Saturday, February 17, 2018

Children Playing With Money


When kids play with money, trouble ensues.

A recent article online describes a problem with one of the cryptocurrency exchanges, coinbase. Apparently they have been double- and triple-charging people's checking accounts resulting in overdrafts for the unfortunate victims of this scenario.

When I found hilarious about the whole thing was that the articles were quoting from Reddit - never a good source for newspaper or magazine articles, as all of the postings are anonymous and many of them are trolls or simply made up.  But assuming that these postings are true, one particularly made me want to chuckle.  The person in question "invested" $300 in Bitcoin through the coinbase exchange and was debited several more times.   I find this laughable as $300 is not an "investment" - it is a bet you are placing - it is gambling.

Another fellow claims they debited his account seventeen times for $1000 each time, and now he is "officially broke".  How sad when your entire net worth is $17,000.  Sadder still that you leave that much money in a checking account and grant some cryptocurrency exchange the right to debit from that account.

This reminds me of a guy I saw online who "invested" $500 in the Facebook IPO saying "I can afford to lose that amount."  He really isn't so much investing in the future of Facebook but thinking that maybe the stock with spike after the IPO and he will make a lot of money  Why not, everyone else makes money on these IPOs, right?  Just as "everyone else" is making money on Bitcoin.  But for someone to make a dollar, often someone else has to lose one.  You cannot create wealth from a vacuum or from nothing.

Of course, Facebook stock tanked initially and he panicked and sold it, cutting his "investment" in half.  If he had a time machine and hung on to it for a few years, it may at least paid itself back. That illustrates the nature of this type of gambling on the market - people usually just lose money, due to fear and greed.   It also illustrates that all the big talk online from"investors" if not outright fake, is just the talk of kids throwing $100 at something.

Oh yea - that.   As it turns out, "crypto" has been the subject of pump-and-dump for some time now.  People hype cryptocurrencies in chat rooms and online forums.  The chumps thinking this "secret tip" is shared only with them, buy, driving the price up.  The spammers, trolls, and shills cash out and make a few bucks.   Act shocked.

Getting back to this crytpo warrior profiled online, what was even more laughable - and sad - that his investment was $300, was when they debited his account several times, he said his account went negative.  "But I used to have a comfortable balance!" he said.

I'm sorry, but having $1,000 to $1,500 in your checking account is not a "comfortable" balance. It's just nearly about empty.  Sadly, that situation describes me when I was younger - spending every last penny I made and borrowing five pennies more.  I was juggling my expenses and robbing Peter to pay Paul, and had barely a dollar in my bank account when I got done making payments on all the loans I had.

I recounted before how I used the debit card to buy some Chinese food at the takeout near our house, back when we used to do those sort of things, far too often.  The old lady behind the counter was very sweet, but kept swiping my debit card and couldn't figure out why it wouldn't go through.  She also had a bad habit of not reconciling her charges until the end of the week.  So what happened was about five holds for $25 for Chinese food were placed on my account and it wasn't until the end of the week that they were reconciled and cleared off.  In the meantime, I'm ashamed to say, my balance was so low that this cause my mortgage check to bounce.

If you have less than $1,500 in your checking account, maybe one should think about leaving $300 more in it rather than "investing" in Bitcoin.  Because if one has that small a bank balance, one is really in no position to be investing in anything.  True, you should be contributing to your 401(k) or making regular, small payments to an IRA, or perhaps investing small amounts in stocks or mutual funds at a rate of $50 to $100 a month to start with.  But throwing $300 at Bitcoin when your balance is $1500 or so?  Not very responsible!

If you are sucking air at the end of the month and your bank account never gets above three figures, you're really no position to be investing, and really no position to be speculating wildly on things like cryptocurrency.

The article is illuminating however, in that it illustrates an example of who these people are who are buying Bitcoin and other cryptocurrencies. These are not billionaires pr millionaires investing thousands, tens of thousands, or hundreds of thousands of dollars in cryptocurrency as an "investment."  Rather, these are small investors who are throwing a few hundred dollars here and there at Bitcoin and hoping it goes up in value.  And they are also very young people, mostly males in their 20's to mid-30's.  Prime chump meat.

The real users of Bitcoin and other cryptocurrencies are people trying to transfer enormous sums of money from one part of the planet to another - usually to avoid taxes or for some other illegal purpose.  They purchase the cryptocurrency and immediately transfer it and then convert it back into a local currency.  The Chinese businessman sends millions of dollars to Vancouver to purchase a house and establish a business there so he can obtain Canadian citizenship - just in case the whole China thing blows up.  A drug dealer in Panama launders his money through Bitcoin and transfers millions of dollars to an offshore account.  Human traffickers from Eastern Bloc countries send millions of dollars back home using cryptocurrency.  These are the real users of these cryptocurrencies - and almost all of their uses of them are illegal which is why governments will crack down on them in the long run.

The real users are not "investing" in Bitcoin - they're using it to transfer money.  So for them, the price of Bitcoin or other cryptocurrencies is really irrelevant as they are buying and selling almost immediately.  Unless a sudden spike occurs in the market between the time they purchase and sell - which might be a matter of minutes - they really don't care whether one Bitcoin cost a dollar or $10,000.

And since they're buying and selling almost immediately, their transactions really don't affect the market that much.  But these other people - the little people - who are buying and holding Bitcoin are driving the demand up when the supply is limited.  These are the $300 chuckleheads who are causing the price to spike to the stratosphere.

These are the grocery clerks and shoeshine boys that Joseph Kennedy complained of back in 1928, who are trading stock tips.  They have no idea what they're doing, and as soon as they start losing money they panic and sell.  Amateur investors tend to spook markets.   In the case of  cryptocurrency  it's basically kids doing this, and by kids I mean people in their late teens or early twenties or possibly maybe early thirties.  What today is considered childhood in America.

When you go online to these discussion groups, ask yourself whether you want to take investment "advice" from some 20-something "playa" who has all of $300 "invested" in crypto.

Anyway, it made me laugh and also made me sad to read these reports.  I'm sure the poor guy threw a plate of chicken tenders at his mother when he found out his bank account has been drained dry. But then again, I recognize the pattern here because I used to be that way myself - very immature with money. And money is something you can't be immature with - but something to treat deadly seriously.

Friday, February 16, 2018

Fitbit Suicide



MIAMI - An Ormond Beach man was found dead yesterday of an apparent self-inflicted gunshot wound. Volusia County Police report the man left behind a suicide note saying he was despondent as his Fitbit no longer loved him.

Friends and neighbors said the man, a Mr. George Ormstein, was enamored of his new Fitbit which he purchased several months ago.  "He loved that damn thing," a neighbor said, "It was always telling him to get up and walk around and giving him little positive feedback messages whenever he did some exercise or got his pulse rate up!"

The relationship expanded from there. In addition to the constant nagging and praise the Fitbit provided to Mr. Ormstein, it started suggesting other activities. "I remember I was quite shocked," another neighbor said, "when it suggested they go out to dinner or see a new exhibit at the Museum."

Mr. Ormstein was apparently quite fond of his Fitbit, wearing it everywhere and constantly checking it for messages.  He started buying it accessories, such as colored wristbands and a custom diamond-studded charger.  However, the relationship soon turned sour.

"It happened slowly," a neighbor said, "the messages started coming fewer and fewer, and then some very odd and quixotic messages started appearing.  He (Ormstein) wasn't getting the positive feedback he was enjoying before!"

The end came, a neighbor said, as Ornstein received a message from his Fitbit suggesting that perhaps they start seeing other wearable devices.  Ornstein fell into the depths of depression, as his Fitbit stopped sending him daily messages.  "He tried dating a Garmin, but it just wasn't the same.  He was just going through the motions - his heart wasn't in it, nor was his heart rate," the neighbor said.

Services will be held next Saturday.  I lieu of flowers, donations may be made in Mr. Ormstein's name to Fitbit anonymous.

Thursday, February 15, 2018

Why Belief?

Belief is like sex - it feels good.

A recent article in the paper profiles a religious woman who gave away over a million dollars to an online Nigerian scammer.   He posed as a suitor, and after her husband died, she was lonely.  Over the years, he told her one tale after another, and always had a plea for money - a few thousand dollars at a time.  Finally, even he had enough of the charade and told her the truth - he was not the handsome man in the photos he sent her, but a scammer at an Internet cafe in Nigeria.   She is writing a book about the experience.

Why would someone do this?   Once again, belief trumps reason, and belief in that regard can be evil.  People are willing to use belief to make important decisions in their lives, and they usually end up screwed as a result - although in this lady's case, not literally.

