Tuesday, July 5, 2022

This Flag is Your Flag!


This flag belongs to all Americans - except the Nazis and Confederates.

I went to Dollar Tree the other day and they had Fourth of July decorations on sale. I spent five dollars and decorated our golf cart with a dozen flags, bunting, ribbons, and other patriotic tchotchke.  It was fun for the 4th to have a decorated "buggy" and I got a lot of waves and hellos from people.

Some folks assumed that since I was flying the America flag, I must be a Trump supporter.  The weird thing was, the folks who thought this were either Trump supporters themselves, or people who hated Trump.  It seems the far-right has attempted to hijack the American flag as a symbol of their own, and in some minds, has succeeded.

This is not right.  This is our flag - America's flag.  It belongs to all of us.

It is the flag that fought off the British to establish our economic freedom.  Granted, it was not a perfect freedom - but it was the 18th century and we were the first country to declare Democracy in the modern era - and probably the oldest Democracy as a result (the Isle of Man and Iceland notwithstanding).  Sure, things are better in some European countries - they don't have an archaic electoral college.  But it always makes me laugh when someone from Germany runs down America as undemocratic.  Say there, Fritz, who installed your current democratic government, and what came before that?  Yea, that.   But I digress.

This was the flag that fought against slavery - and tried to make our union more perfect.   Today, we have slavery apologists trying to use the American flag as a symbol of their far-right racist views.  Sorry, no sale.  The American flag stood against those values - in 1865 and today.

The American flag was the flag of the army that fought the Nazis back in 1945.  Yet today, neo-Nazis are trying to use the American flag as a symbol of their own.  Nice try, Nazi-boy.  But you got the wrong flag!  This here is my  flag, not yours!  You wanna be a Nazi?  Go fuck yourself!

Sadly, we have let the far-right co-opt the American flag as their symbol - and went along with it.  I run into people who are leftists who claim the American flag is a symbol of oppression.  But it is also a symbol of freedom, progression, and enlightenment.  Just because the other side wins once in a while doesn't mean we should give up - or let them define what our country is all about.

The far-right is often clumsy in their use of the American flag.  Trump was famous for his over-the-top flag displays - so many flags crowding the stage or the Oval Office that it looked like a curtain of flags.  Sort of like Putin and is comically over-sized conference tables.  Overcompensating, perhaps?

Trump also made a fetish of hugging and kissing the American flag - again to overcompensate for his utter lack of real patriotism or love of the real values of this country.  This is the guy who dodged the draft - more than once - claiming to be a super-patriot.

We need to take back the American flag as a flag for everyone - well everyone who really loves this country and our democracy.  People who want to celebrate "rebel pride" or think Hitler wasn't so bad - they can't have our flag as a symbol of their hate.  The American flag is only a symbol of oppression if we let it be.

So fly the American flag.  We should make sure it is present at all protests and rallies and whatnot - the ones advocating for real freedom, not dictatorship or insurrection.   If we can claw back our flag, it is a start.

Because if we let the crazy people lay claim to the American flag, then they lay claim to America.

And we can't let that happen!

Monday, July 4, 2022

Coup Two

It looks like Trump had more people at his insurrection than his inauguration!

I was re-reading my recent posting on knowing when to leave and wondered whether maybe it was already too late - or soon will be.  Suppose - just suppose - Trump runs again in 2024.  He loses, of course, both the popular vote (which he lost both times) and the Electoral College (which he lost last time around).  But the GOP has been proactive in installing Trump-faithful as Secretaries of State in many swing States as well as other election officials faithful to the GOP.  If the GOP wins the House and Senate in the mid-terms, well they have a lot more leverage this time around.

Last time around, it came down to about a dozen people or so doing the right thing - Vice President Pence, for starters.  Next time, it would be Kamala Harris in the hot seat, but if electors are challenged and enough votes are tallied to disqualify a State's electors, who knows what could happen?   At the State level, election officials might refuse to certify their State's tally (as one tried to do last time around), once again making vague claims of "fraud" without any real evidence.  State legislators may decide to appoint their own slate of electors.  It could get messy.

It could be even more direct - the rioters at the Capital last year assaulted police officers and shouted "hang Mike Pence" and bought a gallows along to do the job.  Also, many were armed.  For whatever reason, the violence did not escalate beyond where it did - although people were killed and seriously injured.  Suppose next time around, it's gloves off?  They start gunning down Capitol Police and Democratic legislators? 

