Thursday, September 19, 2019

Stocks v. Bonds - Again

Who owns a company?  The shareholders or the bondholder?  The real answer may surprise you.

Back in the olden days, if you wanted to start a widget company, you sold stock, which represented shares of ownership in the company.  If you made money, the shareholders were paid dividends, which represented their share of the profits of the venture.  It was really a pretty straightforward deal.

If a company needed to borrow, they went to the bank, or maybe issued bonds.   But bonds, as a percentage of the "Enterprise Value" of the company, were a pretty small fraction.

All that has changed.

Since those days, corporate bonds have become a thing, and it many cases the real owners of a company are the bondholders not the shareholders.   As bondholders, you are a creditor of the company - someone owed money, just as the suppliers might be, or even the company pension plan.   If the company goes bankrupt - which today seems to be more of a "when" thing than an "if" thing - the creditors often end up as shareholders of the new company and the existing shareholders are wiped out.

The Sears debacle is a case-in-point, and has been the world's largest slow-motion con-job to date.   We all saw this coming for years.   Mr. Eddie Lampert drove the company into the ground - perhaps by design - by failing to update the stores or product lines.   Over the years, unprofitable stores were closed and many of the assets, including brand-names, sold off - with the money often going into Mr. Lampert's pocket, directly or indirectly.

When the charade of turnaround plans and "shop your way" finally collapsed, guess who ended up owning the remains of Sears?   You betcha - Mr. Lampert.   You see, he "lent" money to Sears over the years until he became their largest creditor - also shareholder and CEO, but that's not a conflict of interest and donchuforgetit.   When Sears went bust, he lost his stock "investment" but walked away with the rest of the company.  Oh, and he got paid all those interest payments on the loans he made to Sears over the years - so he likely didn't even lose money in the bankruptcy.

Now, whether this turns out to be a smart move remains to be seen.  Mr. Lampert is apparently betting on either a revival of Sears, or making money by slowing selling off the remaining bits.  Sears probably would have failed in any event - but the way he dragged it out, he ended up making money from the carcass of this old company.

Other shareholders, of course, are outraged, but largely impotent.  Oh, sure, they'll sue, and lose - and the cost of litigation has already been factored into Mr. Lampert's scheme.   In the end, Sears will either finally dissolve, as Radio Shack did, or maybe emerge as a niche market retailer - but I think that is highly unlikely.   But you never know - tiny Sears stores still thrive in many small towns and in Alaska.

Multiply Mr. Lampert's scheme by 1,000 and you understand the scope of modern "Vulture Capitalism".   This is the same sort of scheme that made Mitt Romney rich - and totally unsuited to be President.  It is the sort of scheme Trump used to make money from failing casinos - and walk away from the wreckage unscathed.

Why do we let this happen?   Well, in short, there is no one else around.   Companies like Sears, or some small manufacturing company with a pension and hazmat problem are basically toxic assets.  No one wants the job as CEO of a failing company with no realistic turnaround options.  So the sharks come in, picking off the weaklings - cleaning up the environment and restoring balance to the ecology, in some respect.   The government could step in, I suppose, and slowly wind down a company like Sears, making sure the money received went into the pension and healthcare funds, and paid suppliers, instead of making a few people very wealthy.   But how could the government decide which companies should stay in business and which be wound down?  The results of such actions in response to the last recession illustrate that such actions could end up being arbitrary in nature - if not outright political.

So when a company is wounded, there is blood in the water, and the sharks start to circle.   And there is no one there to stop them, once they take over a company and start loading it up with debt - all in a complex plan to fail, while avoiding any obligations to suppliers, pensioners, or workers.

What can you do to stop it?   Probably not much, other that to make sure your company is healthy and has a good long-term healthy outlook, instead of, perhaps going on strike the first time the company shows a reasonable profit.   It also illustrates why relying on a pension is a sketchy thing these days, unless it is from the Federal government or some larger State or municipality (although, I guess California is the exception, perhaps other time bombs are waiting to go off).

Could we pass laws against this sort of thing?   Perhaps, but they would be hard to enforce.  Mr. Lampert can claim - with a straight face - that his turnaround plan, based on "shop your way!" was a serious attempt to revive the Sears brand, but that he was just a shitty manager and screwed everything up.  The classic "My Bad!" defense.   I'm not a criminal, just an imbecile - and he can say this and it is hard to disprove.   Of course, the fact he lines his pockets with Sears money sort of gives the game away.

But as an investor, what does this mean?   Well, for starters, owning stock isn't as attractive as it used to be.  I owned $5000 of the "old" GM stock, which went in value down to zero in short order.   The bondholders of GM bonds, however, ended up getting paid off - pennies on the dollar, of course - in "new" GM stock, which today has gone up in value to the point where those old bondholders might be doing pretty well.   They are doing better than I did, of course.   I ended up with nothing - as did a lot of other people.

This doesn't mean, of course, that bonds are the answer to everything.    I hate extremism - do all of this, none of that, eat all of this, none of that (which will surely make you sick).   Only that owning stocks isn't the end-all to investing, and can be quite risky, even if you are investing in "blue chip" stocks like IBM, GM, GE, and so on and so forth - few of which, of course, are "blue chip" anymore.

A diversified portfolio with reasonable rates of return is, in my opinion, better than some speculative investments that may pay off handsomely, or end up bankrupting you.

Too Many Investors, Too Much Capital?

The problem with our economy it's not too little investment capital, but too much.

Overpriced houses, overpriced stocks, overheated bonds, and ultra-low interest rates have one thing in common: too many investors seeking too few opportunities.

It may seem an anathema, as most economists claim that the fundamental cause of economic distress is a lack of available Capital.  But what happens when there's too many investors and too much money flowing into an investment market?

