Showing posts with label welfare. Show all posts
Showing posts with label welfare. Show all posts

Tuesday, November 13, 2012

Quote of the Day

"I may be heartless for saying that it is morally repugnant to require the healthy and fit to pay for the sick, lame or lazy (to be honest I really don't mind paying for the sick and the lame, but the lazy really get my goat)."
-American Mercenary

The rest of the post is as thoughtful and valid as everything else AM writes so check it out.

I couldn't have said it better myself. Personally I don't mind helping out folks with serious medical problems who are no longer able to hold down a job with the understanding that if circumstances put me in that place I will in turn be helped. The way to do this currently via social security disability insurance (vs the retirement side) and whatnot isn't how I would prefer (large coop style disability pools maybe?) but that is relatively minor in the grand scheme of things. Also I do not mind folks are trying to work but can't or having a really bad month getting some stop gap help though I do prefer it to come from families, churches, food banks and various other various non government entities. 

On the other hand as with AM being forced to pay for reasonably able bodied (most jobs these days do not require the ability to do 18th century farm labor or be an infantryman) who simply choose not to work really bothers me for a lot of reasons. It is a terrible combination of theft and social engineering. Also more importantly people respond to incentives. Fear of being broke then eventually hungry as well as probably homeless is a heck of a motivator to get and keep a job, run a small business or whatever. It has worked to keep most people generally on the right path for a very long time. By subsidizing laziness and lack of the most basic sort of motivation we make this behavior less painful than it would otherwise be and thus naturally more of it occurs. By (arguably) trying to look out for people we are in fact making their lives worse.

Well those are my thoughts on that. 

Thursday, September 13, 2012

Putting on my Nostradamos Cap

On Economics/ Politics:

Well QE 3 is finally getting launched so we will see a fast meaningful recovery the lost decade will continue.

Unfortunately I do not think our economy is going to get better until we are really honest about our situation and take the steps to get back to an honest and stable place. This requires facing the pain of unraveling all the bad "assets" floating around and the massive empty inventory in the housing market gets unloaded at realistic prices. As this is not happening any time soon the pain will continue.

I saw an interesting article over at James Dakin's place (original Lew Rockwell article here) that basically says we will not have hyperinflation because it is not in the best interest of big banks and their whole crony network. I cannot say that I understand it fully but, not necessarily for any quantifiable reason, I agree that hyperinflation is not likely.

We do need to get onto the same page as to exactly what is considered hyperinflation. Let's pick the definition of hyperinflation as greater than 50% inflation in a month. It is as good as any. I do not see this happening. Yes we have a huge debt but we are too big and powerful with too many huge productive businesses for it to be likely IMO. (Also I think Arctic Patriot noted that huge powerful countries do not go broke, they go to war) I don't intend to argue this point, it is just my take on things.

Now I do think a period of painfully high inflation is quite possible. Maybe somebody gets some sense and cuts off the free money that has been subsidizing big businesses and poor decisions like dollar shot night at the local bar. Maybe our creditors start to get wise and demand an actual return on their money. Maybe the big banksters aim their destructive market powers at US. I don't know.

We could see 10-13% inflation which would probably leave the fed rate around 16%, prime mortgages around 20% and consumer debt in the area of 30%. This would drag down our economy like a guy trying to swim with an anvil tied to his waist. Several consecutive years of this would essentially destroy those on fixed incomes. Folks holding adjustable rate debt's would probably face default or ruin.

We may see rioting and disorder as welfare/ food aid/ etc that are chained to the ever more manipulated to give a happy story CPI get left behind. [Briefly touching on Matthew Bracken's When the Music Stops I do not see our government failing to send out welfare/ food stamps (now on cards)/ etc. I respect Matthew Bracken immensely but IMO this article misses the simple point that our government via it's cronies the Federal Reserve has a darn license to print money. It is like saying that Jack Daniels will run out of Whiskey or Tula will run out of .45 caliber bullets.

Seniors and moochers will get what they are "entitled" down to the exact penny. However that doesn't mean it will be worth the same as it is today. Somebody on food stamps or whatever will get the same dollars worth of hand out's but if a pound of rice costs $5 and a Digorno frozen pizza costs $10 it won't go very far. Not quite as sudden or whatever as envisioned in the scenario. It would more likely cause a slow upswing in problems than a sudden burst of angst. That is of course unless some sort of response was coordinated to meet a specific purpose in support of some agenda.]

I see this arguably intentionally orchestrated series of events potentially diminishing our status on the world stage with a wimper, not a bang. Think of the way Britain's role and power have changed from WWI to now. They went from being the biggest and arguably most powerful nation in the world to being publicly dissed by Argentina stealing their island (yeah they later took it back, barely).

On War:

The madness between Israel and Iran is out of control. All I hear in the media is war drum's. At this point I really would not mind if they get it over with and fight, at least that way it would get done and we could have  the news back. Except of course it would cause a lot of problems, likely embroil us in a nasty conflict, maybe cause nuclear war, blah, blah, blah.