One would presume that a Democratic administration would take precautions - calling out the National Guard if necessary, or mobilizing the Army.  They would not let a riot just "happen" as Trump allowed it to.  We are realizing, just now, how close we came to losing our country - it was a matter of a few people doing the right thing - Trump's limo driver was an unsung hero.  It was also a matter of a few people who were doing wrong things to not do more wrong things.

Right-wing Christian nationalists have infiltrated the military, that much is clear.  It only takes a few people to get a coup going, particularly once the opposition is lined up against the wall and shot.   If that happens, what's next?  No doubt, Trump would declare "Martial Law" as the MyPillowGuy (the new Secretary of the Interior) suggested.  After all, the country would need to calm down after all that violence (that Trump instigated) - right?

And with martial law comes restrictions on travel - and restrictions on taking money out of the country. It is what is going on right now, in places like Russia, which is Trump's role model.   Worse yet, a coup government is a weak government - they know they only have a minority support and need to instill fear on the rest of the population in order to keep them in line.   Trump would have to round up opposition leaders, intellectuals, members of the press (other than Fox News, of course) and anyone who might be perceived as a threat.  And sadly, he would have a willing civilian army - well stocked with weaponry - who have been waiting for this day to come for years.

Neighbor would turn on neighbor.  It would be Kristallnacht all over again.  Brown-shirted (or brown-panted) thugs would intimidate anyone perceived as "different" or "disloyal" to the new regime.   "Owning the libs" and "making them cry" would take on new meaning.  They have much to learn from the "death squads" of Central and South America.

By then, it would be too late to leave.  Your only choice would be to stay and fight - or die.  Or both.

Dramatic?  Extreme?  "It could never happen here?"  Maybe.  Maybe not.  The history of the world is rife with such examples of coup d'etat, many of which were instigated by our own CIA in small foreign countries.  As for "It could never happen here!" - it has in the past.  The Civil war was anything but civil and an attempt at insurrection - in fact, that is the term used to describe the "rebels" - insurrectionists.

And we know how the civil war played out - the bloodiest war our nation ever fought in.  More dead than in every other war we have fought in, combined.

Maybe this is alarmist.  Maybe things will turn out OK.   It is hard to say, but one thing is clear: politics are no longer a matter of fun and games.  It isn't a matter of differences of opinion.  People are willing to kill over these things, as evidenced by the rise in racial and other killings in our country (and abroad as well).

With this sort of thing, it never ends.  You don't just defeat fascism and then sit on your laurels.  It is more like whack-a-mole, where you have to continually fight for your freedom.   It is sad, but many folks have forgotten just how bad things were back in December of 2020 and into January of 2021.  The GOP tries to gloss it over as a mere protest, and the rioters mere tourists wanting to visit their nation's capitol.   It was a lot more than that.  We had a President refusing to accept election results and making noises that he wasn't going to leave.

So much of our country - our democracy - is based on people doing the right thing.  Many on the far-left and far-right complain that the two parties are not that different - that they get along and work together too much.   But "my way or the highway" accomplishes nothing, and leads to more divisiveness and eventually, to violence.

If Trump gets the nomination, I think I will have some foreign travelling to do!


Sunday, July 3, 2022

Retirement Might Be Cheaper Than You Think!

We are living on not a lot of income, mostly because everything is paid-for.

When I was working, I would talk with financial advisors who would say asinine things like, "When  you retire, you'll need to make about 60-75% of your highest gross income!"  Some idiots claim you'll need to make 80% of your highest income(!).

Let me tell you, that's bullshit.

In my prime, I was making the vaunted six-figure salary, which today is considered pretty middle-class.  But back in the day, it was a big deal.  And at one point, I was making close to two-hundred-grand a year.  Whoo-whee!  I thought I was rich!  Turns out I wasn't.  But hey, we had a vacation home, boats, cars, an RV and we traveled the world.  So yea, we were pretty well off - and still are.

But today, we are not making 80% of our last income.  In fact, we are making far, far less - by design.  If I was making 80% of my highest income level, I would be paying a shitload of taxes.  Moreover, since I would not qualify for an Obamacare subsidy, I would have to pay about $25,000 a year in medical premiums.  I probably would not be able to retire before age 65 at the earliest.

We live on $100 a day - about $36,000 a year.  And we are hardly starving.  We have a late-model car with low miles on it, a de-luxe pickup truck to tow our new camper trailer with, and we spend three months a year touring America.  Once all this pandemic nonsense dies down, we hope to travel overseas again.