We are in South Florida, and I thought about this as we drove along.  I saw another one of those cardboard signs by the side of the road, advertising a house for sale for a ridiculously low price.  "MUST SELL!" it proclaimed.  I wish I had the time and energy to investigate that - get a hidden camera and call the guy and see what the scam was - because you know it is a scam.

You don't?   Well, let me tell you why it is.  First of all, anything advertised on a cardboard sign is a scam, basically, other than a lost pet poster.  And even those....  No one is telling the great secrets of investment, how to buy distressed houses, the secrets to weight loss, or whatever, on cardboard signs.  If what they had was such a good deal, they would at least have a nice sign printed - and be able to afford to advertise.  You can spot a raw deal at 100 paces by the way it is presented.  No need to further investigate.

Still not convinced?   Well, explain to me why thousands of these same signs appear all over America - advertising houses at bargain prices, in almost identical wording.   You know that someone is playing a con.   Still not convinced?  Then just ask yourself this: If you wanted to get rid of a house at fire-sale prices in a short period of time, what would you do?   Call a Real Estate agent and get it listed at a low price so that some investor would snap it up by the end of the week?   Or put out a cardboard sign and hope someone buys your house?   Of course you'd do the former.

But people want to believe - and what they want to believe here is a common belief - that they are going to get something-for-nothing or a bargain that others miss, because only they saw the cardboard sign and maybe the seller is unsophisticated and they can take advantage of them.  So they call the number and the seller gives "the story" about why the house has to be sold so quickly.  And he meets them at the house, which is locked and he forgot the key.  But if you can put down a $10,000 cash deposit, he can sell you the house - but you'd better act fast, because he has other offers on it!

And of course, the house you are looking at doesn't belong to him, and you are out ten grand.  It is an old con.  A very old one - but one still being played today.  And like all cons, it plays upon the belief of the victim, not common sense or reason, which are like kryptonite to the con artist.  Get the victim to "suspend disbelief" as they say, and you've got him (or her) in the palm of your hand.

Why do people allow belief to take over their lives?  Because belief is fun.  You go to a church and sing "Hallelujah! Praise Jesus!" and raise your hands in the air and have that euphoric feeling you can get with belief.  Belief triggers the same pleasure centers in your brain as sex, I believe, as it is very similar in nature.

This is how cults and religions bring in new recruits - they all report that same feeling of euphoria and pleasure when they first join and are showered with attention.   It evaporates shortly thereafter when they are forced to beg on the streets to buy the minister a new Rolls Royce.  But they keep going back - like a junkie, a belief junkie - for another "hit" of euphoria, which are smaller and smaller and fewer and farther between - the classic addiction scenario.   Eventually, they run out of a "high" on the cult and leave - now embittered and angry, having wasted years of their lives and in some cases, most of their money as well.

Belief is a hook - and you can get hooked on it.  And that is one reason these Nigerian scammers are so successful.  The victim of the con enjoys the process of being conned, as the promises of millions in lottery money, a nice car for half-price, or a handsome suitor are always on the horizon but never quite arrive.  It is akin to being enamored of the process as I wrote about before - people who get caught up in the process and forget why they came there in the first place.

And this seems to be a pattern with people who are conned.  They enjoy the back-and-forth with their Nigerian scammers, as they ask for more and more money.  They enjoy thinking about the riches they are going to receive.  Actually receiving the money (which of course, never happens) would be a letdown.

Belief is a fine and wonderful thing, but God gave you a brain to use, not to put in "park" and leave in the garage up on blocks.  Belief - when it supplants reason, can be evil.  Blindly following someone or blindly believing in things that are convenient to you at the moment generally end up causing you personal grief, and I say this from experience.

If you look around the world today, and see all the hot spots and troubles we have, most of them boil down to people using belief in place of reason.  Whether it is a cult of personality around a dictator, or blind belief in a religion or a religious leader, belief leads to trouble, time and time again - and rarely leads us out of it.


Wednesday, February 14, 2018

The Good Life

What is the Good Life?  Is it being rich, or happy?

A reader writes that I am living in a world of self-delusion if I believe that working hard and achieving "only" a middle-class existence in America is really worthwhile, when I could end up being an internet billionaire.  Why settle for merely happy, when you could be ecstatic?

There is an old saying that "Money Can't Buy Happiness" and the retort that lack of money can buy all the misery you can stand.  And both are true.  I've lived amongst the rich and they are some of the unhappiest people you could ever meet.   Having enough money to get by is important.  Sadly, many in America squander their money on consumer goods, stress themselves financially and "have it all" while being desperately unhappy.  I know this as I used to be one of those Americans.

I think the reader in question is perhaps from the Russian troll farm - they love to spread discontent among Americans.  It is one of the narratives that the Russian Internet Research Agency, a.k.a. "Fancy Bear" has been pushing online lately - that since somebody else has billions, the fact that you have mere thousands or millions makes you miserable by comparison.

I'm not sure I buy it.  First of all, happiness is not determined by the balance in your bank account. Some of the richest people in the world are probably the most miserable. Take for example our President - who really isn't that rich but has quite a bit of money.  Do you think Donald Trump is really happy?  I mean this guy spends a lot of time on Twitter being angry at the press and his critics and just about everybody.

He wolfs down mounds of junk food and is obsessed with his reputation and image and with having all the trappings of wealth.  This sounds to me like someone who is chronically depressed.  Or at the very least, he doesn't act like a happy person.

I recounted before that I was fortunate enough to be raised and some of the wealthiest enclaves in America.  For a time, my parents lived in Old Greenwich Connecticut, which today is an enclave of investment bankers and their trophy wives.  Oddly enough, Mark's grandparents also had a house in Old Greenwich - a Sears House - back in the day when living in Old Greenwich was merely nice and not obscenely expensive.

We also lived for a time in Lake Forest, Illinois, a tony upscale suburb of Chicago.   But the bulk of my childhood we spent living in a wealthy suburb of Syracuse known as Cazenovia.  We had a beautiful Frank Lloyd Wright style house on the lake and like Richie Rich, the spoiled little rich kid, I would take my speedboat to school everyday.

My parents were hardly wealthy, but they were classic strivers.  Only one or two generations removed from abject poverty, they sought the trappings of wealth and acceptance by wealthy society.  I didn't realize until years later that they could barely afford to live in the neighborhoods they did - after all my mother did drive a Vega.  But they were more concerned about what people at the Country Club thought of them than what they thought of themselves.  And that was typical of their generation - you strove to move as high up as social ladder as you could.

But as a result of this upbringing, I had a chance to meet people who came from real wealth - inherited wealth or folks who had made truly obscene amounts of money. And the interesting thing to me was that - particularly the inherited wealth people - you saw that most of them were extremely unhappy people.  And among the self-made millionaires, it was often the case that their children were very unhappy. - unable to live up to the standards of their rags-to-riches parents.

And by unhappy I don't mean merely sad, but also the chronic use of antidepressants, the casual alcoholism and drug abuse, and the serial philandering.  There was also severe mental illness, and of course the more than occasional suicide.  One of my best friends, who stood to inherit enough money to live the rest of his life without working, had a brother who killed himself when he was only in his late teens.  Imagine that - not having to work for the rest of your life and having nothing to do but figure out how to entertain yourself for 70 years or so, and the only viable option seems to be parking your car in the garage with the engine running.

The "Richard Corey" song has more truth to it than folks realize.

Another friend came from a family that had millions of dollars (back in the day when millions of dollars really meant something).  His father pulled out a handgun at the dinner table one night and blew his brains out in front of the entire family.  Needless to say that sort of warped his son's mind after that.  Fabulously wealthy people - fabulously unhappy with their lot in life.  It makes no sense.

Now, I am not saying you should feel sorry for the rich.  Fuck the rich - if you can't be happy with millions of dollars while others starve, then something is wrong with you.   Rather, I am merely pointing out that being fabulously wealthy does not equate to happiness and in fact, people to are that wealthy are often less happy than people who are merely comfortable or well-off.

For a brief period (before they threw me out after they realized I didn't come from real money) I did attend a Prep School.  My brother did likewise.  It wasn't entirely like Harry Potter at all, either.  My experience was more like some of these weepy novels about prep schools -  such as The Dead Poet's Society, which was made into a movie starring Robin Williams (irony alert).  Once again, depression, alcoholism, drug abuse, and suicide rear their ugly heads.  The kids from the "rich families" were all messed up in the head and desperately unhappy.  I was just stoned out of my mind.