What happens if people start looking for things to invest in and there's not enough stuff to go around.?   Perhaps that's one reason why IPOs are hyped so much in the press these days, and why so many people invest in them.  There's not a lot of other stuff to invest in these days has an adequate return on investment.

Compounding the problem is that private-equity just sucking up all the oxygen in the room.  Some people claim private equity is taking so many companies private that there not many stocks left to invest in.  Of course, there are also corporate bonds, which have exploded in recent years.  The returns are very low, even for junk-rated bombs. There are so many investors out there that you're bidding against other people for the privilege of taking huge risks for very little return.

All of this money floating around means that people are willing to even accept negative interest rates as we are seeing in Europe and as our President is proposing for the United States.  People want a place to park money, that's safe even if it means they lose a little bit over time.  Negative interest rate mortgages are now a thing, overseas.

The housing market is also a case in point . People want to invest in houses and bid against each other and drive prices through the roof.  Low interest rates certainly threw gasoline on this fire.  Ordinary people who just want a place to live, are being priced out of the market, at least for the time being.

Of course, one reason people have all this money is that so many of these assets are overinflated in value.  People think they have more cash than they do, but the whole thing could come crashing down if prices for these investments and commodities decrease.  Of course, it doesn't help that the government prints more money, does it?   Inflation stays low - for the time being - as these investment markets are sucking up all the excess cash.  Wonder what happens when people try to cash out?

When that happens, pundits will then publish articles asking "where did all the money go?" when in fact, the money never existed.  People tend to value things by the price the last idiot paid for his house, or stock, or bond, or tulip bulb, or whatever - and that does not necessarily represent the value of the entire inventory of those investment assets.  Just because somebody paid $188 for the last share of Facebook stock sold today, doesn't mean all the shares are worth that much, if the company was liquidated.

In many places in the world, the lack of available capital is a fundamental problem in their markets. Since there is no money to lend or borrow, businesses cannot get started or expand.  They have to build a business using only the profits from the business, which means expansion is slow and methodical, if at all.  The US is attracting capital from all over the world as people looking for safe harbors to invest in as well as to increased gains and rates of return from their investments.  As a result, they're flooding into our investment markets, including real estate, stocks, bonds and even government bonds, driving the prices of these commodities through the roof.

And you can't blame foreigners for throwing their money at US stocks, bonds, or houses.  Overseas, investments can be a crap shoot, even in Western countries.  Want to invest in bankrupt Italy or Greece?  How about the nightmare that is about to become Brexit?   China is a swell place to invest, provided they don't nationalize your business, line you up against a wall and shoot you, or just prevent you from taking your money with you when you leave - if they even let you leave.   All down the line, foreign investment is looking less and less attractive over time - at least at the present time.  Possible great rates of return are tempered by the extreme risks involved.  Some half-assed Silicon Valley IPO looks safe by comparison.

Income inequality may be yet another factor.  As I noted before, if you are mega-rich, you can only buy so many mansions, super-cars, and mega-yachts.   The rest you end up investing.  And with more rich folks owning more of the capital, they are looking for more places to invest - and not finding them.   Thus, they park money in low-rate bonds, or take wild risks on IPOs - or use "private equity" to buy companies and load them up with debt.

The excess of capital - at all levels - even explains the exuberance over gold and Bitcoin.  Since most companies aren't making much in terms of rate of return (based on stock price or bond price) these speculative investments appear more attractive - particularly to the small investor, who sees his portfolio growing painfully slowly.

The advent of the 401(k) hasn't helped matters either, as it has turned many ordinary Americans into amateur investors, and that excess capital is tossed into onto this heated pile.   We may be in for a passive income bubble, according to some.

Like anything else, it is possible that maybe we need less capital in the marketplace, not more.  If this money isn't being spent as well as invested, then no one ends up making money in the long run.  You can't run a company making widgets, if no one is buying them - but buying your stock, instead.  But perhaps there is good news - the baby boomers are retiring, and as a result will be cashing in their stocks (I already started, a couple-hundred grand, last year).    This money will be spend - on cars, meals, groceries, and of course, the medical industry.   This may depress stock prices in the short-term, of course, but that will also mean stocks will look more attractive and have more reasonable P/E ratios and that bonds will have better effective rates of return.

I suspect, in the long run, the market will stabilize itself.  But in the short term, some folks are going to get hurt in this crazy era of negative interest rates and fractional rates of return.

Wednesday, September 18, 2019

Get Back to Work You Lazy Slobs!

When you cause your company to go bankrupt, you are not "saving" the company.

The UAW - the Union of Assholes and Whiners - has decided to go on strike against GM, because despite the fact GM is making money, they are very vulnerable right now, having had to shed their European divisions, and looking to lose the cash-cow that is China.   Toss in a recession and threat of high gas prices, and we're right back to 2008.

But unions do that - they strike when the company can least afford it - so they have leverage.   It is like beating a man when he is down.

But what made me laugh out loud was a comment printed in the paper from some union slacker.  "We were there for GM during the bad times, and now it's time for GM to be there for us!" - or something to that extent.

What he doesn't realize is that the reason why GM went bankrupt was the UAW.   The UAW forced a contract on GM that required them to pay people not to work and required them to keep plants open that were losing money.    These assholes weren't "there for GM" in its time of trouble, they were the ones causing all the trouble.

Sorry, go sell crazy somewhere else.

The left is hoping that unionism takes hold again in America - and it just might, as a whole generation has been raised in a largely non-union country, and their only exposure to unions is maybe some old Woody Guthrie songs.

