected that their life would be a certain way; we were "invincible" and it would turn out because we willed it to be that way. Well, surprise. I have a favorite saying: "God loves us, but the universe doesn’t care." So it is.
It's unfortunate that the government manipulated the economy for as long a period as they did. That resulted in a very long period (nearly 40 years) in which the US avoided a really nasty recession. By that I mean one with at least 10% unemployment for at least 18 months.
As a result, everyone got "fat and happy". A few intermediate recessions would have given people the opportunity to "exercise" some of the muscles that have atrophied over the past decades, and deal with some serious unpleasantries. Now the "artificial" economy has collapsed and millions remain in hock up to their eyeballs, or stuck in a home they cannot sell, etc. I'm glad [a friend] did sell his house; that gives him and [his spouse] the opportunity to relocate or whatever. Many aren't so fortunate and are stuck and can't relocate; you should be glad you didn't purchase.
Then there are those who say "just do it" to which [a relative] and Nike belong. I've stated that I hate that quip. It implies that one never needs to prepare and that there are no difficult choices. True, one can just "do it" but I also think that if one does, then he or she should be prepared "to pay the price". There are choices to be made. Of course, the "smart rat" will say that "it is the way it is" because they "chose it that way." Yeah, right. So how about taking on one of the things I am avoiding to do and "choosing" to do that? I once told a proponent of "just do it" that each and every day I pick a task I really, really don't want to do and I do that. It's an exercise in preparation for making difficult choices, but I still avoid some of the more uncomfortable tasks.
I personally hate it when people pretend they have no choice. We always have a choice. It may be "expensive" to walk from a house that is under water. It may make us uncomfortable to relocate, or to take a risk. Or there may be a price, such as personal choice to commute to and from Chicago each day. Some years ago I turned down an offer to move and rent in the city; sure, I could reverse commute 35 miles each way each and every day; no thanks! I wasn't willing to spend 2 to 3 hours daily commuting. That's 10% of my life spend doing nothing, or something that works for them. But they still thought it was a good idea.
When someone has an agenda, their idea is always a good idea, since it supports their agenda.
Getting back to the subject of unpleasantries and depressions, since I met my spouse I frequently tell her that today might be the best day of our lives and we should brace for unpleasant times. I didn't mean simply financial. We have many elderly relatives. Life expectancy in the US is about 78 years. As I look at the ages of many relatives and it doesn't take a rocket scientist to realize that we may lose one or more each year. I'm not sure how the family will handle it when some close relatives leave this earth. Based on a recent funeral in which there almost wasn't a "public" ceremony, I can hardly wait for the next installment....
As for the depressed relative who annoys you, I suggest you don't let him or her, or any one else get to you. Focus on yourself and your relationship with [your girlfriend].
The rest of us can deal with our own lives in our own manner. We are all adults and it is insulting to treat anyone as something else. Yeah, I know we all want and need sympathy at some level. So what. As a very hard employer once told me when I was struggling "If you need sympathy, you can find it in the dictionary between shit and syphilis." He was absolutely correct.
As a story, I have a relative who always gets involved in helping those he selects and defines as the "little guy" or those who are struggling. So now he has lost just about everything and part of it was he refused to keep his eye on the ball. I have suggested that he enter the ministry or some such if that is his purpose in life. Otherwise, stop screwing around and live his life well and be an example to others. Same advice as I give to anyone. The best he can do for his grown children is be self reliant and be "available" as a father. I suggest no hand-holding, no pseudo therapy, no feel good crap."
Comment:
The above slightly edited from the original to remove personal information.
Education in America
The Wall Street Journal posted an article today entitled "U.S. Reading Scores Stall in Urban School Districts" A link to the article is contained at the end of this post.
The reality is the demographics are changing. Ask any large school (inner and outer city) teacher and, if it is safe to speak honestly, they will tell you that they deal with "immigrants" with many languages and lots of other "language" problems; English may be the second language or not used at all at home; I know of one teacher who told me that her middle school, with 1500 students, has about 20 languages, some children who are technically "homeless', which is to say from displaced families, and so on. Then there are the single parent families, in which "mom" is attempting to raise a family and work or go to full time school. So guess what? Kids don't learn to read.
Our government is, as usual, blowing smoke. This is a losing battle and everyone will blame the unions, the school districts, etc. The fact of the matter is, the problems start at home where homework and reading fall behind just about everything else. I have seen statistics that indicate the U.S. has a 45% at basic or below literacy rate overall. And that "proficiency" is decreasing!
Even in middle class "stabilized" families, sports and other extra curriculars displace reading.
Charter schools, which are in many cases nothing more than a subsidized and bleached version of parochial schools, won't work unless parents take something at stake. Handing them cash and telling them to spend it on the school of their choice is about as dysfunctional as handing a home to people via no money down loans and telling them they are "homeowners". We see where that got us. Thank you Sen. Frank for "rolling the dice" with the citizens money.