On Gun Control:

I do not see a reinstatement of the Assault Weapons Ban or whatnot. The balance of public opinion is clearly against it. Unless the Dem's sweep the house and senate plus keep the presidency which is probably not likely I am not concerned. Even then I am not so sure for heavens sake Walmart sells AR-15's.

That being said ATF fiat and possibly executive orders might pop up with some fun new stuff. The play of the ATF arbitrarily usurping more of our rights changing some regulations which FFL's (and individuals) will then follow or face their lives being ruined and livelihoods destroyed is already in the playbook. Remember that your shotgun is a shotgun unless it is suddenly a pistol or maybe an evil assault weapon.

On Crime and Disorder:

In general I think crime is getting worse with the signs showing the trend is likely to continue. Maybe it is the economy. With everybody (well a lot of folks anyway) taking a step down the proverbial economic ladder some folks look to crime as the easy way out. Some of it is cultural/ environmental but that doesn't really matter. For reasons I am not entirely clear on criminals seem to be getting more and more violent. Home invasions seem to be becoming more and more prominent.

As discussed above there is a potential scenario (amongst others) where things could just go nuts like LA Riots times 1,000 all over the place.

Anyway that is what I think may be coming. Now to what we might be able to do about it:


Some folks argue that having a lot of debt is fine because hyperinflation or at least inflation will let them pay it back in cheaper (or basically free) dollars. The first issue with that plan is that if you haven't figured it out yet banks are going to get taken care of at the expense of common folks, not the other way around. The second issue is that you it will be hard to pay back cheaper dollars if you lose your income/ job because the economy tanks.

If you listen to nothing else that I say get out of any debts that have an adjustable interest rate. The only exception would be if you have the cash to pay the debt off immediately (like in the next payment) but choose to keep it at a low adjustable rate so you can stay a bit more liquid. Rates are very low right now with almost a guarantee that they will go up. As we saw with various European countries a bad auction or two can jack up rates in a hurry.

The basics still apply here. Minimize debt and live below your means. Save in various forms against an uncertain future.

Gun Control:

In this quadrennial 'OMG the evil gun haters might ban everything' period I have spent a bit of money but that was just bumping up some purchases I planned to make anyway by a bit. Sort of hedging my bets if you will. That being said I have been getting squared away in this area for awhile and while things aren't perfect (are they ever?) most of our bases are covered. If you do not own something, especially if it is likely to be targeted in a ban, that you want and can afford then consider getting it.

Crime and Disorder:

Things are getting more and more dangerous. Carry a weapon if it is legal and practical for your lifestyle. Get the training to know what you are doing. Make yourself a hard target. If you live someplace that is sucky and dangerous with a high percentage of unhappy urban folks and welfare types consider moving if you can figure out how to afford it.

Note that most of the things I have recommended are the same things I have been talking about for awhile. Preparing for every situation is not the same. You do not need a dozen assault rifles to survive an economic collapse. Having half your net worth in PM's will not be ideal if things go all mad max. That being said a whole lot of the commonalities are the same. Live below your means saving (in various forms) for emergencies and the future. Store food, fuel and other various things you will need. Have the skills and weapons to protect yourself and your stuff.

Anyway that is what I have been thinking about. Thoughts or input are of course welcome. 

Friday, April 13, 2012

Friday Night Ramblings and Tab Clearing

I always knew that liberal dudes were weaker and generally less masculine but now there is scientific proof.

Apparantly CNBN did a hit piece of the venerable Remington 870. Hat tip to The Firearms Blog for the find. Maybe they could have been even more unamerican by bashing apple pie and cold beer.
Now for my take. I will even set aside the fact that the so called experts who testify about how pretty much every firearm is unsafe FOR MONEY and are trying to sell some new safety thing they invented.

The thing is that shotgun safeties, to the best of my knowledge are not so much safeties as trigger stoppers. To the best of my knowledge there isn't a shotgun out there that has a safety which blocks the sort of accidental impact based discharge that happened to the unfortunate fellow mentioned in the story. Sort of like many open bolt machine guns if you give them a good whack they will probably go off.

There is a simple and time tested way to handle this mechanical weakness. KEEP THE CHAMBER EMPTY UNLESS YOU ARE ACTIVELY USING THE GUN! For a shotgun this means that when you are done using it take the round out of the cylinder and stick it back into the tube or buttstock carrier.
I own a Remington 870 Express. With both short and long barrels it is a really versatile weapon equally capable of defending ones home or all manner of hunting and sporting. I have trusted it with my life in the past as a primary home defense weapon and would not hesitate to do so again in the future. As to my thoughts on reliability and usefullness the Remington 870 I won't sell the one I have and at some point will get another one.