But I worked there - and saw the workers sabatoging the assembly lines out of boredom or childishness.  I saw the foreman getting punched in the face by one of these UAW thugs and then the union demanding we hire his attacker back with back pay plus interest (sadly, management caved in).   I saw the people showing up late - or not at all, or drunk, or on drugs, or dealing drugs in the plant.  I saw the payroll at our plant, where forklift drivers were making 42 grand a year - in 1979.   I saw it all.   You can't play this bullshit game with me.

Or many other people.  We all bought your Vegas and Chevettes and Monte Carlos that were assembled slap-dash, cost a fortune, and never went over 100,000 miles.   Most Americans were desperate for an alternative to the crap you made, and when Japanese cars came along they bought them in droves.

And today, the Japanese make cars in the USA and actually export them - something GM, Ford, and Chrysler say is impossible to do.   And these same non-union workers make quality cars and work for less money that you do, but still manage to "feed a family of four" on their salaries.

But again, a whole generation has been raised knowing nothing but imported cars - they never had to deal with a car that had holes rusted through the body within three years of purchase.  They never had to deal with cars with blown transmissions or engines long before the payments were up.   They never had a car that some UAW worthy put a coke-bottle in the door as a prank - leading to a lifetime of rattles and shakes - and no, that isn't an urban lengend, Snopes, it was life on the assembly line - where four out of eight chassis bolts were installed on your Caprice - if you were lucky.

Of course, quality has improved at the "big 3" - although Chrysler always seems to come in last.  The reason for quality improvement isn't the UAW, though, it is the sale of all the parts divisions of those companies.   Today, the parts in your "American" car may be from Japan, China, Europe, or even a foreign-owned factory here in the USA.   I just ran into a fellow who works for a Japanese brake component company - they make calipers for all the big automakers, foreign and domestic alike - right here in Indiana.

The "big 3" are now just parts assemblers and the assembly plants are merely where the magic happens - where piles of parts are bolted together to make a car.  It ain't like the old days at the Rouge, where iron ore went in one end, and Model A's came out the other (along with Kingsford charcoal).

So quality has improved, because parts quality has improved - parts made largely in non-union plants.  But even so, quality of "American" cars lags far behind that of Japanese, Korean, and European cars (Fiat excepted, but then again, they are an "American" car company now).   And with the Chinese and Indians already starting to import cars, well, you can see the writing on the wall - now is not a good time to be striking, but rather a good time to be working to keep your job and keep your company in business.

Why does "American" quality lag so far behind the competition?   Cost.   The UAW has blackmailed the "big 3" for decades now, threatening or enacting costly strikes, to the point where management caved in every time to every demand.   As a result, the cost of labor, including the cost of health care and retirement costs, has skyrocketed.   As automation has increased - and that is not a choice anymore, but a mandate to survive - and as market share has decreased, these companies are now top-heavy with retirees - with each GM worker carrying two retirees on his shoulders.

When you are at a cost disadvantage to your competitors, there ain't much you can do but die a slow death.  You can hope to sell a niche product that others aren't selling.  In the late 1950's, Rambler and Studebaker thought they could beat the "big-3" by selling small cars.   By the early 1960's, the "big-3" fought back with the Falcon, the Chevy II, the Dart, and the Corvair.   Studebaker was history, and Rambler became "AMC" and tried to compete in the muscle-car era.   Some clever engineering allowed them to hang on for a while, before that clever engineering moved over to Chrysler.

The "big 3" have tried to sell big SUVs and pickups as their niche product, to beat the Japanese and Germans.   It worked in the early 2000's and it is working today - the pickup truck still is the best selling vehicle in America.   But Nissan and Toyota both are making bigger and bigger trucks.  Maybe not an F350 just yet, but wait for it.  The Japanese carefully and slowly fill each market niche before moving onto the next.   It was only a few years ago that "real men" dismissed "jap pickups" as mere toys.   Today I see people in the rural West driving Toyota Tundras and Nissan Titans to the feed store, and no one is mocking them for it.

GM, Ford, and Chrysler have abandoned the car market - that is to say, the sedan market in favor of these monster SUVs which are more profitable, at least for the time being.   Activist "investors" are pushing them to do this.   There is, of course, still a market for "cars" and we see millions of them on the road everywhere - but the market is now exclusively for the foreign makes, who now have a clear playing field.

Again, the last time this happened was a decade ago - in 2008.  Chrysler abandoned most of its car line in favor of SUVs.  Then the price of gas spiked, making them unaffordable to drive.    Then a recession hit, and no one wanted to buy a $50,000 SUV or pickup.   Today, those cost close to, or over, $100,000 now.

GM, Ford, and Chrysler are making profits, sort of, for now.   Ford is being written-off as dead on arrival, due to its debt load and lack of China exposure.   Its Chinese operations have made little, if anything for Ford, if not in fact operating at a loss.   Chrysler makes money on its big Ram pickups in the USA, but hemorrhages cash in Europe where strong unions mean that Fiat loses money on each car made.

GM is the most profitable of the three, but most of these profits come from China.   One could argue that GM is in a good position for a strike, as inventories of vehicles are starting to increase, and "days on lot" for even hot models are stretching out.  A few mid-engine Corvette fans might be disappointed, but that's about it.   Hell, half the Chevy Silver-a-doo's are made in Mexico, anyway.

This strike may actually increase GM's profit margin in the short-term.   Not only that, it will force some of its weaker dealers to fold their tent, which GM needs anyway, as they have far too many dealers for their current US market share.

Perhaps the UAW, looking only at GM's short-term profit picture and not the long haul, is making a huge mistake.   Maybe, this time around, management will show some backbone, instead of caving in to every UAW demand.   Maybe this is the strike that breaks the back of the union once and for all.