Now of course, you could probably say the same thing is true in the ghetto.  The rate of mental illness, drug abuse, alcoholism, and suicide is probably high there is well.  And if you looked at happiness is a function of how much money you have, you might expect this to be the case. After all being poor sucks, so poor people are likely to be depressed.  But oddly enough, suicide rates can be higher in wealthier neighborhoods, at least according to some studies.

But if having a lot of money was definition of happiness, then why were so many rich people I knew so desperately unhappy?  Now I suppose someone will point to a study showing that people with more money on the average are less unhappy than poor people.  But of course such surveys are based on self-reported data and are the suspect.  But not only that, even if such data existed, if you really had more money then you shouldn't be unhappy at all, right?

And that's what the reality is - you can have all the money in the world and be the most miserable person possible.  On the other hand, so long as you have enough money to live comfortably but not necessarily ostentatiously, you can be quite content and happy in life.  And according to some studies, this is indeed true (again, self-reported data is suspect).   These studies suggest that having "enough" money makes you happier, as you don't worry so much about money.  But having too much might make you unhappy, as - like the poor person - you worry about money even more, but in a different way.   It's like this lady who won the lottery but doesn't want her name exposed - she knows her life will be miserable when her neighbors and friends find out she is a half-billionaire.  I suspect they will find out anyway.

I think one sure way to be unhappy in life is to be constantly comparing yourself to others.  This goes back to the coveting aspect of the Ten Commandments which I wrote about before.  I never understood what that meant in Sunday school, as our Sunday school teacher never explained the Bible very well.  They were so in awe of the holiness of that book, they never bothered to question the meaning of any of it, even though it's been translated several times and was very ambiguous and contradictory in parts.

(I recounted before how at age eight, I was nearly thrown out of Sunday school as a heretic, because I questioned what the Holy Ghost was.  Like any rambunctious young kid, I was drawing pictures in the margins of my Bible workbook of a ghost with holes in it. This horrified my Bible teacher who was certain I was going straight to hell.  It turns out, there is a whole religion based on the idea that the Holy Ghost is a bunch of hooey - it is called "Unitarianism" or "One God".  No wonder my Bible teacher was horrified - I was turning into a Unitarian at age eight!).

But getting back to coveting, a lot of people think that coveting means that you are lusting after your neighbor's wife or wanting his possessions.  And maybe that's part of it, but I think more of it has to do with comparing yourself to your neighbor in terms of his wife and his car and his house.  Because if coveting was all about lusting, then this commandment would not also mention "his ox and his ass" unless it was trying to prescribe bestiality.

No, I think what the Bible is getting at is that if you constantly compare yourself to the wealthiest man in the world, you will always come up short - and you will always be depressed as result.  This is some good common sense advice, which the Bible is often short of, particularly in the Old Testament.

Because if you think about it, not only does comparing yourself to your neighbor or to other people make you depressed, comparing yourself to your own potential can make you depressed as well.

For example in my case, I could have made millions of dollars if I chose to do so.  I certainly had the ability, and I certainly had the opportunity.  After all I was able to become a Patent Attorney, and many of my friends in law school and at the firms I worked at are now partners in large law firms whose names you have heard of.  They're easily pulling in well over $200,000 a year, perhaps two to three times that much.

If they lived a reasonably comfortable lifestyle, they could invest a large portion of that money and have millions of dollars in the bank.  And indeed, I could have done this as well - and still be working in pulling in that big salary.

It is also possible they could have end up as a senior partner and some huge Law Firm or some big-shot litigator and be pulling in millions of dollars a year - it does happen to a few select lawyers. Of course, that presupposes one has the skills to do that.  I realized quite early on that while I could write a decent patent application, I was not a courtroom litigator.  We all have different levels of intelligence and skill, and although I've done very well with my skill-set, I have had the good fortune to rub elbows with people with far more skills than I have.  And as Clint Eastwood said in his role as Dirty Harry,  "a man has got to know his limitations."

Oh, and some of those wealthy partners I worked for?  Some of the most miserable people I've met.  Most were on wife number two or three (and their wives were constantly worried about being traded-in, so they resorted to plastic surgery and boob-jobs to maintain their trophy image - they were miserable people as well!).   Many were estranged from their children and step-children.  They really didn't even have any friends.  Even their "partners" at work didn't like them, and they were all willing to stab each other in the back to take over the firm or take a client - something I witnessed firsthand more than once.   Maybe that is why I didn't want to end up like them!

So yes, in theory, we could all end up being fabulously wealthy.  For some of us it would be a matter of luck, for others a matter of talent. For most of us will be a combination of both along with, of course, opportunity - and lots and lots of hard work, as well.

We live on a planet populated by billions of people.  And if you look around this planet, the outcomes for most of these people are pretty miserable.  For about half the planet, scrambling to obtain enough caloric intake for the day is their main occupation.  And indeed, your calorie intake affects even how you think.  When your blood sugar level drops below a certain point, your brain reverts to an animalistic level.  Survival becomes the name of the game, and you will do anything in order to stay alive.  Civilization is only the nice window dressing of the successful and well-fed community.  We are all one meal away from being savages.

I think the secret to happiness is not in comparing yourself to the richest man in the world, or comparing yourself to some hypothetical you that could become wildly wealthy.  In fact it's not in comparing yourself to wealth at all.  I think, at least for me, happiness is in trying to do things and finding out after years of effort how surprisingly successful you've been when it's all said and done, and realizing that being healthy and well-fed, and not having to worry so much are the best things in life - far better than the trappings of wealth or mere possessions.

Life is too short to obsess about being rich.  Be happy instead!

Tuesday, February 13, 2018

What's The Whole World Coming To?


The windows of the world are covered in rain. What's the whole world coming to?

Those lyrics, penned by Burt Bacharach, are very much a 60s saying.  It was a popular saying that was very popular back then, as I recall, what with the hippies and beatniks and all and the Vietnam War and the threat of a nuclear annihilation.  People would say "what's the world coming to?" when talking about some latest outrage or occurrence.

My mother, when she had a few martinis too many - which is to say more than zero - would get into one of her Fugue States and start railing against the world in general.  "What's the world coming to these days?" she would say, as if somehow our planet back in 1972 was in more dire straits than it was in the pas,t or indeed even today.

And I guess each generation goes through this - thinking their situation is somehow more unique or dire or dangerous than that of previous generations.  And it's funny to me, that as a woman who lived through both the Great Depression and World War II, she would rail that "what's the world coming to?" in the 1970s when the economy was relatively stable despite the gas crisis, Watergate, and stagflation.

But each generation and each decade faces its own challenges, some great, and some small.  Like I said, my parents had to face both the Great Depression and World War II, which you would think would make anything after that seem pretty small potatoes. But the Red Scare in the 1950s as well as the threat of nuclear annihilation probably put those two events somewhat perspective.  It seems as though the entire planet was ready to blow up on a moment's notice.

(This is not to say, of course, that each generation faces the same level of difficulty, only that it seemed so to each generation in question. The difficulties my generation faced with the Vietnam War, Watergate, and the oil crisis were nothing compared to the Great Depression and World War II. Problems we had in the 1990s or nothing compared to those during the war on terror in the 2000s.).

Then decades go by and the planet doesn't blow up, we develop a false sense of security that it never will.  Of course, one day we will probably all be in for a good surprise in that regard.  But then other things happene, such as the Arab oil embargo of 1973 which really changed our entire economy permanently.  Suddenly overnight, the price of oil was on everyone's lips in the price of gasoline became a big thing.

And then the economy started to tank and people lost their jobs - and suddenly politicians promised jobs as part of their election campaigns - something that seemingly never happened before.  And in the 1980s Reagan was elected and it was "Morning in America" and we were shipping arms to the cCntras and exchange for birthday cakes given to the Ayatollah. What was the world coming to?

And in the 1990s it was saxophone-playing Bill Clinton with his dalliances in the White House and elsewhere with chubby girls who like to give head.  Oh, what on Earth was the world coming to?

And then George Bush was elected in the World Trade Center was attacked and suddenly a lot of the trivial bullshit of the past was put into real perspective.  An entire generation has grown up since then knowing nothing but the war on terror and what is become a de facto war on Islam.

Today the anguish that people are wringing their hands over is the Trump presidency.  It seems we are headed once again in uncharted territory and dire consequences are forecast.  And, as in the past, no doubt some of those consequences may indeed come true.  But on the other hand, if you look at the track record of humanity and see the horrific things we've survived over the decades and centuries, when you ask "What's the world coming to? " it pretty much amounts to more of the same.

