Coffee heat rising

Economy

Haven’t forgotten you…

by

Postless in Gaza… Well, in lovely uptown Arizona, anyway, where at a little after 9:00 p.m. the outside temperature hovers just below 100 degrees.

A great raft of 2500-word papers has floated in on the molten sea. I’ve managed to read three of them today. All 20 or so have to be read, assessed, commented upon, and graded by Friday morning.

Sat down to a dinner of poké salmon and tuna, snabbed from Whole Foods on the way home by way of a still relatively decent Target (tar-zhay) on the fringe of what was once an upper-middle-class shopping mall, where I went in search of another baby gate to block Charley from bedrooms where he might eat furniture and kiss electric sockets. To rest my weary eyes while dining in solitude I picked up the latest edition of The Atlantic, which came in the mail today.

Something there is about print, something that turns Internet copy to ephemera.

You need to go out and buy this month’s edition—that would be September 2011. It has impact. If you can’t afford it or you can’t bring yourself to touch paper, then for hevvinsake go to the site. Take a long, horrified look at Don Peck’s piece titled “Can the Middle Class Be Saved?,” in which he describes “the hollowing-out of the American middle class.” Read Rhett Miller’s brief, gut-wrenching mini-memoir, “About That Day.” And whichever side of the gun control issue you happen to reside on, get your mind bent by Adam Winkler’s “Secret History of Guns.”

Can the middle class be saved? There’s a question to file under the heading of “a day late and a dollar short.” Middle class? What middle class?

This morning I had occasion to drive through several of the strip malls that surround the former glory that was Paradise Valley Mall. Next to the Tar-Zhay: a dollar store. I’ve been in that dollar store: it smells bad and there’s not a thing in it anyone who wasn’t pretty desperate would want to buy. Apparently Paradise Valley has enough desperate residents to support it. Across the road: retail strips pockmarked with empty storefronts. Places that are still on your GPS or your iPad or your iPhone that just aren’t there anymore. Other stores hang on in tired buildings that need, at the least, a paint job. This is not the middle-class American shopping center that you and I knew a scant ten years or fifteen years ago.

I am scared.

I’ve never been so scared for my country. And I’m an old lady who has lived through some scary times: the Cold War, when we were serenaded once a week by air-raid sirens atop our apartment building; the Chicago riots; Vietnam, the Cuban Missile Crisis…all the way to 9/11. None of those times seem nearly as scary as the times we’re in right now.

Why?

Because we’re doing it to ourselves. In World War II, Korea, Vietnam, the Cold War, we had an enemy without, even if sometimes that enemy was largely imagined. Today we have an enemy within. We are the enemy within. We consume ourselves.

We who are Americans are destroying America.

There’s no treaty for it, no end to it but entropy. And I am scared. You might be, too.

The Markets of 2011: 2008 déjà vu?

by

A few words from one of my financial managers…

The events of the past few weeks have unfolded in a most unflattering way for the financial markets.  Outside of gold and U.S. Treasuries, investments have lost a significant amount of value recently, giving back some of the gains garnered during the rebound of the last few years.  While today’s global stock market reaction today came on the heels of a downgrade to the United States credit rating from AAA to AA+ (negative outlook), the continuation of the market slide is more likely related to expectations about global economic growth, the impact of government belt-tightening, and lack of leadership from the world’s largest economy, than it is from a rating agency’s downgrade of the credit worthiness for the world’s reserve currency.

Investments typically have two components: income and appreciation.  For the last few years, the risk-free rate of return (typically defined as the three month U.S. Treasury) has been incredibly low, forcing investors to take some level of risk to obtain a reasonable level of income.  Currently, U.S. Treasury yields out to 10 years in maturity are producing a negative real rate (after inflation) of return, with no expectation of appreciation, since bonds mature at a predetermined value.  A situation like that is well outside the norm and cannot continue indefinitely.

The last few years have been some of the most challenging times I’ve experienced as an investment manager, and I know that it is troubling to many investors that are not immersed in the investment business on a day-to-day basis.  Over the years we have made considerable efforts to measure the investment needs of our clientele, and have deployed client assets in a manner consistent with our understanding of those goals and objectives.  With objectives ranging from the extremes of low-risk to high-return, each objective requires periodic portfolio adjustments specific to each objective to maintain the appropriate longer-term risk/reward profile.

To that point, while we believe that 2011 will not go the way of 2008, there may be continued market turbulence to contend with in the short run.  We focus on a three- to five-year investment horizon, because the portfolios we manage have objectives based on income, growth, or a combination of the two, but not liquidation based on short-term developments.  We have, and will continue to make adjustments to improve the long-term position of the portfolios we manage with respect to our client’s specific longer-term investment objectives.

Steve Taddie
Managing Member
Stellar Capital Management
Phoenix, Arizona
August 8, 2011

Published by permission.