But then again, union slackers are never the brightest bulbs in the universe.   They fail to realize that their cushy jobs - often paying several times the prevailing wages in their community - are only there because of a mafia-like organized crime approach the union takes - threatening management with rack and ruin if they don't comply with their demands.   Of course, some unions are more than mafia-like, but actual mafia.   Remember, I used to be a Teamster.

Unions suck.  Unionism sucks.  The type of people who are attracted to unions are the types of folks who have no real talents and don't like to work hard - the antithesis of civilization.  Put down your stupid signs and get back to work, slackers!

Tuesday, September 17, 2019

Self Defense v. Stand Your Ground

The media likes to gin up controversy where there is none because it generates clicks and revenue. This is disgraceful.

In a recent incident in Georgia, three teenagers tried to rob some people standing out in front of their home. The teens age 15 to 16 approached the group while wearing masks over their heads. One drew a pistol and started firing it at the residents. Unfortunately for the teens, the residents were armed and fired back, killing all three of them.

Of course, it's unlikely that the residents will be charged with any crime, as they were defending themselves from an armed robbery.  Once people start shooting at you, or even if they wave a gun at you, you have a right to defend yourself from threats of imminent death or great bodily harm.

That is the classic definition of self-defense. If you do ever get in a situation where you killed someone, the only thing you should say to the police is, "I was in fear of imminent death or great bodily harm," and "I want a lawyer."   Say nothing else.

It's a pretty straightforward story and a pretty open-and-shut case of self-defense. But the news media has to make it into something it isn't by mentioning stand-your-ground laws and the fact that Georgia, among 10 other states, has such a law. They then quote the self-defense statute and claim this is the stand-your-ground law which it is not.  They're trying to conflate the two things together to make it seem like some sort of outrage that these young hoodlums were gunned down trying to rob and murder people.

Stand-your-ground laws really merely codify an aspect of self-defense.  In some jurisdictions, the question has come up as to whether self-defense allows you to use deadly force against someone who is trying to attack you, if you haven't at first use other, less deadly alternatives, such as retreating from the scene.

If somebody comes after you brandishing a baseball bat saying, "I'm going to bash your goddamn head in!" do you have an obligation to try to run away from them?  Suppose you could run away from them and avoid being hurt?  Or can you simply draw your pistol and shoot them as they clearly intend to hurt you?

The problem is, of course, in situations like this, no one is really thinking very clearly.  In the heat of the moment, one might not necessarily be thinking logically enough to measure the distance between you and the nearest police station and calculate the relative running speeds of the attacker and the victim and determine whether you have a clear avenue of escape.  In fact, it would be impossible to make such mental calculation at the spur of the moment.

Of course, in the courtroom, weather at a civil trial for wrongful death or the criminal trial for manslaughter, people can raise these questions in the relaxed atmosphere of the courtroom where people have hours, if not days, to consider such questions.  In the light of day, it may seem rational that someone could retreat and should have made that choice.

Some conservative States saw this is an outrage. They saw this as an example of the law of self-defense being watered down in favor of criminals. If people were required to make such mental calculations before using the right of self-defense, they could end up as victims. Even if they successfully defend themselves, they might end up being victimized later in court.

Sadly, the media likes to do this sort of thing, conflating self-defense cases with stand your ground cases. They want to vilify the stand-your-ground law and will use any case as an example of why the law should be repealed.  The BBC in particular was quick to label this a "stand your ground case" because the Brits love to run down America (the Guardian and the Independent do little else).   Perhaps this distracts people from the looming fiasco that is Brexit.

The most famous example of this conflation of self-defense with stand-your-ground, is the Treyvon Martin case where a young hispanic man shot young black teenager who he suspected of burglarizing homes in this area. Many people were outraged that he was acquitted of the crime, as he argued that he was only acting in self-defense when he shot the teen.

Regardless of whether you think that case was an outrage or not, it was not a stand your ground case. The defendant never raise the defense of stand your ground, but rather  common law self defense.  And the reason is pretty simple - it is a lot easier to win a self-defense case without clouding things with stand-your-ground.   If you felt you were going to be subject to "imminent death or great bodily harm" then lethal force is justified.  If you raise the stand-your-ground issue, things get more complicated.   Thus, few cases are brought under the stand-your-ground statute, as in most cases, it is just an unnecessary complication of a self-defense defense.

Of course, in Florida and most other States, juries are instructed - even in self-defense cases - that the defendant accused has no obligation to seek retreat or other avenues of escape, if he felt he was threatened with imminent death or great bodily harm.  And this applies in States with and without "Stand your ground" laws.  Only Vermont has an explicit "duty to retreat" enacted into law.  Some argue that this is an outrage - again, that people who are being robbed, mugged, raped, assaulted, or murdered, have to look around and figure out the least intrusive means of of disabling or evading their robber, rapist, mugger, or murder.

I can tell you firsthand, when someone is chasing you with a length of steel pipe, threatening to beat your head to a pulp, there isn't a lot of time to do that sort of calculation.   I ran away, only because it was my only option at the time.   And I was lucky in that I was able to outrun my attackers.   But suppose I hadn't been lucky - or suppose I was armed, instead?   It becomes a messy question, and Monday-morning quarterbacking is all-too-easy to do.

What it gets down to is the fundamental right of citizens to defend themselves versus the rights of criminals to have a "safe space" to commit their crimes.   From what I understand, places like Baltimore, Chicago, Newark, and now Minneapolis are now declared "safe spaces" for criminals to commit assaults, robberies, or even murders, without having to face hazards in their workplace. Perhaps OSHA is now regulating this.  No one would mind if the criminals went on strike for better working conditions.

