Should We Go Back to the Good Old Days?

People have selective memories as to what comprises the "Good Old Days".

Many Republicans decry the newfangled things going on in our country.   Using subliminal glurges they send over the Internet (or publish in Reader's Digest) people on the right try to paint "the Good Old Days" as a time of peace and harmony and heaven-on-earth.   No, we didn't need no Internet back then, or Women's rights!   And everyone was happier, too!

Well, except maybe the Blacks who were lynched and kept in economic oppression.   And women who were treated as property and beaten by their husbands and denied almost any career opportunity.  Or any minority group back then, who would be allowed to live, so long as they "knew their place" and didn't get too "uppity".

So what we have here is a selective memory on the part of folks on the right.  Or worse yet, a false memory of days gone by.   People create scenarios out of whole cloth to "prove their point" that the old ways are best.

Gold Bugs, for example, claim that if "we only went back on the gold standard" our economy would once again be as stable as it was in 1900.  But of course, this is just nonsense.  Our economy was actually more unstable during the 1800's and early 1900's, with cycles of boom and bust, worse than today.  The stock market crash of 1929 occurred while we were under this Gold Standard panacea.

It is easy to paint a rosy picture of the past, particularly if you never lived through it - or are selling the image to people born long after.

But it struck me that one example of this rosy past the people on the right never talk about, is regulation of our financial industries.   And I lived through this change, and can witness, firsthand to the changes that have taken place - and none for the better.   But, like cooking a frog, the water temperature has risen so gradually over the years that we tend not to notice these changes - and never objected to them - until it was too late.

Back in the 1960's, when I was a kid, we didn't have the following rip-offs, mostly because they were illegal, or that people simply didn't stand for them:

• Payday Loans

• Check Cashing Stores

• Rent-to-own Furniture

• Title Pawn Loans

• Buy-Here, Pay-Here, used cars

• Automobile Leasing for Consumers

• Frequent Flyer Miles Credit Cards with 14% interest rates

• Adjustable Rate Mortgages

• "Optional Payment" Mortgages

• Casino Gambling (outside of Vegas)

• Lotteries

• Etc. Etc.

What changed since the 1960's?   Well, some of it had to do with the economy in the late 1970's.   When inflation soared into the double-digits (still think we have it so bad today?) and interest rates went up to 14% just for a home mortgage, State Usury laws ended up being repealed or modified, so that interest rates once unheard of, became the norm.

Since then, inflation has eased, and interest rates are at an all-time low, at least with regard to the Prime Rate.  But a funny thing - today Credit Card rates are at an all-time high.   The media touts a 14% interest rate on a credit card as "reasonable" and 10% as"low".   And we are told that 25% rates are "OK" so long as you are getting some cash-back or flyer miles out of the deal.   When did we become idiots?

Leasing of cars - for individuals - was unheard of in the 1960's.   I didn't see this advertised until the late 1970's and early 1980's, when car dealers became desperate to move iron.  Before then, leasing was something that only businesses did - as it allowed them to expense out the cost of the vehicle on their taxes, as opposed to depreciating it.   Today, nearly one in every five cars sold to consumers is leased.  And these leasing deals are usually raw deals - where the dealer hides the purchase price and interest rate in a mountain of paperwork, pushing only the "monthly payment" at the consumer.  And lets not even talk about back-end and front-end charges.

Yes, we had pawn shops, back in the day.  But these were mostly in the inner-city, and not very prevalent.   In fact, they nearly went extinct by the mid-1970's, as the cost of consumer goods continued to fall.   But Pawn Shops came roaring back in the 1990's, and are the number one source of crappy financing for the very poor (and even the middle class!), offering interest rates well above 30% or more to the people who can afford it least.  Pawn shops today are more loan businesses than shops selling secondhand merchandise.

And today, you can pawn your car, as well, at exorbitant rates.   You can even pawn your paycheck, getting a "payday loan" a week in advance, and paying 30% interest for the privilege.  Rolling over each loan into a new loan can piggyback the interest to 300% or more, in a short period of time.