I was at the store the other day picking up a couple things on my way home from work. The folks in front of me bought some stuff using WIC. Nothing really new about that. Overseas food costs are pretty high so they calculate eligibility differently and a lot more folks get it. I bought my few items and walked out to the parking lot. The folks who bought the stuff with WIC in front of me got into a car that was maybe a year old. Nothing crazy, I think it was a Ford Focus or something like that. I got into my 10 year old SUV with some minor cosmetic damage and drove home. Honestly it sort of made me angry. Why should I be subsidizing them? If they don't make very much money maybe they should be doing things like not buying new cars so they can afford food for their kids. I got to thinking. Given the state of our nation I don't really look down on folks who figure out how to work the system a bit in their favor. A few years back I did look down on them for being moochers. These days I sort of look at it that if you can get a little bit back it isn't a bad thing.
Ironically this year we qualify for welfare Earned Income Credit. A nuance of combat deployments is that since our pay is not taxed. Thus as far as my taxes are concerned it does not count. Since I deployed in February and was gone for a year our taxable income was pretty tiny for last year. Thus we get welfare Earned Income Credit. I wouldn't have thought of it but a pretty sharp contractor (ironically also a contrarian investor and survivalist) said I should look into it. This is something I had some real internal conflict about. It is pretty crazy that we qualify because my income fell into a different column on the stupid little piece of paper that is the W2. I make a decent living and we aren't in any sort of need. However me deciding to be a good guy and turning away free money is not going to fix the national deficit. We are putting the money into our house fund. I kind of look at it as a partial refund of all that money I put into SS and medicare
The man who committed 10 felonies in 9 hours was pretty impressive. Some folks are just bad and if this sort of thing happens when everything is normal toss in a power outage or a hurricane or a riot and well, it ain't pretty.

Well it is just about a done deal that Mitt Romney is going to be the Republican presidential candidate. I am almost entirely ambivalent about this. Got to purchase some more mags between now and November.
Heineken is pretty good and Jimmy Fallon probably has the best late night TV show these days.

That is all.

Monday, January 31, 2011

RE: Retirement Fun-for Boomers and Beyond

Mayberry said:

Ryan, Yep, the division/diversion campaigns have worked very well. You are still in bed with the system, therefore you lash out at those who've done nothing more than start to collect on that which they paid into their entire career. Your diatribe is best directed at the criminals who 1) created the Ponzi scheme to begin with, and 2) stole from the "trust fund" for decades, and 3) made promises to pay ever increasing "benefits" from that fund, knowing full well there was not enough money to cover those promises. For no other reason than selfish political gain...

But those truths seem to be lost on the right wing crowd, who have no problem forking billions into illegal wars of imperial aggression, while screaming for SS beneficiaries to have their funds cut.

SS is not "welfare". It WAS a retirement program, which, by the way, was (is) FORCED upon us working stiffs by, and has been aborted beyond it's original intent by criminal politicians. Do I like it? No. Do I want it? No. But I've been forced to pay into it for 20 years now, and like all the others who've paid, I damn sure expect to get back what I've put in, with INTEREST.

Will it be my sole retirement income? No. Hell, I doubt I'll ever be able to retire. But do I want to see my 80 year old Grandmother's SS go away? Hell NO! That, and a small pension from my Grandpa is all she's got.

Now to address you on your Dave Ramsey high horse: MAYBE if SS was not extracted from our pay by the barrel of a gun, folks could have planned better for their retirement. But they suck a hell of a big chunk of cash from our pay, reducing our ability to plan and save for ourselves. So maybe you want to rethink your "welfare" position. Maybe you want to open your eyes and SEE that the government WANTS people dependent on them. It's a self preservation thing you know. Most people, yourself included, refuse to recognize that little fact. Chew on that for a while...

TOR here:

Mayberry, You've got it twisted. Maybe I wasn't as clear as I could have been anyway moving on.

First and most importantly I am not looking at what I want to happen but what I see happening. The combination of impossible numbers/ demographics and changing political power situations will make drastic changes unavoidable. I know old ladies who rely on SS to live also and don't think it would be desirable in any way to change the income they depend on.

If I was the King of America (a hypothetical situation where I had wide sweeping powers to fix entitlements and such) here is what I would do. I would sit down with a bunch of economists and actuaries and such. We would figure out how much money is needed to pay for those collecting or about to collect SS benefits. The unfunded obligation would have to come from somewhere, really a whole bunch of places. Foreign aid, agricultural subsidies, and defense (foreign wars, bases and cushy defense contracts) are likely candidates.

As for figuring where exactly to draw the line for who would get SS benefits that is a toughy. We would have to look at what we could actually afford and balance that with an individuals ability to adjust their retirement plans (ie a 55 year old doesn't have a lot of time while a 30 year old does). I would like to say we could offer some sort of benefit to those in their early to mid 40's but imagine the numbers will actually support SS benefits for those in their  late 40's or even early 50's. Maybe some sort of individual retirement fund type thing with some money could be done for people who we can't fund SS for but will be seriously affected by this move.
As for if entitlements are welfare. I tend to classify entitlements as welfare because, despite forced contributions, the money that comes in (even if you factor out the money pulled into the general fund) doesn't equal the money going out. I don't think anyone can actually believe the money they pay into medicare covers the free market cost of insuring them through the most expensive years of their life. SSI paying widows and children vastly beyond what a wage earner may have made, let alone contributed is IMO welfare. Social Security minus SSI is a bit more  complicated. We would have to do some research and look at all kinds of tables, charts, etc. However lets say we had all that stuff and were sitting around in a nice quiet bar. I would wager the next round of drinks that some people, most likely low income ones who just made the required number of quarters, receive a payout that is dispurportionately generous when compared to what others receive. Maybe welfare is a poor word because it has a lot of stigma attached to it. Anyway lets focus less on one word and more on the big picture.
As for blame. There is so much to go around that most everybody can take a nice big bite. I blame the politicians who created the stupid program as well as the people who voted them in. Most of the folks meaningfully involved in that stuff are long dead. I don't blame individuals collecting Social Security because they are just doing what normal reasonable people would do. That would be like blaming a bank teller because a bunch of CEO's got the bank into mortgage backed security madness.