Financial advisors are full of horseshit.

The advice they gave me scared the crap out of me at the time.  To make 80% of my highest income, using the 5% rule for retirement, I would have to save up nearly three million dollars - in savings alone!  That's a pretty daunting task for anyone, even someone making six figures.  In fact, it's pretty darn near impossible to do.  You'd have to put nearly half your income into savings or work until you were dead.

So why were they so wrong?  Well, I think for starters, they want to sell you investments.  Whether it is insurance policies or mutual funds, they get a commission on each sale, so the more they can sell you, the more money they make.  So they use fear to sell you another investment or another policy.  You are going to end up destitute in your old age if you don't put all your money into your 401(k)!

And you should put money into your 401(k) - no doubt about it.  Don't take this the wrong way, I am not saying you should be a spendthrift or assume you can live on $10 a month when you retire.  It ain't like that.   But if you haven't saved up $5M by the time you retire, it isn't like you are going to starve.

The second reason they make such a wrong assumption is that they assume  you are playing the IRS game, where you are mortgaging your life to the hilt in order to get a tax deduction, so you will have hefty mortgage payments until the day you die. They assume the only real drop in spending in retirement will be because you commute less, eat out less, and don't have to have your suits dry-cleaned.  Hey, that's 20% right there!

But not having a mortgage, not having credit card debt, not having car payments, not having student loan payments and so on and so forth, make a big, big difference.  When you are old, you hardly drive - our hamster has 30,000 miles on it in seven years and looks and drives like new.  At this rate, we'll have it for two decades before it hits 100,000 miles - presuming we need it that long.   When I was "working" I put 15,000 miles a year on my cars, and traded in on average, every four or five years or so.

It becomes a game - to see how cheaply you can live.  We stopped going to malls and "shopping" a long time ago.  We find great bargains at the thrift stores - particularly ones in wealthier neighborhoods.  You can buy a nice shirt, hardly used (sometimes brand new) for a dollar or two.  Or,  you could go to Abercrombie and pay $100.  It is a choice.  Often it is the same shirt.

We eat at home - and eat well.  When we were "working" we went out to eat - a lot.  We also sent out for food or took home "takeaway" foods.  This increased the cost-per-meal by a factor of four or five.  It wasn't healthy either.

Of course, years ago we cut the cord on cable.  Today I pay $25 for my Internet hot spot and we stream video from that onto an old television.  We subscribe to one channel (or just YouTube) at a time and pay for one month of service - which is all you need to see all they have.  Some folks pay hundreds of dollars a month for "all the channels" and high-speed internet and the latest smart phones.   Are they getting more out of the deal, or just getting depressed and fat sitting in front of the TeeVee wolfing down bad delivery pizza.  Been there, done that.  I wish I could take it all back.

The point is, relax.  Life doesn't end in retirement.   It can be a real mess if you retire with massive debts and no savings.  And that does happen to people who don't plan and don't think they will ever be laid off.  Plan on being laid-off at age 55 or so - it happens a lot.  If you aren't laid-off, well, good for you - you have the option of retiring early.  But have a plan in place because it many cases, people lose their jobs in their 50's and never work again, or work at a second career for far less money.

If you are socking away money in your 401(k) and paying down debts - and have a plan to be debt-free before you retire - then you probably will do well and have a comfortable and happy retirement.  But don't stress about having to save up millions of dollars to maintain 80% of your current income in retirement.  Chances are, you don't need that kind of money when you retire - or shouldn't anyway.

And beware of financial advisors - they lie like a rug!

Saturday, July 2, 2022

McDonald's and Optimal Pricing Strategies

The most efficient merchant charges the optimal price for each customer - the highest each customer is willing to pay.

I've written before about fast food.  It isn't fast.  It isn't food.  It isn't a very good bargain.  But Americans love it and it is hard to get away from.  We don't eat a lot of fast food.  According to my Quickbooks log, in the last 54 months, we've visited McDonald's maybe 28 times or about once every other month.  Some people go every day.  Today we spent several hours at the camper doing work for our trip.  It was hot and we were tired and Mark suggested we get a quick sandwich.

It was an interesting experience in economics.

I wrote before how we were travelling a few months ago and drove through a McDonald's and got a coffee and fries. It was like eight dollars!  The fries alone were nearly four bucks.  I was disappointed to say the least.