 

Songs of the Times

by

So I’m driving home from campus, a-listenin’ to the radio. Got a fistful of errands to run before I can come to light back at the Funny Farm, so I need the radio to keep me company for a while. Seemed like half the day that NPR had been moaning on while Rome burned (again!).

Enough, already, of the stürm und drang! How much of this can any one human being listen to without losing its mind? A click of the button sent the radio dial surfing across the airwaves to the cowboys. The Cistern (that’s “City Western”) station tuned in just in time for the start of this:

And you thought cowboys have no sense of humor?

Y’all come over for some of that home-made wine, y’hear? We’ll be needing it…

Saturday Night Wipe-out

by

OproverbialMG am i whipped.

Didn’t do much today but am just about wiped out with exhaustion. Compiled the Best of Money Carnival and scheduled it, but it was halfway done before this. Went with M’hijito to return the redundant dog crate to Walmart (His Maleness to haul the damn thing), there to collect a $90 refund. Ran over to Ace to pick up some new Danish oil with which to repair the puppy scratches on the kitchen cabinetry; got it home before I realized it was “walnut” stained; drove back through the heat-crazed traffic to get the “golden oak” flavor. Did the laundry, including the sheets. Fooled with the pool some more. Did battle with a difficult student who deserves a C-minus, is getting a B, and believes she should have an A.

Never did get around to cleaning house: too hot to function. Decided to put the puppy crate in a cooler part of the house, since the area where I’d like to locate Doggy Central is significantly warmer than any other rooms. Put the Navajo rug back on the wall where Pup tried to pull it down. Watered plants.

Finished off the day responding to a student who got a zero on the last paper (for not having done the assignment in spite having been warned at the draft stage) and threatened to go to the chair. Forthwith this development was topped off with the discovery that the washer overflowed and flooded the garage. Just spent a half-hour sweeping a lake down the driveway.

More gawdawful pretend news on the idiot box now, at 10:00 p.m.

Am I the only human in the country who’s bored stupid with the “what does the S&P credit downgrade mean for YOU?” pretend-news stories?

The answer:

Nothing.

There’s not a damn thing any of us can do about it.

• Are we going to lose our shirts? Not likely: our shirts are already lost. You can’t lose a shirt you don’t have anymore.

• Are we going to be unemployed? Probably; earlier this year a third of Americans were under- or unemployed. More recent data report that fewer than half of adult African-American men are employed, and that by 2018, less than half of adult white men will be employed; 22 million to 23 million people are under-employed or unemployed. Can we get any more unemployed than we are? Does anyone care?

• So our credit-card interest is going to go up? This matters to people who can’t afford to charge anything on credit cards in the first place?

• Our variable-rate mortgages are going up? How many more houses will go into foreclosure? Does this change things one way or the other? Real estate is already so profoundly trashed that a few more hundred thousand foreclosures will mean nothing.

• Our student loan interest is going up? Will this make any difference to those of us who are going back to school because we can’t get work? Will it change the plans of college kids who couldn’t get jobs if they tried?

Speaking of going back to school to retool for new work that represents underemployment, I heard from a client who’s a medical doctor in response to my questions to him about medical transcription as a possible new income generator.

He said that indeed a medical transcriptionist can make a decent wage. And while it’s true some of the work is being offshored, most jobs are still here in the U.S. But, says he, “The job is tedious and low intellectual in my opinion. You and Tina are way overqualified for the job. I hope you can find a better option to use your talents.”

So true. However, there seem to be no better options. Tina’s already waiting tables two or three evenings a week, after she gets off her full-time editing job. I’m a little old for that kind of strenuous work, though I suppose I could clean house, another trade that pays more than I’m earning at adjunct teaching. Exactly how “intellectual” it really is to teach people who think Arizona is a “Great Plans” state, Wisconsin is a Rocky Mountain state, and World War I happened in the 19th century remains to be seen. And as for tedious: dealing with people who don’t pay attention in class, refuse to address the assignment, and then threaten to complain to your boss when you flunk them…that defines tedious.

If I can earn the same or more transcribing doctors’ case notes, actually get paid for all the hours I work, engineer an income all 12 months of the year, and not have to put up with a lot of bullshit, I’ll take a new form of unintellectual tedium.

Looks like we may have found JackDaniels’s real name: as he was clambering around the backyard yesterday it struck me that his name is Charley.

Asked M’hijito about that idea. He seemed to like it; said he wasn’t crazy about “Jack” because it’s too close to “Jake,” the name of his childhood pet.

So Charley he is. For the time being.

Hounds of the Baskervilles

 

We Won’t Be Getting That Job…or Much of Anything

by

Holy F**k! If you’ll excuse the not-quite expression. And even if you won’t, I’ll say it again.