I am young enough that I've been paying in my whole working life knowing I will never get benefits. Seriously lighting a bunch of 20's on fire every payday would be way more entertaining. I could light a cigar with a hundred dollar bill somewhat regularly which would be kinda cool too.

I know you would like to receive benefits that reflect what you have put in. However lets be realistic here. As a guy in his 30's do you actually see that happening?

I agree that our government likes people being dependent on it. However the government is simply not going to be able to make it work. Right now the subject is essentially toxic. Expecting politicians to commit job security suicide is just not realistic. Sooner or later a radical change in entitlement benefits is inevitable.

Lastly I want to talk about why I wrote the original post. I am sure somewhere in the last few years you have heard the phrase "stress test". Basically a stress test is, at least in theory, a way to see how a corporation, bank or person would do in different scenarios. I wrote this to be thought provoking and to lead people to do their own personal stress tests on what I see as plausible scenarios. If it was a bit gloomy that is meant to be a warning. Sort of how you would warn your buddy if the 300 pound gorilla sitting at the bar slamming shots started angrilly glaring at them. My intent was not so much to talk about the ethics of entitlements or even entitlements in general but to provoke some thought and get folks to consider how these events would affect them.

Sunday, January 30, 2011

Retirement Fun for Boomers and Beyond

I should note that I do not have a crystal ball or a product to sell which will magically fix all the problems I am about to discuss. I am also not an accountant or a financial advisor or anything like that so nothing I say should be seen in that light. By all means read what I say and think about it. If you decide it might have some merit then consider it in your plans. However don't just mindlessly put a lot of money into this or that because I (or anyone else) talk about it if you do that you are a fool and deserve all the bad things that could happen. Be an adult and make your own decisions because you will have to live with them.

With the slew of municipalities being broke and having insolvent retirement funds, corporations dumping pensions whenever they get any excuse and a whole bunch of states broke I would be concerned if a pension was going to fund my retirement. Heck even the federal government isn't doing so great. Consider what would happen if you pension was radically reduced or even defaulted entirely.

Also if you haven't noticed the USA has a real problem with welfare social security and medicare. Like the level of problem Charlie Sheen has with vodka and cocaine. Social security was started by commie FDR with benefits at 65 when people on average died at 62. Also there were lots of workers to pay for it. The numbers don't work and are rapidly getting worse. Too many people are retiring and not enough are working to pay for them.

I imagine a lot of small things will be done to try and bend the exponential curve of welfare entitlement costs.The are to collect full benefits will likely go up, well off people will be charged on more of their income (I think it's 100k right now), and some sort of a means test will likely appear. I believe all of this will only succeed in kicking the can down the road a few years.

Also more significantly generations X and Y realize we are never going to collect meaningfull social security. As boomer politicians screw us with higher rates of theft contribution we will get pissed. Pretty quickly we will get into an age demographic that votes at a far higher percentage and are a significant force there is going to be a reconning. I am not sure how we will screw you the boomers but I bet we will. Best case is that they are going to be paid in inflated dollars. On a more gloomy side it could be significantly inflated dollars. Worst case for them the welfare social security checks will stop entirely.

My point here is that you should plan for retirement without counting on a pension OR social security. If you can collect either of them then go for it. However personally I would want to be able to support myself without either and just have them as icing on the cake.

In an even darker scenario the dollar and subsequently paper investments denominated in the dollar could take a nasty hit. Maybe it could be a slow slide or a fast crash, I don't know. In any case the have money in investments and live off interest/ dividends plan would fail in this scenario. To be honest this is relatively unlikely (slow slide to a currency among many versus world reserve currency and a moderate loss in purchasing power is more likely) but it would be a bad one. Most retirees would be devastated. The truly rich would generally be fine (somehow they always are) but middle and upper middle class folks would mostly be destroyed.

What can be done for those who are worried about this relatively unlikely (the extreme version anyway) scenario? The first thing that comes to mind is to have your basic financial house in order. For those close to retirement age having very minimal or no consumer debt and having your primary residence paid off is so huge. I watch a lot of those financial shows and the amount of people who are trying to retire with car loans and very little equity in their home (let alone having it paid off) baffles me. If you are debt free and retire then something happens so you face a drop in income at least this way you can shred your expenses. It would suck but as long as you can pay property taxes, fuel and food you will be OK if not happy. However if your pension fund fails/ the stock market and subsequently your investments collapse and you have all sort of stupid consumer debt and a high mortgage payment it will get ugly fast.