Of course, what people on the left fail to realize, is that there is a 100% safe way to avoid such workplace injury, and that is to not assault, rob, rape, or murder people.   You see, "stand your ground" and self-defense don't apply when no crime is being committed.

And that was, of course, the point of the Treyvon Martin case - it was unclear what crime, if any, the young black teen was committing.  The only witness to the incident was the defendant at trail, who claimed he was being assaulted by Martin, although one other witness claims he saw Martin standing over Zimmerman, punching him.  His physical injuries and a 911 audio seemed to indicate that this might have been the case - or at least enough for a jury to find reasonable doubt.

But bad cases like that make for bad law - and using that case as a poster-child for abolishing "stand your ground" laws is like using Chelsea Manning as a poster-child for transgender rights.

What irks me is that the left seems to be enamored of criminals as of late, putting the rights of criminals - including violent criminals - over the rights of citizens.   This sort of thing isn't going to sell well outside of certain left-leaning States.   Sure, it may win California - but the Democrats will win that State anyway.   It may not sell well in the States the Democrats need to win.

Outlawing Hamburgers

The far-left has given Trump all the ammo he needs to win next years' election.

The Democratic Demolition derby continues to go on.  A few participants are out of contention early.  Smokin' Joe might have blown a head gasket, but he hangs in there, while Kamala Harris appears to have stripped the gears in her tranny.  If she can't get it moving in the next few minutes, she'll be disqualified.

But of course, this is just the preliminaries. The "winner" of this contest, goes on to fight the incumbent President in the next election.   And he's got a pristine, brand-new "beast" to drive in that round.  Meanwhile, whoever wins the Democratic Primary will come to the general election pretty well bashed and beat-up.   It isn't a fair fight, and ousting an incumbent never is.

But Democrats are unnecessarily making things harder than they have to - to the point where I think they actually want to lose, so that they are not blamed for the next recession, and also to get the far-left to shut up and sit down.  Trump's campaign ads - and those of associated PACs - have juicy soundbites to work with.  They can claim - with a straight face - that Democrats want to outlaw cars and hamburgers and force everyone to become vegan.   It isn't quite true, of course, but some on the far-left actually believe this sort of thing.  So all you have to do is trot out some sound bites and people will believe.

The problem with these positions is that while they may have currency in some extreme leftist enclaves on the coasts, in the rest of America (who also can vote) they make no sense whatsoever.  We are in Indiana, after driving across Nebraska, Kansas, Missouri, Idaho, Washington State, and Oregon.   Most of these States are largely agricultural, and many of them have large cattle and dairy businesses, as well as crop business related to dairy and cattle.   Huge bales of hay are trucked down the road and then stacked up to build barns of hay bales and then covered with tarps - that's a lot of cows to feed!   When you start talking about outlawing hamburgers - or even implying that the meat business is bad for the environment (which it may or may not be - that's beside the point) you are going to lose votes and lose elections in those States.   Veganism doesn't sell in cattle country.

I drive the most popular selling vehicle in America, the Ford F150.   And there are a lot of them out there, too - not only in the wild west, but in the big cities as well.   Arguably GM sells even more pickup trucks, but loses out in the "best selling" contest because they brand them as Chevies and GMCs.   The point is, Americans love their pickup trucks and big SUVs and that isn't about to change anytime soon.   The Democrats position is, you are a bad person for eating a hamburger and driving a pickup truck and should be punished.    Maybe that isn't actually their position, but it is what they appear to be selling.

I said before, you don't win elections by telling people they are pieces of shit.  Maybe you'll get the masochist vote, but that is a slim slice of the electorate.   But not only that, the idea of telling one group of people they are right and another they are wrong, is just, well, wrong.   You see, many on the "left" are also politically incorrect, but try to bumper-sticker over their transgressions.  I don't know how many people with "Coexist" bumper stickers I see speeding in a Prius, because they are late for the global warming protest.

Or take my politically-correct brother (please!) who now drives a lumbering SUV, but only after his hippie theater group dumped or leaked toxic chemicals (acetone) at their commune-farm - and left rotting old buses by the side of the road there to slowly leak oil into the ground.   And how many "politically correct" types do you see driving cars that burn oil?   It's like the "public transit advocate" who has to drive their Volvo to the important public transit meeting because, they're important and everyone else should be taking the bus.

The point is, no one is 100% right or 100% wrong in these debates. And we need to realize that each side has something important to say, rather than just shouting each other down.

Monday, September 16, 2019

Prudish Schoolmarms & Kavanaughty

It used to be the far right was the part of the spectrum that shamed sex.  Today, Democrats have jumped on the bandwagon.

Back in the 1960's and 1970's, it was the era of "free love" and "do your own thing."  Ideas we thought were outdated - about sex and marriage - were tossed aside in what was to become a new liberated era.   Or so we thought, anyway.   By the early 1980s, gay men started getting sick, and the spread of various venereal diseases was on the rise.  Many started to wonder if maybe this was why our forbears had such contradictory ideas about sex - desiring it, and shaming it at the same time.

Nevertheless, while Anita Bryant and Jerry Falwell and his "Moral Majority" attacked this new era of libertines, the Democrats defended our rights to defile ourselves.   Fast-forward a few decades and a new Jerry Falwell is embracing a conservative GOP President who is something of a libertine himself.  Meanwhile, the Democrats are realizing that the intersection of women's rights and sexual liberation is a difficult crossroad to traverse.   You can't support "free love" and "me too!" at the same time, particularly when free love wasn't necessarily free for everyone involved.

And in the interim, our society changed as well.  Times Square went from a collection of seedy porn shops, XXX-rated movie theaters and live sex shows, and of course, prostitutes and pimps, to a G-rated Disney experience.  We embraced the sexual revolution, but only if it was kept behind closed doors and not talked about.  We embrace gay politicians, so long as they are gay only in theory, and don't do that icky stuff.