A couple of months later, we stop by a Micky-D's with the trailer, so we can't go through the drive-through. I go inside and use the kiosk and tap on "Deals".  They had a chicken sandwich with fries for about three dollars or a double cheesburger with fries for about the same.  This is the "small fries" in the paper sack that is so hard to find outside of a happy meal.  No, I don't need an entire fried Idaho spud in a cardboard box, thank you.   Anyway, the total, for two people, came to $7.11.  While I was waiting, I looked at the menu and realized that some sandwiches cost nearly that much, particularly the fancy things that were heavily promoted on the menu.

On today's trip, the total was even less - $6.36 for a "Spicy Chicken" sandwich and a "McDouble" both with small fries.  More than enough food for two people and well under ten bucks.   Others in line were buying $20 worth of food.  Why was this?

The worst way to go to McDonald's is to go through the drive-through and order off the menu.   The most popular menu item at McDonald's is the "I'll have the uhhhh,....uhhhh.....uhhhhh!" - which is by design, as the menu is very confusing to read.   People get to the head of the line and they panic - and they order the flashiest thing they see and don't look at the prices too closely.   So they spend over eight bucks on one "meal" while I am spending less than that for two people.

Of course, McDonald's has an "app" and you can use that through the drive-through, with mixed results.  I noted before the app was buggy and some restaurants were refusing to fill app orders.  Apparently, McDonald's has a new app (which wiped out all the "points" people accumulated with the old app) and maybe it works better.  If you sit down and look at the menu choices, you can see there are low-priced items and "deals" to be had - far less costly than the featured sandwich on the menu board.

It struck me, though, that this was an excellent example of optimal pricing.  The busy construction worker goes through the drive-though and orders the first thing he sees on the menu.  He doesn't care about the price as much as he wants fast service and doesn't have time to dick around looking for coupon specials.  The retiree, on the other hand, is living on a fixed income and has time to scour the menu for bargains.

Whether you are selling soap or hotel rooms or automobiles or hamburgers, the game is the same.  The "wealthy" shopper (who thinks they are wealthy anyway) doesn't look at prices and buys brand-name detergent.  The thrifty shopper buys the store-brand soap (made by the same company) or uses a coupon.  The hotelier sells rooms to businessmen and tourists at the standard "rack rate" but fills empty rooms using discount promotions or through online services.  The automobile company has a make and model for "every purse and purpose" (as we used to say at GM).  From lowly Chevy Biscayne to fully-loaded Cadillac, there is a price point for every shopper.  Only an idiot would sell the same product to everyone at the same price

So it is also true at Micky D's.   You can spend a lot or spend a little.  The people in a hurry will pay more.  Those who have the time and want to save money will pay less.  It is a choice.

Of course, it still is cheaper to make food at home.  A chicken patty, a bun, and some lettuce and mayonnaise cost maybe a dollar or so overall.  A small handful of frozen fries, far less than a buck.  You just have to take the time to put it all together, which we usually do.

Making food at home is the ultimate price point for stingy folks, and our default mode of operation (and one reason you can retire on a lot less than you think - my next blog entry).  It is also why we rarely eat out anymore and when we do, it is either because we are traveling or because we want to share a special treat with friends.

But if you do eat out, there are price choices, even within the same restaurant, even with the same menu items.

UPDATE:  A reader writes to remind me about IN-N-OUT burger, a chain that is popular on the West Coast.  They have a simplified menu, fast service, and fixed low prices.  Sort of the model McDonald's had back in the 1960's.  Sadly, the lady who owns the place is not only anti-gay but an anti-vaxxer as wellShe makes Chik-Fil-A look progressive.  Then again, most successful major corporations are run by heartless conservatives.  The companies run by bleeding-heart liberals all went out of business.

Friday, July 1, 2022

The Bubble Bursts

When it costs more to own a house than to rent it, housing is overpriced.

A recent article in the New York Times notes that as of April, it costs more to own a home than to rent one, in many markets.  We've been down this road before and it was one of the very early topics of my blog, over a decade ago.  Back then, we were just coming down from the real estate debacle of 2008.  We lived in South Florida in the early 2000's and saw housing prices skyrocket 20-30% every year.  And while rents went up, they didn't go up as fast as housing prices did.

We looked at houses that cost $3000 a month to buy, but were renting for $1700 a month.  We weren't just talking about a small difference but rather a huge delta - nearly twice the cost for the "privilege" of owning and maintaining a home.  It made no sense at all and eventually the market collapsed.