My next thought also flows well with what is likely reality for most boomers. The reality is that many of them saved like they have a cushy defined benefits retirement plan when in fact they have a 401k. Too many of them continued to upsize their home and used home equity like an ATM instead of paying off their home. Fundamentally a lot of people are approaching retirement age and just can't afford to retire, at least in the way the Greatest Generation did. Some will be able to retire and live modestly (versus lots of travel and recreation) while others will need to keep working in some capacity or another.

The advantage is that earned income (vs from dividend's, stocks, interest, etc) is pretty flexible. You can, at least in theory, renegotiate the deal for future services to reflect a changing economic situation. That could mean getting paid to reflect the real value of currency, in a stable currency, PM or barter. Hard to do that with your pension or retirement account. If something this ugly happened a lot of people would be headed back to the workforce in a seriously damaged economy. The way to get ahead of the game would be by working in some capacity already. Maybe you could work part time, consult or just have a couple clients. Even a modest income could (in addition to making todays retirement economics more comfortable) be the difference between making it and not.

Where you choose to put your money is important also. I am not against precious metals for an alternate currency/ store of value but have concerns about them for retirement. The reason is that they do not benefit from interest, dividends, etc. Every silver dollar or gold eagle you spend is coming strait out of your principle.

The reason that truly rich (maybe wealthy is a better word) people do not get wiped out is that they own businesses and real estate that produce income for them. If currency values change radically a solid business will continue to earn some money. People will continue to rent apartments, homes and commercial space.

Things that produce income are good things to buy. A lot of the downsides of real estate (and to a lesser degree businesses) are minimized if you pay cash. I would rather have some money in the bank and the market and a modest rental house or twelve in decent areas earning me income than a bunch of money in the market.

I don't know what is going to happen so I hesitate to suggest putting all your eggs in any basket. If your finances are in order, you earn a bit of income and have at least some of your money in tangible things that produce income odds are you can weather whatever comes.


Sunday, May 9, 2010

Sunday Ramblings

People seem to hate bankers. As Commander Zero noted they do stop hating them when they need to buy a car or a house or whatever. After they get "their car" or "their house" then the banker goes back to being greedy scum for wanting their money back AND A PROFIT! The nerve they have.

I don't really have anything against bankers. No banker has ever cornered me in a dark alley and forced me to take a loan at terms I do not like. I have a student loan which I got because it seemed to be in my best interest. Seeing as my earning power went up significantly it seems like that was a fairly good choice.

I am not a fan of the whole capitalism on the way up socialism on the way down pattern of late. I blame our government and by default us for that more than bankers. It drives me just as nuts when people try to do the same thing. They are happy as can be when the value of their home goes up 30% and talk about how they made such good choices. Then the minute things go the other way they demand that the government do something to stabilize housing prices.

My observations of people is that everybody tries to get as much as they can. From "disability insurance" for a person who has earned little to nothing to "earned income credit" to "mortgage interest deductions" all the way up to pet tax loopholes for big businesses and bank bail outs everybody goes for as much as they can. I can't really blame individuals too much. If there was a 10K refundable tax credit for some niche group I fell into darn sure I would take it!  We deserve every dime we can grab but that other guy is a greedy SOB for trying to do the same.

I tried again to buy a beer brewing kit from Amazon but I can't find anyone who will ship one to us. There is a place that sells beer brewing stuff not too far from here so I will make the trip in the next few weeks. That town also has a pretty nice Chinese restaurant so the trip would be pretty decent anyway. Apparently my last book order didn't go through so I re ordered it.

Also today we ordered a second computer which I am pretty psyched about. Really knocking off all of our significant economic goals inside of a week or so (in April!) makes me pretty happy.  No more real big financial goals, just stashing a few more euro's and some spare parts and mags. Now we can focus on whipping that darn student loan. After that we can save for a modest home with a wood stove and ideally a basement on a big lot.

I am psyched to get another computer. I will have my own puter so when out and about I'll be able to watch DVD's and save up scheduled posts more conveniently. Also while I don't play video games at home they are a good time killer for when I am away.

As a final thought Jericho looks real nice on the new TV.

Friday, April 9, 2010

Atlas Shrugged IPR#1

So I am about halfway through Atlas Shrugged. The review portion is going to be a bit shorter than normal because I do not want to spoil anything for those who haven't read it. Basically it follows a series of people. The people fall into 3 groups: producers, moochers and looters. About as simple as it sounds with producers producing stuff (they are big industrial types), moochers thinking they deserve something for just being themselves and looters taking by force. It is interesting. Onto the review.

The good: It has made me think a lot about all sorts of stuff. There have been (without ruining it for you) 2 points that really stuck out to me. First is that even a theoretically well intentioned highly centralized planning committee can not manage an economy in a decent fashion for very long. Not a big surprise there, Russia pretty much proved that one. Also the reminder of how well things are going in North Korea helps. Even if Thomas Sowell ran things along with Milton Friedman and Adam Smith who were brought back to life for the occasion it wouldn't work. Markets work because of dozens of decisions made daily by every person involved. They produce and thus earn and consume by turning the fruits of their labor (or ill gotten gains) into things they desire. A particular product like a new type of soda doesn't succeed or fail because of a report by experts that report to a committee. It does because people choose to try it or not and then whether to drink it in the future.

