Uncle Sam's Dysfunctional Family

Our country is a lot like a family - with needy and irresponsible siblings, as well as crazy cousins.

It struck me the other day that our country is a lot like a family.  It is dysfunctional.  As I pointed out in a previous posting, there are people in this country who spend every last penny they have, and then borrow 10 cents more, just to have a jet-ski or some other stupid purchase.   And they don't fund their retirement or buy health insurance.

These folks are a burden to the rest of us, and you and I pay for their care, when they go to the hospital and stiff the $20,000 bill from their Jet-Ski accident (and they we pay them the rest of their lives, as they go on disability).

Others of us work hard, ask for little and end up paying a lot of taxes.

And it is funny, but many families work the same way.

Take Jason (not his real name).  Jason comes from a family of three children.  Jason works pretty hard and saves his money and supports himself in a modest lifestyle.

His "crazy sister" Eileen has four children (and no husband) and is constantly calling her parents and begging for money.  The living room needs new carpet.  The children need braces.  The car needs a new transmission.

And Jason's parents sigh, and then write out a check to Eileen.  Their checkbook is filled with stubs of checks written out to Eileen, which Jason would find, once he probated his parent's estate (and yes, Jason is a real person, and yes, I saw the checkbook).

Jerry, Jason's ne'er-do-well brother, has a substance abuse problem, and similarly sponged off Jason's parents for years.  His parents finally cut him off - there were willing to buy Eileen a new washer/dryer, but not crack for Jerry.  What the difference was, I don't know.

But Jerry went into rehab, and once he got out, the largess poured from the parents.  They let him stay in their vacation home, for free, for several years, as a primary residence, and Jason's Dad gave Jerry his Mother's old Cadillac to drive around.  And of course, there was the money.

Now, Jason kept quiet about all of this.  As a middle-child, he was not one to make a fuss.  But nevertheless, it infuriated him that his siblings were using his parents as an ATM machine and a personal loan officer - for "loans" that were never paid back.

As I noted, Jason probated his parent's estate.  "We always try to treat each of you equally," Jason's Parents always told him, "And we're so proud of you, Jason, as you have been such a success in life!"

But Jason, sitting at his Father's desk, sat and cried quietly, as the cancelled checks and bills fell to the floor.  He read his parent's will, which, as they promised, left everything to the three of them, equally.

The problem was, since his parents had doled out so much money to his siblings over the years, there was nothing left for anyone to inherit.  Jerry and Eileen had taken the lion's share of the money, over the years, leaving little more than $100,000 in the Estate.

Jason didn't need the money.  Well, he could have used it, in his retirement, to travel.  But that was beside the point.  Jason felt cheated.  Why did his parents favor layabouts like Eileen and Jerry, and seemingly punish him?  What did he do to incur their wrath?

And maybe Jason's parents didn't intend it to work out that way.   But then again, maybe they did.  As I noted in The Parent Trap, many parents love to lord over the ruined remains of their children's lives - and then complain to their friends what parasites and layabouts their kids are.  But the successful kids - do the crow about them?  Hardly ever.  Successful kids are a threat to them.  They hate them.

The problem with this sick behavior is that it enables, which is amateur psycho-babble for encouraging bad behavior.  Eileen has hit upon a perfect scheme - where her house gets continually remodeled at someone else's expense.  And, as a bonus, she gets to spend part of her Brother's inheritance.  Jerry gets to get high and stay high - all the time - with little or no consequences, even after he sobers up.

It is, to say the least, unfair to Jason.  These people are "needy" and "need help" because of their own actions - and the help provided does not cure them of their needs, it merely amplifies them.

The same could be said of our dysfunctional "Family" as a country - our government hands out money to people who are often irresponsible, which encourages more irresponsible behavior.  People are entitled  to money, regardless of their actions.

And maybe our elected officials enjoy lording over the ruined lives of welfare recipients - at least they know who they will vote for, right?

And today, more and more wealthy people are cashing in on this, from $50,000 mortgage reductions for mini-mansions, to bail outs of Wall Street.

GM and Chrysler get a bailout, while Ford is forced to go it on its own.

I bet Ford feels a lot like Jason!

Should We Force People to Buy Health Insurance?

One of the controversies facing the Supreme Court is whether the Health Insurance Mandate is Constitutional.  Of course, some would say it is not even a mandate.

