Hey Dummy, It's The Economy

The Angry Middle's Guide to Dough
First, I'm not anywhere close to being an economist. I took one economics course at CCCC. A lot of it is common sense, some of it makes no sense whatsover. My personal finance knowledge is based on a fear of being poor. And a complete fear of debt. To the point that the only debt I'll carry now that my student loans are paid off is a mortgage, and even that to me is evil. So it's credit cards that get paid off every month and paying cash for a car, so we are huge on 1990's Hondas. I still roll change, I return empties, etc. I'm a cheap mothafricker. Not to say I don't splurge, I got a big tv, cable, broadband internet and like good beer and booze, but mostly I have no desire to ever put my electric bill in my daughter's name, get chased by bill collectors, etc. I believe in living below our means.This really isn't the American way. I may sound arrogant about personal finance but that's the way I feel. Don't spend what you don't have, how complicated is that? (more later on this topic)


VEN ACA, TORO
I've taken my bruises investing. The key to the New American Corporate economy is to get everyone in the game. 401K's, mutual funds, self funded pensions, discount stockbrokers got everyone in the game. A thing of beauty for Wall Street, no longer was there a huge rift between the middle class and the wealthy class, what was good for GM was good for America. The difference between retiring to a nice house on the Cape and living with your kids and being a greeter at Wal-Mart. There began to be more of a revulsion of the poor, taxes were high, because of welfare, or housing, or support for schools, money that would be better spent as part of the Investor class.


I continue to invest, both in a 457, which is the public employee's version of the 401K and in a taxable brokerage account which is my wife and I's version of casino gambling, which of course has hit a speedbump to landmine depending on what's being held, with our old friend Freddie Mac leading us into the toilet. I've been here before, holding some Fidelity tech funds in 2000 that tanked, leading me to believe that the idea of investing Social Security funds, already an underfunded Ponzi scheme into the general economy to be completely ludicrous and probably the biggest piece of corporate welfare this side of the Military Industrial complex ever handed to Wall Street. The Scratch Ticket Index fund would certainly not be too far behind this development. We all hypnotized by the idea of compounding interest and "free" money on our investments. Thinking that this money should appear overnight and without risk.



Cover Your Fannie, Mac
this rabble you're talking about... they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath?
I'm really too old to believe in the Easter Bunny or conspiracy theories. Working for government it is hard to believe that it would be organized enough or that there would be any public employee that would be able to keep a secret longer than a trip to the water cooler.


But sometimes things are just too hard to believe. How could the mortgage crisis get as bad as it is other than by some type of bizarre conspiracy? Did everyone simultaneously get so blinded by greed and avarice that common sense jumped out the window? Were loans really given out for a half million dollars or more to people with such low numeracy or literacy skills that they didn't know what they were getting themselves into? That real estate for some reason would continue to go up 20, 25, 30% a year and everyone could flip themselves into wealth?


I'm a strong believer in home ownership, it builds a pride, a continuity in a community. But you got to be ready and understand what you're getting yourself into. Certainly it was not completely the fault of uninformed consumers, banks and mortgage agents "conspired" to create this craziness, where someone without employment or savings could walk out with a loan to buy a multi family, or someone who just qualified could get an huge ARM at an incredible rate to go from college student to McMansion in minutes. Hell, everybody wins, you get a home and equity loans and HELOC's fuel a consumer revolution with Sony, Hummers and Martha Stewart at the tip of the spear. Every man a paper millionaire.


Like Oksana Baiul running off the highway, this came to a quick halt. Soon all these mortgages are collateralized and bonded, overrated by the very firms that were supposed to be analyzing them and keeping them in check and ignored by a laissez faire administration that didn't want to regulate themselves out of fake economic growth. And now we face the issue of the guarantors, Freddie and Fannie. Freddie and Fannie were the folks that could make all of these loans happen. It's not their fault per se, it was there job to make sure there is liquidity in the market, money so people could own homes and as long as everyone was making money, who cared. Not keep an eye on the quality of the investments. Now the chickens have come home to roost, the bonds for Freddie and Fannie are so widely held that it could totally disrupt the economy including retiree pension funds. So it's a taxpayer bailout with more rich people getting richer or a chance for the federal government to become the world's largest landlord of people who either were too dumb to understand a home loan are were swindled by mortgage agents.


Chances are the American economy will live through this crisis. The immense size of the US economy and increased globalization may make this all into a half trillion dollar hiccup. Wall Street will come up with another scam to make their billions, outside of growing American industry and economy.


Wow, that was some of the most boring stuff I've ever written, and most of this issue I don't even understand.

Drill, Baby, Drill

The next corporate scam is drilling in the US. It's probably inevitable. Soon the drills will go into ANWR and an oceanfront near you. The rightwing is screaming that the treehuggers are killing the American economy and hate America, the public is clamoring for cheaper gas at any cost, and the Democrats, the sissies that they are, seem to be afraid of speaking up, once again.

There is a great misunderstanding in worldwide oil markets. Folks actually think that all the oil that is pumped in America will end up in their gas tanks and bring back dollar gas. Oil as the economists like to say is "fungible", and what that means in layman's terms is that stuff is going to go where you can get the best price for it, it may be in your Expedition, but it may also go to fuel the Chinese war machine, Dutch brothels, or a Japanese go-go bar, one never knows. I guess I got nothing against the oil companies, they're in business to make money, and make money they have, and given the opportunity to drill closer to home and make more money they'd probably take it.

I don't know much about Peak Oil. I know it took millions of years to create these fossil fuels and we're burning through them as fast as we can. Most of OPEC's oil is easy to get and relatively inexpensive, meaning huge profits for all. OPEC knows it's the easy oil and will likely not just burn through it all and will control the tap until they retreat back into the 14th century. (a gross oversimplification of OPEC as being predominantly Muslim) At that point the move will be to the highly polluting US shale fields.

Hell, even T. Boone Pickens, who may be one of the biggest jerks in the history of recent American politics sees the economic benefits of alternative fuels and thinks you can't drill out of the problem, the drive to drill is just another quick fix, and honestly by the time it's pumped will do little to alleviate $7/ gallon gas. But hey, if it's nice to yell and scream about liberal treehuggers, be my guest.

OK, enough depressing economics, onto VP candidates next week.