The mortgage thing is the same deal.  In the 1960's, mortgage rates were fairly stable.   So no one even dreamed of a variable-rate note.   By the late 1970's, rates had skyrocketed and banks were struck with 6% notes in an era of 14% rates.   To avoid this, they pushed the adjustable-rate note, which also allowed them to offer lower rates during an era of high rates.

But like with the credit cards, once rates dropped, the adjustable rate notes were still being offered.   And people bit on them, convinced that rates would never again go up (and not understanding that when rates go up, housing prices go down).   And making matters worse were scary new mortgages with "teaser" rates and "optional" payment plans, where the balance on the note actually went up over time.

As I have noted before, when I was a kid, gambling was illegal, outside of Vegas.  Today, almost everyone lives within 30 minutes of a casino, and the government is even in on the game with State Lotteries - which didn't exist in the 1960's, but came into being during the economic downturn of the 1970's.

What happened in the last 50 years that changed everything so much?   I believe two things are at work here.  First, a lot of the banking and consumer protection regulations passed since 1929 have been eliminated or reduced.   Banks are now free to speculate in almost any market, and as a result, our banking systems is more unstable than ever before.  In addition, raw deals that would have been illegal in 1965, are routinely offered to consumers today.  And consumers accept them as "good deals," too.

Why is this?  Well, that is the second half of the equation.  Consumer education is at an all-time low.   The consumers of the 1960's either lived through the depression and World War II, or their parents did.   They knew that the economy could spin out of control - and their personal finances as well - if they were not careful with money.    So people were more skeptical about con artists and flim-flam men, and more careful with their money.  And perhaps, they were better educated back then, about basic economic life.

If you told a person, back in 1965, that they could get a second mortgage on their modest home and "cash out" and buy a new Cadillac with it, they would say you were crazy.  Or, if you told them, as one recent President did, that spending money was a "patriotic duty" they would have you committed.   And if you suggested to them that it was OK to run up thousands and thousands of dollars in credit card debt, and then pay it off by refinancing their home, they probably would punch you in the face.

Back then, even in an era of Corporate Socialism - where people had defined benefit pensions and health care - folks were more careful with money.   And in an era before the invention of the IRA and the 401(k), where we have to save for retirement, people saved at a rate nearly twice that of recent years.  Today we need to save more, yet we save less.   It makes no sense at all.

In short, people were more fiscally responsible back then.  Why is this?  Again, I think the experience with the Depression is one aspect.   But I think also our social values were different.  Odious deals just weren't advertised on television.   If you tried to go on television and hawk investments or crappy bargains, consumer protection agencies would jump down your throat - and likely the television station would not air the ads in the first place.

(Back then, there was something called "false advertising" and you could get sued for it.  And Police departments had "Bunko Squads" who went after criminal flim-flam artists.  Today, the Police yawn and say, "forgetaboutit!  Ain't noting we can do!" if you are ripped off.  And besides, the person ripping you off might have enough money to buy his own Judge.)

But that changed, with the advent of Cable TV.  Suddenly, we had 500 channels of poor normative cues to choose from - everything from trinkets sold on the home shopping channels, to poor investment advice shouted at us on financial channels.   People were trained to "want it all now" on e-z money terms, a trend that started after World War II, but one that accelerated rapidly in the 1970's and 1980's.  By the 1990's, most of us were heavily in debt, and the savings rate dropped to nothing, if not in fact, negative.

And the GOP - and the Democrats - told us that deregulation was the answer to all of our problems (a lot of the deregulation programs credited to Ronald Reagan, such as the airlines, occurred in the waning days of the Carter administration).

So, in terms of financial regulation, the "Good Old Days" were in fact better than today.  Of course, the "Good Old Days" are not going to come back.   I am not idiotic as a Republican to suggest such a thing.   Time doesn't work that way, and you can't "go back" to simpler times, only move forward.

But we do live in a different world today - a much scarier world in terms of finances.   Today, it is Dog-eat-Dog, look out for yourself, I've got mine, Jack, you get yours, kind of a world.   And while it is still possible to get ahead in this era, you really have to look out for yourself.