Two neighbors live side by side.  They make the same amount of money, but live radically different lifestyles.   The Smiths spend all their money and then borrow more.  Their yard is choked with cars, boats, and jet-skis.   They have four satellite dishes, and everyone in the family (six children) have the latest smart phone and designer clothes. They have no health insurance, as they argue they are young and healthy, and besides, that $400 a month pays for another car.  And of course, they have saved nothing for retirement.  They eat out nearly every night, putting it all on credit cards, and they are all terribly obese and in poor health, despite their relative youth.

The Jones live frugally, have two children, drive older cars, don't have cable TV or smart phones, and they wear ordinary clothing.   They save for retirement and have paid down their mortgage.  They live frugally, but their finances are in order.   They have little or no debt, are fully funding their 401(k) and have health insurance.  In addition, they have started a savings plan for their children's college.

The Smiths often openly mock the Jones' for being "poor."   When they get together, Mr. Smith will say to Mr. Jones, "I guess you-all can't afford a smart phone!  Ha-ha!"   Mr. Jones just smiles and wonders what he did to deserve such boorish neighbors.

The problem is, of course, that eventually the Smiths end up in financial trouble.  Mrs. Smith or one of their kids gets sick, and with no health insurance (and no money, just debt) end up in the emergency room, which they use as their primary care physician.  The hospital tries to collect from the Smiths, but they have no money, so the costs are folded into the operating cost of the hospital, which means the rest of us, including the Jones', are paying for the Smiths medical care, and in effect, the rotting Jet Skis in their side yard.

When the Smith children are ready for college, they get more financial aid and student loans, based on "needs tests" - as it is not hard for the Smiths to show they are insolvent.

When Mr. Smith is laid-off from his job, he collects unemployment, and millions like him petition the government to extend this for two years - because they have hit on "hard times" and are "disadvantaged."

When the bank comes to foreclose on their home, the Smiths cry out that it is all so unfair, and demand a reduction in their interest rate AND a reduction of the balance on the mortgage.  And Government programs are set up to do this.   Banks, so overwhelmed by the Smiths of the world, just give in and cut $50,000 off their mortgage, without blinking an eye.

When retirement comes around, Mr. and Mrs. Smith have nothing but Social Security to rely on, and since there are so many retirees, the government cannot pay them all.  So, they decide to do a "needs test" and cut the Social Security of the Jones' so the Smiths can get more.

How is any of this fair?  And the answer of course, is that it isn't.    The Smiths are out having a grand old time, buying up a lot of crap and being fiscally irresponsible, and then forcing the rest of us to clean up their messes.  We end up paying for their medical care, paying for their houses, and paying for their children's college.  We even pay for their jet skis and penis boats, directly or indirectly, since our subsidies of other parts of their lives allow them to buy these things - and since their frequent defaults on loan obligations and the resulting losses are paid for by part of the interest on our loans.

In short, the Smiths are not "rich" at all, but just social parasites.   They are financially irresponsible and thus end up costing us all a lot of money.  And worst of all, they don't even say "thank you" but mock us, for being "poor" and not buying a lot of the crap they buy.

Taking care of yourself is not just a good idea, it is a social obligation.  It is part of the unwritten social contract that we have with one another, to not just help one another, but to not be a burden to one another as well.

The Smiths have avoided this obligation, assuming (rightly) that we will not let them fail in life, due to our humanitarian impulses.  And many people, oddly enough, feel "sorry" for the Smiths of the world.   And many of the Smiths of the world are so-called "teabaggers" who claim they pay too much taxes, which is why the finance company is towing the jet skis away - and ain't that unfair?

In most Industrialized countries, the unwritten social contract is, in fact, written.   In most of Europe, the UK, Canada, and even Mexico, medical care is nationalized, socialized, or whatever you want to call it.   For some this is deemed a "human right".   But for others, it is just making sure that people pay their fair share for medical care (through taxes) and then receive such care in the most cost-effective way (other than at the Emergency Room, which is quite costly).

Similarly, most Industrialized countries have some sort of Social Security, National Pension plan, or the like, so that people who don't save for retirement have at least some sort of pension, or at least a "safety net" that they are required to pay into.

Of course, in America, we are a little different.   We believe more in free enterprise and free markets and letting markets decide how such things should play out.   But the Smith/Jones situation is, in fact, an example of such a market decision.   Mr. Smith is a blithering idiot, but he has stumbled upon what could be considered an optimal outcome.   He lives large, spends it all, and has a wealthier lifestyle than his neighbors, who are actually wealthier.   And he gets his neighbors to pay for a lot of it.