About two seconds after I hit “send” to shoot four incredibly complicated documents off in application for a full-time job at the District, I went to close the short-form resumé I’d written to supplement the 12-page curriculum vitae, the 11-page application form, and the two-page (11-point Times New Roman, line spacing “exactly”) cover letter that I’ve spent the past three days laboring over.

The resumé was an afterthought. IMHO the endless CV is something that probably is never read and, if it is, probably is the target of much seething resentment on the part of the person who is forced to read it. So I thought it would be a good idea to send a two-page business-style resumé that, while it doesn’t detail every word I’ve ever published, every conference I’ve every attended, every class I’ve ever taught, and every thought I’ve ever had, is at least readable.

My fingers alight on Command-W just as my eyes come to rest on the screen, where what should I read as the file flickers away but

…a editorial office…

Oh, hell and damnation!

I spent hour after hour after HOUR trying to get this stuff right. Went over it and over it and over it and then went over it again. If I have to screw up, does it have to be, dear God, does it have to be right where I’m crowing about my brilliant editing career?

So, if I ever had a snowball’s chance (which of course I didn’t), it just melted away in the 110-degree heat.

I’m screwed.

And if the FARKING Republicans get their way and shut the government down, I (along with about half my fellow Americans) am double-screwed.

I do not know what I am going to do if I don’t get a Social Security check next month. And I’m quite sure I’m not the only person who does not know what she or he is going to do if we don’t get our Social Security checks last month.

So far, Social Security hasn’t deposited a payment this month, either. Yesterday I spent my last available cash-flow dime on food. To buy enough gas to get to work between now and the end of the credit-card cycle, I’ll have to pull more money out of savings.

My next paycheck, which will arrive on Thursday after I’ve been standing in front of classrooms for two weeks, will cover three days, thanks to PeopleSoft’s wacko “lagging” pay periods. It might, maybe, buy enough gas for another week of commutes to the campus.

Damn it. I’m ready to go to the barricades. Americans of good will need to riot in front of the offices of these crazy Republicans. We need to march on Washington. We need to stage sit-ins at every Republican senator and congressman’s office in the nation!

If those SOBs manage to cut off Social Security—which is exactly what they want to do—I will have to double my drawdown from savings, and that will just barely cover my living expenses. It will not cover the payments on the house that Zillow now says is worth $120,000 less than we’re paying for it. Doubling my drawdown will exceed the 4% recommended drawdown, by a long shot. My savings will not last the rest of my lifetime. Before I’m carted off to the nursing home, I will be flat broke and living on welfare—assuming the Republicans haven’t managed to get rid of that, too, as they wish they could. There will be nothing to leave to my son.

Most Americans have far less in retirement savings than I do. As retirees, they don’t have any extra money to draw down. Large numbers of formerly middle-class baby boomers will be left destitute long before it’s time for them to shuffle off this mortal coil. Because they will have no financial capital to pass to the next generation, their children will fall out of the middle class—assuming any of them are still there by the time their parents die.

We will not be left that way through any doing of our own—outside the coastal cities, most people simply do not earn enough to set aside upwards of a million dollars for retirement. And we will not be left that way through any misdoing of the average man and  woman on the street, the ones who go to work and pay their bills and raise their kids in the time-honored American way. We will be left that way by a strategy to slash this country’s revenues by cutting taxes on the wealthy and on corporations that can easily afford to pay their share, by a decision to plunge our country into a ruinous war on the strength of a lie, by a bat-brained policy to deregulate the financial industry (and everything else that can be allowed to run loose across the land like so many wound-up mechanical rats), and by a nit-witted policy to resist raising taxes to fund the war built on a lie.

Something wicked this way comes, my friends. Matter of fact, it’s already here. It’s come for us, and it’s come for our kids.

Image: William Rimmer, Scene from Macbeth, Act IV, Scene I (witches conjuring an apparition). Public Domain.

The Value of a Dollar

by

On Thursday Frugal Scholar expressed awe at the extent to which consumer prices have soared over a typical Boomer’s lifetime. And how! I can remember when you could buy a week’s worth of groceries for ten dollars.

She reproduces part of a Faux News squib showing how prices have (apparently) risen over the past thirty years.

Well…hmmm….  Basically all this says is that the relative value of currency changes over time.

My father once said that when he was a young man—that would have been in the mid-1930s—he earned $30 a month and lived well on it. The $1.41 FS cites would have been worth 9 cents in 1935. Depending on how you look at it, 1935’s $1.41 would be worth anything from $22.40 (consumer price index) to $282 (relative share of GDP) today.

Our problem today is that while prices are rising, income remains stagnant or even continues to fall through furloughing, pay cuts, and unemployment. Rising prices are not the issue. Employment is the issue.

Check out the site that produced these figures: it has some fun tools.