Why did people pay so much for homes? There were a number of reasons, from mortgage fraud (not what you think it is) to the basic irrationality of human beings.  Everyone was caught up in the real estate bubble and stories about buying and flipping houses were rampant.  Sadly, some folks held out for years and then said, "I guess we better get in on this real estate gig!  Everyone else is making money at it!" - and those were the folks who were hurt the most.

Crazy financial instruments, from "payment optional" loans to balloon notes, were used to "get people into" a home, much as leasing is used to "get people into" a car.  Only later on, on the back-end, when the bills come due, do the real costs manifest themselves.

I wrote recently how, this time around, people are using weird loans based on potential AirBnB income projections, to over-pay for houses.  It is a neat idea, but you can only have so many vacation rental properties on the market before it becomes saturated.  I suspect more than one homeowner is going to find their AirBnB projected income to be largely imaginary and the wear-and-tear on the property huge.  It is like driving for Uber - yes, you can make money destroying your car, but you don't make a lot of money and once everyone drives for Uber, no one drives for Uber.

There are, of course, some weird reasons people keep paying top dollar in overheated markets.  For example, people doing a Starker Deferred Exchange might have to buy another property or else face a withering 25% capital gains tax.  So, for example, a landlord has a property in Florida they want to sell.  They "roll over" the proceeds to a house here in Georgia, and avoid capital gains tax.  They then live in the property for 3 out of 5 years and declare it as their personal residence and can now sell it tax-free.  So long as they don't lose more than 25% in equity, they come out ahead of the game.

In some markets, too, people are "buying ahead" of the market.  The cost of rents do go up over time, as well as home values.  So you pay 10% more for a house than you ordinarily should have, but within a few years, you are in a situation of positive equity and what's more, your carrying costs are less than comparable rental costs.  But usually situations like this are only 5-10% deltas over the cost of renting - not the near 100% differences we saw in Florida in 2007.

But the main reason is emotional.  People are emotional creatures and rarely logical ones.  So much is would up emotionally in real estate, which is, for example, why agents call them "homes" and not "houses".  They want to suck you into this nesting idea, and young couples of a certain age fall for this trap.  It is understandable - a young couple is having a baby and owning your own home projects the image of stability and comfort and commitment to each other.  People pine for the family homestead, even if it is just a myth.

So, just as people buy overpriced cars for emotional reasons (to impress people they don't even know), people buy houses for a plethora of emotional reasons.  And yes, status is one of them ("OMG! You're not still renting are you?  All my friends own their own homes!").   People want to impress others with their apparent wealth, and owning a home and a fancy car is one way to do it.  Mark regaled me with stories about recent immigrants in Alexandria, who wanted to buy a certain kind of house - the cheaply built, but expensive-looking mini-mansion - brick on the front, vinyl on the sides.  They would park their (used) Mercedes out front and take a family photo to send to "the folks back home" to show they "made it" in the USA.  And I suppose there is nothing wrong with that, provided they are not bankrupting themselves to do so.

But emotions are eventually checked by logic. There reaches a point where people start to notice prices and the pain of paying them.   It takes a while - the system has a lot of hysteresis in it.  But eventually, something has to give.  With bonds, they talk about the inverted yield curve - when short-term rates exceed long-term rates - as a sign of recession.  I suggest there is a similar inverted yield curve in real estate - when it is cheaper to rent than to buy - it is a sure sign of a bubble, and a sign of recession when the bubble pops and people get hurt.  And when people get hurt, they stop buying stuff, and it has a snowball effect.

I think it is safe to say that given all that is going on the world today -  war, inflation, high energy prices, labor shortage, supply chain shortage, defaulting on debts - that we are headed for recession, if in fact, it has not already started.

The good news?  Eventually markets turn around.  Not much help to the guy who just bought an overpriced mini-mansion or the fellow laid-off from Tesla, but that's all I got. 

UPDATE:  A friend of ours, who owns a house in Florida and one "up North" decided to sell both and buy a house in the Carolinas.  They put down a non-contingent offer on the house in the Carolinas before selling their other properties.  They had an offer on the "up North" house but the buyers quickly withdrew.  I feel very bad for them - they now own three houses and the music has stopped and they have no place to sit down.  They were real estate professionals, too!  Did they not see this coming?  When interest rates go from 3% to 6% they thought nothing would change?  I am very sad.