Of course, each time this question is asked, the underlying premise is that somehow eventually the planet will eventually exact it's righteous revenge from mankind for overpopulating the world. Perhaps this time around it will be global warming that will kill us off.  We all thought we would starve to death long before now as the supply of food will be far outstripped by the supply of humanity.

And if you look at the history of every species that's existed on this planet, you will see to that pattern does hold true.  Species breed and survive and thrive in a particular environmental niche until they basically destroy that environment and something catastrophic happens.  Sometimes that species goes extinct, other times it adapts to a new environment or perhaps a new species becomes dominant.

All hail our new cockroach Masters!

But as I noted before, you really can't make any money betting on Armageddon.  Even if your bet is correct, the best you can hope for is an subterranean lair stocked with canned goods and ammunition to last as long as you can survive.  It's not a plan for survival of the species, however, but merely a chance for you to witness the last degradation of mankind.

You have to hope that whatever wipes out humanity from the face of the earth - whether it is a cataclysmic comet, mega-volcano, nuclear annihilation, or the slow rise in sea and land temperatures, that it happens after you are long dead in the grave.  Because these things happen on a time frame measured in millennia not at near years or months.  And our investment horizon is usually terminates when we do.

This is not to say we shouldn't be concerned with world events or take action to change them.  The worldwide coalition to abolish ozone-depleting chemicals apparently has worked - and the ozone hole in the atmosphere has shrunk over the years.  This is in spite of the fact that many right-wing commentators - who are today decrying global warming as a hoax - said that the entire ozone thing was overblown and a bunch of nonsense.  It does illustrate that people working together can change the world literally and physically.

But that requires action, not hand-wringing in wondering "What is the whole world coming to?"

Monday, February 12, 2018

If I Could Turn Back Time...

We can't turn back time.  But if you are young, you might learn from the mistakes of those that came before you.

A reader writes:
I discovered your blog last year and I have been reading it off/on ever since. I was curious if you were able to give me some advice as a young person on how I can become actually wealthy instead of "pretend wealthy." I'm a college student and of course I am not eager to be incredibly stingy and miss out on experiences that can be afforded to me, but I thought you might be able to help. Some questions I have are,
What should I look for in a credit card?
What would be good to start investing in and what tips would you give to someone looking to jump into investment? What would be good investments early on?
Finally, and this is a little bit more of a curiosity about the lifestyle you live, how often do you fall back into your old ways? In what areas of your life does that happen?
I hope you can get the opportunity to answer my email.

So many questions packed into one e-mail!   I don't know where to begin.

First of all, I am not an advice columnist, so I cannot provide advice.  Furthermore, any advice from anyone over 30 is suspect.  How you succeed in this new economy is something I have no idea about - just as my parents didn't understand why I was obsessed with "computers" back in the 1970's.  After all, who could afford to have an IBM mainframe in their home?  The electric bill alone would be staggering!  Old people are clueless, let's face it.

Today, people make money by tweeting.  I am not sure exactly how, but I would have said that was a stupid thing to do.  Hell, some six-year-old made $11 million last year just playing with toys on YouTube.  The world is a crazy place.   But don't think that just because people like that strike it rich without any apparent effort, that it will happen to you or that you are entitled to it Being hit by lightning is a rare event.  It doesn't happen that often.  The rest of us have to work for a living - so have a plan in place to do just that.

But in a way, our reader has already won the game, if he is thinking of personal economics at age 18 (assuming the e-mail is not a troll).  When I was 18, like most young men, all I was thinking about was where my next beer was coming from, how to score some pot, and what sort of sorry thing I was going to stick my dick into next.   Sounds like our reader is light-years ahead of me at that age!

I wrote before - several times in fact - about a quote from Norman Mailer's The Naked and the Dead which jumped out at me when I read it the first time.  He mentioned something about wishing one could live their life over again and do things differently.   And he mentions that it is a common thought - and a waste of time, too.  Because you can't live your life over, you can only look forward.

At age 18, it may seem like the "adults" have all the cards - have all the money, the good jobs, the fancy cars, the big houses - the power.   But we all wish we were you - or at least could be 18 again and this time around not screw it up by being... well, 18.   If we had the wisdom and knowledge of the years, and the time and health of youth - what a potent combination that would be!  We could rule the world!

The problem for me at that age - and most 18-year-olds - is that we were big goofy kids who had no common sense or an idea about the future.  We wanted money - sure.  But we wanted it so we could squander it.  And what little we accumulated, we squandered on dubious things that didn't last long.  And when we "invested", well, it was like these get-rich-quick schemes you read about online.  We didn't invest for the long-term, because that was slow and boring.  We wanted to make huge amounts of money right now dammit!  And that is hard to do, unless your last name is Zuckerberg and you get struck by lightning.

So I can't offer any "advice" but I can tell you all the really stupid things I did, and maybe if you do only half of them, you will do better than I did.   Because you will make mistakes - we all do.  I am a college dropout and a "failure" on many levels.  But on the other hand, I am a millionaire and in the top 5% of wealth for the US and top 1% of the world (easily)I have no right to complain about how rotten I have it, because quite frankly, I did quite well, thank you, in spite of myself.   Others could do much better, quite easily, by not doing half the bonehead things I did.

Which is why I am not jealous or resentful of those who make more money than I do.  Sure, many of the guys I went to law school with, are today partners in big firms drawing huge salaries.  Maybe that could have been me, too.  But I made different choices and am happy with that, which is good, because I have to live with that.   There is more to life than just money, but being comfortable is important.

Today, of course, we have a new economy and new pitfalls for young people.  We didn't have staggering student loan debt back when I was in school.  And many today don't have it either - because they don't borrow more money than they can realistically pay back.   Borrow as little as you need - that is always the best route to take.  Borrow not at all, if you can.

One of the biggest life mistakes I made over the years was to borrow too much money.  Borrowing money for a worthwhile college education (I borrowed about $38,500) isn't a dumb move, but I easily borrowed twice as much as I needed - as evidenced by the fact I remodeled my kitchen with some of the money.   Borrowing money for a house wasn't too bad a deal.  Buying more house than I needed or borrowing more than I needed would have been dumb.  Refinancing my mortgage again and again was really, really dumb.  Of all the bear traps I stepped into, debt was probably the worst.

But what about life experiences?  Our friend doesn't want to be "stingy", but to drink deep from the well of life - like most young people do.   But the funny thing is, having fun and having experiences doesn't mean spending a lot of money and in fact, often spending more means having less.

For example, I mentioned my friends who hitchhiked around the world - twice - on a very small budget.  I also have some friends who are heirs to a fortune.  They took a cruise around the world that easily cost $100,000 in today's money.  Guess who had more fun?  Guess who had more experiences and really experienced foreign cultures?  I am not saying you should hitchhike around the world, just using this as an example of "less is more".

Or take my old BMW.  I bought a 1974 BMW 2002 for $700 and fixed it up.  It needed everything, and I took apart that car down to the last nut and bolt and rebuilt it.  I found a Korman 2200 cc 10.5:1 engine that a customer had ordered and never picked up - and snagged it for $1500!   That car ran like a scalded rat when I got done with it.  I sold it to buy a 1999 BMW M Roadster from my wealthy friend.  It was a nice car.  I put gas in it.  That was the extent of my interaction with that car.

Of the two cars, I had more fun for a lot less money with the old beater 2002 than the nearly brand-new "poster car".   You don't need to spend a lot of money to have fun, and often spending more means less fun.  It takes no talent to sign a check or swipe a credit card or sign a loan document.   Do things that require skill, artistry, effort, labor.  It doesn't matter your skill level - the fact you do things is important in fighting off depression and learned helplessness.

Going to college can be a good thing if you are getting a worthwhile degree.  The pitfall of college, as I have noted before, is to spend a lot of money for a degree that leads nowhere.  It was true when I was in college (all 14 years of it!) and it is doubly true to day with staggering tuition increases and student loan debt.  Taking hard subjects and being realistic about job prospects in the field both served me well.  In my case, I had the job while I was going to school.  It staggers me that people can be smart enough to get into college and still clueless about where their chosen field of study will take them.  A degree in "Sociology" isn't going to take you many places, but can cost a lot of money to obtain.

I was fortunate to go to GMI, which put me to work in a General Motors factory as a salaried employee at age 18.  It was like boot camp, without the drill instructor.  They threw us off the deep end and saw whether we could swim or not.  And Engineering classes weren't easy - but then again, nothing worthwhile really is.   I flunked out after three years (in a five-year program) and one of the bonehead things I did was cash in a $2200 retirement account from GM instead of rolling it over into an IRA.   One of the biggest mistakes young investors make is to cash in or borrow from retirement accounts for "emergencies"or in my case, to buy a motorcycle.