You see, what the GOP doesn't want, is for us to "go back" to a simpler time when companies couldn't exploit people mercilessly, often using their own weaknesses against them.   That is the name of the game today, as I have noted before.  You can make more money out of ruining someone than you can establishing a profitable business relationship with them.  And according to the GOP, this is not a bad thing, but just good old American Business know-how, unfettered by regulation.

To me, it is how Mexico ended up with seven families owning most of everything.   We are not growing as an economy, just taking away from the most impoverished sectors and redistributing the wealth to the richest.   Ahhhhh.... but the GOP doesn't like to talk about "redistributing the wealth" even as they do it.

So they use our emotions against us.   They tell an 18-year-old that they will be fabulously wealthy if they go to college and borrow $100,000.   And oh, by the way, it will be a ball - all the sex, pot, and beer they can consume!   And an 18-year-old believes this.   Or at least they did - perhaps the plight of these "OWS" idiots is waking them up to the real consequences of financial actions.

And Mr. and Mrs. Middle-Class is sold on the idea of "home ownership" and granite counter tops - all the better to impress the neighbors with.  So they go heavily into debt for nothing of real value.

Or worse yet, leased cars.   Or credit card debt - so they can charge crappy meals at chain restaurants in strip malls and pay for it all with a home equity loan.

They tempt us, but we needn't bite on the bait.   And perhaps, just as our parents learned the lessons of the Great Depression, this generation will learn from the lessons of our current recession (which, while officially over, is still not really doing very well).

And there may be evidence this is starting to happen.   Personal savings rates, after years of decline, are starting to rise.   But as the economy gets better, they are starting to fall, yet again.  And even though rates have risen in recent years, they are still low by historical standards.

The exploitation of the masses of Americans will continue, it seems.   Payday loans are still in business, as are the pawn shops and title pawn places.   Folks will still be suckers for rent-to-own furniture, and car leasing will no doubt take off again.

There is not much we can do about this, on a national level.  But on a personal level, you still have choices.  You can choose to consume less and save more.  You can walk away from bad bargains.   And you can point out these bargains as bad, to others.   Because in every instance, all of these crappy deals have one thing in common - there is a magic moment where you, the consumer, have to sign a piece of paper that obligates you into one of these shitty deals.

Just leave your pen at home.

Designer Dogs

People get ripped off all the time by ads like this, for non-existent bulldogs from Mineral Wells, Texas.  People wire money, which goes to the Russian Mafia, and never get a dog.   But the overarching question is, why would some people pay more for a dog than they would for a car?  It makes no sense.

I recently was exposed to the seamy underworld of the Puppy Scam when my debit card data was stolen.  It was a fascinating trip down the rabbit hole of international scam artistry, an Alice-in-Wonderland journey, which took me from Ontario Canada, to Mineral Wells, Texas, all the way to Moscow, Russia, the home of many of these scams.

And the scam lives on.  In today's mail, this missive:

The credit card vs debit card fraud and came a cross a puppy add that looks familiar?  The company that we were going to purchase a pup from is now advertising under ****bulldogs.com.  I was researching the company and your blog popped up on google.  This ad was posted June 2 and it's selling the same exact puppies?  We are looking into to this place now, but just thought you maybe interested or what to look into who may have taken your $.

Note that it had the notation Sent from my iPad at the end, which didn't have a question mark? after it, thankfully.   Apple users.  Go Figure.  Apparently it changes the way you think - and not for the better.

Of course, I didn't lose any money in a Puppy Scam - I just had to hassle with my bank when my debit card data was swiped and they used it to pay for the advertisements for these non-existent puppies.  The people who wire-transfer money for these non-existent dogs, they lose money - and a lot of it.

But should we feel sorry for such people?   Not only are they dumb enough to fall for the wire-transfer scam (which is as old as the hills, in Internet time) but they are putting their desires for a material thing ahead of common sense - the hallmark of such scams.   And worse yet, the material thing they want is a living creature.