We are more liberated than ever, and you can go online using your phone and "hook up" with a partner who is interested in the same sexual fantasies as you are - at least in theory.  Because many of these "hook ups" amount to little more than "sexting" which has replaced intimate contact.   Despite our liberation - or maybe because of it - some are reporting that young people today are having less actual sex than young people in the past did.

It is an interesting conundrum.

The Democrats, trying to work up some sort of majority that would actually win elections, are trying to woo the female vote, and thus embracing the "me too!" movement over, perhaps, the interests of the sexual libertines. The Democrats have gone from free-love advocates to scolding schoolmarms, chastising those naughty males for being, well, male.

Of course, this scolding doesn't end there.  They tell people in the Midwest States - which they derisively refer to as "flyover States" - that their big pickup trucks are ruining the environment, their cattle business and hamburger drive-ins are causing global warming, and that they will have to surrender their guns because, well, they're the problem - beastly males with their big diesel pickups and rifles and cheeseburgers and penises!

It is an odd way to try to sell yourself to voters in those States.  Because while most women appreciate the "me too!" movement sentiments, there are also women who are sexual libertines as well.  And there are women who are conservative and see through a lot of this as posturing rather than actual action.  And I think a lot of women see it is as a good thing taken too far.

Make no mistake about it, sexual harassment is no joke.  Rape isn't funny.   But then again, the sort of accusations being raised against Justice Kavanaugh are almost stupid.  Someone says he put his wanker in the hand of a woman when he was in college - decades ago.  When asked about it, the woman in question wants nothing to do with it.   Kind of hard to have a "me too!" moment without the "me!" in it, unless his fellow fraternity brother claims to be horrified at the sight of Kavanaugh's penis.  Yet, we are told with a straight face, this is grounds for impeachment.

The Democrats have been on a losing streak. They've lost governor's mansions, State houses, and even the Senate and House.   Sure, the mid-terms allowed them to pick up a few governorships and the House, but with Trump as President, the gains should have been much higher.

The problem is, the message the Democrats are selling isn't a positive one. They are telling the electorate that they are worthless pieces of shit and moreover that they are the problem in the world - by merely existing in time and space.  If only those "baskets of deplorables" would just off themselves, the world would be a better place!  Meanwhile, Trump tells the electorate they are beautiful people and the problem is someone else - a heady and toxic cocktail that has instant results, but usually results in an extended hangover.

The problem with the Democrat's message isn't just that they will continue to lose "The Flyover States" - which they need to win the electoral college.    And by the way, that is the exact reason the founders created the electoral college - so that populous States would not outvote the less populous ones.  Our entire government is structured this way - ever wonder why Rhode Island and Delaware get the same number of Senators as Texas?   Same deal - but you don't hear noises about changing the Constitution to appoint Senators on the basis of population, doya?

So no more loser talk about the electoral college or how the Constitution should be amended - it simply isn't going to happen.  You want to win elections, then win over the voters - all of them, not just those on each coast.

But the problem is deeper than that.  You see, while many on the left think the "deplorables" that are being shamed are other people and thus support this platform, what they fail to realize is that they too may be tossed in that basket, by mere dint of making too much money or owning a disposal in their kitchen.

Torch and pitchfork is a fun game to play, until you realize the peasants are coming after you.   The French Revolution and rein of terror was a jolly good time and all, until it turned upon itself, and the executioners became the executed.  This is where we are heading.   Those who fail to pass a party purity test will be purged.  And you think you may be safe - but you aren't.

THIS is why Trump is so popular in the heartland of America.  The snake oil the Democrats are selling just makes no sense - that convinced child molesters should get free sex changes, but that a fraternity brother who boorishly exposes himself at a drunken beer bash should be shamed for life. There has to be some sort of middle ground here.  There has to be a policy that makes sense and isn't just some pander to various demographic groups.

The Democratic platform can't just be a collection of apologies and promises of free money.   It just isn't going to sell!

Sunday, September 15, 2019

Safe As Houses

What does the phrase "safe as houses" mean?

In the Elvis Costello song, Indoor Fireworks, he uses the phrase "we thought we were safe as houses" which I didn't understand, really.  At first, I thought this was an idiosyncratic use of a words by the lyricist, but recently I learned that this was a bit of very old British slang.

The phrase - which dates back more than a century - refers to how investing in a house was about the safest investment you could make - better than the Bank of England!  Oddly enough, this came about after the speculative railroad bubbles of that era burst.   And no doubt, presaged some sort of housing bubble.   Perhaps the term was used sarcastically after that point.

What is interesting to me about this phrase is that it illustrates how far back the obsession with real estate investment goes.   This is not a new thing.  People have viewed houses as a "solid" long-term investment that would never go down in value - for a long, long time.

Of course, as recent events (recent to me, anyway) of 1989 and 2009 illustrate (and as 2019 seems to be echoing) housing prices can go down as well as up.   When supply exceeds demand, it doesn't matter whether "they aren't making anymore" land - if there is no one there to buy it, prices can drop.

We drove across vast stretches of arid land in Idaho, Montana, Nebraska, and even Kansas - land suitable only for grazing.  A recent baiting article online lists the top 50 families (or some such nonsense) who own all of America's land!  Well, at least 2% of it, anyway.   Ted Turner is among them - owning zillions of acres of this arid grazing land.   It isn't worth much to anyone.    You can't build on it - no water.   You can't put a factory on it - it ain't near anything, not even roads.   You can't plant crops on it - again, no water.   All you can use it for is grazing - and it takes acres and acres just to feed one cow.

