Thursday, January 31, 2019

What Changed?

Image result for living stingy bills

When I started this blog, I was living "paycheck to paycheck" which was tough, as I was self-employed.  Today I am retired and financially secure with no debt.  What changed?  Or more precisely, how did I change?

Early on in this blog, a well-meaning reader suggested that I "steal the cheese" with these credit-card come-on offers.  Get the card, cash in the rewards, and then move on - without running up credit card debt and paying 15% to 20% interest on it.   I told him that was a nice theory but that in reality, most people bite on the cheese and then the trap descends on them and kills them.   It pays to be the second mouse - so long as you don't mind a piece of cheese splattered with the brains and blood of your friend.

I read all the time about people who are living "paycheck to paycheck" and unable to figure out why.  In the news today, a Reddit story (which is not news - and may be made-up!) about an Engineer and his wife, making well over six figures each and still living "paycheck to paycheck" and unable to figure out why,   "I go over our finances again and again, and can't see the one thing that is busting our budget!"

What a shitty Engineer.   It is like an associate of mine who once told me I could increase profits of my business by "cutting out the waste."  But try as I might, there was no pie-shaped wedge on my Quickbooks expenses chart labeled "waste" that I could just click on and discard.

In Engineering, you quickly learn that there are no "hail Mary" solutions, but rather incremental improvements that are painful to enact.   Your boss comes to you and says you need to cut $5 out of the cost of a circuit board for an industrial controller.  You spend a month sweating blood, trying to cut 5 cents here and 10 cents there - badgering your suppliers for discounts and looking for alternative suppliers.  You try to figure out ways to simplify the circuit or use alternate chips.   It isn't easy, but a few pennies at a time, you may come close to that $5 goal.

Or maybe you work for a car company and they mandate (or the government mandates) that gas mileage goes up 5% next year.  Easy to say, hard to do.    In the early days, this was much easier.  Cut out weight, change the gearing, go to smaller engines, use fuel injection for better economy - all things tried and done.   But if you want to increase gas mileage every year thereafter it gets harder and harder.   You go to an aluminum body - or composites - and install a 10-speed transmission.   Use turbochargers - better yet, maybe two of them.   The cost and complexity goes up, but you reach those goals, a few percentage points - or fractions thereof - at a time.

When I was at GM, we were experimenting with putting automatic transmission fluid in the differentials instead of 90wt gear oil.   A big savings?   Maybe a fraction of a mile-per-gallon.  But add that to the fractions saved by low-rolling-resistance tires and a more aerodynamic rear-view mirror, and maybe a more efficient transmission - and you get a 1 mpg or 2 mpg increase.   Maybe it doesn't seem like much, but on a 20 mpg car, that's 5-10% - heroic amounts in the Engineering world.

And that's why I say the fellow in the article was a shitty Engineer.  Likely he is one of these dudes working for Facebook or something, writing software.  They have money coming out of their ears right now, so the idea of cost-cutting and efficiency - the watchwords in other "real" Engineering fields - are alien to them.   And thus alien to his personal life.

I learned the hard way that it isn't just any one thing that is busting your budget, but rather a host of small things.   Eating out at restaurants too much.  Those designer coffees.  Leasing new cars every three years.  Home improvement projects that don't really fix anything in your house.   New clothes when you have old ones that fit just fine.   Subscription services for internet, phones, streaming, and whatever else.

Yes, it is only a few dollars here and a few dollars there - but it adds up.   The "Engineer" in question says he is paying $250 a month for car insurance, which is about what I pay every three months (that aluminum body Ford has high collision insurance, even with $1000 deductible!!).  Likely he has had some tickets or accidents from driving like a maniac everywhere, which jacked up his rates.  Ask me how I know this - that used to be me.

Yes, I lived like that.  I was "proud" that I never checked prices when shopping as "I could afford it".  I bought brand-name products and never considered store brands, because I was "wealthy" - or so I thought.   I had cable TV, high-speed internet, two cell phones, and a host of other subscriptions.  And I had a "rewards" card so I could get flyer miles!   And a $10,000 intractable credit card debt, of course.

What changed?   I started applying Engineering principles to my financial life.  I started monitoring spending instead of just spending.  I logged all my purchases and expenses on Quickbooks - which I had done for my business but not for my personal life.  And I was appalled to see what we were spending, without realizing it.   It wasn't a big pie-slice labeled "waste" but a host of smaller things.

I was entering credit card charges and asked Mark why there were not one, but two charges to Starbucks for over $12 each.   "Well, the girls at work like to go there on our break, and it's just across the street.   Suzie forgot her wallet and promised to pay me back, and that afternoon, Lydia said she was a little short this week, so I covered for her!"

"They paid you back, right?" I asked.

"Well, I forget.  It's only a few dollars anyway, right?"

Maybe, but it was those "few dollars" repeated over and over again, over time, that added up to an awful lot of dollars.  Just as a "few dollars" a day put into your 401(k) can end up being a half-million or more by the time you retire, a "few dollars" in excess spending a day can bankrupt you slowly, over time.

Mark started drinking the free coffee in the break room and told Lydia and Suzie to go fuck themselves.

We started talking with each other about finances, and we started cutting things out.  It wasn't easy.   It was far easier to add things to your lifestyle and painful to cut them.   Cable TV was the first thing to go.   And eating out several nights a week (or ordering take-out or delivery food) was next.   We were getting fat and unhealthy and spending three to four times as much as necessary because we were "too tired to cook".   It was stupid.

We lucked out in the Real Estate world - selling our house at the height of the market and "cashing out" before it crashed.   Drunk on money, we spent it on a lake house and poured well over $100,000 into remodeling it.   That was a big-ticket item - they do exist.   But what killed us at the lake house was little things - we spend a lot on remodeling projects that added nothing to the value of the home.  We could have rented the basement apartment full-time and paid the property taxes on the place.  We could done a lot of "little things" differently.

But hey, I was still making big money, right?   No need to do that!

The money started going away and I started to panic.  An unexpected tax bill maxed out a credit card.  Suddenly it seemed we were right back in the shit.  So I started this blog.  And I started examining every damn thing we did, from large to small and started cutting things out. Even something as stupid as changing from coffee to tea saved hundreds a year (we still have coffee - made in my cheap-ass found-on-the-street coffee maker, just not every damn day).