(In case you woke up late today, Wire Transfer Scams work like this:  A seller, overseas, advertises a desirable consumer good online, for a fraction of its market value.  People who are desperate to own things bite on this hook.  The seller has a long-winded story as to why the item is so cheap.  But, the victim is told, they need to wire transfer the money right away to seal the deal.   Once a wire transfer is sent, it is gone for good, period.   Anyone can pick it up, anywhere.   And no, there are no secret release codes needed to get the money.   Just walk away from anything having to do with Western Union!).

I wrote before about pets - and how expensive they can be.   A basic dog - not a purebred, either -  can cost you upwards of $1,000 a year to feed and take care of, if you give it the heartworm and flea medications, have regular shots, and at least one veterinarian visit a year.

And while I love my dog, realizing that a dog costs $1000 a year was a revelation to me - and made me wonder how so many poor people, struggling to get by on $20,000 a year can really afford pets.  Over the life of the pet, the owner will spend enough to buy a brand-new car.  Seriously.

But some folks take this even further - they want a particular breed of pet, and will pay hundreds of dollars - often thousands - to buy a pet of a particular breed.  And I hate to say this - as some of my best friends have "breed" pets - but there is something unseemly about it.

It is one thing to want a companion, a friend, a pal, to keep you company.   It is another thing to desire a particular look in your pet, to impress others.   And worse yet, to encourage breeding and designing of animal life, to achieve these certain types of looks.

It is not that just paying $2500 for a dog is a waste of money.   No, there is something sick about it as well.

Now granted, some breeds of pets were bred for specific purposes.   Retrievers were bred to retrieve water fowl.  Pointers to point, and hounds to hunt.   Terriers were bred to hunt down rats and other vermin, just as cats were domesticated to get at mice.   And greyhounds were bred to catch rabbits, and later to race.  Back in the day, dogs were working animals, and bred for specific working purposes.

But today, few people buy such animals for their intended purpose, but rather for their looks.   And indeed, if these breeds had a purpose, their breeding has long since veered off into other directions - mostly for "show dog" looks.   Most retrievers today would not make good hunting dogs.

And the entire "show dog" industry, to me, is just sick.   Creating life and grooming it to win prizes, and nothing else, is just wrong.   And the people who own such dogs behave as though winning a blue ribbon was some sort of personal accomplishment of their own - and not the animal's.   It is creepy and weird, period.  And the people who drive around in vans with "Caution: Show Dogs" on the back are just strange.

So, to some extent, I have no sympathy for people who get caught up in the Puppy Scam.   They put themselves in peril by deciding that they desperately needed something that was a want, not a need.   Once you decide that you "have to have" a $2500 designer puppy, well, even if you get that dog, you are getting ripped off, as you paid a lot of your hard-earned cash for a freaking dog, for chrissakes! 

And why do they do this?  Status.   I have met more than one person with a "designer dog" who walks around with their nose in the air at the local dog park.   Their dog is better that yours, they think, and by extension, they are better than you.   It is childish and sick, and moreover stupid.  And an utter waste of money - to try to impress people you don't even know.  And it doesn't work.  No one is impressed!

Again, the easiest way to avoid being ripped off is to decide you don't desperately need something.   The moment you start salivating for a Harley or a Camaro, the local dealer has you wrapped around his finger, and you are screwed, even in a "legitimate" deal.   And when you become that desperate, ads on Craigslist advertising one for half-price sound like a dream come true.  But dreams like that can quickly turn into nightmares.

And the weird thing about pets is, while some people will pay thousands of dollars for one, they basically are throwing away thousands of them, every day, in every city across the country - even purebred designer pets.   To me, it makes no sense.

When we got our first dog, I went to the local shelter in Alexandria, Virginia.   At that shelter, they had a number of purebred dogs, including a beautiful red Doberman, several Spaniels, and of course those obnoxious "Frazier" dogs, who people bought in a frenzy when the show came out, and then discovered that they were basically insane.

Our dog today is a retired racing greyhound.   In terms of bloodline, she is a well-bred dog, with a champion genealogy going back 10 generations.   Total cost?  A $250 adoption and neutering fee.   They basically throw them away when they are done racing them.  They may have been worth thousands of dollars apiece to the kennels that raced them.  But once they no longer race, the kennels give them away to adoption agencies, for free.