Worse yet, since there are so many Smiths in the world, when it all goes bust, they can petition the government for relief and get more free money in the process.  Democracy fails, Heinlein wrote, when the plebes all discover they can vote themselves a raise.

And yet, we have realized, in the past, that allowing people to do this sort of thing is unfair to everyone involved.   When someone retires with no money at all, the are a burden to the rest of us.  And their life becomes brutish in short order.   So, we established Social Security - mandating that everyone who works, pay into a system that will pay them back, in retirement.   We also mandate that people who work pay into Medicare as well - so their medical needs are addressed in retirement.

Is this a humanitarian gesture?  To some extent, yes.   But it also is sound economics, in that we are forcing people to pay for their own care in later years, at least in part - so that they are not a 100% charity case when they retire, and thus a total drain on everyone else's resources.  And as I noted in an earlier post, if you live to an average age, you basically get back your Social Security money, plus a few percentage points in interest.

Our country is steadfastly against nationalized medicine, perhaps rightly thinking that government bureaucracy and medicine don't mix.  Of course, the private-sector model of medicine has its own problems - and let's face it, we don't have a totally "free market" model of medical care in this country, and never will, unless Medicare and Medicaid are abolished.  The government is already the largest player and payer in our medical system.

So instead, we have come up with this crazy idea that people should be forced to buy health insurance.  Well, not forced, in the traditional sense, but encouraged very strongly.   If you buy health insurance, fine.  If you don't, you are assessed a "fine" or "tax" depending on your point of view.  In a way, this is not a radical departure from what we already do.

For example, if I buy health insurance, the premiums are deductible from my taxes, which means I pay less in taxes than the fellow who doesn't buy health insurance.  Under existing law, we are "fining" or "taxing" people who don't buy health insurance for themselves.  Of course, we are also fining people who are provided with health insurance by their employer, which would not happen under this new law - only those who refuse all health insurance will be taxed or fined. 

(From a deduction point of view, of course, this makes sense.   Someone who gets "free" health care from their employer is getting an untaxed benefit, so it is justice that their tax bill should be a little higher than mine - where I have to pay for this benefit out of my own pocket).

Of course, one problem with deductions is that they only reduce the taxes of people who are working and making a lot of money.   Moreover, they favor the rich, who get a 35% rebate on their health care costs, in the 35% bracket, versus 15% for us peons.

Well, then, why not sweeten the pot and make it a tax credit?  That would certainly be Constitutional - after all, Congress can grant tax credits for buying electric cars, why not health insurance?   That is an interesting approach as well, and in fact, such an approach could actually pay poor people to buy health insurance.  A tax credit, even if you owe zero taxes, can result in your getting a check back from the Government.

But there are two problems with that approach, too.  First, it would mean we would be paying a LOT of health insurance premiums - the bill would be staggering.  But I suppose you could limit the deduction to a certain amount, so that people didn't just go out and buy so-called Cadillac plans.  Second, since a lot of people wouldn't have the foresight to understand how tax credits affect their taxes, they would not buy the health insurance, claiming they could "not afford the premiums" on a monthly basis, even though they would get all that money back on their taxes.

But it is an interesting idea - if you allowed, say $2500 to $5000 a year tax credit for health insurance, insurance companies might scramble to provide a basic coverage plan that could be paid for, in one lump sum at tax time - perhaps.

So, instead, they came up with this so-called mandate.   Like I said, it really isn't a mandate, as no one is going to jail if they don't buy insurance.   But your taxes will be higher.  And you might go to jail if you don't pay your taxes (big surprise there, right?)   Will this work?  Is it Constitutional?

The very poor end up costing us all a lot of money in terms of health care costs.   They tend to use emergency rooms as their doctors, and they leave huge unpaid bills at hospitals, which we all end up paying for, in terms of higher health care costs.   This so-called mandate approach would make them choose whether to pay for insurance or to pay the government, the latter of which would recoup some of the costs of uninsured patients.  It might work.

Is it Constitutional?  Well, that remains to be seen, and with a polarized and politicized Supreme Court, the ultimate decision may have more to do with party politics than any real reading of the Constitution.   Act shocked, and then read the Dred Scott decision, and then sober up as to what this country is really all about.