The problem I see with centralized planning is that markets are complex and unpredictable and thus impossible to plan. It is nice to think of them like making a sandwich, want some more lettuce so you just add a bit more, ditto for tomato, cheese, etc. However markets are a lot more like baking with yeast. They are their own weird creature and when you start tweaking things (heck even if they stay the same) then who knows what will come out of the oven. One discrete (and lets just say, well intentioned) move made by a central committee can have all sorts of crazy and entirely unanticipated effects. Think of the movie Butterfly Effect but with the economy.

Secondly I think it is important to remember that in an environment where the granting of favors to preferential groups is customary, even if it works out well for you once, it will probably not always go that way. For example Middle class home owners deserve the massive tax breaks they get but corporate tax cuts are unacceptable and earned income credit is welfare. Just about everyone would like to keep whatever breaks fit their situation and get rid of ones that benefit other groups as those are wrong.

Taking it to a corporate level General Motors has been helped in incalculable ways by the federal government. Without pet legislation (buy American, tariffs, bail outs, etc) they would likely not exist. However a big part of why GM is stuck with its very powerful union labor force. If tomorrow the president of GM (whoever he is) was able to fire his entire workforce and go non union it could be a very different ball game.

In a climate where preferential treatment is given in order to garner influence just don't be surprised if sooner or later politicians want to buy some other groups vote. Also revisiting our first theme central planning, which includes pet legislation often has unintended consequences.

The bad: Ayn Rand is long winded. The book is good but it could easily be 25% shorter.

The ugly; Ayn Rand is really long winded. The ideas which are part of the actual plot of the book are good. However frequent random paragraphs about the way a characters clothes fit their certain type of body and the expression of their face when they sat with their leg sprawled onto a table smoking a cigarette in a certain way is a bit much. It is really lame when those paragraphs don't matter at all or relate to anything. Saying that the character sat in a chair and smoked a cigarette would suffice and skipping it all together might even have been better.

I am enjoying it and hopefully will finish it in the next month or so. 

Monday, March 8, 2010

Thinking About Entitlements

I have been thinking about entitlements for the last couple of days. I've written about them before but well, I'm thinking about them and blogs are somewhat redundant. I went back through my posts on these matters and the first of my relatively recent ones sums up my core views nicely. I think that picture is accurate, for at least a decade.

I was watching Tom Brokaw on some news type show. He made a very interesting point. My generation are going to screw older people. Those under 40 (and doubly so under 30) realize social security is a Ponzi scheme. More importantly (older folks aren't stupid, they know it's a Ponzi scheme too) we realize we are at the point in the pyramid where enough new contributors can't be found so it falls apart. Right now we aren't an important demographic for anything but beer, clothing and electronics sales, we are largely ignored in politics. However when 20 and 30 somethings become 30 and 40 somethings we get pretty important pretty fast. I think the likelihood of us adjusting social security benefits to fix a dysfunctional budget are pretty high. Look at what big corporations and nations do when they are broke, they cut the pensioners because aside from ill will by that group it is a darn easy thing to get rid of. Maybe we will screw you guys, at best we will pay you in highly inflated dollars.

In any case I think retirees and those approaching that age need to think about a stance based more on making the program viable and something my generation can have some trust in than getting their 2.5% this year. Also if I was anywhere close to retirement I would do some looking at where I would be without these entitlements.

When it comes to medicare. This is a bit more complicated because the benefits are far less clearly defined and the costs are booming. More people are going to start drawing SS but more people will start drawing medicare and each of them will cost more. We can figure the cost of SS for a given retiree is X plus a couple points a year. Medicare doesn't work that way. First I think we need to make it so retirees with access to other medical care must use it first, not visa versa as it is now. I had two grandparents, both of whom retired with good reasonably priced medical insurance for life. Instead of that insurance paying for their medical needs our government paid. In what world does that make any sense? Also some sort of a means test would make sense to me. Someone who is worth 3 mill in total assets (just to toss out a number) can realistically afford to buy their own insurance.

Also as unpleasant as it sounds we need to really talk about end of life care. I am not a socialist and I do not want to control peoples medical care. I believe people should be free to spend as much money as possible to prolong their life or their quality of life. If Warren Buffet thinks taking a bath in a tub full of diamonds then throwing them away every day will cure cancer then good luck. However I do think an articulate discussion needs to be had about how much money I AM GOING TO BE FORCED TO PAY to keep a 75 year old morbidly obese man with stage 4 cancer who just had a massive stroke hanging on to life for the next week. We spend an obscene percentage of the total cost of health care at the very end of peoples lives and it needs to be looked at. Back to Social Security to close.