Today, a lot has changed. My income from work is now zero.  We live on maybe $30,000 a year in passive income.   We have no debt, no mortgage, no car payments.  It makes things pretty easy to deal with and budget.   It still is a struggle, to be sure - and I can still step in the dogshit big time if I am not careful.   Being older and retired, I have no "do over" to fall back on - no job to generate lost income to make up a shortfall.

Oddly enough, I am now in a position to "steal the cheese" more than ever.  Since I have no debt, including no credit card debt, I can pay off my credit card balance several times a month and as a result, my credit score is over 820.   I get offers.

One offer from Capital One offers a 15% credit card with 1.5% cash "rewards" and a $200 signing bonus if I spend $1000 in the first three months.   It isn't hard to spend $1000 in three months on a credit card, particularly when things like the water bill are automatically debited to the card.   I put the card in Mark's name, as he has little credit in his name alone - and if you die, your spouse may find out their credit cards are cancelled, if they were taken out in your name (with the spouse as an authorized user).

Or consider this offer from Fidelity:

$150 Bonus! Confirmation Code: 
With the Fidelity® Rewards Visa Signature® Card, you could start spending smarter and saving more than you ever thought possible. How can a little card do so much? Here's how:

Unlimited 2% Cash Back
That's 2% cash back on everyday purchases deposited into your eligible Fidelity account to spend or invest. No caps. No category restrictions.

No Annual Fee
Try to find another card that gives you all this without an annual fee. We dare you.

$150 Bonus3
Earn 15,000 Bonus Points—which equals $150 cash back when deposited into an eligible Fidelity account1—after you spend $1,500 within 90 days of account opening.3

These are attractive offers, but financial bear traps for the unwary.  If I was living "paycheck to paycheck" and rolling over a balance onto one of these cards, odds are, I would end up paying interest on that balance (in addition to the 3% balance transfer fee) and it would wipe out even the $150 to $200 signing bonus in short order.

The me of a decade ago would be foolish to accept these offers.  The me of today, well, they are still loaded handguns and should be treated as such.   But I will try to "steal the cheese" on one of these and see how it works out.   If you are living paycheck-to-paycheck or have a credit card balance, I would strongly suggest you find a low-interest, low-frills card and work toward paying that off and then getting your financial house in order.  Do as I say, not as I do (today).

I changed.  It took more than a decade - and it is an ongoing process.   But it was a transformation worth making.  We talk about money more now - a lot in fact.   A friend opined that "all you talk about is money and death!" which may or may not be true.  I suspect what galled her was that we talk about these things rather than denying they exist, as most Americans do. 

Most Americans don't want to talk about topics that make them uncomfortable.  Yet, your discomfort with a subject is probably a good indication that it is something that desperately needs to be discussed.  Many married couples don't talk about money - and end up getting divorced, as the marriage becomes a "race to the bottom" where each partner sees how much more they can charge to the credit card before it all unravels.

Eventually, this change happens to everyone - some by choice, others have it thrust upon them.  The latter is often tragic to see.   An older couple loses it all through poor planning and wasteful spending (and lack of communication).   Elderly and infirm, they are forced to live on Social Security, with no excess money for even the simplest of pleasures in life.  They end up in the State home, when they run out of money and can no longer care for themselves.  Or they are reduced to begging money from friends and family members - who quickly distance themselves from them.   They learn to live on a budget, not by choice, but mandate.

I hope the "Engineer" in the article figures this out.  But it is just as likely he never will.  Many Americans view the paycheck-to-paycheck lifestyle as something that "just happened to them" like a tornado or a hurricane - a natural disaster from which they need a bailout.  They are not spendthrifts, they are the victims here, even as they make $200,000 a year, which places them in the top few percentile of income for the nation (and top 0.5% for the planet).

It's a lot easier to be a victim, and the press and the politicians are eager to help you out, in that regard.

Sunday, January 27, 2019

Revisting the Keurig

I was asked to fix a broken Keurig coffee maker and it confirmed to me that these machines are no bargain.

I wrote before about the Keurig, the coffee machine that turns something as simple as a cup of coffee into a subscription model.   Rather than buy coffee beans, grind them, and make a pot of coffee, you buy a Patented and licensed (and royalty paid) cartridge called a "K-cup" and insert it into the machine and it makes one cup of coffee - which is perfect for today's living alone generation where everyone wants to do their own thing and can't even share a pot of coffee.

The problem is, of course, cost, and the limited options.   With regular coffee, you can buy coffee anywhere from any vendor.  But with Keurig, you can only buy cartridges from people who agree to license the technology, and these by and large are the big corporate brands.   Oh, sure, you can buy the little do-it-yourself cartridge and load it with your own coffee - that sort of negates the whole "hassle-free" argument about the machine, though.

The resultant cost increase basically doubles the cost of making coffee, which is a huge cost delta, taking aside the staggering cost of these machines.  And the machines are complicated and can break down (hence my being asked to fix one) and they do require regular cleaning, lest they turn into a mold and mildew nightmare - as the one I worked on was.   And in terms of cleaning, they have a number of oddly shaped parts that are difficult to clean - we're talking spending hours with Q-tips, or as our Australian friends call them, "ear buds" - not to be confused with Apple head phones.

So the argument that the Keurig is "easier to use" and requires no cleaning is utterly specious.  If you don't regularly clean your Keurig, you'll end up in a world of woe.   And by the way, when you are done with it, you might want to leave the cartridge holder in the open position to let all that dry out.  Otherwise - mildew.

From an Engineering standpoint there are a number of flaws in the design, in my opinion.   First of all, it is incredibly complicated.  You have a removable water tank - which some regular coffee makers have - which can be a source of leaks.   A built-in tank is plumbed directly into a coffee machine and there is no failure modes possible.  But with removable tanks, you have a one-way valve on the tank, another on the machine, (both with seals) and a seal between the tank and machine.  If any one of these seals or valves fails, the thing will leak or not work.   And getting repair parts and installing them is nearly impossible, so you have to toss the whole machine.   Sure, it is "convenient" to remove the tank and fill it with water - I guess.   But it is just as convenient to pour water into a fixed tank.

And by the way, the tank on this thing is tall and narrow.  Set it in the sink to fill it and it tips over - a good way to break it.   The fact the bottom isn't exactly flat doesn't help.   Whoever designed this never had to use it regularly.   So you have to hold the tank while it is filling.