For most young people, starting an IRA or 410(k) isn't in the cards.   IRAs generally are not tax deductible for college students (consult your tax adviser - laws change!) and most college students are not employed, as I was, with a big company.   That doesn't mean you are without options.  Building up an after-tax savings account is a good start - to have that "rainy day" fund you can tap into, rather than use a credit card or cash in or borrow from your IRA or 401(k) later in life.

How to build up that savings?  The two mistakes I made were undersaving and oversaving.   Undersaving is to say not saving at all - just spending every penny and borrowing more.   When I decided to "save" I did the typical young person bonehead move of putting money into an investment without figuring out where in my budget the money was coming from.   By the end of the month, I was out of money and wondering what the hell happened.

I finally figured out that the smart move was to cut some small, unnecessary item from my budget - cable TV, designer coffees, and so forth - and put just a few dollars a day or per week into a basic savings account.  No, it won't grow very fast, but over a year or so you might have a thousand or two, and it will grow from there.   Being patient was the key - I wanted to see results right now!  And many people give up on saving or investing when the $100 they put in the bank doesn't magically turn into a million overnight.  You think I am being sarcastic - look at the savings rates of Americans.

Once you have some savings, you can invest.  But what to invest in?  At first, just building up a buffer of savings is important.  But later on, you can put money into mutual funds, bonds, or even stocks.   When you qualify to start an IRA, you'll have money to put into it.  The key is to diversify and to invest in fairly rational things.  Younger people can afford to takes more risks, to be sure - but gambling is not "risk-taking" - it is just throwing money away.

Diversification bears special mention.  I was having dinner tonight with an old friend and he mentioned putting 1/3 of his retirement account into a "tech" stock back in the day.  It went from $10 a share to $55 a share.  "You then sold half of it, right?" I said.  "No, I rode it all the way down to $5 a share!"  The expression on his wife's face was, well, interesting.   Diversify into a number of things, and if something does make a lot of money, consider selling off part of it to lock in your gains.

The main thing is to establish financial discipline - something I was lacking well into my late 20's and even early 30's.   Today, I enter every expense in Quickbooks and monitor all of my accounts on a daily basis.  When I was 18, I never even balanced my checkbook and bounced checks all over the place.   Learning to keep track of money is important - as you start to realize how hard it is to accumulate, and it forces one to think twice about spending.

The big problem for me was the company I kept.  I hung out with people who drank too much, did lots of drugs, and squandered every last penny on dubious car modifications.   As a peer group, this was a bad influence on me morally, mentally, and financially.  In that group, the best thing you could have as a "bitchin' car" and they would go into hock to get one - working a job to have a car, so they could drive to work.   It was idiotic, and we were all in debt up to our eyeballs just so we could have bling today, instead of wealth tomorrow.

Debt was not a big problem for me - at least initially.  They didn't have credit cards for 18-year-olds in 1978, but by the 1980's (when I was still in college, at the age of 25) it started to be a "thing."  It is tempting, as a young person, to think you should get a "rewards" card and earn all that cash-back!  But the interest rates are murder, and if you miss even one payment, the rates can jack to 25% or even 30% - and you'll never pay it off.  Instead of building credit, you are ruining it.

Young people are the most likely to have emergency expenses with little or no savings to fall back on (which is why it is important to build up that after-tax savings!).   So they are very likely to fall down on a rewards card and end up in a credit card crises - intractable credit card debt, ruined credit rating, late payments, and endless debt that never seems to get paid off.  Most Americans do this at least once in their lives - if you can avoid this, you will avoid a lot of pain.

By the way, getting back to coveting, it may seem a lot of your peers have nicer stuff than you do.  Fancier cars, the latest electronics, the designer fashions, and so forth.  Some may come from money, true.  Others are merely borrowing huge sums and are in desperate credit card trouble.  One thing I have learned in life is that it is possible to put on a front of "pretend wealth" leveraged all with debt, for at least a few years, before it all comes crashing down.  In the long run, however, such folks often end up desperately poor later in life.  And it ain't pretty.

Today, I have a lot of after-tax savings, so I have a "rewards" card and I watch it like a loaded handgun and pay it off several times a month.  No playing the float!   But not long ago - when I started this blog, I had a low-interest card with a LOW LIMIT, because I was getting into credit card problems and it was biting me on the ass.  I would suggest this for anyone starting out or anyone who is having trouble with financial discipline as I was (and still struggle with).  And yes, I still keep a low interest rate credit card "just in case" I need to make a large purchase that I can't afford to pay off in a single month.   These rewards cards are great if you treat them like a loaded handgun and are careful.  They are deadly if you don't!

I would think that a low interest-rate card with a low limit is the best choice for anyone with little or no assets or no access to ready cash.  When you don't have a "rainy day fund" your credit card becomes that, and in that case, you want to have a low interest rate and a reasonable limit - so you can pay it off in short order, rather than spend years and year paying off a transmission repair, with ruined credit to show for it.

Of course, your friends will shout that down.  Get the highest limit possible!  It means you are successful!  Get all the rewards!  That's the "smart" way to do things!   Talk to them in 10 or 20 years and ask them how that all worked out.  70% of Americans carry a balance on their credit cards, and I think 100% do at one time in their lives.  A credit card is a debt instrument, first and foremost.   Treat it like unspent nuclear fuel rods.

Credit cards are very, very dangerous, and I have had friends in their 20's declare bankruptcy over credit card debt.  It is very, very sad!   Low interest rare, low limit.   Don't be fooled by the bank "congratulating" by raising your limit - they are setting a bear trap for you to step in.  If you can avoid the problems that I had with credit cards - the problems my friends had - and the problems most Americans have, you will come out way ahead.   And don't think it can't happen to you.   We all like to think we are made of kryptonite - we aren't.   Understanding your own weaknesses and planning for them is the smartest move possible.

Buying a brand-new car is another bone-head thing I did when I was like 25.   I thought it was a sign of my financial independence and fiscal responsibility (like credit cards!)   Then I got a few speeding tickets and my insurance cost more than the car payments.  Oh, well, at least I didn't lease it like a friend of mine did - who ended up paying three years on a lease, and then another four years on car payments!  And all that high-dollar insurance the whole time.  Ugh.

And it never ends, either.   We all make dumb mistakes, to be sure.  What separates successful people from unsuccessful people is that the successful people learn from their mistakes rather than repeat them over and over again.   I've tried to learn from my mistakes in the last decade, and that is the reason I started this blog.   I was making many of these mistakes up until a decade ago!

And I still make mistakes, but they are getting smaller and smaller.  I wake up in the morning and realize that maybe we could have split an entree at the restaurant last night and saved money and ate less.  Or maybe some electronic toy was a waste of money (I haven't done that in quite a while, thank God!).   That sort of thing.  The real boners?  I am making less and less of them - at least I like to think I am.  Maybe I am living in a fool's paradise.

That pretty much sums up all the dumb things I did when I was young.  Like I said, when I hear a young person thinking about how to get ahead financially, I think they are already way ahead of the game.  Because most young people don't think about finances, and when they do, they think idiotic things like "Maybe I should buy bitcoin with my credit card!" or "I could make money selling Amway" or whatever other scheme or scam is going on these days.

But then again, maybe what I am saying here - which is not advice - will fall on deaf ears.  Because I am not saying what to do, but only illustrating the bonehead things I did and my friends did.   And they are all the bonehead things an 18-year-old desperately wants to do.  The credit card company dangles out a 25% interest rate "rewards" card, and the car dealer dangles out a set of keys to a shiny new Camaro.   It is tempting, and the best thing to do is leave your pen at home - particulalry in an era where an 18-year-old can sign his life away before age 21.   But most Americans, they fall into these traps, and then spend the rest of their lives bitching about how awful they had it and how unfair it is that someone else has more money than them.

Just don't do what most Americans do.  I guess it is as simple as that.



I'm 18, and I don't know what I want... that describes me at that age!

Sunday, February 11, 2018

Whatever Happened to Matthew Lesko?

Whatever happened to this guy?

I was reading one of my earlier blog postings, which analyzed the "extreme retirement" website - which is selling a book, of course.  And it struck me the scenario was similar to that of Matthew Lesko.  They sell the idea that you can retire early on not a lot of money - $7000 a year, according to one source - which I think is over-selling early retirement just a wee tiny bit.