To be honest I think it is going to get ugly. Maybe the whole thing will collapse and we will go all hyperinflation. More realistically things will just be bad and we will pay seniors with highly inflated dollars. Maybe my generation will radically change benefits and just shove the old folks under the bus. I see several potential outcomes, all of them bad. It is more a question of how bad and for whom than if it will be bad.

Upon reflection I just can't see the Ron Paul way out working. The first reason is that if there is an example of our government massively slashing expenses in order to pay for an already existing benefit I can't think of it. Secondly I think we are just talking about too many people getting too much money to meet those obligations without a massive dedicated tax. Third I think the "stop gap" concept fails to really recognize how long it would take. I think that in order to not screw over/ honor the contract with seniors we are going to have to pay most of them a high percentage of what they had been promised for the rest of their lives.  I do not have an actuary table for the population we are talking about handy but this plan would have us coming up with a whole lot of money for at least a couple (more likely 3.5-4) decades. We aren't talking about sending these folks 4 more checks and calling it good.

There are just too many retirees getting too much money from the government to be able to have my garnished waged go into my own privatized account (or just stay in my pocket?) and Granny to keep getting checks. I just don't think the math works out.

 In closing, buy silver and ammo. Not that silver and ammo have anything to do with the above, just that I wanted to close on some good advice which everybody can agree upon.

Tuesday, February 9, 2010

1 OUT OF 8!

According to a segment I just heard on the BBC 1 out of 8 Americans is on food stamps (I doubt they made it up). Seriously I do not even know what to say about this one. The argument could be made (not sure if I agree) that giving some people a helping hand now and then is a good thing for the government to do. However 1 out of 8 people seems pretty ridiculous to me. Then again since 1 out of 10 (either a slightly fat one at 10.2 or missing a part of a limb at 9.7) workers is unemployed maybe it is just that our economy is doing horribly.

Green Shoots! How do you prepare green shoots in order to eat them? Because in addition to being unemployed apparently lots of folks are hungry.

Friday, December 25, 2009

Book Review: Generation Debt, Why Now Is A Terrible Time To Be Young

I just finished the book Generation Debt: Why It Is A Terrible Time To Be Young.  Honestly I think if you are 18-35 or have a kid in that age range you should read this book. Here are some interesting snippets of the book:

-In 1970 the nations largest employer was GM and the starting wage was 17.50 in today's dollars. Today the largest employer is Walmart and wages start at $8.00.

-One in 8 adults has worked a McJob at McDonald's at some point. Overwhelmingly before they turn 30.

-Roughly 30% of jobs in the US require a 4 year college degree.

-In 1960 roughly 3/4's of grocery store workers were full time and they earned a livable wage and benefits. The other 1/4 were teenagers, moms who wanted to make a few bucks and the like. Now it has flip flopped.

-"It is simply not possible today to work enough to cover college expenses without taking a heavy toll on student academic performance." -Some study by an official organization (TOR notes: forgot to write down who)

-That the majority of young people in this country are wasting years of their lives in low wage, low skill jobs is an economic and moral disaster.

-The cause is not a temporary recession but structural changes in the economy. In income and occupation prestige, young adults are behind where their parents were at their age.

-The new reality is postindustrial, nonunion, service-oriented, highly competitive, highly flexible and technology-dependent.

-Today what is considered a basic standard of living has crept upwards.

TOR here: Lets just for a minute work under the assumption that we aren't going to run out of oil or suffer high altitude EMP blasts or a serious Pandemic or have something else happen which will lead to us all fighting our neighbors for our very survival in a small regional/ clannish structure of post apocalyptic America. Think Mad Max but with a few more bullets and no gas. Even if we aren't bayoneting Mr. Smith from down the block to death in order to keep the last box of Crispix on our street things are not looking great for us.

For a variety of reasons (mainly corporate cost cutting) good jobs have became mediocre jobs and formerly mediocre jobs have became dead end low paying jobs. In 1960 roughly 3/4's of grocery store workers were full time and they earned a livable wage and benefits. The other 1/4 were teenagers, moms who wanted to make a few bucks and the like. Now it has flip flopped. By and large this fairly representative of a significant change in our society. Jobs that 30 or 40 years ago would allow a guy to get married and support a family will now barely pay the rent.

Broadly speaking unions are going the way of the dinosaurs.  The day a nice young man could walk down to GM (our nations largest employer not too long ago) and immediately start earning a livable wage with great benefits for doing a job that could probably be done by a well payed monkey are over. Sorry to say but they are not coming back.

Increasingly these middle class union or union like manufacturing/ miscellaneous jobs are slipping into minimum wage no benefit dead end jobs. The way things are going the two real options are low wage service jobs and the knowledge economy. The lack of a middle ground is leaving a lot more folks slipping backwards instead of going forward. It is not that there are more good jobs or more great jobs but that there are less decent jobs.

I don't think it is fair to call all folks in this age range adultessents or brand them as lazy or shiftless or whatever. I also don't think it is fair for us to just idly sit back and blame the economy or anything else for our situations.

Part of it is our expectations. We want a job that is interesting, emotionally fulfilling and pays well. Realistically we can probably get 1 or 2 of the 3 and we are lucky of pays well is in there.