Our machine was leaking, and I removed the front face plate to investigate whether it was an internal leak or a leak (as I suspected) at this tank valve.   The thing is difficult to disassemble, and I would not recommend doing so - no user serviceable parts inside!   Inside there is a pump, a motor, an internal water tank with heater, and a circuit board.  Four wires connect to an RJ-11C jack underneath the machine, for what I am not sure (accessory items?  Internet interface?  Telephone extension?).  The inside of the machine was damp but not wet.   Cold water coming into the machine via hose causes condensation on the hose in humid climates.   But all in all, it seemed to be in good shape from what I could tell.

I realized that the tank, when inserted into the machine, was level with the countertop.   I wondered whether this award-winning design feature was causing the tank to not seat properly.  I placed some felt stick-on pads ($1 a sheet at Dollar Tree) under the feet of the device to raise it up.  This seemed to allow the tank to "seat" on the valve and the water stopped leaking.

The big problem was it wasn't making coffee.   You turned it on, pressed the button and the pump merely stalled.   Not even hot water would come out.  And this was because of the other Achilles heel of the device - making coffee pour through needles.

The way the device works is that hot water is pumped, under pressure, through the "K-cup" via two  hollow needles.  One pierces the top of the cup to allow the pressurized water to enter.  The coffee is located above filter material in the cup.  A second hollow needle pierces the bottom of the cup, and the coffee travels through this very, very narrow opening into a tray (which is removable and needs to be cleaned regularly) and out into your coffee cup.

It all sounds good, except these hollow needles are tiny and can clog easily.   YouTube is full of videos of how to use paper clips or toothpicks to unclog the needles.  I found it was the upper needle that clogged with coffee - which makes no sense, as this is where the pressurized hot water enters the device.   I suspect that somehow the pump, at the end of the cycle, is pulling a vacuum and sucking coffee grounds from the top of the cup back in.   I never found the bottom needle to clog - the needle that actually dispenses the coffee.

I cleaned the whole machine thoroughly and ran a diluted solution of lime-away through it and than ran a dozen or so cups of hot water through it (Keurig sells a "cleaning solution" and you should probably use that).   It made coffee OK, but them almost immediately jammed.   I cleaned the needles again, finding coffee grounds in the upper needle.  It may be this machine is ready to be junked, as somehow it is sucking coffee up into the upper needle - the pump is worn or something.

But after three cleanings, it seemed to work OK, and after four cups of coffee, I was quite jittery and also regular.   I noticed that if you ran hot water through it after making coffee, you would see coffee grounds come out - somehow the thing is sucking coffee grounds up into the machine.  This was particularly noticeable when I tried to re-use a K-cup (which makes a particularly weak cup of coffee the second time around!).   There may be a problem with the K-cups I used, as they were quite old.

(By the way, this is another issue I have with these machines.  "Fresh Ground Coffee" is really of unknown freshness if it has been sealed in a cartridge for God-knows-how-long in a warehouse somewhere.   Some of the cartridges I was using were "vintage" K-cup, and were sort of bulging at the top.  This may be related to the problem).

Another YouTuber opines that some cups have a thicker bottom which prevents the bottom needle from penetrating all the way.  As as result, pressure builds up, the machine shuts off, and the pressurized coffee back-feeds into the top needle.   This indeed may be the problem - or the bottom needle may have seated (sagged) over time and isn't extending as far as it should.

All I know is, this is an awfully complicated way to make coffee.  The best coffee makers are the cheapest kind.   The Braun that we found on the sidewalk in Charleston nearly a decade ago continues to work fine, because it has no moving parts.   It was probably a decade old when the previous owners discarded it.  I wash it with Lime-Away about once a year and that's about it.   It has a heating element and a switch, and when one of those goes South, that will be the end of it.  Such coffee-makers can be bought new for under $20 at Wal-Mart.

I found the Keurig to be useful, oddly enough, in group situations, such as an office or conference, where you would think a big old Bunn-O-Matic would make more sense.  But old-school commercial coffee makers leave huge pots or carafes of warm or cold coffee that is almost undrinkable.  Making coffee involves heating water to the boiling point and passing it through ground roasted beans to release the oils and aromatics from the coffee beans.  It is an olfactory as well as taste experience.  When coffee "sits" even in a heated carafe, it loses this "freshed-brewed" effect rather quickly.

Thus, at 10:00 AM, you go to the break room and pour some of that coffee left over from the morning, and it tastes like crap, even if it is hot - the aromatics have long since evaporated away.  So you throw away the coffee (which is waste) and make a fresh pot and pour one cup for yourself.  An hour later, someone else in the company repeats the process.  So in situations like that, I can see where a single-serve coffee maker might make sense and maybe even save money in terms of less waste of coffee - and produce better coffee as a result.

I note that even truck stops are going to this model.  We stopped at the Flying-J on the way back from Florida, and noticed that instead of warming carafes of hours-old coffee (or worse yet, those "tank" machines that hold gallons of the stuff) they had a machine that would grind coffee on demand, and then make one cup, like an automated barista (you 20-somethings, take note - those slacker jobs are being automated!).   The result was, of course, a better cup of coffee, but I suspect the complexity of such a machine is a nightmare compared to even the Keurig.

Of course, the cheapest and best "cartridge" hot beverage maker is the tea bag.   And after doing a cost analysis on this, we switched to tea (Trader Joe's Irish Breakfast Tea) which we drink about five out of seven mornings a week.   We still make coffee on occasion (with the old Braun) but just not every day.

Tea bags are even less "muss and fuss" than a Keurig or any other kind of coffee maker.  All you need is hot water and the bags are easy to dispose of, with no machine to tear down and clean.

The Keurig came from the pot shop, which already bought a new machine to replace it.   But I will be taking it back there shortly in any event.  The thing is a horrible counter hog, worse than a bread machine.   I doubt I will need to drink cartridge coffee anytime in the near future.  And the needle clogging thing seems to be chronic at this point - I suspect that unless the potters are religious about running hot water through it every fourth or fifth cup, it will clog again in short order.

At which point, it will end up at the curb, and unlike the Braun we snagged, I doubt anyone will pick it up.   In fact, now that I mention it, I notice a lot of these Keurig 2.0 models at garage sales, offered for sale, with the owner confiding they "already bought a new one."   Once the needles start clogging, maybe that is a sign the pump is shot and the end is near.

Everything has a design life, and often more complicated things have shorter service lives than simpler things.   It's just an inexorable law of nature - and Engineering.