Lesko might be a little bit before your time, but if you had cable TV in the 1980's, you saw his annoying commercials and infomercials more than once.  Back then, before cable really was big, you could buy informerical time late-night for hardly anything.  It was a wild, wild west and made millionaires out of the likes of Ron Popeil.   Lesko pranced around on the screen in a Joker-like suit with question marks all over it.  He promised - if you bought his book - to tell you how to get all sort of "free money" from the government.  He made a lot of money selling these books, to be sure.  But some government agencies were not so keen on his claims.

Yes, it is true that the government "gives away" money to people, but in order to get this money, you usually have to qualify or do something to get it.  If you are poor, yes, you can get food stamps, subsidized housing, TANF, an Obamaphone, and whatnot (although many of these programs do have work requirements).   But you have to be poor - the money isn't there for the middle-class unless you are going to commit fraud on the government, which is not recommended.

Similarly, other "grants" and programs are very narrowly tailored to specific groups.  My hippie brother uses NEA grants to put on his little "I hate America" puppet shows - your tax dollars at work!  Other types of grants and programs are available out there - from the government or from the private sector.  The money isn't "free" however - you actually have to do something to get it and use the money for a specific purpose.  You can't just ask for free money for a new Porsche - that's what gofundme is for.

But you can't go broke telling people what they want to hear, and what they want to hear is that the wasteful government is just giving away money and if you had the inside "secrets" you could get all that government cash, and like your smarter neighbors, never have to work again for the rest of your life!

So people send off for the book, making themselves a little poorer and Matthew Lesko a lot richer and they read the book and realize that most of it, if not all of it doesn't apply to them.   So they put the book aside and move on with life, maybe realizing that the something-for-nothing mentality is never true, and there ain't no such thing as a free lunch (TANSTAAFL!).

Is Lesko doing anything wrong or illegal?  Hell, no!  He's just taking publicly available information and putting it in a book.  Maybe some consumer agency thinks he is over-selling it a bit, but hey, if you bought a book from him, based on his loud and annoying commercials, from a guy in a clown suit, who do you have to blame but yourself?

Again, from 100 paces, you can spot this as a bad deal, just from the way it is marketed.  Loud, annoying saturation advertisements?  Check.  Clever marketing gags designed to get your attention?  Check.   Wild claims that sound too good to be true?  Check.   Telling you what you want to hear, rather than what you need to be told?  Check!

You can become quite wealthy in America by taking a little money from a lot of people.  So selling a book like this is quite lucrative - those infomercials weren't cheap, that's for sure!   Each customer pays a little - an amount they can "afford to lose" - but the guy selling the books, seminars, or whatever, makes a lot.

So whatever happened to Matthew Lesko?   He was investigated, apparently in 2004 by the New York Department of Consumer Affairs, which issued a "warning" about his claims, but not much else happened.  His Wikipedia page seems carefully groomed to minimize controversy.  After all, selling books isn't illegal in America - yet.

He is still selling his books, from what I can see, but I think he is using the far lower-profile and lower-cost Internet, rather than the late-night informerical, to sell them.  Informercials have gone mainstream and are a lot more expensive today than in the early days of nationwide cable.

Is there anything you can glean from these books?   As Lesko himself says, they are basically information from government pamphlets you can get for free:
In an interview with the Washington Post in July 2007, Lesko admitted having assembled his books from government guides to grants and loans: "His business model is simple: 'I get stuff for free and I sell it for as much as I can get.
Ah, the American dream!  Still alive!

It's All About the Base (Not the Middle)!

Both political parties appeal to their "base" to get candidates nominated - then appeal to the middle-of-the-road voter to get elected.  Why is our system so schizophrenic?

The mid-term elections are coming up, and it doesn't look good.   The left-wing press has been printing a drumbeat of Trump-is-bad articles (tell us something we don't know!) to the point where reading the Times and the Post is just a waste of time.  You could read any one Trump-is-bad article and you've read them all.

The narrative is, of course, that Democrats may pick up a few seats in the House and Senate, as is customary for an opposition party during a mid-term election.   However a number of things are conspiring against both parties to make it a little murkier than usual.   A lot of the seats "up for grabs" in the mid-terms in the Senate are in traditional Republican strongholds.  So it may be a mixed bag.

But the real problem is that the candidates the parties are putting up on both sides - extremists of the worst sort.   Republican incumbents are not worried about challenges from Democrats, but challenges from within their own party.   Far-right "alt-right" types are challenging traditional Republicans in primaries on the basis that the incumbents weren't Trumpian enough.

On the left - the same thing.   We have idiotic moronic stupid things like Bradley Manning challenging an incumbent Democrat in Maryland for a Senate seat.   Sure thing - you get arrested for disclosing top secret information, have a sex change and voila!  You are Senate material.   Like the Presidency, no experience necessary.   In fact, to this new wave of voters on the far-left and far-right, no experience is the fundamental qualification they seek.

Of course, this could backfire - and likely will.   Republicans will paint the Democratic party as the out-of-touch tofu-eating (and there is nothing wrong with tofu, particularly smoked!) San Francisco-based Nancy Pelosi wacko party of nonsense and political correctness.   And sadly, that caricature will come very close to actual reality - a party that is more concerned about the rights of illegal immigrants than the rights of citizens.   That is the picture they will paint, and it may be a compelling narrative in a lot of swing states with narrow voting margins.   Remember, this is how Trump got elected.

The needs and opinions of the vast majority of Americans - the far-middle, as I would call it - are often ignored.  These are the conservative Democrats and liberal Republicans (yes, Virginia, they do exist!) who are baffled by the positions of the extremists of their own parties - and by extension, the positions of their parties.   These are compassionate people who don't want to see kids deported, but then again, don't think that random circumstance should determine who gets to immigrate to the US.  These are people who want lower taxes, sure, but want lower spending, too.   They want rational government, not the screeching of the Left and Right as they throw one accusation and counter-accusation against one another.

These are folks for whom the "hot button" issues are not having hot button issues.   These are people who don't think the second amendment is under attack, but support the right to responsibly own firearms.  These are the folks for whom the issue of abortion is hardly a black-and-white matter.  These are just ordinary people trying to get along and make a living, who are not obsessed about politics and "releasing the memos" on a day-to-day basis.  These are folks who are not political junkies.

And sadly, neither party caters to them.  Maybe it is the structure of our primary system that encourages extremists to hijack the parties the way they have.  Maybe it is the lack of voter turnout, particularly in primaries, that is to blame.  Maybe if we allowed "open primaries" it would make a difference.  Or maybe, just maybe, if these middle-of-the-road people would make their voices heard, they would drown out the extremists on the left and right with a deafening roar.

That being said, the mid-term elections could be a referendum on the economy.   And it is funny how things are playing out.   The GOP and Trump have enacted two pieces of legislation that would ordinarily make sense only during an economic recession.   Tax cuts and increased government spending are the classic Keynesian economic theories that are so despised by the very party that just pushed them through.   Republicans ordinarily detest using government policies to affect the economy, but here they are ratcheting up deficit spending and creating the very "stimulus" that was decried when Obama tried to do it.

But again, these are economic theories that are only useful during a recession.   But it appears, a made-to-order recession is on the horizon, as the market "corrects" itself and enters bear territory.   If this is the case, then the tax cut and deficit spending of the GOP will not be seen as the profligate actions of an undisciplined party and President, but a genius move designed to nip the coming recession in the bud.

If only Herbert Hoover had such foresight!

It is an interesting thought.  If the market continues to crash, the tax cut and deficit spending will be seen as good things - minimizing the effects of the recession and accelerating the recovery.

Sometimes it seems that Donald Trump can fall bass-ackwards into a cesspool of shit, and still come out smelling like roses.   Democrats will not be pleased!

Saturday, February 10, 2018

Fools And Their Money


" a fool and his money are soon parted" --ancient saying.

A recent article in Fortune Magazine illustrates the old adage that a fool and his money are soon parted.  The article posits that people are selling off their gold hordes in order to buy Bitcoin.  The person they profile on the article almost seems like a caricature of the financial antics of the last decade:
“I got foreclosed on in 2011. The banks weren’t really working with me to come to a resolution. I was just laid off in 2010. It just snowballed,” he said. “I kind of had a distrust of banks and the monetary system.”
The unfortunate soul admits that he lost his home to foreclosure in 2011 after he lost his job.  He then resorted to buying and selling things on eBay and investing his profits in gold which of the time was going up.  Of course, since then gold has reached a peak and then sort of flattened out after dropping about one-third from the peak price.