The reality is, this is not a mandate but a tax.   Granted, like most taxes, it is calculated in a convoluted manner.  Just as my taxes may be lower than yours, because I can deduct my health insurance premiums, a person who buys health insurance under this new law will get a tax break.  Those who do not, get a tax increase.

The opposition, of course, calls this a "fine" and thus a "mandate" to obtain coverage - coercion by the government, "forcing you to do things" you don't want to do.

And yea, that sucks, but wake up and smell the coffee.   If you work for a living, you are forced to pay Medicare and Social Security taxes.   Your employer is forced to match these.  And if you don't pay these taxes, you end up going to jail - simple as that.

Again, it was decided that Congress should force people to pay for their retirement or at least some kind of safety net, rather than let people just rot in the streets ("freedom!") and have the rest of us have to care for them through charity, welfare, or other taxpayer-funded programs.

So to me, anyway, it seems clear that the Constitutional mandate for this "mandate" clearly exists.   If  this is unconstitutional, then so is Social Security and Medicare.

But then again, some folks think those two programs should be abolished as well.....

Hey, How's that IPO working out?

If you remember this sock puppet - whose face was once everywhere on television - you know why IPOs are as bad a deal as a payday loan!

IPOs, as I have noted before, are done for one thing, and one thing only - to make the founders of the company obscenely rich by selling off a pittance of the company to foolish retail investors (e.g., You and Me) who read all about them in the paper and confuse good publicity with a good business model.

The media is hyping the Facebook IPO, because it is an event, and the media likes events, not long-term trends, or heaven forbid, follow-up stories.

So, before the Facebook IPO comes out, let's look back at some famous IPOs of recent and not-so-recent past, and see how they panned out.  As you can see, most are a mixed bag - and some have just yet to tank - being of recent vintage.

Bear in mind that the IPO price for a stock is not the price that is available to YOU, the small investor.  Rather, these are the share prices offered to institutional investors and insiders, who immediately (sometimes within seconds) sell the stock to you, sometimes for double the price.

1.  ZipCar, zoomed from the insider price of $18 a share to the retail price of nearly $32 a share.  Today, it languishes at $14.38.  No dividends, A P/E ratio of "--" and a trailing Earnings Per Share of -0.19.  In other words, if you "invested" in this turd stock, you would have lost more than half your money in a company that is still losing money and appears poised to lose a lot more.  Some bargain.

I wrote about this stock before - twice.  And analysts all wrote about the same thing - that the business model made no sense, and that for the stock price to make any sense, the company would have to expand rapidly - yet at the time of the IPO it was shuttering outlets.

Maybe ZipCar can make a go of its business model, and maybe the stock will be worth something some day (really?  Why?  It pays no dividends and represents a tiny share of the company).  But the bottom line is, it is highly doubtful that it will hit $32 a share again in the next decade, if indeed in our lifetimes.

2. Zynga is a fairly new IPO, and if you were able to buy it at the offer price of  $10 a share, you'd be doing good now, at $13.75.   But then again, since the overall market has gone up by about 11% since December, you'd be good buying any stock around then.  And if you sold it back in January, you might only have gotten $8 a share.  Ouch.

Again, the dividends are nonexistent, the P/E ratio is a divide-by-zero error, and the trailing earnings per share is -0.57.   You have to hope that virtual cows take off again soon - or that their new, Non-Facebook platform is a big hit.

Gaming companies are risky bets, as they are tech companies, but also that their games are the subject of fashion trends.   Quirky games become wildly popular and then vanish overnight.  Game maker OMGPOP labored in obscurity for eight years before scoring a hit with "draw something" - they could find themselves back in obscurity just as fast.

Not sure the plebes have figured this one out yet - that their class-A shares have no voting power and represent about 10% of the company.  And I suspect that one reason the shares have taken off since their January nadir is the Facebook IPO halo effect.

This news item should give you pause:

March 15, 2012

10:35 AM ET Zyngas Secondary Offering to Allow Some Employees to Cash Out

This news item illustrates what I am talking about - selling stock in an IPO creates a mechanism wherein the insiders can "cash out" by selling their shares.  And apparently the people who work there think that having cash is a better idea than having Zynga stock.  I suggest you listen to them!