UPDATE:  I put the Keruig back in the pot shop.  I noticed a toothpick and a bent paper clip where it was sitting.   Apparently, this clogging problem has been going on for some time.  I made several cups of hot water and coffee grounds were in the bottom of the first two cups.   I made a cup of Dunkin Donuts coffee and it worked, but when I went to remove the cartridge it "spit" coffee from the top of the cartridge.  As expected, when I ran hot water through it, more coffee grounds came out.

For some reason, the cartridge is pressurizing and forcing grounds back up into the upper needle once the brewing is complete.  If not rinsed out (by running hot water through it) it will clog, usually with the next cup.   Methinks the device is ready for the trash.  But I will research further.

Friday, January 25, 2019

Individualism

People's abilities are not determined by their race or gender.

One of the odd contradictions of conservative thought is the embracing of "individualism" on the one hand, and the use of stereotyping and prejudice on the other.  Granted, not all conservatives embrace the latter, but this new "alt.right" movement is mostly made of racists who postulate that white people are inherently superior to other races.

They use statistics to "prove" this point, which of course, is another example of confusing correlation with causation.  Oddly enough, there are a lot of people on the far-left who harbor similar racist views (although they would not consider them as such) arguing that certain races or genders or whatever should be given a "leg up" in life, because they are incapable of succeeding on their own merits.

The problem with this statistical view, whether it is being used by bleeding-heart liberals to justify affirmative action or by right-wing racists to justify discrimination, is that it neglects the actions of the individual.   While you can point to statistics to argue that people of certain demographic groups succeed or fail more often than others, it is the actions of the individual that often determine whether or not that person succeeds or fails.   And often it is these statistics that give individuals excuses to not try or to give up.

The video linked above is to a haunting tune, "Christo Redeemer" performed by Donald Byrd.   I was researching his background and as I commented on that site:
I was amazed to read about him and find out that he has a Bachelor's degree in music from Wayne State, a Master's degree from the Manhattan school of music, a PhD. in Music education from Columbia, and even a Juris Doctor (law degree) from Howard (!!). He played with so many famous musicians and tutored and brought along many, including Herbie Hancock, who is playing the piano on this piece.
It took me 14 years to get my law degree, and I never learned to play an instrument. Clearly Mr. Byrd is a smart and talented person, and stands as a refutation of any argument that black people are inferior in intellect or talent. Theories about racial superiority are just plain wrong.

This is not to say Mr. Byrd had an easy time of it. I am sure he faced many incidents of discrimination in his life. The point is, you have to take people on their individual merits, and not paint them with a broad brush based on their ethnicity, gender, or whatever.

Traditionally, conservatives have embraced this theory of individualism - the idea that people should be allowed to succeed or fail on their own merits. And indeed, many today profess these values and decry racial stereotyping. But lurking in the background, always, is this specter of racism that occasionally rears its ugly head, particularly today when an ill-advised tweet is discovered, or an elected official is photographed in blackface. It seems to some conservatives, individualism is a philosophy limited to whites only.

I am not sure what the point of all this is, only that if we are to be a racially-blind country, we need to be racially blind. So long as government forms have check-boxes for race (and people like Elizabeth Warren foolishly check off the wrong boxes) we will always be judging people by ethnicity, rather than on individual merit.

As a (former) registered government contractor, I was exhorted to sign up for special dispensation based on being a "small business" and would have obtained other dispensations for being a "woman-owned" or minority business, if I could qualify to check off the correct boxes. One contractor told me he put his business in his wife's name to qualify for special consideration on contracts (and hoped she never divorced him and took the business with her). It is a system that invites gaming. But it is an example of how we treat people as statistics, and not as individuals - from both sides of the political spectrum.

Of course, one could respect the argument of rugged individualism that the right promotes, if they were a tad more aggressive in denouncing the alt.right, the hate speech, and the rise of the new racism. But hey, they might vote, right? The left finds itself in a similar pickle - unable to denounce the far-left who pines for the days of Stalin, and thinks Maduro is just a misunderstood guy (no really, that's what Bernie thinks) - but hey, they might vote, right?

Thursday, January 24, 2019

Westchester

Image result for westchester
Lying about your past isn't a smart political move.

I will probably get a lot of flack and be called racist for making fun of Ms. Aleandria Ocasio-Cortez's name, which is just too damn long and hard to spell.  Alexandria is the name of a city, not a person, and Ocasio-Cortez sounds like the name of a Japanese digital watch.

How about something easier to remember and spell, like "Alex Cortez"?  No hypens or umlats or whatever.  We need to return to simpler names.

The complex name thing crosses all racial and social boundaries, too - so put down your torches and pitchforks, I am not being racist.   In the last 20 years, the new generation of  "special snowflakes" has insisted on complicated names - many bestowed upon them by their equally-as-special parents.  Three-syllable first names are commonplace today, as are hyphenated last names.  And don't get me started on funny spellings of common names - like "Nyncy" instead of "Nancy" or whatever.

The key is, of course, power-shifting.  If you misspell or mispronounce one of these crazy new names, you are the bad guy (and probably racist, even if the name you struggle with is "Tyffany Hoyt-Symthe" or something along those lines, and belongs to a white person).   It is a way of demanding special treatment in a tiny way - a "micro-aggression" if you will - sort of like people who make a big freaking fuss about ordering the special meal on the airplane.

That's the name of the game today - to be outraged and offended by everyone and everything.  And that in short, is why I no longer fly on airplanes.  I'm just a middle-aged white guy without a service peacock or some hyper-allergy or other special need, so I would get royally shit upon.  And if dragged off the plane, no one would bother to take a "viral video" of me, but instead tsk-tsk and argue that I "had it coming" what with my 400 years of oppression of native peoples and all.

But I digress.  And I hope you are not so humorless as to not recognize sarcasm.  But being utterly humorless is indeed the name of the game these days.

But getting back to Westchester, it is something that ties into Ms. Cortez's plans for 70% marginal rates, in a way.   You see, Mark and I both have ties to this County - one of the wealthiest counties in the United States.  If you are not from the New York area, maybe Westchester doesn't resonate with you, but to New Yorkers, moving "Upstate" often means Westchester or its environs, which are wealthy suburbs, like those in Connecticut, where houses sell for obscene amounts these days.