And now this poor soul, who was caught up in the real estate bubble and then the gold bubble is now investing in the Bitcoin bubble.   I'm not sure what the point of the article is, other than to put up a catchy headline and hope that we all click on it.  And apparently like an idiot I clicked on it as well.

Of course, one wonders why it really matters that people do foolish things with their money.  On an individual basis, the person squanders their hard-earned cash, it really doesn't affect other people that much.  But when the fast hoards of people start to do moronic things with their money, it can affect our society as a whole.  When these people end up destitute, they will petition the government for relief, which will grant it.  Politicians want votes, and if most people are destitute, then they will garner votes the oldest possible way in the book - by buying them.

But more than that, a society where the vast majority of people have squandered their cash through spurious investments is an unstable society.  People threw away their money with starry-eyed dreams of avarice and riches and now are bitterly disappointed.  And they want somebody to blame for their misfortune - someone to blame other than themselves.  So you see a whole new generation of people coming up or blaming the government for all of their woes when in fact they should be looking inwardly at their own actions.  No one forced them to buy a mini-mansion and finance it with funny money.  No one forced them to refinance their house three or four times and take cash out.  No one forced him to buy gold or Bitcoin.  In fact, people warned them that all of these things were probably bad for them and yet they ignored these warnings, thinking they were smarter than the experts.  And I guess we're supposed to feel sorry for them now?

The other problem with the vast majority of people investing in bad things is that it tends to affect the rest of us who invested in smarter things. When markets crash, they take down overall markets not just the bad investments.  We saw this in 2009 when the overall market crashed even though the real problem was mostly mortgage-backed securities.  Of course, the better investments recovered very quickly and the real stinkers went off into oblivion.

We are seeing the same thing today with the volatility in the marketplace.  People invested in these so-called VIX-based products which were not a bet on even share price or the direction share prices were going, but rather a bet on the overall volatility of the market.  So long as the market remains stable, these people reaped fairly generous rewards.  As soon as the market became unstable - even for a moment - their carefully laid plans went awry.  And this triggered a sell-off of assets including worthwhile assets which created a cascade effect.  And it is not clear that this sell-off is by any means over.  As voltality increases, more sell-offs will occur. The thing starts to feed on itself.

And what was the cause of this?  Greed.  Greed, plain and simple.  People weren't content to just buy a stock and hold on to it and receive dividends and see it gradually appreciate in value.  They wanted to bet on the market, hoping to reap huge rewards like lottery winners, from very small bets.  And this drove the market to extremes.  And what's really sad about this is we saw this not even a decade ago with the market collapse after the previous run up.

Back then it was houses.  People thought they were going to make lots of money buying and flipping houses or that their own personal residence was some sort of new gold mine.  And no one bothered to think otherwise, because thinking otherwise wasn't as much fun.

And it all blew up and they looked around for other things to invest in.  And all these new tech companies started coming out and offering IPO stocks which were sure thing to make millions.  And people who invested in those, for the most part, lost their shirts.  So then they flounderd around looking for something else to invest in, as they were starting to run out of money and needed to make huge amounts of returns for very small investments.  And they saw gold was going up so they all started buying gold.  The lucky ones nearly doubled their money after nearly a decade.  The unlucky ones saw their investment cut in half with the drop from the peak.

So, as you might expect, they start looking around for something else and they found it in Bitcoin. Again the siren song of huge profits with no effort or work or risk - and sirens always lure sailors onto the rocks.

It's really hard to feel sorry for these people, and what's more it's very easy to feel angry with them. Because not only are they screwing up their own lives but they're messing it up for everybody else. When their half-ass schemes of avarice go bust, they take down the overall market and hurt the rest of us.  Now of course, the rest of us who invested in sound rational things will see our portfolios recover in short order.  But that is cold comfort for the person who has to sell today after the market has gone down instead of the day before or the day after when it goes up.

And this is one reason why we've had regulated markets. Not only do regulated markets protect individual investors for their own folly, they protect the rest of us from the periodic bubbles and crashes that hurt the rest of our portfolios.  Regulation is not a horrible thing inspite what Republicans tried to tell you.

Republicans are against regulation based on the most religious-like views.  That and the fact they're paid heavily by lobbyist for companies to make a lot of money out of market volatility.  There are people in the marketplace who make a lot of money selling you crap during these bubbles and then clean your clock when they collapse.  They don't want to see the market stable and steady as it was during the eight years of Obama.  In fact they decry the slow and steady growth during the Obama Administration as some sort of horrible aberration.  Anything less than 3% growth was just stagnation!

And now only one year into the Trump Administration, we seen dynamic growth in the marketplace - growth it was really not justified by any sort of metric. And just as quickly as this growth is accelerated it seems to be collapsing.  One starts to wish for the good old days of the Obama administration where you can put your money in the bank and expected to be there the next day.

This will not end well, despite the short-term gains from deficit spending and cutting taxes.  It will not end well!

Because historically, it never does.

Everyone Is A Little Bit Racist

Everyone is a little bit racist...

A reader chastises me for my Squirrel Lives Matter posting saying that I am mocking the Black Lives Matter movement. I'm not mocking the incidents where police have used deadly force without sufficient provocation.  That is indeed a tragedy in any circumstance, regardless of the color of the person being shot.

And sadly this does tend to happen more often to black people than to white people, because black people are more likely to be pulled over or interrogated or be stopped by the police.  And this isn't necessarily a function of direct racism but of the underlying racism in our society.

The black lives matter movement posits that the reason why there's more black people in jail than white people and why more black people are shot by the police is because of police racism.  They posit that police are racist, the courts are racist, and the whole system is racist and therefore that's why black people are in jail and that's why black people are being shot by the police.

However this is actually a very complex problem, and simple answers to complex problems are often the wrong answers as I've often noted.  Yes, racism is involved, but it's not necessarily only direct racism on the part of the police.  I know a number police officers, none of them in my mind go out thinking, "Gosh I need to go shoot a black guy, just for the hell of it."

Sadly, black folks are more likely to be in jail and more likely to be stopped and interrogated by the police because they're more likely to be from a lower socioeconomic class.  Poor white people are also more likely to be in jail and more likely to be detained by the police then richer white people.  It's more a matter of poverty than race per se.  But the reason why more black people per capita are poor than white people does have to do with race.  And that really is the underlying problem not necessarily racism by the police - although that is also a factor.

The sad fact of the matter is that police work is difficult at best.  And when you or I make a mistake at work, maybe we have to do something over or stay late to fix things.  At the very worst somebody doesn't get their report on time or maybe a product is shipped a few weeks late.  But when the police make a mistake, someone often dies, and often it's a police officer.

We've seen a couple of incidents recently where white people have been shot by the police without apparent provocation.  There's a celebrated case in Chicago where an Australian woman was shot by the police when she reported what she thought was a sex crime in progress.  The police drove down an alleyway and apparently she banged on the window of the police car to get their attention, startling one of the officers. He fired his handgun through the open window of the car killing her. And apparently he had his gun right in the face of his partner when he did this which must have been a deafening experience.  Iriony alert:  the cop who shot the white woman was black.   But no one is alleging "racism" or "reverse racism" (which is just racism) as a cause.

It's hard to understand what's going through the mind of the police officer other than he was afraid. Unfortunately one of the effects of the black lives matter movement has been to crank up the level of fear on both sides of the fence here.  And I think as a result, the us-versus-them mentality among the police has been amplified.  When people are marching in the street, calling the police pigs and murderers, you can only imagine that the police must be taking a more defensive posture.

In another recent incident, a white man was shot on his own front porch in Kansas, when somebody "Swatted" his house as a result of some of stupid argument about video games.  By the way, violent video games and video gamers are not an issue and dochuforgetit!   The man was not even involved in the dispute, but one of the people arguing over the stupid video game gave out his address.  The police showed up thinking there was a hostage incident.  The man, curious as to what the hell was going on, went out on this front porch with a cell phone which the police thought was a gun, and they shot him dead.

Funny thing is, we never heard from black lives matter about that incident.  But it was equally as much an injustice if not moreso than many of the incidents that BLM has highlighted.

In another incident which strikes home to me, a young man was shot dead in his car along the George Washington Parkway very near where my house used to be in Alexandria.  This resonates with me because, as I related before, I was pulled over by the police and "sort of" arrested for speeding down the George Washington Parkway.  The police officer thought he had caught Dillinger or something as he asked me to throw the keys from the car and interlace my fingers between my head and then walk backwards toward him.  His service weapon was drawn on me the entire time and if I had turned around and made one false move he probably would have shot me.  Park Police - the clowns of law enforcement.