3.  Linked-In was supposed to be the Social Media Success Story - but the jury appears to be out on it so far.   The stock price has peaked and plummeted in the few months since it went public. While it was offered at $45 a share, on opening day, it rocketed to over $90 a share and has spiked as far as $110, and then valley-ed to as low as $60, before bouncing back to $100.  Hang on to your hats!  You're in for a bumpy ride!

Linked in was supposed to be the success story as it has actually has earnings - 11 cents a share.  But at $100 a share, this means a staggering P/E ratio of 851 - fantastically high, even by Internet standards. (This means, at current earnings levels, you'd have to wait 851 years to make your money back).  At current earnings levels, a more appropriate share price might be on the order of $8 to $10 a share.

To bring this P/E back to planet Earth, Linked-In will have to either increase profitability significantly (like by a factor of 10-20) or expand rapidly.  I doubt either will happen.   Why?  Because this website (and remember, these "dot coms" are just websites) has been around for at least five years or more.  If it ain't grown yet, it ain't going to.

Personally, I find the site less than useful, in terms of finding clients, jobs, or whatever.  Like the friend-of-a-friend-of-a-friend on Facebook, these links are just specious at best. Why should I "trust" someone I basically meet online, because someone I sort of know sort of knows them?

The upside is that they appear to be taking a bite out of Monster.com in terms of job postings.  Can this grow the company to the point where the P/E ratio is below 100?  An 8x grown in earnings?  Sounds kind of far-fetched to me.

Why is the stock price of Linked-In going back up again?   I would call it Facebook Foreplay.  People got tired of waiting for the Facebook IPO and decided to screw her ugly sister instead.

4.  Groupon was offered at $20 a share, zoomed to over $25 a share, and is now trading at $16.89.   Another company with zero dividends, and P/E ratio that is "--" and a trailing EPS of -0.36.  This means they are hemorrhaging cash, folks!

Groupon was a fad - and an idiotic one at that.  And as a business model, it was entirely un-protectable as well.  As a result, a hoard of "me too" companies have jumped in, diluting the profitability, the brand awareness, and generally flooding the field until the profits - if there are any - are marginal at best.

If you bought this IPO you lost nearly half your money so far, and are ready to lose the other half.  Hey, maybe they will offer a Groupon for their stock!

4.  Martha Stewart Omnimedia is not a stock you hear a lot about these days.  She sold off 4% of the company for $18 a share, over five years ago.   Today?  trading at $3.87 a share, and no dividends, a ? P/E and an EPS of -0.30.   Yup, Martha is losing 30 cents a share every day she stays in business.

Of course who could have foreseen her arrest?  Shit happens as they say.   But on the other hand, I think anyone can foresee that a media "empire" based on one lady making cookies can't be worth all that much.   And when that one lady gets old and decrepit, well, what happens then?

Like with Groupon, there are no barriers to entry in this market.   Anyone can show you how to make snowflake ornaments with a glue gun - and a legion of Martha wanna-bes did just that, with their own TeeVee shows and magazines and YouTube channels.

This stock will not likely recover, ever, in my lifetime, as far as I can see.

5.   Pets.Com  At the height of the dot-com mania, a company called Pets.com was started, did an IPO and went bankrupt - all the same year!  They hemorrhaged cash from the get-go, selling products for below cost and then blowing more money on a saturation ad campaign.

But, at the time, the "dot com" era was the "next big thing" and many little people invested in these speculative stocks - and lost it all.

Again, what is the market model that cannot be copied?

* * * 

The conclusion I reach is this:  IPOs, particularly with regard to Internet, Media, and Technology stocks, are very, very risky bets.  There is going to be a lot of hoopla over Facebook, and the stock price will no doubt jump up initially, leading some short-attention-span folks to say "told you so!"

But investing is not a matter of looking at short-term gains and losses, but the long haul.  And in many cases, these IPOs, in the long haul, are real losers for their initial investors.

And the winners?   In the examples above, they have only been out a few months.   Wait for it.  We could be in for a "dot com bust" in the latter half of 2012 or 2013.

Why?  Because you can't have negative earnings forever without going out of business.   And P/E ratios of over 800 cannot be sustained for very long, before people wise up.

Much of the inflation of these stock prices is due to small, unsophisticated investors getting into the market - investors who never look at earnings (or losses) or P/E ratios or any other metrics.   They listen to the shouting guy and look at stock prices - as if something could be derived from the price of the stock itself.