There is a stereotype of residents there.  When I was in college, we had a young fellow at the GLSA who we nicknamed "Westchester" as he often mentioned he was from there.  He was an attractive young man - sort of a Kurt Hummel type - who wore stylish clothes.  And we sort of called him "Westchester" in a mocking sense, which probably wasn't very nice, and maybe a little bit of bullying.  He was somewhat insecure, which was why he put on this air of being from the upper class elite.

Of course, not everyone who lives there is super-rich, as Ms. Cortez is quick to point out.  Her mother worked a blue-collar job, and they moved from the Bronx to Westchester to be near work. The problem with that claim, is that she has stated, on more than one occasion, that she was "born and raised" in the Bronx, and this "Bronx Tale" turns out to be less than accurate.   Her street cred is somewhat lacking. The difference between attending school in Westchester and the Bronx is staggering.

My Grandfather lived there and was mayor of Larchmont, located in that County.  Now before you say, "I knew it!  You are one of those 1% rich bastards of the elite!" you should know the whole story.  My Grandfather grew up in the early part of the last century, in Brooklyn, back when Brooklyn was the sticks.  His Grandparents farmed there, but eventually lost all their land due to bad business dealings.  His own Father committed suicide, so his mother - a formidable woman - worked buying and selling second mortgages to put her three children through City College.

He graduated, got a law degree, and went to work in a Brooklyn firm representing what is now Citibank.   He worked his way up to partner, moved to Westchester and was elected mayor - probably the first, last, and only Democratic mayor of that city.  A committed new-dealer, he was also involved in establishing new banking regulations during the great depression.

But they were hardly wealthy by Westchester standards, or indeed, even today.  He had a nice four-bedroom house in a suburban neighborhood, but it was hardly a mansion.   They had a cleaning lady, and when he retired, he bought a Cadillac, which back then was considered a "nice car".  They were comfortable, but hardly rich.  And what wealth he had, he earned from the ground up, one dollar at a time.

One reason he never became wildly rich was probably the high income tax rates back then - and we'll get back to those later. With marginal rates as high as 70%, it was hard to accumulate dynastic wealth.  And with increasing property taxes, owning a fancy "white elephant" house was out of the question for him.

Mark's Dad had a different trajectory.  After being released from the POW camp at the end of the war, he returned to the New York area where he was raised.  He inherited as small amount of money from a relative and used it as a down payment on a mansion in Westchester.

"I knew it!  More of those damn 1%'er elites!"

Calm down there, Trotsky.  There's more to the story.

After World War II, you couldn't give houses like that away.  Marginal tax rates were high - as high as 70% and property taxes were nothing to sneeze at, either.  It wasn't until a Democrat - John F. Kennedy - lowered marginal rates significantly, that there was any tax relief.

Mark's Dad bought the place not to live in (as indeed, he could hardly afford that!) but as a business. The house was huge, with a dozen bedrooms, a ballroom (with an orchestra balcony, no less), a long winding drive and outbuildings and a caretaker's cottage.   He reconfigured it as a retirement home for wealthy old ladies from New York City, whose sons and daughters paid to support their Mom in old age.

And he made a living at it.  The income paid the mortgage and taxes and employee's salaries.   But they hardly got rich from their income - and it was a lot of labor, 24/7.    Mark's Dad always drove Ramblers (and later AMC's) because they were economical and affordable.  Like I said, he hardly got rich from it.

Eventually, the State of New York required that all wood-framed rest homes be equipped with sprinklers, and the cost of installing them was more than Mark's Dad could afford.   By then, the real estate market had recovered (thanks to the Kennedy tax cut) and investment bankers from New York were snapping up these old mansions.  He sold the place and made enough money to retire to Maine.

Today, the house and grounds are worth a staggering amount of money - far more than anyone in either of our families could afford.  And certainly more than the income from a small retirement home would generate.  Times have changed and cutting the 70% marginal rate meant that a new generation of super-wealthy can once again afford these estates.

In the small town I grew up in, a similar thing took place.  In the late 1800's the super-wealthy (remember there was no income tax back then!) bought homes along the lake and built mansions and hired servants - the descendants of the latter now populate the town.  When I was growing up there in the 1960's and 1970's, these hoary old estates had been long sold off to local people, who lived in them and raised large families (we had a lot of "devout" Catholics in that town!).   I would go to a friend's house and we would skateboard in the ball room.   Again, they weren't wealthy people - they could barely afford to heat these huge homes - and often didn't, with the thermostat set at its lowest setting at all times.

But with the tax cuts of the 1980's and 1990's, all of that changed.  Over time, these houses changed hands, and the new owners, flush with new money, remodeled them to their former glory.  Some were subdivided into subdivisions and tacky mini-mansions built around them.   It seems odd, because I recall at one time, they were talking about bulldozing one lakefront estate because it was worth nothing to anyone because no one wanted "such a large house" - an 8-bedroom shingle-style "cottage"on the lake.   How times have changed.

(A few decades earlier, another wealthy resident left his lakeside estate to the town for use as a library.   Not able to afford the upkeep, the town burned the mansion down but kept the land as a lakeside park.   Monster houses require monster incomes to keep up, which is why so many rich folks leave these nightmares to the State where they fester on as monuments to themselves, for us plebes to visit and ooh and ahh over their fixtures and fittings).

Maybe, you could make the argument that it is time for higher tax rates - going back at least to Obama-era rates would be a start.  We are seeing, once again, a huge increase in income inequality over the last couple of decades.   Before the Federal income tax was instituted (and no, tax protesters, it isn't optional!) you could accumulate wealth, which in turn would allow you to accumulate more and more wealth.  The more land and businesses you owned, the more you could control, to the point of forcing others out of business.  It was not a fair system, unless you were born into wealth.

We see today, a bifurcation of markets.  In the boating business, since 2008, there are two markets - one for trailerable runabouts, and one for 100+ foot mega-yachts.   The old days when middle-class people could afford a 30' cruiser seem to be behind us.   It's rowboats or ocean liners, these days.  The lower classes can afford little more than a jonboat (unless they load themselves up in debt to their eyeballs for a fancy metalflake fishing rig).  The upper classes have millions to spend on custom-built yachts.

Airplanes are about the same.   After the war, you could afford a small Cessna or Piper and fly it on weekends, if you were a middle-to-upper-middle class person.   Today, it is all about private jets that cost tens of millions.  Fewer and fewer people can afford even a small private plane, much less have the free time to fly it or even stay current on their FAA license, which requires periodic flying time.