The only advantage to the charter school concept is that, like the parochial schools, the school could technically boot students and parents who aren't interested in learning. Of course that simply marginalizes a growing group of disinterested or disabled students. So how do we deal with them? And who are we going to pay to teach the unteachable? I think people need to be honest and realize that part of the problem in some of the inner city schools it that no one in their right mind wants to teach the unteachable. Its a thankless job which will suck the life out of any teacher.
No one really has an answer that is palatable to the parents, many of whom are children in adult bodies and unequipped for adult hood, parent hood or just about any other hood I can think of and that includes living in the "neighborhood"
Today, with school districts struggling with reduced financing, adding specialized "literacy" teachers or aids is not a viable option. Meanwhile, our congress continues it's emphasis on leaving our borders open and unprotected, and allowing "immigrants" to flood the schools. Believe me, I don't have a problem with immigration. I do have a problem with politicians who create these problems and then turn their backs on the citizens of this country. I also have a problem with politicians who create these problems and then again, turn their backs on the social issues they create and leave it up to the citizens to clean up the mess. Currently, the U.S. government is abrogating much of its responsibility in education and the funding thereof. I am tired of politicians who insist upon "social engineering" and then walk away from the messes they create.
Perhaps it is time to take the "free" out of "free" education and charge for all extra-curricular activities. If this results in kids on the street and the US government wants to get kids to get off the streets, let the Obama Administration and congress put its money where its mouth is and come up with the $billions it will take to do that. If the congress want the borders open, then perhaps they should come up with the additional $billions to fund the schools and other programs necessary to integrate these "immigrants" into our country. Instead of making mandates and simultaneously reducing funding. As far as I am concerned, it's "put up or shut up" time and considering how some of the politicians have been unusually quiet, I assume they decided to "duck and cover".
Click for Article "US Reading Scores Stall"
Click for Average Literacy Scores
A definition of "homeless" as applied by a nearby school district:
"The definition of homelessness is broader than people may think. You or your family are considered "homeless" if you are:
The reality is the demographics are changing. Ask any large school (inner and outer city) teacher and, if it is safe to speak honestly, they will tell you that they deal with "immigrants" with many languages and lots of other "language" problems; English may be the second language or not used at all at home; I know of one teacher who told me that her middle school, with 1500 students, has about 20 languages, some children who are technically "homeless', which is to say from displaced families, and so on. Then there are the single parent families, in which "mom" is attempting to raise a family and work or go to full time school. So guess what? Kids don't learn to read.
Our government is, as usual, blowing smoke. This is a losing battle and everyone will blame the unions, the school districts, etc. The fact of the matter is, the problems start at home where homework and reading fall behind just about everything else. I have seen statistics that indicate the U.S. has a 45% at basic or below literacy rate overall. And that "proficiency" is decreasing!
Even in middle class "stabilized" families, sports and other extra curriculars displace reading.
Charter schools, which are in many cases nothing more than a subsidized and bleached version of parochial schools, won't work unless parents take something at stake. Handing them cash and telling them to spend it on the school of their choice is about as dysfunctional as handing a home to people via no money down loans and telling them they are "homeowners". We see where that got us. Thank you Sen. Frank for "rolling the dice" with the citizens money.
The only advantage to the charter school concept is that, like the parochial schools, the school could technically boot students and parents who aren't interested in learning. Of course that simply marginalizes a growing group of disinterested or disabled students. So how do we deal with them? And who are we going to pay to teach the unteachable? I think people need to be honest and realize that part of the problem in some of the inner city schools it that no one in their right mind wants to teach the unteachable. Its a thankless job which will suck the life out of any teacher.
No one really has an answer that is palatable to the parents, many of whom are children in adult bodies and unequipped for adult hood, parent hood or just about any other hood I can think of and that includes living in the "neighborhood"
Today, with school districts struggling with reduced financing, adding specialized "literacy" teachers or aids is not a viable option. Meanwhile, our congress continues it's emphasis on leaving our borders open and unprotected, and allowing "immigrants" to flood the schools. Believe me, I don't have a problem with immigration. I do have a problem with politicians who create these problems and then turn their backs on the citizens of this country. I also have a problem with politicians who create these problems and then again, turn their backs on the social issues they create and leave it up to the citizens to clean up the mess. Currently, the U.S. government is abrogating much of its responsibility in education and the funding thereof. I am tired of politicians who insist upon "social engineering" and then walk away from the messes they create.
Perhaps it is time to take the "free" out of "free" education and charge for all extra-curricular activities. If this results in kids on the street and the US government wants to get kids to get off the streets, let the Obama Administration and congress put its money where its mouth is and come up with the $billions it will take to do that. If the congress want the borders open, then perhaps they should come up with the additional $billions to fund the schools and other programs necessary to integrate these "immigrants" into our country. Instead of making mandates and simultaneously reducing funding. As far as I am concerned, it's "put up or shut up" time and considering how some of the politicians have been unusually quiet, I assume they decided to "duck and cover".