Will I have another dog in the future?  Maybe.  Maybe not.   But one thing I can tell you is this:  I would never, ever, pay thousands of dollars for a dog, just so I can show off.   Status is the worst reason in the world, to spend money.

And Status is one of the biggest reasons most people in this country are broke.

Pricing Games

A fabulous river cruise!  And at half price!  Call for details!   But when you call, you are given the hard sell to buy a different cruise.   Nothing in life is free, and when someone offers something for half-price, chances are, no one ever pays full price.

Although we are not enamored of cruise ships in general, we thought a river cruise on the Danube would be fun.    Rather than riding in rough ocean (which makes boats rock, despite stabilization systems, which turn gentle rolling into a series of rough jerks) you glide down smooth rivers.  And instead of looking out at the ocean, you see beautiful scenery.  And every evening, you glide into a beautiful town or city to explore by bicycle or by tour.  Sounds like fun.

And we certainly enjoyed renting a canal boat in the UK - it was an inexpensive holiday to be sure.  Maybe this would be more like that, without having to steer.

But it ain't cheap.  The basic fare is about $5000 per person, plus airfare.  This does include drinks with meals, of course, but still is not a cheap trip.   The competing line, AMA waterways, has lower fares, of course.

But we get catalogs and e-mails from the Viking people saying their $5000 fare is cut in half and they are offering free airfare - if we call now!   You can't book online, so you have to call in.

So you call, and guess what?   It is the old call for price gag.  The fare you have chosen is sold out, of course, but they can sell you another fare, a year from now, for the same price, but without airfare.  Um, maybe not.

AMA Waterways advertises slightly higher prices - higher than the "half price" gambits that Viking uses.  But those are their regular fares.    Viking plays price games, like GM used to do, putting joke prices on the cars - prices that no one pays - and then "discounting" them so you feel that you are "lucky" to be getting the "deal".

It is a game as old as the hills.

And while we are on the phone, the operator wants to sell us "vacation insurance" which is like an extended warranty.

And, oh by the way, even though you are booking a year in advance, they want payment in full, in three days.

Thanks, but no thanks.  Not with the euro declining the way it is.  Better off to book next year, I think.

Maybe we can rent one of those canal boats over there and steer it ourselves, like in the UK?  Sort of a Hertz rent-a-boat.   That would be a lot more fun than riding around in a barge with a bunch of other people.

We'll keep looking.  But Viking is crossed off the list, for sure.

Double-Sided Printing (Duh!)

Most modern laser printers, such as this HP1320, have double-sided printing capabilities.   Setting your printer preferences to "double-sided" will slow down printing, but cut your paper usage in half.

As I noted in another posting, Paper is Dying.   Very few of my customers want "hard copies" anymore, and most communicate by e-mail with .pdf attachments for documents.  With large, dual-screen displays, there is no need to print out documents anymore, really.

But there are a few clients who still use paper, including one I am doing a search report for today.   And I was alarmed to see I was actually running out of paper, as I haven't bought any in over a year.

I wanted to get the report out in today's mail, but there was not enough paper to print all the Patent References.   Then it struck me.  Duh!  Use two-sided printing!

Most modern laser-printers can print on both sides of a piece of paper.  It prints one side, spits out the paper, then sucks it back in, and then prints on the other side.  It takes a little longer to do, but it cuts paper usage in half.

Now, granted, there are some documents you don't want to print on both sides - such as business letters (remember those?).   But for the most part, the few things you do print anymore, can be printed on double-side - your Mapquest directions, or whatever.

It seems like a simple thing, but it does cut consumption in half.   And in any endeavor, saving 50% is a sizable reduction.

Stock Analysts - Worse than Worthless?

If you go online or watch the financial media, you will hear all these recommendations from Stock Analysts.  Are they worthwhile?   I think not.

I have noted time and time again that stock-picking is generally a bad idea for the small investor.   We don't have the time, energy, or expertise to figure out if XYZ Corporation is a sound investment or not.  Worse yet, most of us want to "strike it rich!" by buying a "hot stock" touted on television.