We see the same in real estate.  Penthouse "apartments" in New York City are selling for millions - tens of millions or even 100 million in one recent sale.   But the working class can't afford a place to live.   No worries, the same people who bought the penthouse bought up all those affordable houses after the market crash - and would be happy to rent one to you, provided you have a good credit rating.   And by the way, they own the bank that wrote you all those "private" student loans you are saddled with.

Now of course, if you are one of those folks who has all that money, raising tax rates seems like a pretty rotten deal.   And their children probably don't like the idea, either.   The very rich do end up paying a lion's share of the country's taxes - albeit at an effective marginal rate far lower than some of their employees, as Warren Buffet once noted.

A rich friend of mine once argued that she didn't understand why she should pay any taxes, whatsoever - parroting a line no doubt her Dad had taught her.  After all she wasn't earning income but rather living on dividends and capital gains.   Of course, she didn't realize that the rates she was paying on this "unearned income" was higher than the marginal rates I was paying on my earnings.

It really doesn't matter - people are people, and we all see things in the light most convenient to ourselves.  It's called weak thinking.   And we all like to indulge in it.   Some more than others.

There has to be some happy medium, I would hope.   Abandoned mansions in the town I grew up in were an eyesore and certainly didn't help the local economy.   Having people with money move into town certainly improved the tax base and brought increased business - while increasing the cost of living.   On the other hand, living in a drab stalag of soviet housing where "everyone is equal" doesn't seem like such a swell choice, either.  Nor does abandoned buildings.

I doubt we will see a return to 70% marginal rates, however.  Such rates were too excessive and indeed, curtailed the economy - as Jack Kennedy told us.   The idea that both the House and Senate could go Democratic (the latter 60% or more) and pass such legislation seems, at the present time, far-fetched.

I mean, after all, the Republicans have been so good and convincing trailer-dwelling troglodytes that the so-called "Death Tax" (actual: Gifts and Estate Tax) applies to their pitiful estates.  They will have no trouble convincing them that a 70% marginal rate on incomes above $10 million will apply to them as well.  Some people aren't confused by facts.

Of course, such a tax rate would really make winning the mega-ball lottery suck, wouldn't it?

Should You Go To A Liquidation Sale?

Image result for sears liquidation sale
Shopping for bargains is one sure way to go broke.

Sears is in its last dying throes.  Even if Eddie Lampert manages to draw a rabbit out of the hat, it looks like a substantial portion of the stores will be closing very soon. And I suspect with the damage to the brand, the remaining stores will probably go belly-up within a year or two.

So be prepared for liquidation sales.  Do these represent good bargains?   It is an interesting question, as liquidation sales are structured so that the discounts increase with every day or week and the available inventory decreases at the same time.  It presents an interesting mathematical algorithm (a non-racist one, we hope!) to the average shopper.

For example, say you go to an appliance company that is going out of business, because you want to buy a toaster oven.  And let's assume you actually need and want a toaster oven and are not just impulse-buying something because you think the price is attractive.

The same toaster oven sells at Walmart for $50 everyday.  You go to the liquidation sale on you see they have it marked down to $45 for the first week, taking 10% off.  You talked to one of the clerks and they say that each week they'll increase the discount by another 10% until all the merchandise is gone.  You take a pass at $45 as it doesn't seem that great a discount, and the "NO RETURNS! ALL SALES FINAL!" sign worries you.

Actually, that's not quite true.  Oftentimes, the liquidators only discount things so far, and it then at a certain point they load up the rest into a truck and take it somewhere and sell at another liquidation sale.  Yes this is a spoiler alert.  Stuff you might see for sale at "liquidation sale" might not even be from that store, but rather inventory liquidators had, from other stores in the chain or who-knows-where.  Liquidation sales are no different from ordinary mercantile transactions, and in fact may be so.

Years ago, when we lived in Alexandria, Virginia, there were a number of rug merchants on King Street and Duke Street that had perpetual "Going Out of Business sale!  Lost our Lease!" signs plastered in their windows.   And by perpetual, I mean a decade or more.   It was actually a shock to drive by one day, a decade later, and see they actually went out of business.   I guess it wasn't false advertising after all - all businesses eventually go out of business.   But I digress.

Anyway, you come by the appliance store next week and now the toaster oven this for sale for $40 - a 20% discount.  You're tempted to buy it because you'll save $10.  On the other hand if it's broken or not what you wanted, you can't return it to the store as it's going out of business.  If the item is defective your only recourse is the manufacturer's warranty, which is difficult to make use of, as nobody wants to pay to ship a $50 toaster oven in for repair.

So you decide to wait another week for an additional discount.  At this point you're starting to get anxious.  For starters, you want the toaster oven in your kitchen now, not next week.  Second of all, you saw another lady looking at the same toaster oven - and there was only one or two in stock - and you're worried that somebody else might buy it out from under you, before the price goes low enough for you to jump on the purchase.

Fear of missing out or FOMO kicks in. You don't want to buy the toaster oven for $40 when you could wait a week and get it for $30 or maybe even a week more and get it for $25, or maybe even $20 if you want to wait until the bitter end.

After all, wouldn't it be great to regale your friends with tales of how you got a $50 toaster oven for $25?  Once again status rears its ugly head.   And yes, people do this - I know many folks who like to boast of "getting deals" on things as if they were winning minor victories in the economic wars.   On the other hand, you don't want to be ridiculed by those same friends for paying too much for a toaster oven from a company that's going out of business.

Finally, in the end, returning to the store two or three times (wasting $10 in gas on a $50 toaster oven), you bite the bullet and pay $35 for the toaster oven which really isn't a great bargain.  After all it was a display model - it might not even work.  If it doesn't, you cannot bring it back for a refund.

What's interesting about this liquidation model is that it's a very highly complex mathematical equation, which also involves psychology.  I'm sure a mathematician could probably create a model in one or two equations, contrasting the perceived increase in discount over list price versus the risk of losing out on the bargain if someone buys it before you.  And I suspect the latter causes a lot of people to pay more than they were they would like to for these liquidation items due to fear of missing out.

(You can see why liquidation sales are so lucrative - and why many creditors would prefer to have them and cut their losses than to keep shipping product to a money-losing company.)