Almost 30 years to the day and at almost the exact same location, a young man is shot in his car after he left a hit-and-run accident.  Apparently he pulled over and somehow ended up in a ditch and the police told him to halt and he tried to accelerate away at which point they unloaded their weapons and killed him.  It's unclear whether this killing was justified or not.  It's a lot easier to sit in an armchair and decide what was right and wrong if you weren't on the scene.  When somebody starts driving off, particular in your direction, you may feel threatened. We may never know what really happened and what people were thinking at the time.

All I know is, as I was walking backwards towards the police officer with my fingers interlaced behind my head, I remembered what my criminal law professor told us. He basically said that if you were assaulted or killed by the police there's very little chance there will be "Justice" on your behalf. A jury of your peers is likely to side with Mr. Friendly Police Officer, who was in fact apprehending a dastardly criminal such as yourself.  So when the police officer says freeze you should freeze. When he says drop your weapon you should drop your weapon.  When he says walk backwards with your fingers interlaced behind your head you should do exactly what he says because he is likely to blow your head off, if you don't.  Maybe that's right, maybe that's wrong, but that's just the way it is, so you better obey the rules.

And that's the problem with the black lives matter movement.  They've chosen as their poster children for their cause some people who really have kind of sketchy backgrounds.  In some of the incidences it's clearly agreed that the police officer was not justified in shooting anyone -  and police officers have been tried and gone to jail over these things. And other cases officers have been tried and acquitted but their careers have been ruined.

And in other cases, it's more ambiguous as to what was going on. Somebody decides that they don't want to be arrested and tell the police that.  But that's not a matter of your choice. The officer says put your hands behind your back you have to do just that. And you can't do things like leap into patrol car and try to snatch away the officer's gun, as happened in Ferguson.  And we know that's what happened in Ferguson because President Obama himself told us so. And yet black lives matters continues to use that young man as a poster child for their cause.

Similarly, in a case in Brooklyn, man was illegally selling cigarettes. The police went to arrest him and he refused to be arrested.  You can't refuse to be arrested that's not the way the thing works.  So the officers tackled him.  He was an enormous fat man and it took three officers to bring him down. And since he was so overweight, he choked to death and died as a result of the altercation. Was this the officer's fault or his fault or what?  The point is, if he just said, "Okay I'll go downtown you can write me your stupid ticket to appear in court, and the judge will probably tear it up and throw it away!" the whole situation would have blown over.  It's only when he decided that he had the right to decide whether or not he would be arrested or not was that the whole thing went downhill.

And my criminal law professor was right. When you resist the police, no jury is going to find in your favor. And it really doesn't matter because you're dead anyway - so whether or not a jury vindicates you after you're dead really doesn't help you much does it?

Getting back to the idea that simple answers to complex problems are usually the wrong answers, if we want address this issue of the disproportionate number of black people in jail and the number of black people being shot by the police, then we need to address the root causes. And staging protests and linking arms across busy highways isn't going to engender sympathy for your cause.  In fact it's going to generate antipathy.  And that's the problem with the black lives matter movement.  While most white Americans, at least up North, had sympathy for the civil rights movement, fewer people today have sympathy for the black lives matter movement only because the way it's being run, and who they've chosen as exemplars of police abuse.

The problem is, these "movements" are ripe for parody and mocking, even if most comedians are reluctant to touch this third rail.  Today we hear that one of the founders of the "me too" movement is now accused of "sexual harassment" herself - grabbing buttocks and genitals at a softball game in what she probably felt were a playful manner.  Supposedly.  Now the conviction by public acclaim is against her, and maybe people are seeing that like any movement, it has gone too far.

The accusations against her illustrate part of the foolishness of this "movement" - that someone can make a bald accusation and ruin someone's career overnight, without any sort of due process.  It is a new form of McCarthyism - itself a movement that seemed unstoppable but collapsed under the weight of its own hypocrisy.   These "movements" take on a life of their own and become parodies of themselves in short order.

As I noted in a recent posting, many men are being called into account for actions from decades past based on the standards of today. While no one condones outright rape or sex-for-promotion blackmail, the slap-and-tickle of years gone by was viewed in a different manner than today.  And the message we should be sending today is that women should stand up for themselves and say something, rather than wait decades to drop bombshells.   Because that would be real equality if they just could say "No" from the get-go.

Similarly, the BLM movement has to acknowledge that there is more to the story than "police racism" but rather a whole host of factors that have resulted in the situation we are in today.   Black folks are more likely to be poor, underemployed, in jail, or in confrontations with the police because of their socioeconomic condition - just as poor white or Hispanic folks are.  I'm not saying police racism doesn't exist - the experience of my Cuban friend negates that.   But until blacks are on the same economic footing as whites, there will be a disproportionate number of blacks in the justice system.  That is the underlying cause of the problem.

And that problem isn't simple or easy to solve as "end police racism".   We need to eliminate racism, period.  And this starts in the black community, where social mores are desperately in need of reformation.   Black culture today - moreso than in the past - has celebrated criminality and marginal living.   Rap music and hip-hop often glamorize the "gangsta" image and lifestyle, which does little to incentivize black youth to escape this desperate cycle of poverty. criminality, and incarceration.  When the most popular song is "fuck the police" you can see where this is going - even when many of the police officers are black themselves.

This is not to say that black folks are entirely responsible for their own plight, only that there is a factor to it, and a factor that is blithely ignored with chanted slogans and arm-linking marches.  The people gunning down innocents in the ghetto are, by and large, not the police, but gangs and gangsters.  And the BLM movement curiously does not address this.  And sadly, by making cultural "heroes" of people who rob liquor stores or who have rap sheets a mile long, they do a disservice to those folks who do try hard to get ahead, but instead are dropped by a stray bullet from a drive-by shooting.

The idea that "all lives matter" is also somewhat of an insult.

This is not to say that I agree with the outright racists out there who posit that "all lives matter!" which is just cover words for their racist views.   As the cartoon above illustrates, when someone's house is on fire, spraying water on the house that isn't on fire doesn't accomplish much.  And as the cartoon's author stated, the idea of the cartoon was to generation discussion, not shut it down.

Yes, there is a huge problem in the black community with criminality, incarceration, and death at the hands of police officers.   But the answer to this problem isn't a simple one - it is not just "racist police officers" who are the problem, but an entire system we have created that a fosteres a culture of poverty and criminality among black folks - often a culture that many are quick to defend as representing "blackness" - as if stealing shit defined who you are as a race.   I simply don't buy it, any more than I buy the argument made on twitter by a young black woman that "black people cannot be racist by definition" - as racism cuts across all boundary lines of race, class, and ethnicity.

Yes, black folks can be racist, as can hispanics, whites, and everyone else.  In fact, we all are, and often the most racist are the ones who claim not to be.  I cannot recount how many times I have been to a cocktail party with "liberal" whites who, once the blacks have left the room predicate their conversation with, "I know this sounds racist, but...." and then go on to make fun of made-up black names or ebonics, or whatever ridiculous-looking thing blacks are doing this week (and whites are emulating the week after).   Decrying racism is fine and all, but we first need to look inwardly and realize that every one of us is uncomfortable, to some extent, being around people who are "different" than us - for whatever reason.

And that's OK.  It is human nature to fear the unknown, fear the different, mistrust the people from the other tribe, the other cave.  It has been bred into us for millennia  It is a survival instinct, for God's sake!  It takes a lot of guts, courage, and faith, to embrace the unknown or the different.  It is not a natural condition of man.

So yes, black people are often uncomfortable being around whites.  Hispanics have a visceral hatred of blacks - or at least many I have met, do.   Some white folks often try to be open to people of other races on a conscious level, but subconsciously are uncomfortable being around those who are "different" than themselves, even if it is just other white people of a different social class.

Hell, we even discriminate against Canadians - and they discriminate against us as well.  Here on Retirement Island, we get a lot of Canadians as winter residents, and for the most part, they stick to themselves.  We had a course available at the Arts Association, and it was booked up with Canadian residents.  One of the participants chirped to another, "you'll like the course,  it's all Canadians!  We're trying to keep it that way, so sign up!"  Birds of a feather, flock together.

And again, this is not to say Canadians are evil or bad, only desperately human like the rest of us. We all like to be with our peer group, as we know the social norms and mores and are comfortable around them.  Being with foreigners?  It is stressful and misunderstandings can abound, due to cultural differences.

We are all a little racist.  And maybe that is the key to ending racism, or at least understanding how it works and figuring out how to make it better.