And many of us try to correct for our deficiencies in stock-picking ability, by relying on the advice of Analysts and advisers, whether they are the "retail" type like Motley Fool, or some obscure analyst you have never heard of.

Facebook continues to slide, although it did briefly go back up to nearly $30 yesterday.   What was interesting to me was a comment on one website that quoted an obscure analyst as being bullish on the stock (as opposed to bullshit on the stock) and saying his "target price" for Facebook was $40 a share.

Huh?  Target price?    Yea, that is the gambit most of these "Analysts" use in giving their BUY, SELL, and HOLD advice, is to also offer a "Target Price" for each stock.

The problem is, when you press them for some mathematical or logical explanation for their "Target Price" they hem and haw and get very evasive.  You'd get better advice from guys pedaling horse tips or football bets.   At least they look at the players, the injuries that may have sidelined them, and their relative track record of wins and losses.   There is at least some logic there.   With the Stock Analysts, the logic is, well, utterly lacking - in most instances.

And as a result, the "advice" from these folks is often all over the board.   On E*TRADE, you have access to data from these folks, and it amalgamates their BUY/SELL/HOLD recommendations into a nice chart - which is often utterly useless, as as many Analysts are saying BUY as are saying SELL.

Again, like word-of-mouth, you have to know who is giving the advice and know about that person, before you can take that advice.  And many Stock Analysts are in fact paid by companies to "analyze" their stocks and promote them to the public.  But we often don't know this.

It is like the local restaurant that promotes itself in billboards as being "#1 on Trip Advisor!" and then quoting postings by anonymous people ("Awesome Food!") as "evidence" of the quality of the restaurant.  But of course, anyone can go on trip advisor and post reviews.  And for all we know, the restaurant in question is just advertising reviews they themselves posted (and put themselves in the #1 spot by giving negative reviews to their competitors).

(If you use these social media kind of sites to plan your trips, shame on you.   They are just mostly SPAM.  And even when they do work, you are merely getting the opinion of people who think a Big Mac and a Lite Beer are "awesome food!" - so take it with a grain of salt).

And the list goes on and on.   Every year, they hold a contest for "America's Favorite State Park" and every year, a group of people on our island log in and vote several hundred times each to have our island rated the best.   I believe we made it to fourth place last year.   We are being encouraged to vote even more this year, so we can move up a notch.   These are the same people, by the way, who are convinced that "voter fraud" is rampant in our Presidential Elections.  Ahhhhh, the Irony Meter is pegged, once again!

And then there are "analysts" who are actually trying to sell you something.  Motley Fool started out selling advice.   Apparently they have morphed into something else, as each of their increasingly alarming e-mails they send me (with lots of exclamation points!!!) has some new pitch for the "Next Big Thing!!" including something called "Fool One" which I declined to invest in.

So how do you get advice on which stocks to buy?   The best bet is to not try to stock-pick - avoid the market altogether.   Odds are, if you try to outsmart your mutual fund by purchasing individual stocks, you may end up broke, particularly if you buy all the hyped stocks that the media talks about.

I think you have to take advice from these "analysts" with a huge grain of salt.   Why is this guy saying $40 a share is a good "target price" for Facebook?  He bases his prediction on some numbers - but purely speculative numbers at that.  His “analysis” of the stock includes a lot of ill-defined buzzwords, such as “addressable” and “monetization potential” and “optionality”.  These buzzwords are designed to impress you, while at the same time making you feel like a chump for asking what they mean (they mean nothing). 

And while he claims that their profits may increase to $23 Billion by 2016 (about 30 times current profits) his own chart shows profits doubling.  Online payments, we are told, are Facebook's big potential.  But payments for what?  Cows on Farmville?  Or will Facebook start selling things like Amazon or processing payments like PayPal?   And if so, why would people buy on Facebook over those other sites?  This is not explained, these wild increases in profits are just assumed to happen.

It is, in my mind, pure speculation.   But a funny thing - after he gave this "advice" the stock price jumped up 5% to nearly $30.   It seems that some people believe whatever they want to hear.

Pump..... and dump!  It's the same old game.