At the other end of the spectrum are people who are buying things as impulse-purchases at these liquidation sales.   The person you are "bidding" against in this small toaster-oven war is likely to be someone who buys it on impulse, not even realizing what these things are worth or what a good price is.  They see the word "sale" and salivate like Pavlov's dog, and just assume they are getting a bargain.   You, the wizened shopper, are shut out.

While you think about whether to wait a week or two to buy that toaster oven, Harriet homeowner comes by and says, "Oh look, a toaster oven for only $45! That's a real bargain!" and snaps it up.  Of course it wasn't a real bargain just a slight discount off of a fictitious retail priceBut her impulse shopping has ruined it for you.

And right there, it illustrates why liquidation sales are no bargains.  You are bidding against other people, in effect, in a weird form of slow-motion reverse auction, where the prices go down the longer you are willing to wait.   Someone else will buy the item, most likely, before it becomes any sort of deal or bargain.

I've been to a number of these liquidation sales over the years.  When both Hechingers and Builders Square went bankrupt, they liquidated their entire inventories.   The only real bargains I could find were specific things that I needed, that other people did not perceive as being worthwhile.  For example, there was several packages of drip irrigation equipment that were all broken open and scattered all over the floor.  I quickly realized that they was well over $100 "worth" of equipment here selling for $5 or $10, mostly because the packaging was damaged.

I was also able to scoop up some lawn light transformers, wiring, and fixtures, that again, were in broken packaging or had been returned in partial sets.  I was able to get these for a few dollars each even though the retail price was well over $50.  Of course, as I noted in my post about solar lawn lights, you can "save" a lot more money just by not buying any of this stuff at all.  It is not like they were selling oxygen.  These were wants, not needs.   Toys, really.

But unless you can perceive a bargain where others do not, chances are you're not going to find very many bargains at liquidation sale.

When in Doubt, Start a War


Popularity dwindling at home?  Start a war - and you will surely be re-elected!

It worked for Margaret Thatcher.  It worked for Saddam Hussein (for a while, at least).   It worked for Argentina.  It worked for George Bush.  It worked for so many others throughout history.  Whenever someone challenges your authority or your popularity goes down the toilet, start a war, and see your poll numbers skyrocket.

Sometimes, you may even need a pretext.  Other times, not so much.

It seems that we are poised to start another war, which would work out just fine for Donald Trump.  By recognizing the opposition (now the majority) party in Venezuela, we are triggering a confrontation with the illegitimate Maduro government, and possibly Russia itself (who now owns leases on most of Venezuela's oil fields and much of the offshore natural gas - not to mention billions in loan debt).

And it would be a much easier war to fight - only a three hour flight from Miami - the soldiers could be home on weekends!   None of this flying halfway across the world nonsense.   Better still would be to declare war on Canada (since they are already the enemy, right?).   I could just see it now, two reserve members talking:
"Oh, we've declared war on Canada, we'd better get ready to mobilize!" 
"OK, are we taking a plane or what?" 
"Nah, we'll just take my car, it's only a two-hour drive!"
That would be a convenient war, no?

Of course, one problem with these messy little wars is that the tiny countries we invade are rarely better off when all is said and done.  In fact, usually what happens is they become festering wounds that refuse to heal over time.   Even though we "won" in Korea, or at least achieved a stalemate (in a war that is technically still going on) the situation there has hardly settled down over time.  Iraq and Afghanistan will likely never return to any form of normalcy - if there ever was such at thing in either place.  Of course, the British could have told us of the perils of invading Afghanistan.  And the Russians, too.

You can see how the next war is playing out already.  We have refused to remove our diplomats, arguing that any order by Maduro is illegitimate (as indeed they are).   Maduro will do something stupid like breach the sanctity of the diplomatic compound, and that will give us a pretext to invade to "rescue" our diplomats in a Republican do-over of Benghazi.

Of course, there are flies in the ointment.   Russia has sold billions of dollars of arms to Maduro and has landed bombers there - which may or may not be carrying nuclear weapons.   Do we invade if Russian soldiers are on Venezuelan soil?   Or do we back down under the threat of nuclear annihilation from Putin?

If Trump plays his cards right, a precisely timed war could be the nexus to put him over the top for re-election in 2020.   Everybody loves a good old patriotic war to fight, particularly if we are going after "the bad guys."  And surely with all the opposition to Maduro, we will be welcomed as conquering heroes, right?

Maybe.  Maybe not.   The problem is, all the anti-Maduro people have fled the country to find things like food and jobs.   Maybe they will come flooding back in to support the new government.  Maybe not.   The other problem is, some people in Venezuela actually believe this Commie shit, particularly when it meant a better life for them personally.   If you grew up in a slum, picking garbage for a living, while enriched elites looted the economy, you might not view a return to capitalism as such a great deal.  And if you are drawing a comfortable salary (and maybe even more comfortable bribe money) as a government official or soldier, maybe the status quo, as bad as it is, is pretty good for you.

Because like a lot of countries in Latin America and South America (or indeed, the Middle East) it isn't as simple as a struggle between Democracy and Communism, but a more nuanced problem, involving entrenched interests on both sides, rampant corruption on both sides, and huge income inequality - no matter who is in power.  We may be thinking we are going to "restore Democracy" in Venezuela, but some military strong-man probably has other ideas (along with various special interest groups).

As I said, timing is everything.  Start the war too early, and it may go horribly wrong (or be over) before November 2020.  Start it too late, well, you won't be in office.

But time it just right - and its a brilliant political move, sad as that is to say.

Attention Getters

Do people hold radical political beliefs because they really believe in them, or because they get a lot of attention for having them?

It seems in the last five to ten years that our world has taken a turn towards radical belief.   Our European friends like to tsk-tsk us about Donald Trump, conveniently forgetting their own Marie Le Pen, Brexit, Yellow Vests, and whatnot - radical and often violent political movements that are spreading across the continent - often goaded on by foreign (Russian) social media hacks.

But it isn't just Europe - it seems to be a worldwide thing.   Strong-man dictators on the one hand, far-leftist socialists and communists, on the other.  Increasingly, the two are harder and harder to tell apart.   Are Maduro or Kim Jong Un left-wing communists or right-wing fascists?   If you ask the people who suffer under these "leaders" they'd probably tell you there isn't much of a difference.  The bottom line is suffering by the people and aggrandizement by the leaders.