Click for Article "US Reading Scores Stall"
Click for Average Literacy Scores
A definition of "homeless" as applied by a nearby school district:
"The definition of homelessness is broader than people may think. You or your family are considered "homeless" if you are:
- Living in a shelter, motel, vehicle, or campground;
- Living on the street;
- Living in an abandoned building, trailer, or other inadequate accommodation;
- Doubled up with friends or relatives because you can't find or afford housing;
- Waiting for a foster-care placement."
Wednesday, April 21, 2010
Census Housing Data
http://www.metrostudyreport.com/?p=487#more-487
What’s UP with New Home Sales?
Posted in Economy, National Housing Market | Posted on 03-26-2010 | Written by Mike Castleman Sr.
NEW HOME SALES – Is the Number Up or Down?
EXCERPT
http://www.census.gov/const/www/newressalesdoc.html
What we receive from Census.gov is statistical “output”. It is not data. The data is the stuff they gather when they do their sampling. The value of this “output” is extremely limited. For example, in the most recent news release on New Home Sales, The Census Bureau states:
”Sales of new single-family houses in February 2010 were at a seasonally adjusted annual rate of 308,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.2 percent (±15.3%)* below the revised January rate of 315,000 and is 13.0 percent (±12.2%) below the February 2009 estimate of 354,000.” (My emphasis)
Note the asterisk* above. The following statement appears in every footnote of the Census.gov news releases on housing.
“*Whenever a statement such as “2.5 percent (±3.2%) above” appears in the text, this indicates the range (-0.7 to +5.7 percent) in which the actual percent change is likely to have occurred. All ranges given for percent changes are 90-percent confidence intervals and account only for sampling variability. If a range does not contain zero, the change is statistically significant. If it does contain zero, the change is not statistically significant; that is, it is uncertain whether there was an increase or decrease.” (My emphasis)
In simple terms, the footnote says that when the margin of error % (+15%) is greater than the % change of the estimate (-2.2%), they do not know if there has been a change or not, even though they state that a change has occurred. For the last two years, almost every release from Census.gov has invoked the footnote that they do not know whether there has been an increase of decrease in the month to month housing estimates. So when these releases come out, COVER YOUR EYES and EARS.
When we are making important decisions about the housing market, we need very accurate, reliable, consistent data, and we need Information. Information is the informed opinion that is derived from the data. Statistics are not information, because statistics constitute a guess as to what the data means, if the data are indeed reliable. At the end of the day, because the data are not known to be reliable, the Census Bureau statistics can devolve into meaningless output that does not contribute to sound risk management.
What’s UP with New Home Sales?
Posted in Economy, National Housing Market | Posted on 03-26-2010 | Written by Mike Castleman Sr.
NEW HOME SALES – Is the Number Up or Down?
EXCERPT
http://www.census.gov/const/www/newressalesdoc.html
What we receive from Census.gov is statistical “output”. It is not data. The data is the stuff they gather when they do their sampling. The value of this “output” is extremely limited. For example, in the most recent news release on New Home Sales, The Census Bureau states:
”Sales of new single-family houses in February 2010 were at a seasonally adjusted annual rate of 308,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.2 percent (±15.3%)* below the revised January rate of 315,000 and is 13.0 percent (±12.2%) below the February 2009 estimate of 354,000.” (My emphasis)
Note the asterisk* above. The following statement appears in every footnote of the Census.gov news releases on housing.
“*Whenever a statement such as “2.5 percent (±3.2%) above” appears in the text, this indicates the range (-0.7 to +5.7 percent) in which the actual percent change is likely to have occurred. All ranges given for percent changes are 90-percent confidence intervals and account only for sampling variability. If a range does not contain zero, the change is statistically significant. If it does contain zero, the change is not statistically significant; that is, it is uncertain whether there was an increase or decrease.” (My emphasis)
In simple terms, the footnote says that when the margin of error % (+15%) is greater than the % change of the estimate (-2.2%), they do not know if there has been a change or not, even though they state that a change has occurred. For the last two years, almost every release from Census.gov has invoked the footnote that they do not know whether there has been an increase of decrease in the month to month housing estimates. So when these releases come out, COVER YOUR EYES and EARS.
When we are making important decisions about the housing market, we need very accurate, reliable, consistent data, and we need Information. Information is the informed opinion that is derived from the data. Statistics are not information, because statistics constitute a guess as to what the data means, if the data are indeed reliable. At the end of the day, because the data are not known to be reliable, the Census Bureau statistics can devolve into meaningless output that does not contribute to sound risk management.
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