The only way you'll get mega-rich from it, is if they can frack on it - and that presumes you win geological lottery and have oil beneath it.   Even then, the amount you get from oil leases may pale in comparison to how much the oil companies make.

Land - or houses - is not some safe-haven investment.   In fact, few things are.   Even government bonds have risks, not necessarily of default, but in terms of value.   You pay $1000 for a government bond earning 2% interest, it will be worth $900 if rates jump to 5% or more.  The price of the bond will adjust to the market conditions.   Unless you hold the bond to maturity, you can lose money.  And even then, well, you haven't made much.

Safe as houses - an interesting concept, but a flawed one!

Paycheck to Paycheck on $350,000 a Year

The problem with budgets is that they always show every dollar spent.

A lot of financial advisers say you should establish a budget for your spending.   It may be helpful, but budgets are only general guidelines, and as governments everywhere illustrate, they often end up being wildly out-of-wack with reality.

The other problem with budgets is that they can be manipulated to show that we need more money - there isn't enough money in the budget to pay for everything!   There is no money "left over" after all the budget items are paid!

Relax.  There is never any money "left over" in anyone's life.   Whether we put it into a retirement plan, pay down the balance on our mortgage, or spend it on food or clothing, all the money gets spent.   That's the nature of it.

Two baiting articles published recently illustrate this problem.  Both had click-bait headlines designed to get you enraged, which the powers-that-be want you to be, all of the time, so all you see is red and you never really think about things.  Both articles are designed to fan the fires of class and generational warfare as well.

The first has an obscene title claiming that a family of four is "barely getting by" on $350,000 a year and their budget "proves" it.  Of course, they are more than "barely getting by" but in fact are socking away 10% of their income into a 401(k) plan, paying down a mortgage on what must be a half-million dollar home.  Oh, and they spend $24,000 a year sending their kid to preschool.  That's more than the average American can hope to spend sending a kid to college each year, in case you weren't paying attention.  Barely getting by, indeed.

The rest of the article is hilarious, if it weren't so sad.  They spend $600 a month on clothing (!!) with the notation "Old Navy not Gucci!" (the latter of which they surely are entitled to and would have, if not for Trump!).   Old Navy is, in my opinion, rather overpriced.   I have a few pieces, of course, that I bought at a thrift shop.  But then again, I'm not proud.

The other item is the car payment on a Toyota Highlander, which has the notation "Not the Range Rover!" (the latter of which they are so clearly entitled to, but Trump or Obama took away from them).   No mention on why day care - excuse me, preschool - costs more per year than I live on.  But hey, how's the kid going to get into Harvard (which again, they deserve) if he goes to the wrong preschool?  You think I am crazy, some people in New York actually think this way.  No, really.  Seriously.  I know, it's stupid, but they think it.

What is really sad is that this family is headed for woe.   Assuming they have been married for five years and they have been contributing 10% of their income a year to the 401(k), at best they can hope to have $1M to $2M in savings by retirement.  This equates to maybe $50,000 to $100,000 in income, in the year 2050.   How in hell are they going to go from $350,000 a year to $50K  a year, if their spending habits are like this?

But again, this is a BAITING article, designed to get people riled up, and here I am, getting riled up, over nothing.  These folks are comfortably wealthy, and well-off.  Well off enough to spend countless hours at Old Navy every month buying hundreds of dollars of clothes and paying as much as most people do for a car, every year, for pre-school.  I'm not worried about them "barely getting by" at all.  I would save my worry for the poor black teen working an after-school job at McDonald's, trying to help his Mama by bringing home some extra bucks, staying out of trouble, and trying to avoid being recruited into a gang.

That's a real hero.  I wonder what the budget for preschool for his children will be?

The second article is a similar attempt at BAITING and class-division.   The article states that "old people" (which I guess means me and Joe Biden) are "blaming" young people for their own malfeasance in signing onerous student loan documents.   Apparently, it wasn't their fault - someone forged their name on the loans!  Oh, wait, that wasn't the case.

The poster boy this time around is a guy who has $200,000 in student loan debt and no job and no way to pay it off, ever, ever, ever!   Oh, wait, that isn't true.  He actually is making well over $100,000 a year as a fashion designer.   He can pay this off - over time.  His complaint? That his parents or grandparents had it easier as they have a nice home with an ocean view, which he is so obviously entitled to, at age 28.   He has to struggle with a "starter home" with plumbing issues.  Why can't you start at the top?   Why can't you have all the things your parents strived for over 50 years, just right out of college?

Of course, what our young friend fails to see is that Grandpa had it "so easy" in the 1930's when unemployment was as high as 30%, and then he went off to fight the Nazzis and saw his best friend's head blown off at Anzio.   And maybe Dad had to serve in Vietnam - but even if he didn't, he saw 10% unemployment, 10% inflation, and 14% mortgage rates - and even-and-odd gas days - in the late 1970's.

Yea, those earlier generations had it so easy.  Fuck them!

But the other half of the equation, regarding housing, is that over time, the population increases, and the cost of housing goes up.   When I was a kid, there was undeveloped land along the lake my parents lived on.  My parents had to sell the lake house, as the taxes were too high.  Today, that house is worth millions (my parent sold it for $300,000 - a king's ransom in 1985!) and I could not afford to live in it.   I bought a less expensive house on a less expensive lake - guess what?   I could not afford the property taxes, either.

I learned a hard lesson - I am not entitled to everything my parents had.  Then again, they never owned a color television until 1975.  They drove shitty cars (a Vega, a Volare) and scrimped on many things, so they could have that fancy house.   They certainly didn't spend $600 a month or even the inflation-adjusted equivalent, on clothing.   And no, not anything on preschool.