But elsewhere, where people still do have choices, many people chose extremism, including here in the United States.   All our problems would be solved "if only" a certain political philosophy was followed - with no compromises with the opposition!   So we have people on the far-right embracing white nationalism (without apology) and people on the left advocating for a socialist or communist utopia.   Meanwhile, the vast majority - the silent majority, if you will - don't feel strongly about politics at all, and just wished the extremists would go away.

But we never hear from the vast center - they are not newsworthy, nor do they generate click-bait headlines.   The centrists are busy working and paying the bills and are not marching in the streets demanding that the status quo be maintained.   And historically, they never are.

But today, in the world of social media and click-bait headlines, extremist views are amplified - to the point where people think they represent "movements" of one sort or another.   If you listen to the press, you'd think that white nationalists make up half the country - or at least a quarter.   And you might also believe that "Democratic Socialists" make up a majority of the country or even a majority of the Democratic party.   The real truth is, these are fringe movements, representing fringe thought.

The press loves them, though, and so do you and I.   We might despise Alexandria Ocasio-Cortez (only because trying to remember how to spell her name is a royal pain in the ass) but we click on articles about her to see what outrageous thing she said today.   Then we click on some Trump article to see what outrageous thing he said today.


As I noted in a very early post:
In Howard Stern's movie "Private Parts" there is a line that illustrates how this works. The station manager is reading the latest A.C. Nielsen ratings and says:

"50% of listeners LOVE Howard Stern and listen for an average of 1.5 hours. Reason given? They want to hear what he'll say next!"

"50% of listeners HATE Howard Stern and listen for an average of 2.5 hours. Reason given? They want to hear what he'll say next!"

Whether this survey was actually true, it illustrates the twisted genius of Stern and other "shock jock" and talk show hosts, as well as television programmers. Their goal is to get you to listen or watch, so they can sell you, like a pimp sells a whore, to advertisers.

So, we ourselves "amplify" extremist thought by clicking on these stories.   We are not supporting white supremacy, fascism, socialism, or communism.   In fact, we are often alarmed by these trends, which is why we click on these stories.   But that bootstraps the whole deal - we click and the media sees this and gives us more "red meat" to chew on - more alarmist stories about the far-right or far left.

But I think also, these sort of extremist views, by their very nature of getting attention, obtain more followers.   As I noted before, every generation of young people wants to wear their hair and style their clothes in ways that alarm the older generation.   So if you see that Mom and Dad freak out if you become a hippie, all the better to become one - now you have a modicum of power in a perverse sense, over the folks. 

It really doesn't matter what the political views are, so long as they are contrary to your parents'.   For example, in the 1980's, many baby boomers were alarmed by their children espousing conservative views.  Again, this may have been less a genuine conversion to a political philosophy than an attention-getting device.

Since these "movements" get attention, people flock to them.   Like I said before, the status quo doesn't have a parade or a march you can get behind.   But the extremists do.    So which march do you join?

Funny thing, too.  When I was a kid, we did have parades for the status quo.  Memorial day, 4th of July, Labor day - the whole town would turn out, with the fire trucks (that we were all so proud of, having had bake sales to pay for them), the high school marching band, the local chapter of the Boy Scouts, the VFW, and whatnot.   Speeches would be made and we would all congratulate ourselves for living in the greatest country in the world - and of course the best town in the best country in the world!

Today, I am not so sure we have parades like this anymore.   The sense of community - the marching for the status quo - seems diminished.   Perhaps we think those sort of things are antiquated, or hokey or naive.   I am not sure.   All I am sure of is, that young people today have a limited menu of "movements" to chose from - far-left or far-right.   And when one gets a permit to march, the other will show up to cause havoc.

But speaking of marches, this "women's march" movement seems to be collapsing under the weight of the hypocrisy of Political Correctness - that and how organizations quickly morph into self-protection mode  It turns out that one group of people involved in this "movement" (which seems to have vague and loosely defined goals and demands, other than to "empower women") decided to incorporate as "Women's March, Inc."

That's all very well and fine, but this "national" organization wanted to anoint local chapters and marches, something maybe local people didn't want any part of.   And when they found out that some of the members of the "national" organization were antisemitic, well, it drove away a lot of potential members and marchers.   In New York City, they are having competing marches as a result.  I wish I could say I never saw this coming, but in every movement, there are splinter groups and factions.

One reason people are moving away from this national organization is that some of the leaders apparently espoused admiration for Louis Farrakhan, who heads the "Nation of Islam" and has made many homophobic and antisemitic comments in the past.  Some blame him for the assassination of Macolm X (factions, again), including Malcom's widow, who died horribly in a house fire started by her grandson (who later on was murdered, himself).

If it weren't so freaking sad, it would be funny.  Because in Northern California, they are cancelling a "woman's march" for being too white in a community that is mostly white (about 1% black).   As I said, the whole thing is collapsing under the weight of hypocrisy of political correctness.

It is very sad, too.   For some reason, the black community is being told that Jews are the enemy - repeating the same old tired saw about Jews being "slave-traders" in the past, when in fact, the vast majority of slave-traders, slave shippers, and slave owners, were God-fearing Christian folk, who used the Bible as justification for enslaving a race of people.  Folks are buying into the myth because of what they are reading on social media.  And what they read on social media could be coming from Russia or God-knows-where.

But hey, we have people today who believe that vaccines cause autism and that jet airplanes are spraying chemicals on us.  Our friends at the Internet Research Agency have really done their job - and our public schools haven't done theirs.   Skepticism and analytical thinking have really taken a hit in recent years.

How will this end?   Eventually - eventually - people will come to their senses.   But likely there will have to be a lot of suffering or even death before this happens.   Lincoln said it best - "You can fool some of the people all of the time, or all of the people some of the time, but not all of the people all of the time."   And he said this as he lead the country through its greatest war - one that slaughtered more people than all of the other wars we've engaged in, combined.

Which leads me to believe that we may be headed for some sort of war, sometime in the not-too-distant future.   And that is what Putin (among others) are aiming at.   So many Americans today are already talking about "secession" from the country or forming "sovereign nations" in their back yards, or dividing California into two or three States.  We must overcome the tyranny of Washington!  After all, it is so much worse that the tyranny others are suffering from Caracas, Moscow, or Beijing.  Americans really need to get out more and see the world - and see how lucky they are.

But maybe that won't happen.  Maybe folks will start to see through this nonsense and see that extremism is a vice - even in defense of liberty.   Maybe.