For this age group who for whatever reason do not have a Bachelors degree the picture is bleak. The traditional 'get a job at the bottom, work hard and go up' which got so many non college grads of my parents era into reasonably comfortable decent paying positions with benefits are few and far between these days. For the older folks you must realize that what worked in your day doesn't work so well now.

I definitely have some thoughts about the future of my generation (again assuming I am not bayoneting the neighbors to keep my cereal) but will leave that for another post.

[Edited to include: I received compensation for last link]

Thursday, December 24, 2009

quote of the day

"There is strong evidence that directly links the availability of welfare with the increase in out-of-wedlock births. ...Children raised in families on welfare are seven times more likely to become dependent on welfare than are other children...  Welfare contributes to crime by destroying family structure and breaking down the bonds of community." 
-The Cato Institute

Monday, July 6, 2009

Finances; a Random Perspective

If you haven't guessed I am sitting around writing a couple days worth of stuff in advance. This evening we went to the neighborhood store [relatively expensive but great for getting an item or two] to get butter, vanilla extract and an impromptu purchase of a 99 cent bag of Doritos Cool Ranch chips. There was a woman in there with a couple of questionably behaved children who were running around the place. Her cart had some meat, a 12 pack of generic strawberry soda and a bunch of small cans of pork n beans. This woman paid her $31 tab with a 20 bill and put the balance on a credit card.

Obviously her overall life/ financial situation was not very good. If the kids father is in the picture I would do a proper jig.

Wifey and I a conversation about this on the short drive home. She is probably more compassionate than I am but the conversation was interesting none the less.

My initial thought was that she would be a heck of a lot better off going to Walmart and getting 20lbs of pinto beans, ketchup, brown sugar, honey and some fatty work (bacon works best). Cooking from scratch when you work full time is hard but throw a few cups of beans into a crock pot with a varied combination of the aforementioned ingredients and after 8 hours you have some pretty decent beans.

Wifey mentioned that this lady might not have the cash for a crock pot. My initial thought was that if she figured the cost of buying small cans of pork and beans all the time (she had a dozen of them) against a one time purchase of a crock put balanced by the future far cheaper purchases of 10lbs dry beans and it would not take long until her food bill would rapidly shrink. This reminded me of a quote by someone I once knew (and may meet again as our business is far smaller than you would think) who said "Poor people have poor ways". Not sure if I have discussed this quote or not but in any case lets move forward.

This got me to thinking about finances. To really simplify things there are two sides to the financial equation; making money and spending money. If you are a doctor making $250k there is no need to worry about getting dinner delivered a few nights a week because you are tired from work. There is a reasonable amount of slack in your budget. Conversely if you manage your spending very well things will probably be OK also. For instance our friend Dakin makes very little money but does fine because his spending is locked down solid.

Having good control of both sides of the financial equation (income and spending) is certainly ideal. However having control of at least one side of the equation is essential to being a stable functional person. If you do not have control of at least one side of this equation your life is going to be very difficult. Sadly for lots of folks my observations have shown me that generally speaking people who have control of one side of this equation generally have pretty decent control of the other side. People who have managed to position themselves in a relatively well compensated area tend to be capable of making good choices in spending.

One thing I think is very important in a serious relationship is how the potential partner deals with money. It is what most people tend to fight about and can cause all sorts of problems. For better or worse my anecdotal observations have shown me that while people who have their finances in order (not necessarily being well off but at least consistently paying their bills and such) are not always functional people those whose finances are a mess are almost never functional people.

One guy I know has good financial instincts. He scrimped and saved money every month religiously (and I funed him some about it because he is Jewish) while his wife would manage to somehow spend more than she was able to afford. Who you do or don't get into a marriage with is your own business but if they can't keep their finances stable you are just asking for trouble.

Monday, January 19, 2009

California Controller to Suspend Payments

Reporting from Sacramento -- The state will suspend tax refunds, welfare checks, student grants and other payments owed to Californians starting Feb. 1, Controller John Chiang announced Friday.

Suspending tax refunds. Lets make it clear what that means. They took more of peoples money then they are supposed to (by law) and now they aren't giving it back. It would be sorta funny to have a framed IOU from the state of California. My Grandmother owns a single share of stock in a very novel company that never got off the ground, it is framed and kept in the bathroom. There is something to be said for living in a state without income taxes.

Welfare checks would also be suspended. Los Angeles County officials said they would cover welfare payments to more than 500,000 local recipients -- for now. Apparently there are over a half million people on welfare in LA County. This is a very big problem; not morally but functionally. Short of a bunch of white cops beating or killing a minority on video tape I can not see another situation as likely to make LA burn.

I imagine that if we looked at those numbers there would be lots of people who wouldn't really cause trouble: young children, the blind and elderly, etc. Lets say for the sake of discussion that at least 10% of recipients (or indirect beneficiaries) are male between the ages of 15 and 29, that would be 50,000 prime potential rioters. Once you factor in folks not on welfare who would start looting and burning when it became clear the cops wouldn't come and that very well could be the mother of all riots.

This could be bad, very very bad.
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