Comparing my life to theirs, however, is silly.  As I noted before, it is impossible to compare the relative worth of things between generations.  Maybe the cost of a can of Green Giant green beans can be compared between 1945 and today, as that product (or one nearly identical to it) exists in both worlds.   But comparing things like telephones or televisions, or even things that didn't exist - such as internet service - is pointless.

It is like with cars.  Another recent article laments "why cars are so expensive now!" - because we have more money to spend now, and want all the toys.   My parents' cars were largely deathtraps.  Radial tires and disc brakes were only a "thing" by the early 1970's.   Airbags?  Anti-lock brakes?  Seatbelts?   You've got to be kidding me - we didn't have such things back in the day - and if a car came with seatbelts, the first thing Dad did was cut those things off with a razor blade!  Bloody nuisance!

Today, I have a truck that can park itself.  Heated and air-conditioned seats with massage.  Even comparing this to my 1995 Ford, which had the "luxury" of power windows is idiotic.  Comparing it to the 1964 Ford that my Dad shared with a few other Dads, is ludicrous.  It barely was a vehicle!  Today, you can't hardly buy a car that doesn't have air conditioning and power locks - once only something seen on Cadillacs.  We are a much wealthier nation today.   

But no one wants to hear that.  What they want to hear is "we are all victims!" - not just the guy in the ghetto struggling to get by, but the suburbanites and the city dwellers, making well into the six figures.  They are finding out - horror of horrors! - that even making a big salary doesn't make you rich, unless you spend less than you make.

It is something I found out, late in life - almost too late - and the reason why I started this blog.   I thought that once I made 20 grand a year back in the 1980's, I'd be rich.   Maybe 30 grand would do it.  Then I was making 50 - and still not rich!   Eighty, ninety - a hundred - and still not swimming in money!   Of course, I had a house by then, and a car payment, and nagging credit card debt.  But I should be filthy with the stuff!    I kept trying to make more, but it was like running on a treadmill - the faster I ran, the further I got behind.   Jane! Stop this Crazy Thing!

The problem was - and is - the same problem the folks in the articles cited above are having.   They thought - as I did - that now they are making "big money" that they should be instantly wealthy.  So they spend like they have money they don't have - and banks are more than willing to offer them e-z credit terms and merchants are more than happy to take their dough.   They have "stuff" but no wealth!  They are not getting ahead!  They put $1 in their 401(k) plan last week and it didn't turn into a million bucks!   The system is stacked against them!

The secret to wealth is to accumulate money, not spend it.   You can't "invest your way to wealth" through shrewd stock picks or systems.  You have to have money to invest firstAnd that means making sacrifices which no one wants to make these days.   It means putting $100 more into an after-tax savings plan and $100 less into Old Navy.  It means buying a used car and driving it that extra year, instead of buying the fancy car you think you are entitled to because your neighbors and coworkers have them.

The richest guy on your block isn't the guy with the fanciest car, but likely the dude with the battered minivan.    You can't park a shiny 401(k) in your driveway, though, so no one can tell who has more money.

My mistake in life (among many) was to go from $50,000 a year in income to $150,000 a year - but not keeping my lifestyle at the $50,000 level.  It is very, very hard to do, too.   Once you have a few extra bucks in your pocket, the car dealer and the fancy restaurant and the designer clothes start calling.  You feel you've "made it" and are entitled to a reward for "all your hard work" - not realizing that "all your hard work" takes 30 or 40 years to realize.

And that is why I started this blog.   I am not sure how to help that poor kid in the ghetto working at McDonald's - he has real issues and real troubles, and is a real hero if he can overcome them.

The folks profiled as six-figure-salary "victims" in these articles?   Sorry, no sale.   No one felt sorry for me, as a successful young lawyer making big bucks, when I spent it as fast as I made it.   No one feels sorry for these folks, either.  You can't be "broke" and make over a hundred grand a year.  There are people with real problems in this world, and these folks don't count among them.

Oh, and I did pay off my student loans - eventually.   It was "only" about $38,000 of course, but that is equivalent to about $70,000 today.   Was college cheaper back then?  Maybe.  But then again, I also worked several jobs to pay for college - over 14 years of night school. I didn't have to borrow money to pay for my personal living expenses.   I doubt any of these fuckers in these "oh woe is me!" articles ever had to deliver a pizza, or work the 10PM to 4AM shift at UPS, while they were in college.

Oh, right, our generation had it soooooo easy! 

But then again, I am being BAITED, here, aren't I?  The people who write these articles want us to get upset.  They want the young to hate the old, the old to despise the young.  They want the rich to belittle the poor and the poor to envy the rich.  Divide and conquer - the oldest game in the book.   If we don't see we have common interests, it is so much easier to play us against each other.

And we are the same people, too.  If I am "angry" at these young yuppies whining about how hard it is to live on a six-figure salary, it is because I was the same way at that age and made the same stupid mistakes they are making.   And nothing I can say will prevent them from going down the same road I did, learning all the same damn painful lessons I had to learn, often at the expense of thousands, nay tens or hundreds of thousands of lost dollars.

If the old blame the young for their own problems, it is because the old made the same mistakes at the same age, and realize they were mistakes and indeed their own fault.   It takes a half-century to own up to your own malfeasance, it seems.

And yea, that makes me angry.   If there was only some way, this knowledge could be imparted from an old brain to a young one.  If there was only some way to "go back in time" and knowing then what I know now....

Alas, I fear this will never come to be!  The television isn't going to put on a "reality" show about spending less money, unless it mocks the idea, because advertisers wouldn't pay to advertise on a show that promotes thrift and savings.

If only there was some way for someone to write down what they learned over the years, and then communicate that information and those hard-fought and hard-won lessons to a younger generation.  If there was only some way!