In fact, if you look at every bubble in history - from the railroad bubble of the late 1800's, to the crash of 1929, to the gold bubbles of 1981 and 2012, to the real estate bubbles of 1989 and 2009 and the dot-com bubbles of 1995 and 2015(?) the same common denominator is there - little people decide to get into the market and "Strike it rich like everyone else!" and prices skyrocket.

When the little people get in - you should get out.   This is how I avoided the Real Estate Bubble of 2009.

You are not "missing out" by not buying an IPO.  You are far more likely to lose money than gain, I believe.  I think a better approach, rather than hoping to "strike it rich" in the stock market, is to look for long-term growth and income companies.  It may not be sexy or hyped, but it is probably a safer bet.

UPDATE 2017:  What happened to these IPOs?

ZIPCAR - bought by AVIS in the end. If you bought at the low end, you might have made money. People who bought high, lost a lot more.

ZYNGA- people play farmville anymore?

LINKED-IN - bought by Microsoft. Again, if you paid top dollar, you lost your shirt. A few who snagged cheap got their money back, and not much else.

GROUPON - basically toast. The CEO was fired/quit and wrote a "ha-ha, I'm rich!" resignation letter.

MARTHA STEWART - still around, but of course, her stock will never see $18 a share, ever.

Facebook is doing OK, popular but not wildly profitable. But so long as it is profitable, it will stick around.

UPDATE 2020:  Of all the stocks listed here, only Facebook is still going strong.  But Facebook is realizing that one reason they made money is their platform was largely unmonitored and unmoderated.   Controlling fake news, rumors, and outright lies will cost a lot of money - and has cost a lot of money.

Their largest source of revenue - selling your personal information - may be attenuated as many countries, particularly in Europe, are reining in what Facebook can do, due to privacy concerns.

The good news is, their P/E ratio is a more rational 27 (still a tiny bit high) but of course, they pay no dividends.

Did we "miss out" by not buying Facebook at the IPO?  No, because a lot of stocks have also gone up in the near decade since this IPO. And the risk of buying IPOs just because one was a winner doesn't offset the majority of losers.

The people who really made money on Facebook were the insiders who cashed out when the little people bought.

The Failures of Frank Lloyd Wright

Arguably one of the most influential architects of the 20th Century, Frank Lloyd Wright's career was marked with one failure after another.

As I noted in an earlier posting, Failure is Always an Option, and even inevitable.  And yet the mainstream media, that lovely source of poor normative cues that leads to depression, would have you think otherwise.  They want you to believe that there are supermen in the world, who do no wrong and never make mistakes.   And this is an asinine proposition, and largely what is wrong with things in the world today.

Our politicians and public officials are held to standards so high, that no one could meet them.  People like Washington, Jefferson, and even Lincoln would have been sacked early in their careers, by today's standards.  After the Battle of New York, calls would cry out for replacement of the "incompetent" Washington - if he were held to today's standards.  And Jefferson's sexual peccadilloes would surely have gotten him impeached, if we held him to the standards applied to Bill Clinton.  And Lincoln?  A failed lawyer and businessman who lost eight elections.  By today's standards, he would be relegated to obscurity.

What about Wright?  We laud him as a great architect, and if you are in New York, you really should see the Guggenheim, the crowning achievement of a career that spanned over 70 years.  Yet the Guggenheim has its flaws, as does Fallingwater, his other signature work.  Recent renovations at Taliesin reveal foundations consisting of little more than beams set on raw earth, or in some case, ashes.  In another celebrated project, he argued with his own son on the suitability of using "decomposed granite" in retaining walls without reinforcement.   Much of what he designed had structural flaws, roofs that leaked, foundations that cracked.

And his life was filled with controversy and tragedy - starting early in his career, when he moonlighted for clients in addition to his day job with another architectural firm.  He was controversial, and often his designs were ridiculed and despised.   Many of his greatest projects were never built.   Others, unappreciated, were torn down or remodeled beyond recognition.

But yet, in spite of all of this, he is recognized today as a genius and a trend-setter whose visions are part of the architectural landscape today.  And yet, his life was filled with setbacks, failure, and mis-steps.  He was not a failure by any means.   But successful people fail, all the time.

The media paints a different picture of the great and the near-great.   According to their myopic view, they never fail - just pile one success atop another, until they are at the top of the heap.  But it ain't really so.

Even the best batters strike out on occasion - actually more than half the time.  And even the best pitchers can't always pitch a perfect game.   People make mistakes, and still succeed.   No one, not a human being, anyway, can be perfect all the time.

So what is the point of all this?  Well a few things, I think.

1.  Expect failure in your life - expect things to not work out as you plan.  This is the norm.

2.  Expect yourself to be weak on occasion and guard against this by setting up your finances to avoid weakness.  Gambling responsibly is a nice theory - not going into a Casino at all is a better option.  Similarly, relying on being "perfect" all the time with regard to a high-interest rate credit card is just asking for trouble.  Get a low interest rate one, so you are better off when the inevitable happens.

3.  Don't be depressed when you make mistakes, succumb to human weaknesses, or just fuck everything up royally.  We've all done it (boy howdy, I have!) and still come out the other end of foreclosure, being fired, flunking out, getting divorced - or whatever - pretty well intact.  The media touts being perfect all the time, because they want you to be depressed.  They want you to think there is something "wrong" with you, as you are not perfect like the people on TeeVee.   The want you to be depressed.  Depressed people make excellent consumers, particularly for media.

4.  Expect weakness and imperfection in others.   When a political candidate makes a slip of the tongue, don't castigate him.   But think hard about the opponent who intentionally sets out to make a big deal of it.   Who is pretending to be perfect (when we know he is not?) and who is admitting to human weakness?  Similarly, expecting perfection in our spouses is not realistic.  Having a laundry list of "if he ever....I'm out of here!" is not the sign of a strong marriage or realistic expectations.

The bottom line is you can fail - and fail a lot - and still succeed.   This does not mean you should intentionally set out to fail, but rather expect failure as a part of life and try to learn from it.  Probably the only "mistake" you can make is to never learn from your mistakes, I guess.

But I could be wrong about that....

Rule of Thumb

 As a rule of thumb, it is pretty safe to assume that any bargain offered to the poor is a bad bargain.  As a corollary, any bargain that is hyped or advertised heavily is usually also a bad bargain.

As I noted in a comment in response to an earlier posting, my trepidation about the Dollar Store is this:

1. They present bargains to the poor.

2. The poor are usually presented with the worst sort of bargains.

3. Ergo, anything at the Dollar Store is likely to be a bad bargain, as it is something offered to the poor - who get the shittiest bargains around.

This is not to say there no good bargains there, only that, in general, there are likely to be some real stinkers - and my experience so far has proven this right.  You can sell the poor anything - so they do.

Rules of thumb always have exceptions, of course.  But in general, they can be useful in helping you parse data and make decisions without having to yank out a calculator every 45 seconds.

And as a rule of thumb, buying anything that is targeted toward the poor is probably a bad bet.  Why?  Because the poor get the worst sort of deals imaginable, in terms of bargains, interest rates, and the like.

So you know off the bat, that Payday loans, rent-to-own furniture, pawn shops, title pawn loans, rent-to-own bling rims, check cashing stores, and the like are all bad bargains, without even having to resort to doing the math (which I have here, in the past, and shown them to be bad bargains).   They are hyped and advertised heavily, and are located in lower-class, lower-income neighborhoods.

So, if you want to stay out of trouble, stay out of the places the poor go for bargains, because, chances are, they will not be good bargains.  And the one or two possible good bargains that might be there (but likely aren't) are not worth the hassle or risk.

A similar Rule-Of-Thumb can be applied to anything advertised on the radio, particularly those loud blaring and deceptive ads.  You know, the diet plan that purports to be an "interview" with a local doctor.  Or the car ad that rips through a paragraph of "fine print" at the end of the ad.   Almost anything heavily advertised is a bad bet, simply because the cost of advertising is padding the price.

But, alas, many of us are raging true believers.  "Say, maybe they are having closeout deals on new Hyundais this labor-day weekend!  And free hotdogs for the kiddies!"   But you go there, and 10 hours later, tired and worn out (with two very cranky kids) you come home with the temp tags on a car or SUV you never intended to buy, at a staggering interest rate, at a price that is, well, you don't even know what the price was, exactly.

Sometimes the best bargains are rarely advertised.   The wireless companies will beat you over the head with their "low low monthly rates!" of "only" $39.99 (some restrictions apply, taxes, fee, phone and wireless plan, extra).   Meanwhile, AT&T never even advertises its GoPhone plan, which, for someone like me who rarely calls, works out to about $100 a year.  For that $39.99 you could talk 400 minutes a month - with no added fees.

But that doesn't get a blaring ad, does it?